LAGOS – Finance minister, Ngozi Okonjo-Iweala has offered a sobering view of the country’s economy on Monday, saying growth has mostly benefited the rich and failed to generate enough jobs.
She told a forum of business leaders that the country’s economy likely grew at 6.7 percent in 2013, in line with the seven percent average over the last decade.
“It is clear that the top five to 10 percent is capturing most of whatever growth there is and people at the bottom are being left behind,” said the former managing director at the World Bank.
The minister told delegates that an estimated 1.6 million jobs were generated over the last 12 months but that this was an inadequate number in the country of roughly 170 million people.
“I think we need to grow at least nine to 10 percent (per year) to drive the job growth the way we want,” she said.
Her audience at a Lagos hotel ballroom included executives from a range of sectors, among them Africa’s richest man, Aliko Dangote, a tycoon with interests in cement, food and more recently energy.
“People in this room: if we don’t put our minds to this problem, that we need to create jobs and not just create wealth, you’ll find that the whole economy may be in danger,” she said.
Nigeria, Africa’s top oil producer, is widely expected to surpass South Africa in the coming years as Africa’s largest economy.
The sustained rise in GDP has coincided with sweeping reforms put in place following the end of military rule in 1999.
But the finance minister and others have warned against taking too much comfort in a GDP figure which fails to tell the real story of Nigeria’s economy.
“There is no-one glorifying GDP growth,” she said.
Redistribution and investment
Official statistics released last year said the number of Nigerians living in extreme poverty had actually gone up since 2004, a discouraging trend in a resource-rich nation currently producing roughly two million barrels of oil per day.
Okonjo-Iweala told the business leaders that President Goodluck Jonathan had a road map for “redistributing” some of the nation’s wealth.
These include government grants to kick-start small businesses and an aggressive commitment to agriculture, widely recognised as the key sector in terms of employment and alleviating poverty.
But government needs more revenue to meet its growing obligations, Okonjo-Iweala said, and the focus must be in “non-oil sectors”.
Improved revenue collection is a top priority for Jonathan’s government, the minister said, noting that “75 percent of registered businesses do not pay taxes”.
With its huge consumer base, many foreign firms have identified Nigeria as an attractive market for potential investment.
The finance minister said French car maker Peugeot approached her in Paris last week about the prospect of manufacturing low-cost cars in Nigeria, specifically catered to the domestic market.
But, she noted, producing high-quality goods locally remains a challenge, due to daily power cuts and bureaucratic hurdles.
The government this year privatised the management of its power sector but it is too early to tell whether the move will improve service and free businesses from expensive generator costs.
Ultimately for the internationally-respected economist, Nigeria needs to become an easier place to do business.
“We have to improve our bureaucracy at all levels,” Okonjo-Iweala said. (AFP)