Alex Omenya
In its latest Regional Economic Outlook for Sub-Saharan Africa titled “A Tepid and Pricey Recovery,” the International Monetary Fund has highlighted the detrimental impact of import restrictions and foreign currency shortages on business operations in Nigeria and other African nations.
The report underscores that these challenges could impede the profitability of companies across the region, potentially hindering the post-pandemic recovery efforts. Specifically, countries such as Angola, Chad, Ethiopia, Kenya, and Nigeria are facing hurdles due to either foreign currency shortages or import restrictions, complicating business dynamics at a critical juncture when companies are striving to regain pre-pandemic levels of profitability.
Moreover, the IMF cautions that the post-pandemic economic revival in Sub-Saharan Africa occurs amidst global uncertainties and shocks. Rising interest rates are diverting expenditure away from crucial capital investments towards servicing debts in these countries, further exacerbating the situation.
The diversion of funds from essential sectors to debt servicing is resulting in adverse outcomes, such as diminished educational achievements and escalating food insecurity across the region.
The IMF cites a report indicating that only 65% of school children in Sub-Saharan Africa complete their primary and secondary education, lagging behind the global average of 87%. Additionally, food insecurity is prevalent, particularly in countries like Nigeria and the Democratic Republic of Congo.
The IMF emphasizes that this liquidity squeeze jeopardizes the growth prospects of future generations in the region, as limited funds hinder efforts to address pressing development needs exacerbated by the pandemic’s aftermath.
Notably, approximately 3 in 10 school-age children are not enrolled in primary and secondary education, while an estimated 140 million people in the region, including significant numbers in Nigeria and the Democratic Republic of Congo, face acute food insecurity.
Nigeria has implemented trade policies aimed at promoting local production, self-sustainability, and job creation. In 2015, the Central Bank of Nigeria restricted importers of 43 items from accessing foreign exchange on the official market, including rice, in a bid to achieve self-sufficiency.
However, recent developments, including the appointment of a new CBN Governor, Dr. Yemi Cardoso, suggest a reversal of these policies.
Furthermore, President Buhari’s directive to close all land borders in 2019 aimed to curb smuggling and bolster local production. However, this move contradicted the spirit of the African Continental Free Trade Agreement, which came into effect less than a year later in June 2020.
