Happy New Year!
Now close your eyes for a minute.
Today is January 1, 2030, and the latest inflation data has just come in from the Nigerian Bureau of Statistics. The headline Consumer Price Inflation (CPI) figure for the prior quarter is an impressive 3.5%, continuing a strong and continuing trend of declining CPI over the previous 20 reported quarters.
That is not the only good news. The rate at which the naira is exchanged for foreign currency has also been remarkably stable over the past five years, buoyed by the continued strength of Foreign Direct Investment (FDI) in the country’s fast-growing economy.
More than US$50 billion per year on average has been the reported net inflow, driven in large part by investments from Nigerians in the diaspora, development finance partners, impact investors, international corporations and institutional financial investors. Foreign portfolio investment (FPI) inflows have also been strong, attracted by five consecutive years of positive single-digit real interest rates in local currency terms. The stock market is booming, with hundreds of new issues in print in the past year, led by fast-growing local companies in the technology, media and financial services space.
Unemployment continues to recede at a very rapid pace, to less than 20% of the active labor force, fueled by large new investments in industrial production and manufacturing capacity across the country over the past five years. Several new and large projects are underway simultaneously, driven by private investments in electricity (gas, hydro, wind, and solar), highways, ports, airports, special economic zones, commercial agriculture and commodity processing, natural gas processing , oil refining and petrochemicals.
Also read: May 2023 be an annus mirabilis for us
In addition to natural gas, processed commodities, and refined petroleum, Nigeria is also becoming a globally competitive export source for those petroleum-derived specialty chemicals that are critical components for the emerging global renewable energy economy. : ethylene for copolymer layers in solar panels, as well as propylene and xylene for the production of wind turbine motor houses and rotor blades.
All of these ongoing new investments are possible because the insecurity of lives and property is an issue that also recedes into distant memory. This has been driven not only by large-scale improvements in the economic prospects of millions of people, but also by a fit-for-purpose security architecture and justice administration system, designed with appropriate incentives for good performance and consequences for the failure.
Now open your eyes again.
There are about eight weeks left until the critical state and national elections that will empower a new group of people with the executive and legislative authority to either make the previous pleasing results possible or create an entirely different reality for the country. I am one of those who remains optimistic that Nigeria can become a globally competitive destination for large investments in major projects with high international relevance, creating wealth and positively transforming the lives of millions of people in the process.
However, for these positive outcomes to emerge, Nigeria will require (at the highest levels of decision-making) a combination of the right philosophical approach, strong and resilient political will, and fairly disciplined implementation. This is because none of these highly desirable economic development outcomes can come about without difficult policy decisions, carefully considered and faithfully implemented, very often with truly painful short-term consequences.
Most Nigerians are already aware of the areas in which these difficult decisions have to be made, and indeed the substance of the political decisions that need to be made are also relatively well known, be it in relation to monetary credibility and tax, subsidies, gas and electricity tariff regimes, deregulation, cost of governance, security architecture, administration of justice, industrial policy, exchange management and constitutional reforms, among others.
More than enough has been written and said about all of this and more, including by the candidates for office themselves. What remains is to select a new political leadership elite that will take responsibility for achieving much-needed results. I am confident that the human talent, financial capital, global support and local resources to achieve the above results are in abundance for Nigeria.
Political leadership and national will are the remaining additional ingredients that are essential.
My hope and prayer for Nigeria in 2023 is that all the necessary elements come together to start the difficult development journey ahead.
Again, happy new year, and I wish you all a truly prosperous and successful 2023.