Being paper presented by Dr Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise [CPPE], at the 19th All Nigeria Editors Conference (ANEC) held on 15th November 2023 at Uyo, Akwa Ibom State
The theme of this conference is ‘Stimulating Economic Growth, Technological Advancement: Role of the Media.’ There is perhaps no better time to have this conversation than now. The big issue among the economic players and the citizens today is the state of the Nigerian economy and the prospects of recovery. There is profound anxiety and apprehension about the state of the economy, amid recent economic shocks. The shocks are pervasive, impacting all sectors and categories of businesses – micro, small, medium, large enterprises and informal sector is not spared.
There are serious concerns around the soaring prices of goods and services, depreciating currency, volatile exchange rate, illiquidity in the foreign exchange market, high interest rate and high trade costs. There are also fears about weak and declining purchasing power, escalating production costs, rising energy cost, slump in industrial capacity utilization and erosion of profit margins. In every crisis, there are opportunities. I would be highlighting the opportunities that the current economic crisis has thrown up for investors.
Distinguished participants, it is appropriate at this point to have a conversation on how to stimulate the economy and restore investors’ confidence. A strong economy is imperative for the media business to thrive. A virile economy will boost investment, increase prosperity for investors and drive demand for media services. That is the key nexus between the growth of the media and prosperity of the economy. The media thus has a major stake in the performance of the economy. However, we must get the economic fundamentals right.
Consequently, I would review in more details the current economic conditions, how we got here, what needs to done and the reform initiatives of the Tinubu administration. I will address the expected outcomes of current economic reforms and the trajectory for the economy.
The second leg of my presentation focuses on the media, especially the watchdog and advocacy roles for the realization of good governance at all levels of government. The third leg is the focus on digital disruptions of the media space and strategic options for managing the outcomes of the disruptions.
Context of Current Economic Conditions
Let me now give some context to the prevailing economic conditions. The current administration is contending with a legacy of weak macroeconomic fundamentals – currency volatility, high fiscal deficit, low revenue, unsustainable debt levels, rising debt service to revenue ratio, declining reserves and weak investors’ confidence. There were also global headwinds resulting from the Russian-Ukraine war and tight global monetary conditions. And now we have the Israel and the Palestinian war, the scope of which is still unfolding.
The evidence of the deteriorating macroeconomic conditions did not fully manifest before the exit of the previous administration. But the reality was that the economy was already in a floundering mode. The current reforms were designed to correct the legacy of economic distortions and deteriorating macroeconomic fundamentals. Regrettably, however, the reforms had come with enormous pains, especially with regards to the spike in energy costs, acceleration of food inflation to over 30% and surge in transportation cost. But I should quickly add that these reforms were necessary to pull the economy back from the precipice. Some of the manifestations of a troubled Nigeria economy were as follows:
Ways and means financing of the Federal Government operations grew from N2.5 trillion in 2015, to N30.7 trillion in May 2023. This was a jump of over 1, 000%. This was an issue because this mode of financing deficit is highly inflationary.
The national debt surged form N12.1 trillion in 2015 to N87.4 trillion in July 2023, an increase of over 600%.
Exchange rate depreciated from 196 to the dollar in 2015 to 450/$ in 2022 in the official window. It slumped from 230/$ in 2015 to 750/$ in 2022 in the parallel market.
Foreign direct investment [FDI] contracted by $190m in 2022, indicating a reversal of FDI investment flows.
Oil output plunged to 1.2 mbd in 2022, amid persistent output disruptions and the inability to meet the country’s OPEC quota
Outstanding forex obligations and backlog rose to over $7 billion.
Money supply grew from N19 trillion in May 2015 to N55.5 trillion in May 2023, an increase of 192%. Whereas the growth in real GDP was 8.7% over the period, underlying the role of money supply growth as a major driver of inflation.
According to the National Bureau of Statistics, 63% of Nigerian citizens [an estimated 133 million people] were in multidimensional poverty as at 2022.
In the 2023 Sustainable Development Role [SDG] Index, Nigeria was ranked 146 out of 166 countries globally on account of the limited progress towards achieving the SDG milestones.
According to the IMF 2023 estimates, Nigeria is the largest economy on the African continent with a GDP of $441 billion. But Nigeria’s ranking in Human Development Index on the continent was 28th position, according to the 2022 report of the UNDP
Distinguished ladies and gentlemen, these were a few of the fundamental factors that make economic reforms an urgent imperative. Although the reform process has been hurting, the reality is that there are limited options. And the media has a role to play in educating the citizens on the inevitability of these reforms. But I must admit that the government could do more to alleviate the pains, especially among the vulnerable segments of the society.
Role of the Media in Shaping Economic Discourse and Promoting Economic Transformation
The media has a responsibility to promote the ideals of good governance which is a necessary condition for economic progress.
Good governance has been defined as a process that is participatory, consensus-oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and consistent with the rule of law. It assures that corruption is minimized, ensures the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society. These are the ideals that the media should support our country to achieve.
From an economic standpoint, a number of basic economic management principles needs to be promoted by the media to ensure economic prosperity and enhance the well-being of the citizens. These are the principles of level-playing field for all economic players, investment friendly regulatory framework, transparent policy formulation process, consistency of policy, stability of the macroeconomic environment and regular stakeholder engagement, among others. Economic reforms are not ends in themselves, but means to an end. The ultimate goal is to ensure the welfare of the citizens.
The media should periodically undertake a comparative analysis between campaign promises and actual governance outcomes. This should happen not only at the federal level, but also at the subnational levels.
The media must champion the cause for accountability in governance in collaboration with the civil society organizations. The media must lead the agenda setting process. According to Mahatma Gandhi “one of the objects of a newspaper is to understand the popular feeling and give expression to it; another is to arouse among the people certain desirable sentiments; the third is fearlessly to expose popular defects”.
Regrettably, a major shortcoming in our democracy is that the legislature had not lived up to the citizens’ expectation of ensuring effective oversight over the executive. This is true for all levels of government. This reinforces the need for the media and the civil society to do a lot more to strengthen our democracy and ensure good governance.
on Contemporary Economic Issues
The media should lead public discourse on current and proposed policy measures of government in the overall public interest. This is in addition to spotlighting gaps in the governance process. Some pertinent issues include:
Cost of governance.
Quality of budgetary appropriations.
Feedback on the impact of government policies.
Effectiveness of current security strategy.
Insecurity has become a major drawback for the investment growth and economic progress.
Auditor Generals’ reports on the MDAs which were not addressed.
Merits or otherwise of privatization of public enterprises.
Management of the fuel subsidy regime.
Corporate governance issues in the private sector.
Bottlenecks to international trade at the ports
CBN financing of deficit
Adequacy of government spending on education and health.
Rising poverty, with over 100 million Nigerians in multidimensional poverty. Assessment of outcomes of investigative hearing by the national assembly.
Rule of law and the frequent misalignment between law and justice delivery. Quality of the electoral process.Appropriateness of current leadership selection process for our currency and electoral reform issues.
Reforming the bureaucracy.
Stakeholder engagement by the MDAs.
Risks to the Effective Role of the Media
Ownership structure of the media and the interests of the owners: Whether the ownership of the media is government or private, the disposition of the owners matters. The media can only be as independent as the owner wants it to be.
The economics and sustainability of the media as an enterprise: When there is too much pressure on the management of media houses to ensure business sustainability, effectiveness of the media as a watchdog may be compromised. Economic considerations may cloud professional editorial judgment.
Increasing cases of commercialization of news, adequacy of resources: If financial and human resources are inadequate, quality of content will be affected. Capacity to analyze issues will also be impaired.
Economic financial analysis in journalism requires special skills which many media houses may find difficult to attract because of remuneration. There are serious capacity gaps in this area.
Working conditions of most journalists are deplorable. This affects morale and professionalism. The remuneration is generally very poor and has been made even worse by recent inflationary conditions.
Tendencies to gravitate towards sensationalism to attract readership: Demand driven content detracts largely from professionalism in the media profession.
Weak capacity to analyze and interpret economic or financial data, high mortality rate of economic and business publications, quality institutions to complement professionalism in journalism such as an independent judiciary: Negative reportage could discourage investment.
Negative reporting could trigger social unrest.
Media should also report positive things happening in the economy.
State ownership options are necessary to provide cultural and social content which may not be attractive to private ownership. It is also necessary for the government to tell its own story.
The media should champion the cause for quality of economic governance consistent with tested economic principles and empirical evidence, and contextualized within socio-economic peculiarities. This is critical for signaling and investors’ confidence.
We would like to see an economy where there is level-playing field for all players with a transparent economic policy formulation process and robust competition framework.
Nigeria is blessed with a good crop of entrepreneurs. The government should expand the role of the private sector in all sectors for value delivery and boosting of investment in the economy. This should be complemented with appropriate regulatory framework.
Robust monitoring and evaluation framework to regularly review the effectiveness and impact of economic policies and regulatory practices. Robust and regular stakeholder engagement by key government agencies to ensure properly alignment of policies with investors’ sentiments. Government institutions that play technical roles should be headed by tested technocrats.
The media should take more interest in the dynamics of the macroeconomic environment and escalate issues as and when necessary. The key issues here are the imperative of moderating inflationary pressures, stabilizing the exchange rate and boosting economic growth.
We cannot build something on nothing. We need a stable macroeconomic environment for investment to thrive and for jobs to be created. Fiscal and monetary policy reforms are critical for the restoration of macroeconomic stability.
Tax reform is a major component of fiscal consolidation. The reform is expected to ensure efficiency in tax administration, reduce tax evasion and tax avoidance and eliminate multiple taxation. The fuel subsidy removal and foreign exchange policy reforms are critical steps in achieving fiscal consolidation. Other measures necessary are
• Unlock more income from revenue generating agencies through enhanced efficiency of their operations.
• Initiate budget reforms to ensure fiscal and spending discipline. Ensure value for money in government expenditure and procurement.
• Commit to reduction in the cost of governance.
Trade and Tariff Reform
The media needs to spotlight trade and tariff reforms in the following direction:
• Ensuring that tariff regime that adequately protects local industries. Import duty on intermediate products and critical industrial inputs should be reviewed to reduce production costs.
• Tariff review processes should be more inclusive and transparent.
• The administration should prioritize trade facilitation and removal all non-tariff barriers to trade.
• The practice by operatives of the Nigeria Customs Service of intercepting cargoes that have been duly cleared at any of our ports should be discontinued.
• There should be a balance between the revenue objectives and trade facilitation objectives of the Nigeria Customs Service. There is currently a disproportionate focus on revenue generation to the detriment of investment growth in the economy.
• Policy on agriculture must be holistic, focusing on the entire value chain. Due attention must be given to cost and availability of inputs, production and productivity, application of technology, processing and storage, logistics and marketing.
• There is an urgent need to transit from subsistence farming to mechanized and commercial agriculture driven by technology.
• There is need to attract the youths into agriculture as current farming population is rapidly ageing. This would only happen if sector is technology driven.
• Strengthen the linkage between agriculture and industry within a sustainable backward integration framework.
• Agriculture policy should cover activities in crop production, poultry, livestock and forestry. There is a tendency among policy makers to focus disproportionately on crop farming to the neglect of other segments of agriculture.
The following urgent steps need to be taken to address the concerns of the manufacturing sector:
• Ensure liquidity in the foreign exchange market to guarantee access to foreign exchange for the procurement of raw materials and machineries for industry.
• Upscale investment in core industries to support backward integration initiatives and resource-based industrialization. Such core industries include the iron and steel, petrochemicals, aluminum smelter, pulp and paper and refineries.
• Scaling up investment in infrastructure through the injection of more funds and the attraction of private capital into the infrastructure space. This would reduce production cost and boost productivity in manufacturing.
• Creation of more industrial parks across the country and improvement in the facilities in existing ones.
• Need to strengthen current development finance to support the real sector with appropriate financing – single digit facility with a minimum of five years’ tenure.
Banking Sector Reforms
• The banking system must be repositioned to play its fundamental role of financial intermediation for the benefit of investments and economic growth.
• The regulatory body, CBN, could be effective without being overbearing or intimidating. The apex bank must engage stakeholders in the financial sector for the good of the economy, without compromising its regulatory powers.
• Development finance operations in the economy have had some positive impact for a few beneficiaries in the real sector. But it needs to be streamlined to minimize loan losses and ensure effective targeting of deserving investors and sectors.
Fuel Subsidy Removal
This reform measure had benefited the economy in the following ways:
Huge savings in government revenue. The FAAC allocation was almost double what it used to be.
Reduced smuggling of petroleum products.
Eradicated the inherent corruption in fuel subsidy.
Reduced domestic consumption from about 65 million litres daily to less than 40 million litres
Outlook for private investment in the downstream is much brighter.
Conservation of foreign exchange as less fuel is imported.
Bigger investment opportunities in the petroleum refineries and related industries.
Opportunities in renewable energy investment.
Opportunities for private sector importation of petroleum products.
Better focus by investors and households on energy efficiency.
New opportunities in the use of CNG, LPG in transportation.
However, we should acknowledge the challenges that followed the fuel subsidy removal.
The increase in PMS price was a huge shock to the economy, investors and the citizens on the back of escalation of energy cost.
Triggered intense inflationary pressures.
Profound adverse impact on the welfare of the citizens – food prices, transportation costs.
Poverty level increased, Middle class disappearing.
Profit margins of many businesses have been considerably eroded due to high operating costs which are not transferable to consumers.
Forex Rate Unification
The commitment of the current administration to convergence of rates between the official forex window and the free-market rate is a step in the right direction. This had also been beneficial in the following ways:
Better prospects for forex inflow.
More revenue for government.
Better prospects for growth of non-oil sector.
However, there had been downsides to the forex reform as follows:
Spirally inflation on the back of sharp depreciation in the naira exchange rate.
Resurgence of speculative pressure on the naira, amid weak external reserves.
Rates began to diverge few weeks after the convergence of rates.
Currency flight to the dollar as store of value.
Power Sector Decentralisation
The decentralization of the power sector by the Tinubu administration was a major policy change.
It opened up the power sector to more private investors.
We should see more mini grids, off grid power solution and less dependence on the central grid.
Decentralization opens up opportunities in the entire electricity value chain.
Opportunities in investment in embedded power solutions.
Opportunities in the Current Economic Crisis
Incredible opportunities for import substitution across all sectors.
Provision of domestic alternatives to medical tourism
Domestic alternatives to education tourism
Domestic alternatives to vacations abroad.
Domestic alternatives to imported industrial raw materials
Local fabrications of spare parts and other mechanical devices.
High food prices offer great incentives for investment in agriculture.
Greater returns on export sector investments. $100 is now an equivalent of N100, 000. Similarly, $1m is now almost one billion naira. It’s incredible.
Opportunities for diaspora Nigerians to invest at home.
Opportunities for export of services –Japa is not entirely a bad idea. India had $100 billion remittances in 2022, Philippines $38 billion; Pakistan $30 billion, Mexico N61 billion and Nigeria $22 billion in 2022.
There should be deliberate policy to promote migration abroad in more beneficial ways. Even our artisans, care givers, truck drivers can benefit.
Outsourcing opportunities for business abroad.
Traditional and Digital Media Convergence
The media industry is perhaps one of the most disrupted in the last decade. The traditional media have been under intense pressure and there is a major risk to their sustainability. The good news is that most media houses in Nigeria have responded well to the ferocious disruption unleashed by the digital media. The truth is that any media house that fails to undertake the digital convergence may not survive the disruption.
Risks to the Sustainability of Conventional Media
Media consumption pattern is changing very rapidly with clear preferences for online news portals.
Changing demographics is influencing the choice of media channels in favour of digital platforms.
The high cost of production and distribution has become a major risk to the sustainability of the print media enterprise. Cost of newsprint, ink and distribution has become very prohibitive, amid the exchange rate depreciation and the fuel subsidy removal.
Digital media is much more cost effective with significantly lower production and distribution costs.
Declining advert revenue because of the limited impact of advert in the print media.
Sales revenue is also declining because it has become difficult to transfer the increasing cost to newspaper buyers. This has thrown many print media houses into loss position.
There are environmental issues around the use of newsprint which is produced from wood. There are also pollution concerns on the use of ink for printing.
Managing the Digital Disruption
Media houses need to strengthen their digital infrastructure to enable them compete in the digital pace.
Mainstream media have the advantage of credibility and goodwill. This confers more trust on their content compared to the multitude of the current digital news platforms. They should leverage on this credibility advantage.
They should build capacity to manage the digital platforms.
Ensure the adoption of Search Engine Optimization and digital adverts on major search engines.
Publish electronic version of their publications.
Boost revenue from adverts on their digital platforms, especially on their news portals.