The Director of Strategy and Trade Relations of African Young Entrepreneurs, Mr. Olubunmi Olowudare, speaks to ANOZIE EGOLE about Nigeria’s economic challenges and expectations in the coming year
World Bank says rate hikes could fuel global recession. How do you think such a recession would affect the Nigerian economy?
We must understand that it is not just the rise in monetary interest rates that will accelerate the much-anticipated global recession. There are other fundamental issues such as the ongoing war between Russia and Ukraine, which we pray will not lead to nuclear war. Also, we need to address the issue of climate change that we are currently experiencing in so many parts of Nigeria. The global energy crisis is staring at us. Oil subsidies could be phased out in the first quarter of 2023. What about the insecurity? In my opinion, all of the above will definitely have a negative impact on our country’s economy. They will drive the rate of inflation; the cost of living will be super high; food crisis will emerge; and the unemployment rate will skyrocket, halting private sector productivity.
The Central Bank of Nigeria recently increased lending rates. What impact do you think it will have on the economy?
I think the central bank team needs to understand the true definition of economic development and what is driving economic growth in the developed world.
The socio-economic growth of all industrialized nations is driven by the stimulated development of entrepreneurship with great infrastructures, uninterrupted electricity supply, good government policies and structured financial support for small and medium-sized enterprises to stimulate the economy positively.
The recent and constant increase in lending rates by CBN will definitely impact productivity in the private sector ecosystem. Many companies will stop borrowing at high interest rates for their various business transactions. We all know that high interest rate is a major burden for entrepreneurs and this will lead to an increase in high levels of non-performing loans, which could pose a serious threat to the stability of Nigeria’s financial system. An increase in the interest rate means an increase in the cost of borrowing. If financing costs increase, local production would suffer. So I think it’s a wrong move that CBN needs to reconsider immediately.
What measures do you think the Nigerian government should take to improve exports?
I think it’s time our political leadership had an in-depth understanding of what drives productivity for local consumption and exports. The only real way to increase economic productivity in Nigeria is through the massive development of entrepreneurship through technology, knowledge economy, innovation and visionary leadership.
The knowledge economy of entrepreneurship will teach us how to convert our vast natural and human capital into productivity, which in turn will culminate in Nigerian manufactured products and services for local consumption and global export. To achieve this, all future government policies must be geared towards rapid economic development, with the provision of adequate necessary infrastructure. Our educational curriculum must be knowledge-based and the social services must be first class. Single-digit lending must be encouraged by all of our financial institutions, and the government must create an environment conducive to business development. Privately run industrial and technology centers need to be developed in all six Nigerian geopolitical zones.
There seems to be a lot of wealth in the digital economy. How do you think the nation can tap into this?
There is no denying that the 4th and 5th industrial revolutions are being driven by the digital economy. It’s already happening and we can all see it causing disruption in all of our socio-economic sectors. As you can see, Nigerian businessmen hardly ever travel to China or other parts of the world to procure goods or things anymore. They prefer to travel digitally from the convenience of their various offices or from their homes to place orders for their goods or products. They make payments and their goods are shipped into the country. This makes business transactions cheaper, easier and faster than the old conventional ways. The Nigerian government and private sector must launch a massive investment offensive in the tech ecosystem, particularly among Nigeria’s youth population. This needs to be included in the curriculum of our educational institutions.
Nigerian young entrepreneurs are engaging in digital solutions to our various challenges and this is super healthy for our nation.
How do you think Nigeria as a country will benefit from the construction of the Badagry Deep Seaport project?
I think it’s a good development for Lagos State and Nigeria as a nation. But we need to think and plan properly how to stimulate our port activities to operate in both directions and focus on import and export.
We all know that most of the loaded containers shipped to our country’s ports mostly return empty to their original destinations due to our low economic productivity.
We have to be productive as a nation, otherwise all ports could just be a trailblazer for the developed nations to constantly dump used or new goods on us and that will not help our economy to grow.
The proposed port operations at Badagry will definitely increase government revenue, create employment opportunities for our young population, speed up ship and handling operations, but I will also advise the federal government to approve port licenses for other river states as well, particularly the proposed ports in Ondo State, to avoid over-concentration in Lagos State.
With the oil sector suffering major setbacks, what alternatives does Nigeria have to boost its economy?
Crude oil may no longer be relevant in a few years. As a nation, we must make intensive use of our agricultural sectors, digital economy, green energy ecosystem, natural resources and our blue economy. To achieve this, we must awaken our entrepreneurial spirit, which drives us to be highly productive.
I saw this coming a few years ago, so I started an eco-transport advocacy with our flagship Oldang solar-powered electric vehicles. I have presented it to the federal government of Nigeria through the Ministry of Transport as an alternative to cushion the high cost of transportation in Nigeria.
They said something about creating 800,000 indirect and direct jobs in Ekiti State. How do you intend to achieve this?
I am from Araromi Municipal Council Development Authority, Iyin-Ekiti, Ekiti State. I have said openly on several occasions that I am ready to support the new government of Governor Biodun Oyebanji in reducing poverty and unemployment in Ekiti State to the bare minimum within four years.
It is a well-known fact that the state of Ekiti is a landlocked country that is currently facing various socio-economic challenges ranging from poor internally generated revenue, low allocation by the Federation Account Allocation Committee, bloated public services, debt and insecurity, among others. But the exciting news is that our amazing foundations are able to push us out of our challenges if we can only look inward, entrepreneurially, at the diverse opportunities that lie ahead.
Massive job creation or poverty eradication is no mystery, but an inspired master plan orchestrated by an entrepreneurial mindset to channel our vast natural and human resources into productivity.
My Strategic Economic Development Master Plan will lift over 500,000 indigenous people in Ekiti State out of abject poverty and create approximately 800,000 indirect/direct employment opportunities within eight years. It focuses on the overall processing of our agribusiness, digital economy, tourism, human capital and natural resources by examining all value chains related to the latter.
The inflation rate was 20.77 percent in September, according to the National Bureau of Statistics. What impact will high inflation have on the country’s economy?
We must prepare for the worst of the food crisis early next year. The currency crisis will worsen and import costs will increase. Several companies could probably collapse not only because of the high rate of inflation, but also because of global climate change and the energy crisis.
My concern is the unemployment rate, which could be very close to 75 percent.
The federal government recently gave the Lagos state government permission to build Lekki Airport. What does the logistical situation in this axis mean for the inhabitants of this area?
It is a good development for Lagos State with an estimated population of over 20 million people. Lagos deserves at least five major local and international airports to facilitate air travel in and out of the cosmopolitan city, but the state government also needs to tackle serious road infrastructure development to free the Lekki-Epe axis of congestion, which is likely to happen could be worse than Apapa’s.
The Lekki Axis will definitely see tremendous socio-economic activity due to so many individuals, families, businesses and institutions set to relocate to the area. No doubt this will definitely drive real estate activity 10 times higher than the current situation.
What do you have to say about the N20trn budget 2023 and the new government in 2023?
Budget 2023 is not as bad as other budgets in the past, but the implementation and source of income to fund our budgets is always an issue. We love great figures as a nation, but we scarcely address how we can use our human and natural resources productively for the latter.
We rely on loans from developed countries with high interest rates to fund our budget. I think the Buhari government should implement the 2023 budget for the latter and complete all the projects started before handing it over to the new government in May 2023.
The federal government must stop any leaks in the system and take crude oil theft seriously. Critical sectors that can drive economic development must receive the government’s absolute attention. State/local governments should complement the federal government’s efforts to promote good governance across the board.