Once the promise of Africa, Nigeria gets rich under crime, few jobs | Business and economic issues

If there was ever a time when Nigeria could have taken flight, it was in 1999. Democracy had been restored, with its economy reopening after decades of mismanagement and sacking under military dictatorships.

Tomi Davies, systems analyst, was one of thousands of Nigerians who came home to help rebuild the country. After a few years working on public sector projects, he was offered a bag full of dollars to add phantom employees to the pay system he was installing. When he refused, a group of men attacked him at his home in the capital, Abuja.

“I arrived like many others full of hope, but I had to escape in disgust,” said Davies, 65, who has returned to the UK, where he is now head of investment at GreenTec Capital Partners, a Frankfurt headquarters. .

Others like him left too, defeated by the spontaneous aspirations of a nation that should not turn like that. Equipped with some of the world’s largest oil reserves, plenty of arable land and a young tech-savvy population of 206 million that sets Africa’s music and fashion trends, Nigeria has the potential to emerge on the global stage.

However, false policy steps, entrenched corruption and excessive dependence on crude oil mean that a country that makes up a quarter of the continent’s economy risks becoming its biggest problem. A dangerous cauldron of ethnic tensions, youth discontent and crime threatens to spread more poverty and violence in a region that is rapidly falling behind the rest of the world.

Since its discovery in the 1950s, beneath the mangrove forests of its south-east coast, oil has dictated the boom and bust cycles of the former British colony, with the commodity now numbering 90. % of exports and half of government revenues.

Capital Poverty

The economy has not yet recovered from the 2014 oil collapse, and is unlikely to do so any time soon, meaning its population will continue to slow economic expansion by adding poorer to what is already the capital of oil. the misery of the world. More than 90 million people live in poverty, more than India, which has a population seven times larger.

A presidential spokesman referred the questions to the government’s economic team. The finance minister and central bank have not responded to several requests for comment.

The coronavirus only made things worse. According to the World Bank, personal incomes will fall to the lowest in four decades, pushing 11 million more people into poverty by 2022. One in three Nigerians in the workforce will be unemployed, among the highest unemployment rates. unemployment in the world, leading to discontent and social insecurity.

Policy mistakes by President Muhammadu Buhari have complicated the road to recovery. He came to power in 2015 promising to create 12 million jobs in his first four-year term; by the middle of his second term, unemployment had more than quadrupled.

Buhari, 78, revived an import-substitution push that was popular when he was a military governor in the early 1980s, hurting businesses that can’t afford to survive. It banned foreign currency for importing dozens of products from toothpicks to cement, closed borders to stop rice smuggling and refused to completely facilitate exchange controls.

Policies like this have held back foreign investment, pushed food inflation to 15-year highs and scared away companies such as the South African supermarket chain Shoprite Holdings Ltd.

“The government made so many mistakes even before the pandemic made things worse,” said Amina Ado, who was one of Buhari’s oil advisers from 2017 to 2020. “We urgently need to change course because we are big enough. to import into the world. ”

The roots of the illness, however, precede Buhari. Under British rule, the three main regions of Nigeria, divided along ethnic and religious lines, were clumsily put together in a 1914 merger. Since independence in 1960, the elite from the south- Christian West and largely Christian Southeast are set to fight for power with the Muslim north.

“Political instability is a major obstacle to the kind of professional, long-term economic reforms needed for Nigeria to be able to start,” said Zainab Usman, director of Carnegie’s African Endowment for International Peace program. .

The oil led to the dismantling of that small industry that was opening the door to economic imports financed by a strong local currency. Countries like Malaysia and Indonesia, which were as poor as Nigeria in the 60s, have surpassed it in per capita income after diversifying.

An increase in corruption has also ruined the resources needed for infrastructure and reliable power supply – both of which are lacking.

“In a lot of countries, people are used to officials squeezing something out of the top, but eventually giving it something away,” said Matthew T Page, an associate at Chatham House in London. “In Nigeria, everything is blown off the top and nothing is sent.”

Security meltdown

Distrust in the State and poverty have increased violence. A decade-long jihadist insurgency in the northeast is growing in fury despite Buhari’s claims to have defeated Boko Haram militants in 2015. Piracy has also made the Gulf of Guinea one of the most dangerous waters in the world. world, while inland, a deadly conflict between nomadic pastoralists and farmers in the middle of the country moves south. A new separatist rebellion emerges in the southeast, where a secessionist attempt to create the republic of Biafra sparked civil war in the 1960s.

The kidnapping has gone to its highest in at least a decade, according to data from the Armed Conflict Situation Project and Event Data. Nearly 900 students have been taken from schools in mass abduction since December, according to the United Nations.

It wasn’t always like that. As a child in the 1980s, Alvari Banu recalled short road trips to visit the family farm between Abuja and the northern city of Kaduna. Now, kidnappings on the same road have kept him away for almost three years.

“The situation is getting worse,” said Banu, 41, a financial adviser. “The government has completely failed to provide even basic security.”

The disorder is a major impediment to growth, costing the economy $ 10.3 billion by 2020 – more than total federal government revenue that same year, according to official estimates. Without key reforms, Nigeria’s economy will remain anemic, expanding just over 2% this year and next, still below the rate of population growth, according to the International Monetary Fund.

Meanwhile, the government lives on borrowed money, with debt service costs consuming more than 80% of its revenues.

“This could end in a foreign debt default if things don’t change,” said Charlie Robertson, chief global economist at Renaissance Capital, an investment bank in emerging and frontier markets.

To avoid the calamity, the government needs to allow the currency to depreciate, invest in electricity and live to lower fertility rates, which at 5.3 births per woman is one of the highest and safest rates in the world, said Robertson. The rise in oil prices, the sale of planned sovereign bonds and the imminent repayment of IMF resources will help the country move for now, said Omotola Abimbola, an analyst at Lagos Investment Bank, Chapel Hill Denham.

The weight of the economic downturn has fallen on young people, two-thirds of whom are unemployed or underemployed. With an average age of 18, the country’s population is growing restless and disconnected from the old political class living in luxury. Last year, protests over police brutality turned into a national uprising that paralyzed major cities, hampered only by a violent crackdown that killed dozens.

“There is a lot of frustration because there are so many highly qualified unemployed people,” said Chioma Okafor, a 32-year-old public health expert who left for Nigeria in 2014. After two years earning $ 200 a month in counseling in Abuja, and with no prospect of a better job, Okafor borrowed money to buy a one-way ticket back to the United States

“When Buhari went to the office, people were waiting for things to change,” he said. “But Buhari was not the only one to fail. The system is broken. ”

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