The Nigerian government is of the belief that things must get worse to get better and hopes to emerge from the recession with a more sustainable and transparent business environment.

The Nigerian government is of the belief that things must get worse to get better, and seeks to emerge from recession with a more sustainable and transparent business environment.

Nigeria hasn't had an easy time of late, battling low oil prices, political upheaval in the form of a massive assault on corruption, and a dearth of forex revenues. The country is not without a plan, however, with President Buhari stating before the 2017 budget release that it would serve to end recession. Part of this involves the issuance of fresh oil licenses to generate additional revenue streams over the year. The wider plan was announced by Udoma Udoma, Minister of Budget and National Planning, at the Senate Joint Committee on Appropriation and Finance, in the form of the revised Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The government thus aims to generate NGN10 trillion in revenues over the year, partly through cost cutting at state agencies. A wholesome NGN5 trillion of that figure is expected to come from crude oil sales. The plan has received considerable support, with Moody's giving it the thumbs up as a solid groundwork to emerge from recession. According to the ratings agency, the country's B1 rating is justified thanks to “significant gains in terms of governance and transparency in the oil sector.” Moody's also envisions government debt remaining below 20% of GDP, in contrast to the average of 55% among B1-rated peers.

A quick look at the numbers shows how hard the drop in oil prices has hit Nigeria; foreign reserves fell to USD30 billion in 2015 from over USD65 billion in 2007. The economy is surprisingly diversified, with strong finance, services, ICT, and entertainment sectors. However, government revenue collection has left much to be desired and export revenues, at over 80% oil driven, are more than vulnerable. One significant development over 2016 was the scrapping, in June, of a local currency peg of 197-199 to the dollar, which had hampered imports, notably of manufacturing inputs. That had seen manufacturing growth shrink 3.36% in 2Q2015, with capacity utilization for the quarter troughing at just over 50%, down 10pp on 1Q2015.

At the helm of the ship is an administration that is getting tough on corruption. Coming into office in 2016 in an unprecedented peaceful transition of power, President Buhari is a man on a mission, making himself Minister of Petroleum in order to ensure that the war on corruption begins top down and at an institution so crucial to the wealth of the nation. “The anti-corruption war is crucial to us. There will be no let up. It is a promise we made, which we are fulfilling, and which we must fulfill to the letter,” Buhari told TBY.

Abroad, Buhari also heads a nation that is a key member of ECOWAS and over 50 other international organizations. Nigeria is also a non-permanent member of the UN Security Council and a founding member of the African Union. As one of the top-two economies in Africa, Nigeria thus wields considerable power on the world stage.

But to get an idea of the future of this nation beyond the trials of cheap oil and graft, one must cast an eye on the sectors of tomorrow. Like in many emerging markets, ICT is shaping up for a growing role. The sector currently represents 10% of GDP, with strong growth potential thanks to low penetration rates in general but strong government support and robust competition. For Nigeria, the advent of smartphones and data from above is allowing it to open up the population to a host of solutions, including internet banking, without even a whiff of a broadband network in some areas. Approximately 25 million people use smartphones, with the vast majority connected to 3G. Penetration in the data area, however, sits at between 10 and 20%, meaning there's much work to do. Some of the largest beneficiaries of the digital revolution, however, could be farmers. In an interview with TBY, Tesfai Tecle, Special Advisor of the Kofi Annan Foundation, explained that Nigeria is at the forefront of changing the agriculture sector with ICT, specifically mentioning the “e-wallet” concept for the supply and distribution of subsidized inputs. “Through mobile devices and apps, African farmers can access up-to-date knowledge and information that is vital to their business, including weather forecasts, advice on best agronomic practices, and market prices for crops,” he said. Nigeria has the potential to seize even more opportunities in this regard, such as digital solutions that will allow small agricultural businesses to access seeds, fertilizer, credit, and insurance, thereby raising productivity and improving Nigeria's food and nutrition security.

Indeed, agriculture is making a comeback and has been dubbed the “new oil.” The government, in that respect, as well as easing access to credit, has set about improving infrastructure to boost market access. If all goes well, Nigeria has a chance to turn around its USD2 billion worth of yearly agricultural imports and finally get a grip on self-sufficiency.

Going forward, Nigeria is anticipating bumps in the road as President Buhari looks to do what his counterpart in the US has only postured, and “drain the swamp.” The government wishes to boost revenue collection to a point where the price of oil no longer dictates growth, and where new sectors emerge as the engines of progress in a modern Nigeria.