Persistently high levels of unemployment have emerged to become a key policy challenge in Nigeria. Between 2010 and 2018, the unemployment rate rose from 5 percent to 23 percent. Worsened by the COVID-19 pandemic, the economy is simply not generating enough jobs for labor entrants, particularly women and youth. In 2020, the national unemployment rate stood at 33 percent, while 52 percent of women remained unemployed and 42 percent of youth (aged 15-34 years) were without jobs.

Moreover, the contribution of the manufacturing sector to formal sector employment has also been low and stagnant, averaging 11.4 percent between 2011 and 2021. Estimates show that Nigeria’s manufacturing sector accounts for less than 10 percent of gross domestic product (GDP), and as a result, the sector employs only a small proportion of the labor force.

Given that traditional sectors like manufacturing alone can no longer sustain economic development and generate sufficient job opportunities, attention is now shifting toward alternative sectors that can support growth and create jobs, for example: agro-processing, financial and business services, information and communications technology (ICT), tourism, formal trade, and transport. These “industries without smokestacks” (IWOSS)—as they have been termed in a growing body of literature—are often service-based sectors that closely mimic manufacturing in their tradability, proclivity to absorb large numbers of low-skilled employees, and potential for technological change and productivity growth.

In our recent report, published jointly by the Africa Growth Initiative at Brookings and the Centre for the Study of the Economies of Africa, we find that these industries without smokestacks are indeed already surpassing manufacturing and other traditional sectors in creating jobs and generating economic growth in Nigeria.

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Nigeria has a population of over 200 million people and is one of the largest producers of tobacco in Africa. However, Nigeria faces significant challenges in achieving food security. With a growing population, there is a need for Nigeria to prioritise food production over tobacco farming. This is because about 40 percent of Nigerians are food insecure, and prioritising food production will help  ensure that there is enough food to meet the needs of the population, particularly vulnerable groups such as women and children.

Tobacco is not a staple food item, and its demand is highly contingent on external factors such as global tobacco consumption, market prices and health regulations. In addition, tobacco farming is frequently linked to deforestation, soil erosion, and water contamination, which can result in detrimental environmental and public health outcomes. Prioritising food production over tobacco cultivation can have substantial environmental benefits, as the adoption of sustainable agricultural practices can help facilitate soil preservation, enhance biodiversity, and ecosystem services, while concurrently augmenting crop yields and decreasing greenhouse gas emissions.

Transitioning from bitter harvest to more nutritious food for all.

Nigeria has a long history of tobacco farming and is currently one of the leading producers of tobacco in West Africa, with about 4,700 metric tons produced in 2021. However, this practice has negative impacts on food security, especially for smallholder farmers who depend on subsistence agriculture. The share of tobacco in crop production in Nigeria may be modest and can vary from year to year but a shift away from tobacco farming can still contribute to achieving food security in Nigeria.  The competition for fertile land, water, and other resources between tobacco and food crops reduces the land available for food production, worsening food insecurity. Moreover,  tobacco farming frequently involves the use of hazardous chemicals such as pesticides and fertilisers that contaminate the soil, water, and food crops. The use of these chemicals also poses a risk to the health of farmers and their families, as well as consumers.

Economic and health benefits of prioritizing food production over tobacco farming.

1. Food Security and Basic Human Needs

Food security lies at the heart of human survival and well-being.  Nigeria’s population is steadily increasing, therefore, providing an adequate and sustainable food supply is critical. By prioritizing food production, we address the fundamental need for sustenance, with the goal of eliminating hunger and malnutrition, which still affects millions of Nigerians.

Redirecting resources from tobacco farming to nutritional crops will contribute to the availability, accessibility, and affordability of food, thereby securing the basic human right to an adequate diet.

2. Public Health and Well-being

Tobacco consumption has been linked to a myriad of preventable diseases, including cancer, cardiovascular ailments, and respiratory disorders. By shifting our focus towards food production, the health and well-being of individuals and communities is prioritized. A reduction in tobacco cultivation will lead to a decline in smoking prevalence, subsequently lowering the incidence of tobacco-related illnesses. This shift offers an opportunity to promote healthier lifestyles, emphasizing the importance of balanced nutrition and fostering a culture of well-being.

3. Economic Advantages and Sustainable Development

The economic benefits of prioritizing food production over tobacco production are significant. Agriculture and food-related industries have the potential to create jobs and stimulate local economies, particularly in rural areas. An increase in agricultural investment can boost productivity, generate income for farmers, and foster rural development. Moreover, this redirection of resources does not necessarily lead to economic losses. Alternatives to tobacco farming, such as diverse crops or sustainable agricultural practices, can be explored to ensure a smooth transition to a more economically viable and sustainable model.

4. Environmental Sustainability and Conservation

Tobacco cultivation places a substantial burden on the environment. It requires extensive land use, contributes to deforestation, degrades soil quality, and consumes vast amounts of water and chemical. By prioritizing food production, we can utilize land more efficiently, thereby reducing deforestation and preserving natural habitats. Sustainable agricultural practices can be adopted, which will help promote soil health and conservation. Furthermore, shifting away from tobacco cultivation reduces the pollution caused by pesticides and chemicals, resulting in cleaner water sources and a healthier ecosystem.

5. Social Equity and Inclusive Development

Prioritizing food production fosters social equity by addressing the basic needs of all individuals. Food is a universal requirement, and access to nutritious food is essential for human development. By focusing on ensuring food security for all, we work towards creating a more equitable society where no one is left behind. This shift aligns with the principles of social justice, promoting inclusivity, and reducing inequalities based on access to vital resources.

Policy implications

The transition from tobacco to food production represents a significant shift with numerous benefits for society. Policymakers play a vital role in facilitating this transition by implementing supportive measures and creating an enabling environment, emphasizing the need for effective policies, incentives, and collaborations to achieve sustainable and successful outcomes.

i. Crafting and Implementing Supportive Policies

Policymakers are responsible for developing and implementing policies that encourage the transition from tobacco to food production. This involves a comprehensive assessment of the local, regional, and national agricultural landscapes, taking into consideration factors such as soil suitability, climate, and market demand. Policymakers can use measures such as subsidies, grants, and tax breaks to incentivize farmers to shift their focus to food crops . To facilitate the process and ensure a smooth transition, clear regulations and guidelines should be set, while also addressing potential challenges and mitigating risks.

ii. Strengthening Agricultural Infrastructure and Extension Services

To support the transition, policymakers need to invest in strengthening agricultural infrastructure and extension services. This includes improving irrigation systems, upgrading storage facilities, and providing access to modern farming technologies. Additionally, policymakers can allocate resources for the development of extension services that provide farmers with the necessary knowledge, training, and support to adapt their practices to food production. By enhancing the infrastructure and support systems, policymakers enable farmers to maximize productivity and successfully transition to food cultivation.

iii. Promoting Research and Development

Policymakers play a crucial role in promoting research and development (R&D) efforts focused on sustainable food production. This includes allocating funds for agricultural research institutions and universities to conduct studies on crop diversification, climate-resilient farming techniques, and efficient resource management. Policymakers can also encourage collaboration between researchers, farmers, and industry stakeholders to develop innovative solutions and technologies that improve food production. By fostering R&D, policymakers contribute to the knowledge base necessary for successful transitions and create avenues for continuous improvement in the agricultural sector.

iv. Facilitating Market Access and Value Chain Development

To successfully shift from tobacco to food production, it is crucial to ensure access to markets and build strong value chains. Policymakers can support farmers by facilitating connections with buyers, processors, and retailers, both locally and internationally. This can be achieved by creating platforms for market linkages, supporting the establishment of cooperatives, and promoting fair trade practices. Policymakers can also assist in developing value-added processing industries, enabling farmers to enhance their income by diversifying their agricultural products and accessing higher-value markets.

v.Engaging Stakeholders and Promoting Collaboration

Policymakers play a critical role in fostering collaboration and engagement among various stakeholders involved in the transition process. This includes farmers, agricultural associations, researchers, non-governmental organizations, and private sector entities. Policymakers can organize forums, workshops, and consultations to facilitate dialogue and knowledge sharing. By creating a platform for collaboration, policymakers can leverage the expertise and resources of different stakeholders, ensuring a comprehensive approach to the transition and maximizing its positive impact.

Conclusion

The need for Nigeria to prioritize food production over tobacco cannot overstated. Redirecting resources, efforts, and policies towards nourishing crops and sustainable agriculture will have far-reaching benefits for humanity. It ensures food security, promotes public health and well-being, stimulates economic growth, fosters environmental sustainability, and advances social equity. By crafting and implementing supportive policies, strengthening agricultural infrastructure, promoting research and development, facilitating market access, and fostering collaboration, policymakers can guide Nigeria towards a future where food production takes precedence over tobacco cultivation, fostering a healthier, more sustainable, and resilient agricultural sector.

Artificial Intelligence (AI) is transforming businesses and economic activities worldwide through its capacity to mimic or replicate human-like intelligence. With the growing potential of AI, many countries are adopting various strategies to become AI-ready. According to PricewaterhouseCoopers (PwC) analysis published in 2017, AI is expected to contribute about $15.7 trillion to the global economy by 2030. AI readiness involves the capacity of a country or organisation to use AI technologies to effectively drive economic growth, social development, and overall welfare. However, AI readiness is still challenging in many African countries due to limited AI-supportive facilities and infrastructure. The availability of reliable electricity, poor internet connectivity, and computing power are vital tools for AI development, but many African countries still need to improve in these areas. It is, however, essential to note that a country's readiness for AI is not simply a question of preparing to buy and install new technologies. The transformative nature of AI typically calls for preparation across multiple critical areas. To capture AI's potential to create value, governments and organisations need to retool and rework their existing processes, upskill or hire key talents, refine approaches toward partnership, and develop the necessary data and technical infrastructure to deploy these advanced technologies. There are fundamental AI readiness pillars that need to be put in place by governments and organisations to enhance and create a conducive environment for AI to thrive.

Fundamental Pillars for AI Readiness

According to Oxford Insight (2021), the AI readiness of a nation anchors on three main pillars that capture and show a country's government's readiness to implement AI in public service delivery and support innovation in the private sector. These fundamental pillars include:

1. The Technology Sector Pillar: The technology sector of a country plays a crucial role in implementing AI strategies as the government depends on a good supply of AI tools from its technology sector, which needs to be competitive and dynamic in size. This sector should have high innovation capacity, underpinned by a business environment that supports entrepreneurship and a good flow of Research and Development (R&D) spending. In addition, the skills and education of the people working in this sector are critical as the level and quality of human capital will determine AI productivity level.

2. The Data and Infrastructure Pillar: A country's infrastructure and data capacity goes a long way in determining its AI readiness. AI tools require lots of high-quality available data, which should represent all citizens within a given country (data representativeness) to avoid bias and error. Hence, to achieve this data potential, necessary infrastructure must be in place to power AI tools and deliver them to citizens.

3. The Government Pillar: This is the most important as the other pillars become dormant without a government's interest and desire to use AI for transformative purposes. The government should have a strategic vision for developing and managing AI, supported by appropriate regulation and attention to ethical problems (governance & ethics). Furthermore, it must have a robust internal digital capacity, including the skills and practices that support its adaptability in the face of new technologies.

Figure 1: Pillars and Dimensions of AI Readiness

Global AI Readiness Ranking

In its 'Government AI Readiness Index 2022' report, Oxford Insights ranked 181 countries by how prepared their governments are to use AI in public services. The USA tops the rankings with a score of 85.72, followed by Singapore with an index of 84.12 and the United Kingdom in third with an index of 78.54. These countries scored far above the world's average score of 44.61 out of 100. The global interest in AI comes amid a broader turn to digital government, further accelerated by the COVID-19 mitigation strategy that emphasized more on digital interaction.

However, best practices in AI strategies remain concentrated in countries in the global north, demonstrating a deepening divide in global AI readiness. Countries in the global south, particularly in Africa, need to catch up. The Sub-Saharan Africa region's average score in the ‘2022 AI Readiness Index' was 29.38, the lowest globally, with many African countries at the lower end of the ranking spectrum. Regionally, Mauritius ranked first with an index score of 53.38, followed by South Africa (47.74) in second place and Kenya (40.36) in third place. The three countries within the Sub-Saharan African region with the least AI readiness index are Eritrea, the Central African Republic, and South Sudan, each having an index of 20.17, 19.90, and 19.45, respectively. Many African countries are still lagging as they have insufficient capacity and have not put in place the fundamental pillars necessary to embrace the world of AI.

Figure 2: AI Readiness Index in Sub-Saharan African Region

Challenges of AI Readiness in Africa

There are several challenges facing the adoption and implementation of AI in Africa. These challenges include:

1. Limited Digital Infrastructure: Many African countries lack the digital infrastructure to support AI development. For example, Internet penetration within Africa is low and was estimated at 28% in 2019. This sore state of internet penetration across Africa is due to infrastructure issues associated with the lack of access to electricity and low investment into internet infrastructure such as fibre-optic cables, cell towers, and base stations. The World Bank estimates that about 100 million Africans living in remote regions are inaccessible to mobile cellular networks and would require an investment of at least $100 billion to provide access to this marginalised group of individuals. Hence, digital infrastructural limitations in Africa affect the adoption and implementation of AI development within the continent.
2. Lack of Quality Data: The need for more quality data is significant for AI development in Africa. African data ecosystems are still in the early stages of the African data revolution. Many African countries need more data collection mechanisms and more data governance frameworks, which result in better data quality. A few intricate algorithms are used to construct AI systems, and to train these algorithms, data is used. There is a data shortage in Africa and the majority of data collected does not accurately reflect the continent's experience. This shortage raises the possibility that many algorithms may not be properly tailored to the characteristics of local inhabitants. Since AI can only function with data, a dearth of high-quality data is a drawback. In its absence, creating and implementing AI solutions would undoubtedly be harder.
3. Ethical and Legal Considerations: There are widespread ethical and legal issues relating to AI in Africa. These issues revolve around the regulatory frameworks that impact the creation and application of AI technology required in Africa. Ethical and legal considerations relating to AI centre around safety and transparency, informed consent to use data, algorithmic fairness and biases, and data privacy. Hence, the need for clear regulations and guidelines for AI development in Africa creates uncertainties and limits innovation.
4. High Cost and Skill Shortage: The cost of AI technologies, both hardware and software, is still high in many African countries, making it challenging to leverage AI technologies fully. More so, the shortage of skilled professionals in AI in Africa is because many countries in the region suffer from a shortage of AI specialists. For example, according to Rwanda's Minister of State for Information and Communications Technology, there are only about 10 AI engineers in the country. Research also shows that there needs to be more trained AI specialists in Ethiopia, and this is the case for many other African countries.  In addition, African countries still need more education and training programs to develop the skills and expertise for AI development.

Looking Ahead: The Way Forward for African Countries

To address the challenges affecting AI readiness in Africa, it is crucial for countries within the region to leverage education to narrow the skill gap by adjusting educational curriculums to make them more technically oriented. Integrating AI training models at all levels of the education system would foster capacity building and talent development and encourage AI initiatives across sectors.

Moreover, investments in digital infrastructures like data centres, clouds, etc., would help develop a more AI-friendly digital economy. Additionally, public-private partnerships with tech giants and foreign start-ups accelerate infrastructural development.

Furthermore, supporting local tech companies through collaboration and investments will help empower organisations with the relevant skills and abilities needed to drive business innovations and AI strategies. In addition, lowering barriers to entry for tech companies would ensure that African countries have robust hubs of AI excellence.

It is also essential to emphasise the need for good data governance in improving public service delivery and output tailored to the needs of Africa’s transforming population. Consequently, creating a solid data collection mechanism to aid the acquisition of reliable data, establishing systems to recognise and prevent AI bias, and promoting fairness and transparency would help to change the current dynamics faced by many African countries.

Access to clean water and sanitation is a basic human right. Nonetheless, it remains a challenge for millions worldwide, with approximately 2 billion people still lacking access to safely managed drinking water services as of 2020, and an estimated  4.2 billion people lack access to safe sanitation facilities (Sustainable Development Goals Report, 2022).

This crisis severely affects people's health, well-being, and economic productivity. The lack of safe water and sanitation leads to waterborne diseases, such as cholera, diarrhoea, and typhoid fever, which cause millions of deaths yearly, especially among children under five (WHO, 2022). Additionally, women and girls are disproportionately affected by the water and sanitation crisis as they spend hours each day collecting water, leaving them little time for education, work, or other activities. Moreover, inadequate sanitation facilities expose women and girls to violence, harassment, and sexual assault (UN, 2022). On the other hand, access to clean water is critical for agriculture, industry, and household use.

The water and sanitation crisis has a significant impact on economic development as well. People who lack access to safe water and sanitation facilities often cannot work or attend school due to illness, which limits their productivity and economic potential (Water.org, 2022). Additionally, the cost of treating waterborne diseases significantly strains individuals, families, and healthcare systems. Furthermore, the water and sanitation crisis perpetuate the cycle of poverty. It disproportionately affects vulnerable populations, such as the poor, marginalised, and rural communities, often excluded from basic services and infrastructure (Water.org, 2022).

The global water crisis has reached a critical point, and urgent action is needed to address the challenges faced by communities and nations around the World. This article provides insights on the water and sanitation crisis in Nigeria, with a focus on the recurring issue of flooding, poor water management, inadequate access to water and sanitation facilities, measures to tackle this menace so far, and the strategies to accelerate change in Nigeria’s water crisis.

Each year on March 22nd, World Water Day is observed to raise awareness about the importance of water and the need for sustainable management of water resources. The 2023 World Water Day theme is "Accelerating Change," which highlights the urgency of taking action to address the global water crisis. World Water Day 2023 is to call for accelerated change and collective action to ensure access to safe and sustainable water and sanitation for all.

The Water and Sanitation Crisis in Nigeria: An Insight

Nigeria is facing a severe water and sanitation crisis affecting millions of people in urban and rural areas. Flooding, poor water management, water scarcity, and a lack of access to sanitation facilities are widespread and have significant public health and economic implications.

The recurring issue of flooding is one of Nigeria's most pressing water-related challenges. Widespread flooding has affected over 3.2 million people in Nigeria, resulting in over 600 fatalities and displacing over 1.4 million people. According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), the floods have affected 34 of Nigeria’s 36 states,   destroying or damaging over 569,000 hectares of farmland and exacerbating the country’s alarming food insecurity. Flooding not only worsens the existing water and sanitation crisis in the country, but it also causes significant damage to infrastructure, property, and crops, resulting in  economic losses and long-term negative impacts on livelihoods.

The geography and topography of Nigeria contribute significantly to the frequency and severity of flooding in the country. Nigeria is a low-lying area with numerous rivers, streams, and lakes, and its coastal regions are particularly vulnerable to flooding during the rainy season. Furthermore, factors such as poor urban planning, inadequate drainage systems, deforestation, land-use changes, and the construction of dams and reservoirs have exacerbated the adverse effects of flooding in Nigeria.

Figure 1: Frequency of Major Flood Occurrences Between 2011–2020, by Geopolitical Zone in Nigeria

Source: Data compiled from Centre for Research on the Epidemiology of Disasters

The impact of flooding on water and sanitation infrastructure is particularly alarming as it causes water contamination and damage to sanitation facilities, resulting in the spread of water-borne illnesses such as cholera, typhoid fever, and diarrhoea. The situation is particularly dire in urban areas, where access to safe drinking water and sanitation facilities is already scarce.

There is also an issue of inadequate access, and poor water management. Inadequate access to water, and poor water management practices majorly contribute to Nigeria’s water and sanitation crisis. According to the World Bank, approximately 70 million Nigerians do not have  access to safe drinking water, and 114 million do not have access to basic sanitation facilities. While evidence has also shown that water sources are frequently polluted with hazardous substances such as industrial pollutants, human and animal waste, and other contaminants, posing substantial health risks to those who consume or use the water (CDC, 2018).

Figure 2: Map illustrating various environmental issues and their corresponding locations in Nigeria

Source: Pona, Xiaoli, Ayantobo, & Tetteh, (2021).

The lack of water and sanitation infrastructure investment is a major contributor to poor water management. Nigeria's water and sanitation infrastructure is outdated and inadequate, with no infrastructure in many areas. As a result, only a small percentage of the population has access to clean and safe drinking water and sanitation facilities. Additionally, pollution of water sources due to inadequate waste disposal and industrial practices is a major issue in Nigeria. This pollution makes it challenging to obtain clean and safe water for drinking, and it has a detrimental effect on the environment and health of the people who depend on these water sources.

Nigeria faces a significant water scarcity challenge despite having abundant water resources - more than 215 cubic kilometres of available surface water per year. This issue is due to poor water management practices and inadequate infrastructure, which renders most water resources unfit for human consumption. The average Nigerian consumes only 9 litres of water per day, which falls below the national acceptable minimum standards of 12 to 16 litres per day. According to the World Resources Institute (WRI), Nigeria's per capita water availability has decreased, exacerbating the scarcity challenge.

This decrease in water availability results from rapid population growth, urbanisation, and industrialisation. all of which have exerted significant pressure on the country's water resources. As a result, water sources have been depleted and polluted, leading to the current scarcity situation.

Measures Implemented to Tackle Nigeria's Water Crisis

The Nigerian government has been taking significant steps to address the water and sanitation crisis in the country. In 2000, the government implemented the National Water Supply and Sanitation Policy to improve access to safe drinking water and sanitation facilities. The National Action Plan on Water Supply and Sanitation, launched in 2012, also provides a framework for addressing the water crisis in the country. The recent National Development Plan 2021-2025 has set a goal of achieving all access to water and sanitation by 2030 and ending open defecation by 2025 in compliance with SDGs 6.1 and 6.2.

To achieve these goals, the Nigerian government plans to invest an estimated 1.60 trillion naira over the next five years to extend water supply access and improve sanitation services to 90 per cent of the population. The government also launched the Clean Nigeria Campaign in 2018 to eradicate open defecation, committing ₦10 billion to these programs in 2019. However, due to the COVID-19 pandemic, the allocation for these plans was only ₦12 million in the 2020 budget and N60.9 million in 2022.

In 2021, the government implemented various measures to enhance access to water and sanitation, including creating more than 2,300 Water Points and constructing 6,546 hygiene facilities and sanitation compartments in different parts of the nation. Individual and collective efforts at the community level have also contributed to improving access to safe drinking water and sanitation facilities. Many Nigerians have taken it upon themselves to provide clean water to their communities by digging wells, constructing water tanks, and other similar initiatives.

Civil Society Organizations (CSOs) have also played a critical role in addressing the water crisis in Nigeria. Several CSOs are working to provide safe drinking water and sanitation facilities to underserved communities in the country. These organisations have also advocated for policy reforms and increased investment in the water sector. Overall, while progress has been made, much work is still needed to ensure access to safe drinking water and sanitation for all Nigerians.

However, despite the efforts of the Nigerian government to address the water and sanitation crisis in the country, there are still several challenges that need to be addressed. One of the major defects is the inadequate budget allocation and funding for water and sanitation infrastructure. For instance, the budget allocation to water and sanitation infrastructure development in Nigeria has been below the international requirement of 2 percent (see figure 3A). Although the government has set a goal of investing 1.60 trillion naira over the next five years to extend water supply access and improve sanitation services to 90% of the population, the allocation for these plans in the 2020 budget was only ₦12 million due to the COVID-19 pandemic. This indicates a lack of commitment to addressing the water and sanitation crisis. Additionally, there is a lack of coordination between the different tiers of government in the implementation of water and sanitation programs, resulting in duplication of efforts and inefficiencies. Corruption and mismanagement of funds have also been identified as major challenges that undermine the effectiveness of water and sanitation interventions in Nigeria (NIH, 2018). Therefore, sustained efforts are required to address these challenges and ensure that access to safe drinking water and sanitation facilities is available for all Nigerians.

Strategies for Accelerating Change in Nigeria's Water Crisis

The role of individuals and communities: Individuals and communities play a crucial role in accelerating change toward a water-secure world. Individuals can take small but impactful actions, such as conserving water, reducing pollution, and promoting sustainable water management practices. Communities can also play a role in improving access to safe water and sanitation facilities through the establishment of community-led initiatives, such as water committees or community-based organisations. Furthermore, individuals and communities can advocate for policy changes that prioritise sustainable water management practices and ensure that vulnerable populations can access safe water and sanitation facilities.

The need for investment in water and sanitation infrastructure: Investment in water and sanitation infrastructure is crucial to accelerating change towards a water-secure world. This investment includes building and upgrading water treatment plants, distribution systems, and sanitation facilities. Investment in water and sanitation infrastructure is also essential for ensuring access to safe water and sanitation facilities for vulnerable populations, such as the poor, marginalised, and rural communities. For instance, the share of budget to the Ministry of water resource over the last ten years has been below 2 percent (see figure 3A), indicating its inadequacy. Furthermore, according to an OECD report 2022, to achieve universal access to safely managed water supply and sanitation for all, it is recommended that countries allocate 1 -2% of their GDP towards the development of water supply and sanitation infrastructure from 2015 to 2030, however, the share of GDP to water supply and sanitation infrastructure in Nigeria has been below 1 percent overtime (see figure 3B).  Governments, international organisations, and private sector actors must invest in water and sanitation infrastructure to ensure everyone can access safe and sustainable water and sanitation.

The importance of education and awareness: Education and awareness are critical to accelerating change towards a water-secure world. This includes educating individuals and communities about water conservation, sustainable water management practices, and the health risks associated with the lack of safe water and sanitation facilities. Education and awareness campaigns can also help change behaviours and attitudes towards water and sanitation, leading to more sustainable and equitable use of water resources.

The need for international cooperation and collaboration: International cooperation and collaboration are essential to accelerating change towards a water-secure world. The collaboration between governments, international organisations, civil society, and the private sector to promote sustainable water management practices, build and upgrade water and sanitation infrastructure, and ensure access to safe water and sanitation facilities for all. Furthermore, international cooperation and collaboration can help address the root causes of the water and sanitation crisis, such as climate change and pollution, which require a collective effort to address.

Modern development has placed digital technologies at the forefront, giving economies a chance to hasten economic expansion and ease the connection of people to services and employment. The contribution of the service sector continues to grow in most economies and at a faster rate in low and middle-income countries, with digitalization as a driving force. The Nigerian economy is on course as information & communication technology (ICT), and the digital economy contributed  18.44 percent to Nigeria’s Gross Domestic Product (GDP) in Q2 of 2022.  

To take advantage of the gains of the growth in the digital economy, the naira redesign policy, the naira swap programme, and the cashless policy deepened the use of digital means in Nigeria. The Central Bank of Nigeria (CBN), through its mandate of maintaining Nigeria’s external reserves, safeguarding the international value of the naira, promoting and maintaining monetary stability, and a sound and efficient financial system, introduced a policy that resulted in a makeover of the currency. Included in this were ancillary directives that aimed to promote the digitization of transactions and facilitate the measure and control of the money supply. Hence, the reflection on what the naira redesign policy by the Apex bank reveals about the state of digitization in Nigeria.

Objectives of the CBN’s Naira Redesign Policy

In fulfilling its mandate, the Apex bank of Nigeria rolled out the policy to redesign the denomination of the N200, N500, and N1,000-naira notes to achieve specific objectives. The stated objectives of the policy is aimed at addressing identified economic challenges in the country and are in line with the provisions of Section 2b, section 18a, and section 19, subsections a & b of the CBN Act, 2007. The control of money in circulation is one of the objectives behind the naira redesign policy. According to the CBN, as of September 2022, N2.73 trillion of the N3.23 trillion of currency in circulation was held outside the safe deposit boxes of commercial banks in Nigeria (85% of the country's total money supply). These funds are held by the populace for several reasons, including traditional piggy banks, cash hoarding, instances of counterfeit money, fraud, and more.

Implications of Naira Redesign on the State of Digitalization in Nigeria

Increased Pressure on the Digital Infrastructure: The paucity of the new naira notes mounted unprecedented pressure on digital alternatives for transactions in Nigeria. The demand for cash far outstrips the supply of naira notes, as over N1 trillion worth of old notes has been mopped up from the Nigerian economy as of December 2022. Also contributing to this gap is the limited supply of new notes by the CBN through commercial banks and POS operators. Due to the scarcity of naira notes, commercial bank depositors and POS customers were forced to pay 10 to 40 percent premiums to complete cash withdrawals.  The daily limits on cash withdrawals imposed by the CBN also increased dependence on digital channels to facilitate effective demand. Other factors influencing the state of digitalization due to the naira redesign policy include:

• The digital infrastructure of banks in their present state seems incapable of handling the sharp increase in transaction volume. Due to the unreliable nature of digital services, digital transfers can take up to 48 hours, while customers with failed transactions are given ten working days before their cases can be resolved. Following the high volume of failed transactions and the influx of complaints from bank customers, many banks increased staffing in customer service functions in order to meet the increase in complaints from irate customers and mobilize information technology (IT) departments. The brain drain of valuable IT support staff for more rewarding opportunities abroad contributes to the digital scalability constraints faced by the commercial banks in Nigeria.
• Telecommunication services are an indispensable component of critical infrastructure in the digital economy. Despite its importance, telecoms are losing liquidity, as banks remain indebted to them to the tune of an estimated ₦80 billion in unstructured supplementary service data (USSD) fees as of November 2022. This marks a significant increase in commercial bank debt to telecoms from ₦42 billion in March 2021. This trend may jeopardize USSD services, which will have a significant impact on the execution of financial services and transactions. Furthermore, it hinders the actualization of the CBN’s cashless policy, as USSD services are used to facilitate financial services and transactions, particularly to the underserved and financially excluded who have unreliable internet connectivity.

Security of Digital Infrastructure: Over 50,000 cases of major harm to telecom infrastructure and facilities were reported nationwide in the five years leading up to 2021. The security of telecommunication infrastructures has an impact on user experience, accessibility, and affordability of digital services. However, legislation is necessary to safeguard the country's infrastructure and is currently being developed.

Migration of Customers from Traditional Banks to Financial Technology Companies: Due to the CBN's naira redesign policy's influence on digitalization, the constraint to commercial banks’ technological scalability is a demerit, leaving depositors to rely on financial technology firms for financial services. Depositors should not be burdened by arbitrary and multi-layered changes because some digital banks offer unlimited free transfers, instant but expensive uncollateralized loans, allow their customers at least 30 free transfers per month, and provide saving options for depositors with excess funds that can earn close to 20 percent interest rate. Although Nigerian youth are the dominant users of financial technology services,  millions of people from other demographics are becoming more tech-savvy and opting for financial services offered by technology-enabled companies. The benefits of  encouraging this trend include a more-reliable alternative to completing electronic transactions and avoiding the lethargy in resolving related issues that is common among conventional banks.

Minimal Digital Services in the Informal Sector of the Nigerian Economy: In Nigeria, the financial inclusion rate was 64 percent as of April 2022, implying that 34 percent of the population did not have access to financial services such as payments, savings, credit, and insurance. The informal sector is characterized by small or ill-defined workplaces, hazardous and unhealthy working conditions, lack of regulation, low skill, and productivity levels, low or inconsistent incomes, lengthy workdays, and restricted access to markets, financing, education, training, and technology.

Given the labor intensity, the naira redesign policy curtailed real demand and plunged producer sales because there are no existing financial and payment solutions to deal with informal transactions in the informal sector, such as using public transportation, shopping at markets, and other similar activities. This had an impact on  people and business operations as financial service systems malfunctioned due to increased pressure.

The CBN's plan to digitally onboard the public at the closest commercial bank branches is not practical for the unbanked and underserved. According to the World Bank, in 2021, more than 50 percent of Nigerians lack basic digital skills (A high level of gullibility among the underserved  may expose them to hackers and those with low digital literacy levels could go bankrupt due to glitches, outages, and unintentional mistakes). In 2022, there were 81 million mobile internet users in Nigeria (over 50% of Nigerians struggle even more because smartphones are the most popular way to conduct digital transactions). More so, the cashless policy is powered by digital technology which is powered by electricity, yet 44.6 percent of Nigerians lack access to electricity.

Conclusion

The naira redesign policy of the CBN is a brilliant idea. It demonstrates the government’s commitment to harnessing the gains of the digital economy. Regardless, the timing, logistics, and overall policy implementation disrupted economic activities due to a lack of digital preparedness for a cashless Nigeria. The policy revealed the deficit in the Nigerian financial and banking sector as significant digital infrastructure and innovations are required for a smooth transition to a cashless Nigeria.

The outcomes and lessons of the CBN's naira redesign policy are digital infrastructure constraints. The digital inefficiencies experienced and its impact on the public and business reliance on digital means since the implementation of the CBN naira redesign policy require all stakeholders from policymakers, the private sector, financial & banking institutions, telecommunication companies, and others, to address the infrastructural gaps  required for the country’s  transition to a digital economy.

Finally, extensive initiatives on digital literacy are pertinent to financially include the public in the digital economy. It is also important to emphasize the importance of data governance, data privacy, and cybersecurity tips to safeguard the public from digital crime and other digital rights concerns.