CROSSING THE RIVER BY FEELING THE STONE: STRATEGIES FOR SURVIVING THE IMPACT OF NIGERIAN ECONOMIC POLICIES IN 2024 AND BEYOND.

Dr. Sulaiman Usman SAN, FICMC, FIMC, CMC, FNARC, FCIML, FAIET.

(D.L, Ll. B (Hons), PgC (Texas), LL.M (Liverpool), Ll.M (QMUL), PhD, (PNH), B.L

Notary Public and Life Bencher

Founding Partner, Gamzaki Law Chambers

Presented at a “WEBINAR” ZOOM ONLINE on 26^TH APRIL 2024 with the theme: Nigeria Economic Crises; Strategies for Survival in 2024 and Beyond by the University of Liverpool Alumni in Nigeria (Abuja- Northern Region)

ABSTRACT:

The Nigerian economy is facing volatility and uncertainty due to evolving policies, which has led to hyperinflation, cost of living crises, and uncertainties. This paper explores strategies for navigating and surviving the impact of Nigerian economic policies in 2024 and beyond. Drawing inspiration from the Chinese proverb “Crossing the river by feeling the stone” thatrequires gradual but pragmatic reform marked by incremental and piecemeal changes.[1]

This paper aims to provide practical advice and insights on how individuals and businesses can adapt to the ever-changing economic landscape in Nigeria. It analyses the challenges posed by economic policies and offers actionable recommendations that individuals and businesses must adopt and resilient strategies to develop to survive and thrive. The paper also discusses the importance of diversifying income streams, staying informed about economic policies, building financial buffers, seeking professional advice, exploring international opportunities.[2], and advocating for change. By employing these strategies, individuals and businesses can better position themselves to withstand the challenges and capitalise on the opportunities presented by Nigerian economic policies.

INTRODUCTION

Navigating the economic landscape can feel like crossing a river with shifting currents. In Nigeria, where economic policies profoundly impact, resilience and strategic planning are crucial. The survival strategies draw parallels to the metaphorical act of feeling stones while crossing a river—navigating carefully, adapting to changes, and ultimately, reaching the other side despite the challenges posed by economic policies in 2024 and beyond.

The current Nigerian economic crisis was the result of the government’s handling of fiscal and monetary policies, especially the botched redesign of the Nigeria currency, the abrupt removal of subsidies, the floating and devaluation of the Naira, as well as the insatiable appetite for foreign currencies among Nigerian elites, the country’s increasing debt profile, the impact of the borrowed funds on economic development, the Government’s unfulfilled promises of job creation, and the hypocrisy and corruption within the system[3].

The economic crises have significantly impacted the population, increasing poverty, inflation, high living costs, and hardship for many people.  The socio-economic outlook remains fragile due to policy impacts.[4]. Addressing the root causes of the economic crises will require broader systemic changes and policy interventions; combining fiscal and monetary policies, trade policies, and a stable exchange rate can help governments address economic crises and promote economic stability and growth.  Some potential challenges faced by individuals in the Nigerian economic crisis may include:

1. Unemployment and Underemployment: Many individuals are struggling to find stable employment or may be forced to accept jobs that do not fully utilize their skills and education.

2. Inflation and Cost of Living: Rising prices of food, goods, and services have eroded purchasing power, making it difficult for individuals to afford necessities.

3. Limited Access to Credit: Financial institutions have tightened lending criteria, making it harder for individuals to access credit for personal or business needs.

4. Currency Devaluation: Fluctuations in the Nigerian currency’s value and the Naira’s floating can impact the cost of imported goods and affect an individual’s ability to conduct international transactions.

5. Reduced Government Services: Cutbacks in public and social welfare programs have left individuals with fewer support options during challenging times.

6. Business Failures: Small business owners may face increased challenges in sustaining their enterprises, leading to closures and job losses.

7. Mental Health Strain: Economic uncertainty and financial stress can take a toll on individuals’ mental well-being, leading to anxiety, depression, and other mental health issues.

ECONOMIC POLICY MEASURES

During an economic crisis, governments often use a combination of fiscal and monetary policies to stabilize the economy and mitigate business cycle fluctuations. Fiscal policy involves the government’s taxation and spending measures to influence aggregate demand and stimulate economic activity. This can include increased government spending or tax cuts to boost consumption and investment. On the other hand, monetary policy is managed by the central bank. It involves the manipulation of interest rates and the money supply to influence borrowing costs, inflation, and overall economic activity. Lowering interest rates or implementing quantitative easing can encourage borrowing and increase investment and consumption.

In addition to fiscal and monetary policies, governments often implement trade policies to improve trade relations and build safeguards against external shocks. Trade policies can include tariffs, quotas, subsidies, and trade agreements. These policies aim to protect domestic industries, promote exports, attract foreign direct investment, and ensure a stable and balanced trade relationship with other countries.

Stabilising the exchange rate is crucial for maintaining stability in international trade and managing external shocks. A stable exchange rate helps to provide certainty for businesses engaged in international trade, reduces currency volatility, and promotes confidence in the economy. Governments may use foreign exchange interventions or pegging the currency to stabilize the exchange rate.

John Maynard Keynes[5]One of the most influential modern economists, often regarded as the founder of modern macroeconomics, declared, “The political problem of mankind is to combine three things: Economic Efficiency, Social Justice, and Individual Liberty.” [6] I would say that today, we would say Economic Prosperity, Social Justice, and Environmental Sustainability.

Keynes’ statement from 1926 reflects the foundational principles that many still consider crucial in societal development. Economic efficiency ensures that resources are utilized optimally, social justice focuses on fairness and equality, and individual liberty emphasizes personal freedoms.[7]. These ideas remain relevant today, albeit with some updates.

Today, the focus has expanded to include economic prosperity, which encompasses both efficiency and overall well-being and wealth creation for individuals and communities. Social justice has evolved to emphasise equality, inclusivity, and diversity, ensuring everyone has equal opportunities and representation. Environmental sustainability is a critical addition, highlighting the necessity of preserving our planet and its resources for future generations.

The Nigerian government has implemented various measures to address recent economic challenges. Some of the responses include[8]:

1. Economic Reforms: The government has initiated economic reforms to diversify the economy away from its heavy reliance on oil, focusing on sectors such as agriculture, manufacturing, and technology.

2. Social Intervention Programs: The government has introduced social intervention programs targeting vulnerable populations, including the National Social Investment Program (NSIP), which includes initiatives such as the N-Power youth empowerment program, the Conditional Cash Transfer program, the National Home-Grown School Feeding program, and the Government Enterprise and Empowerment Program (GEEP).

3. Infrastructure Development: Efforts have been made to invest in infrastructure development, including road construction, power generation, and transportation, to stimulate economic growth and improve living standards.

4. Monetary Policy Measures: The Central Bank of Nigeria has implemented monetary policy measures to stabilize the economy, manage inflation, and support the stability of the Nigerian naira.

5. Investment in Agriculture: The government has prioritized investment in agriculture to enhance food security, create employment opportunities, and boost rural development.

6. Public-Private Partnerships: Encouraging partnerships between the public and private sectors to drive investment, innovation, and job creation.

7. Fiscal Policy Adjustments: The government has adjusted fiscal policies, including budgetary allocations and tax reforms, to address economic imbalances and promote sustainable growth.

It’s important to note that these measures’ effectiveness and impact on the overall economy and poverty alleviation will require ongoing evaluation and monitoring.

STRATEGIES FOR PEOPLE SURVIVAL

Navigating the impact of Nigerian economic policies can be challenging, but some strategies can help individuals and businesses survive and thrive in the current economic climate. Here are some potential strategies for managing the impact of economic policies in Nigeria[9]:

1. Diversify revenue source: Given the Nigerian economy’s volatility, diversifying income sources can be beneficial to avoid cash flow vulnerability. This could involve exploring new business opportunities, investing in different sectors, or seeking employment in more stable industries[10].

2. Stay informed: Keep abreast of Nigeria’s latest economic policies and developments. Understanding the implications of new policies can help individuals and businesses make informed decisions and adapt their strategies accordingly.

3. Build a financial buffer: Given the uncertainty of economic policies, it’s essential to build up a financial cushion to weather any potential downturns. This could involve setting aside savings, reducing unnecessary expenses, and managing debt carefully.

4. Seek professional advice: Consulting with financial advisors, economists, or legal experts can provide valuable insights into navigating the impact of economic policies. These professionals can offer tailored advice based on individual circumstances and goals.

5. Explore international opportunities: In light of the challenges posed by Nigerian economic policies, exploring opportunities in international markets could provide a buffer against domestic economic volatility. This could involve exporting goods and services, seeking international investment, or relocating business operations.

6. Advocate for change: Engaging with policymakers and industry associations to advocate for more favourable economic policies can help shape the business environment in Nigeria. Individuals and businesses can create a more conducive economic environment by participating in advocacy efforts[11].

ECONOMIC VOLATILITY

Several key factors contribute to the volatility of the Nigerian economy, including:

1. Dependence on oil: Nigeria’s economy relies heavily on oil exports, making it vulnerable to fluctuations in global oil prices. Any disruptions in the global oil market can significantly impact the country’s revenue and foreign exchange earnings.

2. Weak diversification: The Nigerian economy has historically been under-diversified, with overreliance on the oil sector. Limited diversification into other industries and sectors leaves the economy susceptible to external shocks and market fluctuations.

3. Political instability: Nigeria’s political uncertainty and governance challenges can create an unpredictable business environment, deterring investment and economic growth. Inconsistent policy implementation and frequent leadership changes can contribute to economic volatility.

4. Fiscal and monetary policy challenges: Ineffective fiscal management, high government debt, and challenges in monetary policy implementation can contribute to economic instability. Inadequate fiscal discipline and monetary policy coordination can lead to inflation, currency devaluation, and reduced investor confidence.

5. Infrastructure deficiencies: Inadequate infrastructure, including power supply, transportation, and telecommunications, hinders productivity and economic growth. Infrastructure deficiencies can also increase production costs and limit the competitiveness of Nigerian businesses.

6. Security concerns: Persistent security challenges, including insurgency, terrorism, and communal conflicts, can disrupt economic activities, deter investment, and undermine business confidence.

7. External vulnerabilities: Nigeria’s economy is vulnerable to external factors such as global economic conditions, trade dynamics, and foreign exchange rate fluctuations. Dependence on imports for consumer goods and capital equipment exposes the economy to external shocks.

SMALL AND MEDIUM ENTERPRISES

Small and medium-sized enterprises (SMEs) in Nigeria face several challenges amidst economic volatility, including:

1. Access to finance: SMEs often struggle to access affordable financing, as banks may perceive them as high-risk borrowers. Economic volatility can exacerbate this challenge, as lenders may become more cautious in extending credit during uncertain economic conditions.

2. Infrastructure deficiencies: Inadequate infrastructure, including unreliable power supply, poor transportation networks, and limited access to technology, can hinder the productivity and competitiveness of SMEs. Economic volatility may further strain infrastructure and exacerbate operational challenges for SMEs.

3. Regulatory and policy uncertainty: Rapid changes in economic policies, tax regulations, and business laws can create uncertainty for SMEs, making it difficult to plan and invest long-term. Economic volatility can lead to frequent policy changes, further complicating the business environment for SMEs.

4. Limited market access: SMEs may struggle to access domestic and international markets due to limited resources, inefficient distribution networks, and trade barriers. Economic volatility can disrupt market dynamics and consumer behavior, posing additional challenges for SMEs seeking to expand their customer base.

5. Skills and talent development: SMEs often face challenges in recruiting and retaining skilled employees and providing ongoing training and development opportunities. Economic volatility can impact workforce stability and limit SMEs’ ability to invest in human capital.

6. Currency fluctuations and inflation: Economic volatility can lead to currency fluctuations and inflation, affecting the cost of imported inputs, raw materials, and equipment for SMEs. This can squeeze profit margins and increase operational costs for SMEs.

7. Limited access to technology and innovation: SMEs may struggle to adopt and integrate new technologies and innovative practices due to limited resources and expertise. Economic volatility can further constrain SMEs’ ability to invest in technology and innovation.

CONCLUSION

Ultimately, surviving the impact of Nigerian economic policies requires a combination of adaptability, resilience, and strategic decision-making. By staying informed, diversifying income streams, and seeking professional advice, individuals and businesses can better position themselves to navigate the challenges and opportunities presented by economic policies in Nigeria[12]. Addressing these challenges requires a comprehensive approach that includes targeted policies to improve access to finance, infrastructure development, regulatory stability, market access facilitation, skills development, and support for technology adoption. By addressing these challenges, SMEs can be better positioned to withstand economic volatility and contribute to sustainable economic growth in Nigeria[13].

Therefore, balancing economic prosperity, social justice, and environmental sustainability becomes the new political challenge in this context. It requires policies and practices that promote economic growth without compromising fairness, inclusivity, or the health of our planet. Finally, we must stress the importance of self-sufficiency and pride in Nigeria’s local currency, products, and services. Nigeria should be proud of its local currency and products and embark on a crackdown on the hoarding and displaying of foreign currencies.

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[1] Li, H.. ‘The Chinese Model of Development and Its Implications’  (2015) World Journal of Social Science Research, 2(2), 128-138. Available at: https://scholarworks.merrimack.edu/pol_facpub/18 accessed: 20^th April 2024.

[2] Zainab Usman, Economic Diversification In Nigeria; The Politics of Building a Post-Oil Economy,  (Bloomsbury Publishing, London, 2022) 4.

[3] Samuel Alabi, ‘Nigeria: botched economic reforms plunged the country into crisis’, The Conversation (2024) Available at: < https://theconversation.com/nigeria-botched-economic-reforms-plunge-the-country-into-crisis-224545 > Accessed:

[4] ‘ Tayo Adeyaju, Policies and Reforms for Economic Development in Nigeria and Africa’, Economic and Policy Review Journal H1′ 2022, Volume 20: Number 1

[5] John Maynard Keynes’s theories and ideas have significantly impacted policy and thinking, particularly during economic uncertainty and crisis. Keynesian economics emphasizes the role of government intervention in managing the economy, has shaped policies worldwide, and continues to be studied and applied by economists today.

[6] John Maynard Keynes, ‘Liberalism and Labour’ The Nation and Athenæum, (1926) Available at: <https://www.economicsnetwork.ac.uk/archive/keynes_persuasion/Liberalism_and_Labour.htm> Accessed: 20th April, 2024.

[7] Ben Nwabueze, Military Rule and Constitutionalism in Nigeria, Spectrum Law Publishing, 1992.

[8]  Ngozi Okonjo  Iweala and Philip Osafo Kwaako,  ‘ Nigeria Economic Reforms: Progress and Challenges’ Available at https://www.brookings.edu/wp-content/uploads/2016/06/20070323okonjo_iweala.pdf   Accessed: 20^th April 2024.

[9] Gaston Moonem, ‘Strategies in a Changing World’, EJA, Available at: <https://www.eca.europa.eu/lists/ecadocuments/journal21_01/journal21_01.pdf >accessed: 18^th April. 2024.

[10] Andy Hemming, ‘5 Strategies to diversify your income streams and start creatin financial freedom’  Linkedin (2023)

[11] Adeyemi, O. A. (2019). Navigating the challenges of Nigerian economic policies: Insights from successful entrepreneurs. Journal of Entrepreneurship in Emerging Economies, 11(2), 234-248.

[12] Zainab Usman, Economic Diversification In Nigeria; The Politics of Building a Post-Oil Economy,  (Bloomsbury Publishing, London, 2022) 5.

[13] Ogunleye, G. A. (2020). The impact of Nigerian economic policies on businesses: A case study of small and medium enterprises. International Journal of Business and Management, 15(4), 112-125.