By Adisa Adeleye
There is a salient fact on which many have agreed without any dissent. It is the apparent poverty of Nigerians in spite of abundant human and naturally endowed mineral resources.
As the country is blessed with abundant oil (black gold) and gas, so its citizens are valuable professionals abroad.
Since Independence in 1960, every government – whether civilian or military – has promised prosperity through eradication of poverty. So far, all had failed to provide macro-economic stability with rising employment and falling inflation. It has always been promises upon promises, followed by one excuse or the other for failure to perform.
According to a religious commentator, “when people say with a sigh, promises, promises, it is often when they’ve been disappointed by someone who failed to keep a commitment, the more it happens, the greater the sadness and the deeper the sigh.” It is rather unfortunate that the failures of the past are presently being laid at the door-steps of the current Nigerian Leader, President Goodluck Jonathan.
Unfortunately, his noble efforts through his Transformation Agenda has little impact on the general welfare of the people. This might be rightly or wrongly attributed to poor communication, ineffectiveness of proffered solutions or both.
The greatest aspect of ‘disconnect’ between the celebrated rulers and the unbelievers was touched seriously in the May Day Speech. The President was reported to have said, ‘I agree totally that until we create jobs, until Nigerians can find food to eat, until Nigerians who are sick can walk to the hospital and get treatment, the economic indices are meaningless to them’. The President’s speech remains a clear, but serious indictment on the country’s economic and health policies.
Recently, the Minister of Finance and Coordinating Minister for the Economy, Dr. Okonjo-Iweala presented a rosy picture of the national economy, embellished with elegant figures. The economy is healthy with a growth rate of 6.8 per cent with inflation rate down to 8.5 per cent, current foreign exchange reserves of about $50 billion; stable exchange rate; strong banking sector and enviable human and natural resources. Nigeria, to our economic goddess, is one of the most attractive investment destinations in the world.
However, the absolute truth is what Dr. David MacRae of the European Union observed on Nigeria. He said, ‘what this country needs are jobs, jobs for the people, especially young people. If young people had jobs they won’t be unnecessarily agitated and getting involved in misdeeds. But without work, without just income, and no social safety net in Nigeria, the people will continue to face poverty. Half of the population in the country are below the poverty line’.
As suggested by notable economists and recommended in this column several times, when there is mass unemployment and idle capacity, an excess of government expenditure over receipts is by far the most reliable way of expanding economic activities. Under such situation, a budget deficit is needed. This is necessary to induce high output and capacity expansion which are necessary for further investments.
By antecedents, Ministers of Finance and Governors of the Central Bank are averse to the policy of budget deficit because of their mortal fear of inflation. It must be recognized that any policy of budget deficit which places emphasis on additional expenditure on conspicuous and wasteful consumption is bad.
The correct method is to inject additional funds into the economy to stimulate effective demand and increase incentive to invest more in men, equipment and plant capacity.
On economic growth policy, Keynes advised that in times of depression and unemployment, it is desirable to encourage huge spending. The right action is to “let as much money as possible fructify in the pockets of the citizens, rather than to fritter it away on government activities not absolutely necessary”. It is a terrible situation when capable hands are kept idle when they should be producing economic goods.
The Federal Government has indicated under President Jonathan’s Transformation Agenda to ensure rapid agricultural expansion by helping the farmers to produce more and profitably, too. A true agricultural revolution would embrace the states and local governments working hand-in-hand.
Agriculture in Nigeria is largely peasant in nature depending on old hoes and cutlasses. Farmers should be encouraged through agricultural extension programs to cultivate the use of modern implements, either at a cheap cost or free. Also, for continuous expansion, there should be ready markets, suitable storage facilities and immediate payments for cash crops supplied; cash for crop is the magical solution that had helped in the past.
A new emphasis on construction industry is a worthwhile agreeable policy that will tend to stimulate demand for labor, cement, iron, blocks, sand and other necessary items used in the building industry.
However, government initiative would be needed in positive mortgage interest arrangements. The Housing Booms of 1970s and 1980s, resulting in many private and public estates, were a product of low lending interest rates (between 3 and 9 per cent) and cheap building materials.
A question on the lips of many Nigerians is, why the deepening poverty in the country in the face of plenty? Perhaps, an answer could be found partially in the economic policies and the attitude of those directing the policies.
First, the attitudes of past Central Bank Governors and the present one are too conservative for modern economic growth with rising employment. Their perception that any increase in government expenditure would cause inflation has been steadfast, and hence, the adoption of tightened monetary policy which is regressive and, anti-employment generation.
Their keen eyes have always been focused on increase in foreign direct investment as a result of high interest rates in the country. This type of investment does not seem reliable.
There is no doubt about the competence of the Finance Minister, Dr.(Mrs.) Okonjo-Iweala and her talented team. The Coordinating Minister for the Economy during her ‘NEEDS’ (national economic empowerment and development strategy) days under former President Obasanjo believed in planned fiscal reforms which would affect the size and expenditure of government, not immediately, but over a long period(presumably, about ten years).
Reducting govt expenditure
The emphasis is on reduction in government expenditure and increase in savings for the rainy day. But as noted by the spokesman of European Union, Nigeria, ‘as the largest black population on earth, with the economy which is growing fast, relatively speaking, but regrettably, poverty is not diminishing in the country, and jobs are not being created’.
What should now be the way forward for the government of President Jonathan in view of the fact that the present economic policy is ineffective in promoting mass employment?