Continues from Thursday last week
EVEN in the face of many other negative stories all over the world, educated Nigerians are doing well and making the nation proud.
The Imafidon twins – Paula and Peter – broke the world record in mathematics by passing the Cambridge exams at age eight, being the youngest ever to do so. Dr. Victor Olalusi who scored 5.0 GPA in the Faculty of Clinical Sciences at the Russian National Medical University in 2013 is arguably the first in the world to do so. There are numbers of Americans of Nigerian descent such as Emeka Echeruo founder of hopstop.com purchased by apple at a price of US$1 billion, who are doing the nation proud in the ICT world. Young Nigerians at home and abroad are proving their exceptional brilliance; 24-year-old Oluwatobi Olasukanmi won the Williams Charleny prize for the best first class law at the University of Cambridge. Nigerian youths are not just strong and energetic, they are bright and brilliant and they compete well anywhere in the world.
The crisis of Nigeria’s underdevelopment as we have highlighted above, can only be confronted and resolved with a bold agenda and plan aimed at changing the present economic structure of dependence, it must be revolutionary, massive and contain the following elements:
i). It must aim within 10 to 15 years to expand the GDP by seven- fold in order to be able to provide the needed resources to end poverty and underdevelopment on a sustainable basis.
ii). The New Nigeria Economic Development Plan must aim to encourage domestic capital formation as a source of financing development rather than dependent on revenue from primary products such as oil and solid minerals. Given present structure of international trade, the more developing countries export primary products, the less value they get. The revenue from exports proceed is usually so little that sometimes, they compete with revenue of just one corporation from advanced countries of Europe and America. Sample for all the fuss about the high oil receipts in 2013 in Nigeria, about US$50 billion, it compares only with the revenue of Disney World, which was US$47billion. Even if no cent was stolen from the oil receipts, it will still be inadequate to finance any meaningful development that a country of 180 million population requires.
iii). The new Nigeria Economic Development Plan must prioritize investment both from public and private investment in foundation industries that will imbue the economy with the technical capacity for industrialisation and manufacturing. These include immediate priority investment through joint venture financing in iron and steel, machine tools, chemicals, aluminum, glass, plastics and petrochemicals. These industries will help accelerate the process of ‘Domestic Capital Formation’ as they are industries directly connected with the production of capital goods.
iv). The new Nigeria Economic Plan must sustain Nigeria as an open economy that encourages private entrepreneurship for both foreign and local investments side by side with State investments in projects linked to the production of capital goods and infrastructure. In order to sustain these essential features of the Nigerian economy as an open society, the current relapse to the regime of impunity must be rolled back to the more positive administrative practice that respects the sanctity of contacts, a practice which encouraged private sector investment in the economy at the dawn of democracy in 1999 and the succeeding 15 years after. This is important because, whereas business can handle corruption, business cannot cohabit with impunity. Impunity and political blackmail of business hurts economy more than corruption.
iv). The new Nigeria Economic Plan must promote innovation, secured property and copyright in order to make burgeoning ICT sector witness rapid expansion. Protection of copyright will also promote increase in scientific research and its commercialisation; it will spur innovation in science and arts.
v). Agriculture must be linked to manufacturing and industry. Currently, over 70 per cent of employed hands in Nigeria are engaged in one form of agriculture or the other compared to about two per cent of Americans. But the total productivity of these 70 per cent engaged hands in Nigeria’s agricultural sector is less than that of two per cent of Americans. It must, therefore, be a central objective of the new Nigeria agricultural policy not only to increase productivity through state support such as provision of extension services to small holders, finance at low interest rate on individual and cooperative basis; but also to link agricultural sector directly to industry and manufacturing in specifically designated zones and economic clusters, where agriculture is integrated with industry. Increased agricultural productivity will have meaning within the economy and that agriculture will cease to be a business just to produce for the stomach but to produce vital raw materials for industries and the manufacturing sector; the most effective way to create employment.
vii) The new Nigeria Economic Plan must seek to transform the Nigerian economy to a manufacturing economy from agrarian economy and change it from an economy that is based on production of primary products. Currently, according to FBS record, manufacturing accounts for 9.43 per cent of Nigeria’s GDP while it provides as low as 0.3 per cent of employment.
Transferring the economy to manufacturing will entail a number of policy incentives, such as creating a fiscal environment and collaborative monetary policy that will allow promoters of manufacturing concerns to access finance at single digit rate, ensuring available power to reduce manufacturers’ energy costs. Ultimately, Nigeria needs to grow the manufacturing sector in such a way that it will account for 30-40 per cent of her GDP and be a major employer of labour. China is already an example of how an agrarian economy can be transformed into a manufacturing economy. As at 2015, manufacturing accounted for 40 per cent of GDP of China.
Full employment as a policy of achieving growth and development: As earlier observed, unemployment is at an all time high in Nigeria, at national level, stood at 18.6 per cent, this is a recipe for an unending chaos. Full employment through value creating jobs is not just a social policy to help the needy but an economic policy to continuously sustain economic growth for a strong population with disposable income, is a key driver to attract investment into new ventures, industries and infrastructure.
Economists such as Lord Maynard Keynes, who was the Chancellor of the Exchequer in England understood clearly the role of creating employment in bailing out a depressed economy in order to stimulate growth. It must be a policy of the new Nigerian economy to stimulate employment in agro-allied industry, ICT, manufacturing, infrastructure, solid minerals extraction, not just for exports but linked to the needs of local industries.
Restructuring public finance, and the financial sector for a growth-led strategy: To direct available finance in the country for key task of industrialisation; the country must prioritise available finance for modernising the country’s infrastructure. The trend in which 80 per cent of revenue in the nation’s budget has been disproportionately consistently applied to recurrent expenditure; whilst capital expenditure takes the back seat at 20 per cent, must be discounted.
To begin with, it must be the goal of public finance to allocate 50 per cent of revenue to capital expenditure.
Secondly, there must be a complete change in the budgeting system from the current envelope system where annual budgets are merely a repeat of previous year sectorial allocation with variations, accounting for inflation. Budgeting must become needs-based, driven by national economic priority, based on a new plan to build modern infrastructure, make the needed social investment for the country and industrialise Nigeria.
Thirdly, another element of financial reform that Nigeria needs to undertake is to ensure banking and financial sectors make capital available to the real sector of the economy.
Whereas, monetary policy formulation is within the competence of the central bank which has autonomy over these matters, the necessary coordination between the fiscal and monetary authorities must be generated to allow the new reform, which must also include bringing down the present unsustainable lending rate to a single digit. At 17.5 per cent – 25 per cent lending rate in the Nigeria financial market, no meaningful industrialisation can take place as industrialists and manufacturers from other countries take money for business for as low as four per cent. In Malaysia, prevailing lending rate is 4.9 per cent; China is 4.35 per cent; India is 9.45 per cent; South Africa is 10 per cent. Nigeria must move within the single digit band.
Removing bottlenecks to promote investments in the economy: As previously observed, the high interest rate of return that investment posts in Nigeria plus the size of the market should naturally recommend the country as a perfect investment destination.
But the ability to attract massive private sector investments both from Nigerian and foreign investors has been limited by unnecessary hurdles investors face in trying to obtain permits, licences, approvals etc. Paper works in Nigeria take more time than even the time developer spend in building infrastructure that the nation desperately needs. While it was the good intention of the drafters of the Constitution and various legislations to provide autonomy to many regulatory agencies to protect them from unnecessary interventions, the autonomy granted have in most cases been turned to protection for administrative incompetence, which has continuously impeded the ability of the country to net needed investments.
While some progress has been made through the initiative of the office of the Vice President of Nigeria between 2016 and 2017, the progress made in the ease of doing business needs to be more rapid.
Ease of doing business
At the moment, Nigeria is ranked 145th out of 190 countries in the World Bank ease of doing business report in 2018. The time has come to dismantle the bottlenecks through a coordinated reform prowess that will be collaborative between both the executive and the legislature.
Prioritising investment in electricity generation, distribution and transmission: Building an industrialised and modern economy will be impossible without simultaneously directing national energy to rapidly increasing electricity generation, distribution and transmission. The current national electricity generation capacity of about 6,000megawatts is too little a capacity for any meaningful development compared to South Africa’s generation capacity of more than 40,000megawatts capacity. Nigeria needs to aim for over 160,000MW capacity within 10 years to be at par with South Africa per capita generation. The country also needs to eliminate current inefficiency in electricity distribution and establish a fair and consumer-friendly electricity tariff that will as well be cost recoverable to attract an estimated US$200billion investments from both private and public sectors for the next 10 years.
Conclusion: The task before patriotic Nigerians who have assigned to themselves the role to see a new, modern, economically developed Nigeria with a prosperous population living in peace and security is daunting but achievable! This great nation, Nigeria, has seen many national challenges in the past resolved by the determination of her people. Our forbears overcame colonial rule by the sheer power of their determination, organisation and faith in the future. Our generation paid the price to rescue the established Nigerian democracy after independence from the jaws of military autocracy. The task at hand is to ensure a prosperous democratic Nigeria for all, where the country’s resources and talents will be applied for all, regardless of ethnicity and religion.
Making social investments the soul of our development agenda
Nigeria as a country has been pulling apart because of rising incidence of poverty, squalor and unemployment. Inequality and the attendant misery have been rising, occasioning massive social instability and insecurity. An agenda for development cannot just concern itself with expanding GDP and raising infrastructure expenditures alone. But must focus on pin-point targeted expenditure on health, education, the youth population and investment in social services.
The reason why Nigeria is experiencing massive social upheavals is not just because it has low income per capital but due also to the fact that available income is not being applied averagely for the welfare of all. Various African countries with half Nigeria’s income per capital post better development indicators. As we have observed elsewhere, “The social problems are not going to abate except Nigeria invests immediately in the welfare of the people. According to a recent study by the African Development Information Centre, by 2030, Nigeria’s population will grow to about 210 million; 70 million of this forecast population will be living in North-Eastern Nigeria where there is currently an extremist insurgency; 35 million of which will be under the age of fifteen and would not have received any form of formal education. This is alarming!
We must invest now to bridge the social divide by making primary and secondary education completely free of all cost with feeding and welfare support at primary school levels. This must be a federally financed program worked out with local authorities for effective implementation. Free education must be entirely free indeed without hidden cost such as examination fees and cost of uniforms. The quality of educational and health institutions must be upgraded through the recruitment of qualified professionals, training and retraining of existing hands making available needed equipment and infrastructure and improving productivity and output through a scientific audit system that ties reward and emoluments to performance.
Nigeria must quickly introduce a comprehensive program of accessible, cost-free and qualitative health service coverage for all Nigerians. Nigeria can afford these programs right now as we are already spending billions of dollars managing the social upheavals that are caused by decades of ignoring the welfare of the people especially the young and the vulnerable”.
Conclusion: The task before patriotic Nigerians who have assigned to themselves the role to see a new, modern, economical developed Nigeria with a prosperous population living in peace and security is daunting but achievable! This great nation Nigeria has seen many national challenges in the past resolved by the determination of her people. Our forbears overcame colonial rule by the sheer power of their determination, organisation and faith in the future. Our generation paid the price to rescue the established Nigerian democracy after independence from the jaws of military autocracy. The task at hand is to ensure a prosperous democratic Nigeria for all, where the country resources and talents will be applied for all, regardless of ethnicity and religion.