Nigerian economy defies macroeconomic logic?? – As inflation and unemployment spike
There is a commonly held myth that the Nigerian economy defies macroeconomic logic. Some go to the extent of saying that economic theory is turned on its head when you get to Jankara. This notion may have received a tacit nod of validation with the recent reverse slope of the Phillips curve in Nigeria. Typically, you will have inflation increasing and unemployment falling simultaneously but the latest data released by the NBS earlier this week shows the reverse – inflation at 17.33% and record unemployment at 33.3%. What is the cure for this chronic situation?
This time you do not have a typical trade-off between inflation and unemployment, hence the solution requires a sequential therapy of dealing with inflation first and then unemployment.
Public-private partnership – A CPR response to infrastructure deficit
Moody’s, the world’s leading rating agency estimates that the infrastructure gap in Nigeria is $3trn. This is 6 times the size of the annual GDP ($481.7bn) and will pose a major funding challenge in the face of the current fiscal imbalances. This is more so, as Nigeria is grappling with the hydra-headed problems of inflation, unemployment and soaring debt. The FGN has re-iterated its determination to tackle the infrastructure problem frontally with a combination of initiatives ranging from the PPP model, to concessioning and privatization of state owned enterprises. The government has started taking steps in this regard. The President recently approved the establishment of InfraCo, a PPP infrastructure company with an initial capital of N1trn to help tackle the infrastructure deficit problem and KPMG has been appointed as transaction advisers.
In this edition of the FDC Bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
Enjoy your read!