This week, a report on Nigeria’s Democracy at 21released by the Lagos Chamber of Commerce and Industry (LCCI) described the years of uninterrupted democracy as ‘work in progress,’ saying core democratic values are yet to take firm root following imbalance in the structure of the economy. Taiwo Hassan reports
Indeed, the 21 years of uninterrupted democracy in Nigeria has earned the country enormous goodwill as one of the few stable democracies in Africa.
But sadly, Nigerians are yet to reap the dividends of democracy, either politically or economically, because of sundry challenges posing major risks to the existence of democratic values in the country, mostly worsening poverty and insecurity.
In fact, Nigerian economy has transformed from basically agrarian to one driven largely by resources from oil and gas sector.
The first quarter 2020 gross domestic product (GDP) data released by the National Bureau of Statistics showed that the non-oil sector accounted for 90.9 per cent of the GDP, while the oil sector accounts for 9.1 per cent.
Oil sector accounts for over 50 per cent of the nation’s revenue and over 80 per cent of the foreign exchange earnings.
Consequently, this reflects the mounting imbalance in the structure of the economy since democracy. It also underscores the growing decline in the non-oil sector productivity since democracy came into the fold. This remains the major failing of the Nigerian economy at 21. It makes the economy very vulnerable to global shocks and weak in economic inclusion.
Nigeria’s economic architecture
Besides, the LCCI has been at the vanguard of championing activities of private sector operators and development of the economy in general.
Precisely, the chamber recognises that Nigerian democracy is still work in progress, but it is crucial to recognise the importance of these democratic ideals in sustenance of the country’s democracy.
According to LCCI in its reports on Nigerian Democracy at 21 years, it is remarkable as well that the military has, over the last 21 years, demonstrated absolute loyalty, respect and submission to the constituted democratic authorities. This has earned Nigeria a great deal of respect in the comity of nations.
However, a strong and virile economy is critical for a sustainable democracy, adding that worsening poverty poses a great deal of risk to the democratic process and the security of the nation.
It stated in the report that a strong economy driven by the private sector was fundamental to the building of strong democratic structures and processes.
This is, therefore, the time to reflect on the critical gaps in the country’s democratic structures and processes as well as our economic architecture.
In the report, the Chamber urged that the political leadership at all levels should rededicate themselves to the creation of enabling environment for private sector development with emphasis on the following, among others, streamlining the democratic structures for cost effectiveness and better economics, reduction in cost of doing business through the provision of critical economic infrastructures, creation of a level playing field for all economic players, and tackling corruption at all levels and spheres of the polity.
Others are strengthening macroeconomic fundamentals of the Nigerian economy, promotion of transparency and accountability in the conduct of government business, strengthening of national institutions, promotion of inclusiveness and engagement in the democratic process, and; development of human capital.
Skewed economic performance
The LCCI, in the report, explained that the country’s economic growth trend, measured by the performance of the gross domestic product, has been generally positive over the last two decades.
This is good compared to growth conditions in most economies around the world.
However, it remains a major worry that the economy is still structurally defective as it is too dependent on the oil and gas sector, creating serious vulnerability risks. The lack of political will to reform the oil and gas sector remains a major shortcoming of governance over the past decades.
The director-general of LCCI, Dr. Muda Yusuf, disclosed in the report that the country’s economic review under President Muhammadu Buhari administration, particularly, real sector of the economy, has been struggling to cope with profiling developments despites the administration’s economic reforms.
In the report, the LCCI DG said the regime of President Buhari came on board with an exceptionally high goodwill and with very high expectations from the citizens, adding that, however, the expectations weakened soon after as the regime was up to a slow start, from an economic management perspective, which ruminatively affected key sectors of the economy.
COVID-19 challenges
Speaking further on the country’s macroeconomic fundamental between 2015 and 2019 under the present administration, the LCCI helmsman acknowledged the fact that COVID-19 and the unprecedented collapse in crude oil prices impacted most macroeconomic variables, and the fact that full year data is not available for 2020.
Power situation
The chamber’s report pointed out that the country’s power situation remained a major burden on business. It is one area in which the trend since democracy has been that of progressive decline.
According to the chamber, power supply has consistently lagged behind the pace of the economic activities and population growth. This development impacted negatively on investment over the past few decades with increased expenditure on diesel and petrol by enterprises. This also comes with the consequences of declining productivity and competitiveness.
Security situation
The security situation in the country deteriorated in the last decade, according to the LCCI in the report. It impacted on investment risk and worsened the country’s perception and image by the global investing community.
Access to markets in the troubled parts of the country has reduced for many enterprises with negative consequences for investor confidence.
Related to this are the many cases of ethnic and religious conflicts, herdsmen attacks on communities and kidnapping.
The incessant oil theft and the vandalization of oil pipelines remain major concerns for investors in the oil and gas sector. Billions of dollars have been lost in revenue; many lives have been lost as well. The many oil producing communities suffered serious environmental degradation as a consequence of this problem.
Real sector
The report noted that over the last few decades, the challenges of production in the economy had grown progressively largely because of the quality of infrastructure; which is why the risk of industrial investment is high and continues to increase.
The various policy interventions have not had the desired impact on the sector.
It is impossible to have a vibrant manufacturing sector in the face of cheap imports into the country, and high production and operating cost in the domestic economy.
Some of these imports are landing at 50 per cent of the cost of products produced locally. Besides, manufacturers have to worry about high energy cost; they have to worry about high interest rates – 20 per cent and above; they have to worry about a multitude of regulatory agencies making different demands on them; they have to worry about massive smuggling and under invoicing of imports, they worry about trade facilitation issues at the sea ports and many more.
Last line
However, the LCCI report says that unless there is an effective and sustained protection and support for the real sector, and a dramatic improvement in infrastructure, the outlook for the country’s real sector will remain gloomy, particularly for the small-scale industries under Nigeria’s democracy in future.
