Nigeria has received USD600 million loan from the African development Bank, AfDB to support economic development. However, not many people are thrilled by the news.
Even the AfDB seems to be frustrated by the government’s lack of direction and seriousness. At the announcement of the loan approval, the AfDB suggested in its remarks that the gesture is more from an humanitarian ground as opposed to a rational decision.
The government has not shown the AfDB a concrete development plan. The AfDB had intended to release USD1 billion but withheld the remaining USD400 million pending when the government submits a plan and carry out reforms that will warrant the release of the second tranche.
The AfDB noted that “The economic recovery plan that the government is working on must be a package of comprehensive reforms, including even exchange rate policy, the consistency with regards to the monetary policy and structural reforms”
The fact is that the Nigerian government and its financial and policy formulators are fast losing the little credibility they supposedly have prior to now.
First is that fact the government does not have a concrete fiscal policy to stimulate economic growth. The country has been in a recession since the beginning of the second quarter, there is no emergency road map that has been devised to ensure the recession is short lived.
The Central Bank of Nigeria, CBN has not helped matters as well. Instead of letting the currency float totally, it has been tinkering with the Naira (NGN), a back door policy that has scared away investors, while hurting local manufacturers.
Last week Erisco Foods, the largest manufacturer of tomato paste in the country said it is contemplating the shutdown of its factories as a result of the CBN’s Forex policy that has starved the company of its needed supply for Dollars (USD).
Time is running out for Nigeria, the fourth quarter of the year gets close to a wrap up, more damage would be done to the remaining part of the economy. The economy is almost bleeding to death. Major blue chips who released their third quarter results depicts that over 80% of all quoted companies on the NSE posted huge losses with many of them reducing their personnel expenses by 60%. This translates to more than 400,000 jobs lost in the last two quarters.
The government might be gaining grounds on the fight against corruption, but the strategy to firm up on the economy, restructure public institutions and increase competitiveness is lacking
This could spell more doom for the world’s largest black country.