Nigeria Mid-Year Economic Review 2019 - Retrofitting the Nigerian Economy: Issues and Drivers

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Wednesday, July 31,  2019  10:14AM / by Dr ‘Biodun Adedipe*

 

The Nigerian economy has struggled for acceleration since recovery from the 2016 recession. The prospects are still bright, but gaining momentum requires making some changes that seem simple on the surface but difficult to make. These changes requiring surgical strike mentality and energetic execution may be the way out.

 

Surgical strike is a military terminology for an action that produces an intended result against a predetermined and well-defined military target, without or with minimal collateral damage.

 

It also means an action aimed at quick resolution of a problem or issue in order to prevent it from escalating into a full-blown war!

 

Retrofit

 

To retrofit is to add a component to something that never had it when it was manufactured.

 

For example, a 59-year old apartment block that is newly fitted with elevator, central air-conditioning system, shared supplementary non-grid power system and all bedrooms en-suite.

 

The retrofitted unit becomes infinitely more effective and efficient than its pre-retrofit state.

 

What Should We Focus On?

 

We have conducted severally half-yearly and annual reviews with outlook over many years. Telling the same story!

 

Perhaps we should begin to shift focus in our analysis and conversation, taking account of the dynamics of economics:

 

  1. The fading rational, economic man and evolving socially adaptable man. (Kate Raworth, 2017)

 

  1. By end-July 2019, the US economy would have been growing for 121 months at a stretch, being the longest run since records began in 1854! (Economist, July 2019)

 

  1. The rising and strengthening phenomenon of ‘unmodellable behavior’.

 

  1. The inability of government to effectively fund growth and desperate need to make growth trickle down.

 

  1. For Nigeria, the exploding population that looks likely to account for about 26.7% of world population growth between now and 2050! (UN)


 

Shift:

 

From GDP growth to measuring quality of life and equitable distribution of growth benefits?

 

From whatever-happens to competing for resources and attention.

 

From the deception of resource-rich country to attractive investment destination.

 

From waiting for investors to come to actively pursuing the type of private investors that will make the difference. 


Global Macroeconomic Overview

 

“The outlook for the global economy has darkened” due to the following major factors:

 

1.       Tightened global financial conditions;

 

2.      Moderate industrial production;

 

3.      Intensified trade and political tensions; and

 

4.      Large Emerging Markets and Developing Economies (EMDEs) experiencing significant financial market stress.

 

Key issues / risks: 

  1. Trade wars between USA and China.
  2. Slowing advanced economies, especially UK and mainland Europe.
  3. Rising protectionism – ‘America First’ and Brexit.
  4. Deeming growth prospects for commodity exporters.
  5. Slowing growth in China and other East Asian countries.
    1. China slowed to 6.2 percent in Q1 2019, but for a $14 trillion GDP, that’s still massive (annualized) addition of $868 billion which is 2.46 times Nigeria’s $353.27 billion (Q1 2019 annualized)!
  6. EMDEs largely (Nigeria included) will suffer from country-specific factors, tighter financial conditions, geopolitical tensions, and higher oil import bills.
  7. Growing risks of global policy uncertainty.
  8. Weak productivity gains and climate change effects will adversely impact output and growth.

*Dr ‘Biodun Adedipe is the CEO of B.Adedipe Associates Ltd. He can be reached vide bioduna@baaconsult.com.ng


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