Chairman Godwin Bolanle Shonekan of the GBS-Alliance for African Economic Development Initiative is upbeat about Nigeria’s economic revival. Inspired by the U.S. economic recovery model from the Great Depression of 1929-1939, Shonekan has spent the last forty years creating an economic plan. According to him, Nigeria’s Economy can be revitalized by implementing a regulated Capital Market structure akin to the Federal Reserve of the United States. According to Shonekan, the current banking system in Nigeria is inadequately constructed, and the growth of the Private Sector and a move toward a more stable capital market are necessary for ensuring economic stability.
In order to reverse the detrimental effects of a dual exchange rate system, he also highlights the necessity of unifying the nation’s foreign exchange markets. In order to put his ideas into action, Shonekan also intends to work with President Bola Tinubu’s National Economic Council. Kehinde Olaboye, a director at SIB Insurance Brokers, has also endorsed the project and emphasized the value of insurance in guaranteeing investor confidence and a smooth launch. Shonekan’s suggested economic model, which takes its cues from the American recovery strategy from the Great Depression of 1929, aims to tackle the problem of the dual exchange rate system, as earlier stated, by supporting a regulated capital market system.
Nigeria might gain from adopting comparable legal frameworks.
Significant government intervention, such as the creation of the Securities and Exchange Commission of Nigeria (SEC Nigeria) to oversee the capital markets and the implementation of the Glass-Steagall Legislation, which overhauled the banking industry, were features of the U.S. economic recovery following 1929. The U.S. economy eventually recovered as a result of these actions, which steadied the financial system and restored investor confidence. According to Shonekan’s model, Nigeria might gain from adopting comparable legal frameworks and focusing on building a strong private sector in order to become less dependent on oil.
This model also suggests a new currency system, claiming that major structural changes are necessary to stop the naira’s ongoing devaluation. Still, not every economist believes that Shonekan’s model is workable. The economic and political environments in the United States during the Great Depression and Nigeria now, according to some, are radically different, even though the American recovery model of 1929 is historically significant. With its External Debt reaching $41.69 billion as of March 2023, Nigeria, for example, has a debt-to-GDP ratio of almost 35%, which raises questions about the country’s capacity to carry out significant changes without making its fiscal problems worse.
Gov’t officials have expressed a desire to discuss Shonekan’s concepts.
Furthermore, if the launch of a new currency is not handled appropriately, it may result in hyperinflation. Responses to the suggestions of Shonekan have been conflicting. Regarding investigating novel economic approaches, a few government officials—especially those near President Tinubu’s administration—have voiced cautious hope. Though they have expressed apprehension about the risks involved in a total redesign of the monetary system, business leaders have expressed interest in the possibility of a more regulated capital market.
Instead of advocating for drastic changes that would cause the economy to become unstable, financial institutions have been more cautious and emphasize the necessity for incremental reforms. Shonekan asserts that he is still confident in his concept, saying, “Our proposal is not merely theoretical; it is a system that has been tried and tested in one of the biggest economic recoveries in history. The time to act is now, as Nigeria requires audacious solutions. Additionally, government officials have expressed a desire to discuss Shonekan’s concepts.
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A Ministry of Finance senior official stated, “We are open to creative solutions, especially those that have proven successful in other circumstances. All suggested adjustments, meanwhile, must be customized to Nigeria’s particular economic environment.” Although Shonekan’s economic model is based on past experiences and presents viable answers to Nigeria’s economic problems, its implementation would need to take into account the nation’s present budgetary constraints, the possible risks associated with currency reform, and the requirement for stakeholder support to assure its success.