Year 2023 was very unique in the lives of Nigerians and the nation’s economy. Starting with January demonetisation policy, the mid-year subsidy removal and the floating of the foreign exchange rates, it was a year of distressing shocks. To say that the effects of the demonetisation policy, power and energy market liberalisation and the floating of the foreign exchange rates are devastating is to say the least. Before then, Nigeria’s debt profiles had become a source of worry to many but the government continued to borrow from abroad and at home; with the country now surviving on borrowed funds to the extent that crude futures had been pledged for already-expended borrowings, and debt servicing so deep enough to swallow generated revenues. This on one hand may explain the desperation for more taxes and levies from all angles, despite the fact that, since COVID-19, MSMEs are either dead or dying in Nigeria and the real inflation rate, especially food inflation, is notching 40 per cent.
Demonetisation means the economy will become illiquid. Effects of this on Gross Domestic Products include reduced consumer demands as reduced patronages on goods and services trigger considerable decline in the GDP figures.
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The Nigerian economy is suffering because of the immediate negative effects brought about by cash crunch, loss of jobs, and general economic slowdown. With the Nigerian economy in the doldrums as a result of the multiple policy assaults post-Covid period, it is the duty of the governments to finance the rebuilding efforts by motivating the Micro, Small and Medium Scale Enterprises (MSMEs), and not the nauseating, more audio than real distribution of their political foodstuffs, rice and co, in the name of palliatives. Inasmuch as the federal government is still lording itself over the resources of the people, a serious aberration in a truly-federal system where dual sovereignty of the state and the federal should be the order, it behoves on the federal to stimulate the MSMEs to restart the quick recovery of the comatose Nigerian economy. However, government is chasing money from already-emptied pockets. Isn’t this an economic masterstroke from the economic luminaries? They remove or deny subsidies that local production needs to revamp the economy, but give billions to those going on private excursion to foreign lands for private supplications. It is the dilemma of a country.
With covid-19 impact and 2023 multifaceted policy barrage, the Nigerian economy can truly be said to have suffered back-breaking and annihilating disasters. Borrowing from the words of Hud Exchange, the attraction, retention, and return of businesses and jobs to the Nigeria’s disaster-impacted economy is critical to short-term and long-term recovery. Therefore, activities that demonstrably restores and improves the local economy through jobs creation and retention are generally needed. All economic revitalization activities must address an economic impact(s) caused by the disasters: destroyed MSMEs, loss of jobs, government’s inability to generate revenues.
According to Greenstone, Michael, and Adam Looney, in the piece titled Renewing Economically Distressed American Communities, “deep recessions can put some places in a tailspin for decades. Some modest policies can help speed the recovery. All communities do not fare equally well after recessions and other economic shocks. Some bounce back fairly quickly. Others suffer more and take longer to recover – sometimes decades longer”. This is where intentional stimulation of the MSMEs come in.
As I wrote on this page in the piece titled “Now That CBN’s Incongruous New Naira Policy Has Paralysed Micro And Small Businesses”, the 2016 demonetisation experience in India left the MSMEs in the country limping with thousands still wallowing in the aftershocks in form of jobs loss to dissolution of businesses, with the attendant panics and chaos in the country. Among the recovery measures was the introduction of eWallet to the agribusiness industry to stimulate production. Also, again, Nigeria needs to learn from how Western Europe was revitalised after the devastating world war two. The 1948 Marshall Plan that was unveiled did not call for taxation or levying of the moribund economy but injection of the provision of more than $15 billion to help refinance the rebuilding efforts. It was a crafted four-year plan to reconstruct cities, industries and infrastructure and to remove trade barriers as well as foster commerce between countries. Will Nigeria ever come up with a Plan to rebuild and reconstruct the industries or it will be expecting miracles from the dead businesses to pay levies and taxes?
Ola Emmanuel is a business planning consultant.
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