That a further loan of about N1.649 trillion will be secured to fund the projected N1.859 trillion deficit in the proposed 2019 budget even with the cries and warnings of our increasing unsustainable debt is difficult to understand. With the additional borrowing which will escalate our total debt to N24 trillion, our debt servicing alone for 2019 is put at N2.4 trillion from N2.0trillion in 2018. In addition, as about 21 million Nigerians remain unemployed and oil price likely to fall further, our economic problems including the foreign exchange challenge are likely to worsen!
In the current efforts to manage the foreign exchange challenge and to diversify our economy, a fundamental question is how to identify and effectively utilise our comparative advantage(s) to provide short to long-term solutions. Excitingly, one of them is the huge population of Nigerians in the diaspora who have continued to maintain the values and culture of Nigeria in their different places of residence. If the CBN can pay about 12% on treasury bills mainly to foreigners, why can’t they pay 10% to incentivize the high population of Nigerians in the diaspora to invest in ‘Dollar Denominated Savings Account’ which can be used to provide more foreign exchange to our businessmen and women. With the current low savings rate in most developed societies (below 1% in the UK for instance), the payment of about 5-10% and flexibility to withdraw from the account either in dollars or in Naira will create the required incentive for Nigerians in the diaspora to effectively patronize and invest in Nigeria. Given that we have over 15 million Nigerians in the diaspora, a significant pool of foreign currency can be generated which can be used to support the Naira. If properly planned, marketed and managed, it is an idea that can generate over $50 billion of investible funds every year. Without any incentive, Nigerians in the diaspora remitted about $22 billion in 2017, $19.64 in 2016 and $21 billion in 2015. From 2011 to June 2014, over $63 billion (about N21 trillion) was sent back to family and friends.
Another way through which Nigerians in the diaspora can be used to provide short term to long term foreign revenue is through the supply of food products consumed by Nigerians in the diaspora. The main reason why these foods that are in very high demand are not sourced from Nigeria is the lack of internationally accepted packaging centres in Nigeria. This is a challenge which the government can quickly address and which I had earlier asked the banks to provide possibly as part of their Corporate Social Responsibility. With about 15 million Nigerians in the diaspora, it is a business with a potential annual revenue of over $81 billion (about N30 trillion). A brief illustration will be helpful. A food expenditure of about $15 by each of the 15 million Nigerians in diaspora translates to about $225 million everyday and about $81 billion every year. As only a very small quantity of the foods consumed by Nigerians in diaspora is sourced from Nigeria, the above is sadly the amount of money that Nigerians in diaspora send to other countries especially in South America and Asia every year. To further illustrate, the UK imports plantains and bananas from Argentina, Ecuador and Uruguay. The flight time between these countries and the UK is about 14 hours compared to six hours from Nigeria. As food products supplied from Nigeria are not adequate to meet the demand, they are very expensive. The products imported from Asia are equally expensive primarily because of the flight time to the UK. Conversely, Ethiopia exports over £1million worth of fresh flowers to the UK every day. This is surprising but true and I mean “normal” flowers for expressing love, for condolences, birthdays, etc.
So, this is a big opportunity for Nigeria to generate revenue. The benefits are endless! Nigerians will always have a preference for foods imported from the homeland so there will be little or no competition especially if these are sold at slightly lower prices compared to the products from Asia/South America. As a major problem is the absence of packaging centers that meet international standards, the government can immediately invest in this vital area by establishing packaging centers in major cities in Nigeria. To ensure prompt take-off and success, distribution centers in major European and American cities will be needed to ensure efficient distribution to all other cities with significant Nigerian/Afro-Caribbean populations.
This venture will improve the Naira’s value, generate foreign revenue and bring about financial inclusion. Not to mention employment generation and economic empowerment especially for the women and the poor. It will provide the required stimulus for the much talked agricultural revolution. Not only will it lead to better revenue for Ozor Nwanjiam of Abakaliki, it will also increase his life span due to the psychological satisfaction that his yams are sold and consumed in London and America (Obodo oyibo!). It will help Mrs. Abuse of Vandekiya village of Benue State to train her kids through the export of mangoes that are in abundance and wasting in her village. Alhaji Aminu from Fagge in Kano State will live in peace with Joshua in Jos as they are both involved in the export of carrots and groundnuts to Canada. Mr. Gbadamosi will prefer to live in Ogbomosho than in Lagos due to his Amala processing plant which provides him with good income. Imagine the yearly impact of about N30 trillion on the economy especially the less privileged Nigerians!
In the long term, it is important to start thinking of how to create a better and more effective economic/monetary policy framework or model to jumpstart our industrialization process. It will require either the adjustment of our failed neo-liberal model to suit our socio-economic and political peculiarities or the creation of a new model that will be suitable to our peculiarities and context. This will ensure a better coordination and integration of our monetary, fiscal and supply side policies to create a sustainable, industrialized and inclusive economy with annual growth of over 10%.
Franklin Nnaemeka Ngwu (PhD)
Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.
