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This Time is Different: There is a Clear Way Forward for the Nigerian Economy

This Time is Different: There is a Clear Way Forward for the Nigerian Economy

This is the extract of a paper of the same title posted on SSRN (Social Science Research Network), on 25 July, 2016. You can download the full paper (in PDF format) here.

Nigeria’s economic situation in 2016 is fast degenerating into early eighties-like doomsday situation in which oil price collapse is translating into a currency crisis, inflationary spiral, fiscal collapse, and recession. This should not be so at all as this time is fundamentally different from the early eighties. The essential difference is that the global economy that had been burdened by a debt crisis then is now awash with liquidity. It should therefore be easy for Nigeria to attract enough foreign investment inflows into infrastructure sectors to compensate for the foreign income lost to the fall in oil price.

The new government in Nigeria will have to do three things:

  • Break the government monopoly that shuts investment out of network infrastructure sectors.
  • Attract foreign direct investment, through immediate IPOs on existing state-owned enterprises, and new licences for greenfield projects nationwide.
  • Engage the world about the investment opportunities in the Nigerian economy.

The new regime could have taken these measures since its inception in May 2015 to avoid the deterioration in domestic economic realities. The steps have to be taken now to stem further deterioration and induce a turnaround.

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