Thursday, October 09, 2008

Nigeria Economy

THE World Economic Forum in a recent report ranked Nigeria 50th out of 52 countries. A World Bank-International Finance Corporation survey showed that Nigeria dropped from 108th position last year to 118th this year on the Doing Business Index. These should cause the managers of the nation’s economy sleepless nights and should disturb the rest of us too.
For more than two years, the Central Bank of Nigeria , CBN, has engaged in self-congratulations over the success of the bank consolidation exercise. Nigerian banks have been receiving awards from various global institutions and three or four Nigerian banks now rank among the biggest 1000. Nigerian banks are going global in every direction. All these, we were led to believe, constituted clear evidence that the global community gives the reforms in the financial sector a pass mark.

Apparently, we have been deceived or the managers of our economic policy have been self-deluded. Quite clearly, size, while a necessary condition for attaining global status, is not a sufficient condition. Quality of service and the consolidation of trust are also very important.

We have no idea how Nigerian banks operate abroad, but if a recent survey were to be believed, Nigerian banks are rapidly losing the trust of depositors in the domestic market. Many feel strongly that banks cheat their customers and are slow to redress grievances even when errors are proved to them.

For many customers, the use of Automatic Teller Machines, ATM, is a nightmare, which is nevertheless forced on them. If the ATM is representative of the quality of other services, then from all indications, consolidation might have resulted in bigger banks but those banks are turning off depositors. The customer has been lost to the race over size.

Banks pay mere lip serve to the customer who is hardly informed of the bases of the charges that banks make on his account. Few banks provide meaningful explanations for the deductions.

When perceived poor banking services are added to low ranking on the Doing Business Index, it is easy to see why Nigeria is still not the preferred destination for Foreign Direct Investment except in oil and gas and telecommunications. Even the investment in hydrocarbons is being redirected elsewhere gradually, as Nigeria fails to tackle issues related to stable supplies to the international market.

These call for a sober re-assessment of our real position. Clearly, the self-congratulation must stop because it is wearing thin and becoming less credible given the reports from more credible sources.

We certainly will not make the top 20 global economy not only in 2020 but for a long time after. South Africa, Botswana, Egypt, Senegal, Burkina Faso and Morocco all beat us repeatedly on all the important indices. Our claim to being the giant of Africa is the result of self-deceit; it insults others.

It is true we have come a long way, but there is a longer way still ahead of us - we must forge ahead more decidedly, to attain global relevant.