While International Monetary Fund acknowledges that most advance economy has a low potential for growth in her July 2016 economic update as a result of the uncertainty caused by United Kingdom vote to leave the European Union. The Organization emphasized that prospects remain diverse across emerging market and developing economy. This forecast is an assurance that developing economy like Nigeria can strive, if they can employs the magic of innovation and evolved from the burden of ineffectiveness and their parochial nature, into a viable and a globally competitive economy. Finland economy and other pace setting economies are success stories that must be understudied by Nigeria policy makers if indeed the country’s economic potential is to be attained for the benefit of all the Nigerian people. Finland’s Economy is not without obvious its challenges. In the last five years, Finland has either recorded a contraction or stagnation in her economy. The global economy is paradoxically fragile, but full of potential, it is essential that Nigeria break the ice for African economic liberation. Just as the Nordic nations have in time past.
The Reality of an economic crisis dawned on Nigerians when the Finance Minister, Kemi Adeosun, pronounced that the country is technically in recession. The National Bureau of Statistics reported that Nigeria’s GDP contracted in the second quarter of 2016 by 2.06 percent after a 0.36 percent reduction in the first Quarter of the year. This harsh economic realities, to many observers is self-inflicted, since the Nigeria has for too long kept all her eggs in one basket.
In 2014, the economy of Nigeria assumed the status of the biggest economy in Africa, with the rebasing exercise, thereby displacing South Africa with 2013 GDP estimation of $502 Billion. Unfortunately, in less than two years Nigeria lost its place as the biggest economy in Africa, owing to her recent slip into recession. CNNMoney, in its ranking stripped Nigeria of her position as the third fastest growing economy in 2014 and 2015 and place the West African Country’s Economy in the 15th position.
The economic potential of Nigeria is no doubt numerous, but these prospective do not reflect the realities of the local economy, Nigerians are poor. Nigeria has huge deposit of mineral resources and enormous human resources. The former president of the country, Olusegun Obasanjo, also acknowledged this when he said, “Nigeria has no business with poverty. With our human and material resources…” for this reason, Olusegun Obasanjo, during his tenure initialed the Vision 2020, a comprehensive framework designed to place the country among the top 20 leading economies in the world. Despite the nobility of this economic blueprint, the Nigerian Economy is under-performing for obvious reasons, while the Nigerian people are languishing in poverty- 70% of the Nigerian people live below the poverty line.
Nigeria’s economic, after independence started off on a good note, with Agriculture serving as the bases of the economy, during the first decade of the nation’s history, Agriculture contributed about 65% of the nation GDP and constituted about 70% of the total export. The sector also accounted for 95 per cent of the country’s labor force. However, the oil boom of the 1970 led Nigeria to neglect its blossoming agricultural sector, and her seemingly growing industries; Leaving Nigeria, a one time export of food, importing up to 50% of the food she consume.
President Mohammadu Buhari acknowledged this fact thus; “one of our biggest challenges during the boom years was that we failed to convert the benefit of high commodity prices into more jobs and significant improvements in standards of living”, regrettably, the plummet in crude oil price in the global market from an average of $100per barrel between 1999 – 2015 to the average of $40 in 2016 has wracked the country’s economy.
With the sharp drop in global crude oil price, the recklessness of maintaining a mono-economy has boomeranged. To service the Nation’s deficit budget, the government is contemplating borrowing, while there are calls for the sales of national assets in order to get the stumbling economy out of recession. Since the flop in national revenue, most state of the federation cannot afford to pay workers’ salaries, while some still own arrears of several months. The External and Domestic Debt stock of the Nigerian government according to Nigeria’s Debt Management Office is placed at $11,261,890,000 and $37,478,210,000 in July 2016.
Nigeria status as a consumption economy is an unfortunate issue that needs to be address; With the absence of a viable Real Sector, the flair of Nigerian for anything imported and a contemptuous disposition toward local made product. This habit has led to Nigerians important every single items, including that it can produce. With the dwindling of our foreign reserve, pressure and fall in value of the local currency-in less than 2 years, the Nigerian Naira has lost one-third of its value against the US Dollars, Nigeria is definitely paying for her inability to internally source for her need. Local industries are folding up due to the fact that they cannot compete favorable with foreign competitions. In the last few months, the harsh economic environment has left organizations with no choice but to close shop. Local Firms like Aero Contractors and First Nation Airlines, have suspended operations, while other organizations including banks, oil firms and other multi-nationals have considered and have actually shredded workers.
According to Naij.com, investigations have reveals that the industrial sector had lost close to N200 billion, thereby increasing the rate of unemployment to 46 per cent. The unemployment rate in the country is so pathetic that reports says that 600 commercial pilots are without jobs
With an Inflation rate of 17.20 per cent in August 2016 – a rate far from the average of 9.69 percent from 2007 to 2016. The World Bank rank Nigeria 169 out of 170 countries on her Doing Business ranking of 2016. This is as a result of the difficulty in starting and running a business in the country, erratic electricity, the problem of construction in the country, Nigeria is also lagging behind in the ease of getting a business registered, the difficulty in accessing credit facilities, the numerous risk involved in business, issues relating to tax payment, difficulty of trading across border and other business sinking factors, this have militated against the striving of new business and Small Scale enterprises.
It is important to take note of the fact that SMEs are important building block of any economy. This is true when you consider that SMEs contribute up to 50 per cent of United States GDP. SMEs plays similar role in Finland too. However, in Nigeria, SMEs are not given enough space to strive. The difficulty investor experience before accessing loans has truncated the economic growth envisaged. Investor also as to contend with the Nigerian’s two digit interest rate, which is one of the highest in the world; worst still, policies governing the Financial Sector is depressing start-ups. The problem of double taxation is a thorn in the flesh. And the constant change and shortfalls of the economic policies of government has it tolls on small business.
Nigeria’s Economy has been starved of innovation, an element that keeps developed economy afloat. While the absence of this factor, has left most developing economy struggling to survive the storm of the global economy. However, the lack of new ideas in Nigeria economy is not surprising because the people needed to ignite the fire of innovation in the economy have not been empowered to do so. The problems facing the country’s economy are a reflection of the human development and management deficiency. In 2014, Nigeria was rank 152 out of 187 countries in the Human Development Index Report of the United Nations Development Programme (UNDP).
As a result of the political instability, lack of political will and corruption, the infrastructure of the country has been neglected. Nigeria has one of the lowest net electricity generation per capita rates in the world. Transportation infrastructure which is critical to the economy; transportation of product, especially agricultural product to where they are needed is nothing to write home about. While there is also the absent of a storage or processing facilities. The rail sector is dysfunctional. The challenge of inadequate infrastructure has frustrated the resolved of genuine investors and increase the cost of production to an uncomfortable level.
FINLAND’S ECONOMIC STRUGGLES AND LESSONS FROM FINLAND’S EXPERIENCES
Finland’s Finance Minister described Finland as “the sick man of Europe” this is due to the disappointing performance of the economy in the last five year. The gross value added of industries have decline by 11 billion Euros since 2007 the economy stagnated in the second quarter of 2016, slowing down from first quarter’s 0.3% quarterly expansion. The gross value added of industries have decline by 11 billion Euros since 2007. Finland, like Nigeria, has her economy fumbling in the last four years, though, the Bank of Finland forecasted that the Economy will begin to show slow improvement in 2016. The Economy has been grappling with this mild recession since the beginning of the financial crisis and the Euro Crisis. BBC Quoted a Helsinki University’s economist Tuomas mallinen to have said “the man blame on our economic woe should be placed where it belongs, namely on the Euro membership”.
Finland Economic misfortune was as a result of the reduction of export due to the slight flop in the economic global competitiveness. Finland lost her share of the electronic and paper market in the global economy. The mobile phone Company – Nokia; accorded for contributing 4% of Finland GDP in year 2000, now contribute just 0.5% of the country’s output. The firm failed to response to the challenged posed by other smart-phone manufacturers, especially Apple Smartphone. Russia, Finland biggest Export partner has shot out import for EU countries in retaliation for the sanction placed on it by the Union as a result of Russia’s Involvements in the crisis in Ukraine. Russia’s action has affected Finland’s exports.
Finland’s vest forest industry has experience reduction in export. The finding of the independence economic Research Agency in Helsinki states that “the Reduction of Demand for print paper due to the substitution of print media by internet services”. The Finland problem as regards the decrease in export can be likened to the fall in demand and price of the Nigerian crude products in the global market. Apart from the adoption of an increase advocacy of green technologies, the world is looking for other viable alternatives to fossil fuel in other to create an eco friendly economy; this has affected the demands for Nigerian Crude.
Finland economy once had it good old days; Days when Statistic was behind it. Finland per capita output is equal to that of other western economies such as France, United Kingdom or that of Germany. The economy of Finland like other Nordic countries is highly industrial economy, with a vibrant manufacturing sector and strong institutions and excellent educational system, vibrant human resource. The World Economic Forum in 2005 ranked Finland’s Economy as the 4th and 8th most competitive economy in Europe and on the global rank respectively. Also the Europe 2020 Competitiveness Report by the World economic Forum describes Finland Economic in 2014 as the most competitive Economy. The OECD comparison in 2014, the Finland’s High-technology Manufacturing was second behind Ireland. Finland’s Electronic Industry, Gaming and Manufacturing Industries have been the economic force of the country.
Despite this challenging time, Finland’s economic framework is up to the task of getting the economy out of recession. The economic environment has fundamentals for growth. Infrastructures needed to execute businesses in Finland are available. Nigeria needs to do the same-build its dilapidated infrastructure. Finland government’s treats all investor equally, both foreign and local investors in her open market policies. Finland is ranked 10th in the Doing Business ranking. Regulatory efficiency is one lesson that can be learnt from Finland.
It is important to note that economic slowdown being experienced in Nigeria and Finland is not exclusive to these two countries. However, both countries have a lot to do to get back on their feet. While Nigeria needs to build it economy from the scratch as a result of the faulty economic foundation the African Nation has, Finland, only has to look to other areas for redemption. Both economies need to diversify. Nigeria needs to look beyond crude oil, embrace possibilities in manufacturing, ICT, Agriculture, Entertainment industry and other viable sector. Finland also has to look inward, in search of alternative.
The importance of innovation in both economies can never be overemphasized. Nigeria needs to duplicate the good in Finland’s economic system. The ease of doing business in Nigeria should be worked on, entrepreneurship should be encouraged. Small Scale Enterprise should be supported to survive the hard economic terrain of the country. Just like Finland, Nigeria needs to initiate policies that help the economy grow. Fundamentally, Nigeria has to deal with the unprecedented and gradual plummet of the Nigerian Currency. To solve the problem of the demand for the US dollars over the Nigerian Naira, Nigerian has to start earning Dollars, rather than buying Dollars. This can be possible, if there is an increase in productivity, and inevitably increase in export.