Breaking News

Planning for Growth and Structural Transformation

Kindly Share This Story:

By Obadiah Mailafia

THE Nigerian growth story has been a rather topsy-turvy one. During the early years of independence, growth was moderately positive, averaging over five percent annually. The lowest rates were during the crisis years 1966-70 when growth went as low as -17 percent. The country emerged after the civil war with impressive growth results, reaching a peak of almost 30 percent in 1970.  From the 1980s to the 1990s – the dark years of military tyranny – growth was a moderate annual average of 3.5 percent, undulating between negative and positive figures during that decade.

The years 2005 to 2014 were the most impressive in terms of consistent high growth, averaging seven percent. However, a World Bank report characterised it as “jobless growth”. It was hardly inclusive. Millions of our youth have been excluded from the mainstream of the national economy. It also did little to incorporate sustainability elements in the general upswing in output. The current APC-led administration claimed to have inherited a virtually empty treasury in May 2015, at a time when global oil prices had collapsed. But the recent recession was not inevitable. The administration wasted considerable time in getting itself off the ground. The delay generated uncertainties that were deleterious for growth and investments.

Nigeria- map

The economy was plunged into recession between 2015 and 2017. During 2016 overall economic output regressed by a factor of -1.8 percent, the worst since the height of our tragic civil war in 1968. External reserves dwindled to a dangerous $27 billion while the exchange rate nosedived to N493 to the US dollar on the BDC market. The public debt rose to an unprecedented high of five per cent of GDP even as inflation rose to a prohibitive high of 19 percent. Manufacturers were groaning under the weight of scarce foreign exchange, which compounded the problem of capacity under-utilisation. Across all tiers of government, public finances were in dire straits, as workers and pensioners were owed backlogs of payments going back months, if not years.

We are now officially out of recession. But it is merely a technical recovery. We have recently acquired the dubious prize of being the world capital of poverty, having overtaken India with 88 million poor. Unemployment has reached intolerable levels; with incidences of youth unemployment as high as 70 percent in the poorest regions of the North East and North West. Rural banditry has been on the increase, in addition to armed criminality and a looming nightmare of random, nihilistic, violence. There is despair everywhere; and with it an all-pervading atmosphere of gloom and emptiness. Many of our young people just want to emigrate, with thousands losing their lives through the Long Trek through the Sahara and almost certain death in rickety boats on the Mediterranean Sea.

It was due to external and internal pressure by stakeholders that led the government to develop an economic blueprint that would provide a strategic framework for frontally tackling the economic recession.  Failure of both government and parliament to expedite action on the annual budget has been a recurring problem over the years, with all the negative consequences on the economy. In 2017 the government launched the national Economic Recovery and Growth Plan, ERGP. The priorities of the new plan – power and infrastructures, food security, good governance, employment, human development and industrialisation – are unassailable. Where I have reservations relates to the nitty-gritty of implementation.

The big elephant in the room is the public service, characterised as it is by Byzantinism, venality and sloth. It is self-evident that no matter how visionary an economic plan, you would have to rely on civil servants to implement it. The ERGP can only succeed if the right vehicle is structured for its rigorous implementation. I am aware of the Focus Labs that are being implemented. I welcome such developments. In the first quarter of 2018, output growth was recorded as 1.95 percent. Unfortunately, forecasts for the year have been revised backwards from 2.1 percent to about 1.90 percent by the IMF and World Bank. Equally impressive has been recovery in agriculture and manufacturing. Other fundamentals such as inflation, interest rates and external reserves remain dissatisfactory while the national debt is spiralling out of control.

Infrastructure, agric, others relevant to boost economy — Econ Adviser

The question remains how to re-boot growth and structural transformation. During the economic recession of the 1980s the late distinguished economist Pius Nwabufo Okigbo delivered his famous lecture at the National Institute for Policy and Strategic Studies, with the strange title, “Sorcerers, Astrologers and Nigerian Economic Recovery”. I was among the audience during that steamy summer afternoon in Kuru. His delivery was a magisterial tour de force. Okigbo gave that dramatic title to his erudite lecture to drive home the point about how bereft we are in terms of serious critical thinking about the economy.

There is this popular delusion among our economists that imported paradigms are what we need to ensure long-term prosperity. While I believe that economics is a universal science, I am also of the persuasion that economic research and analysis must be grounded in the unique conditions that we face on our continent. The economists of Africa must do what those of Japan and those of France, Germany and China are doing – develop their own paradigms and intellectual-analytical traditions in conformity with their global worldview and world-historic ambitions.

At present, I daresay that we lack originality. Our feelings of intellectual inferiority make us to take refuge in imported paradigms and research agendas that have nothing to do with the real human condition on our continent. The other popular delusion that I want to mention is the belief that development planning is bad and that all we need are so-called “rolling plans” and mid-term expenditure frameworks. The history of planning in Nigeria goes back to colonial times. Before independence, the departing British brought in economists from the World Bank and the United States to assist in designing Nigeria’s first five-year economic development 1962-68. The distinguished American economist Wolfgang Stolper was one of the architects of our first national plan, about which he wrote with such nostalgia in his memoirs.

Nigeria has had altogether four national plans since independence, the other three being: the Second National Development Plan 1970-74; the Third National Development Plan 1975-1980; and the Fourth National Development Plan 1981-85. In addition, there has been the National Economic Empowerment and Development Strategy (NEEDS), which, stricto sensu is not an economic plan but a general overview of economic goals and principles.

It is generally agreed that the Second National Development Plan was among the most successful. It was successful because it was masterminded and implemented by great men such as Obafemi Awolowo and Professor Adebayo Adedeji, both of blessed memory, with help of technocrats such as Allison Ayida and Phillip Asiodu who were eminent economists in their own right. In 1985 the Ibrahim Babangida military administration were persuaded by the Bretton Woods institutions to jettison planning altogether. It is a national tragedy.

This is not to say we should by any means idealise planning. Economic development planning is definitely not a panacea to solve all economic ills. But I see it as a discipline and tool for resource and political mobilisation that enabled leaders and the nation’s economic managers to focus on their long-term policy choices. Economic planning also helps to minimise the rampant policy inconsistencies and instability that accompanies regime changes.


Kindly Share This Story:
All rights reserved. This material and any other digital content on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from VANGUARD NEWS.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.
Do NOT follow this link or you will be banned from the site!