October 2, 2019

Nigeria yet to recover from SAP— Ojowu

Nigeria yet to recover from SAP— Ojowu

Prof. Ode Ojowu…government should step in to improve electricity supply

By Emma Ujah, Abuja Bureau Chief

The Nigerian economy has continued to wobble, 59 years after independence. Prof. Ode Ojowu in this interview says that Nigeria has not recovered from the Structural Adjustment Programme, SAP, of the 1980s.

Prof. Ode Ojowu…government should step in to improve electricity supply

The Professor of Economics, who was once in charge of the National Planning Commission, added that the haste to drop the five-year Development Plans was the nation’s undoing. He also calls for an urgent action on Ajaokuta Steel Complex. Excerpts:

Ajaokuta steel project will become reality – Kogi NPC candidate(Opens in a new browser tab)

FIFTY NINE years after independence, Nigeria is still struggling with its economy.  Nations such as India, Indonesia, Singapore that were at the same level with our country have left us behind.  What went wrong with our country’s economic development?

Let me first congratulate us on the 59th year of our independence, twenty of which are under a democratic dispensation. We now have a relatively stable political environment in which we can correct the wrongs of the past, provided we can deftly handle the current security and economic crises. To answer your question directly, we have experimented with far too many development strategies. From independence and through the civil war, we had four five-year fixed development plans: first NDP (1962-1968); second (1970-1974), third (1975-1980) and the fourth (1981-1985).

Of these four, only the first was fully implemented, with a five percent growth in GDP. We were misled to throwing away the baby with the bath water when, in the face of the fiscal crisis brought about by the slump in the crude oil prices, we dropped the five-year development planning and ‘opted’ for a policy plan, called the Structural Adjustment Programme, SAP. We are yet to recover from the human capital damage that SAP wrought on the Nigerian economy and society. Home remittances are inadequate compensation for the loss of services occasioned by the involuntary migration of our skilled manpower. Since SAP, we have stumbled from one development strategy to another, including two Vision Plans 2010 and 20:2020.

The National Economic Empowerment and Development Strategy, NEEDS, with its state counterpart, SEEDS, meant to start afresh with an inclusive participatory and development agenda under the new democratic dispensation of the Fourth Republic, was soon set aside for the seven-point agenda; and the seven point agenda was set aside for the Transformation Agenda. It is not surprising that these muddled changes in the development strategies, against the background of a rapidly rising population and an unpardonable abuse of resources, produced a circular decline in economic growth that showed up in mass poverty and as a recession in 2016. The adoption of the ERGP, with an understandably narrow focus, to rescue the economy from recession is the inevitable outcome of our failure to stay the course of the fixed five-year development plan.

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Beginning from 1951, India has implemented a total of 12 Five -Year Plans (1951-2014). The Indian Planning Commission develops, executes and monitors the Five-Year Plans. Having attained the main objectives of the decades-old Five-year Plans, India is now moving to three-year action plans from 2017, with a think-tank known as Niti Aayog, replacing the Planning  Commission; and with the central objective of attaining the SDGs by taking on board the state governments in what is referred to as “cooperative federalism”.

China is in its 13th Five-Year development 2016-2020. China protected its five-year development plans from its internal political and cultural turbulence. Anyone who reads the 13th Five-Year Plan for Economic and Social Development of the People’s Republic of China, can see the confidence exhibited and the directedness in what it sets out to achieve. The results of the consistent implementation of China’s five-year development plans for over sixty years are already in the public domain and serving as a role model for developing countries, even when we may not agree with the political system.

I rarely like to compare Singapore with Nigeria, with Lagos maybe. Singapore’s Master Plan focuses on the long term (10-15 years) use of land, subject to review every five years. What is common success factor for Nigeria’s comparator countries are consistency, leadership commitment, human capacity development and effective frowning on the abuse and misuse of the resources of their countries. Happily, we still have our resources all around us. We only need to imbibe the success factors.

At independence the three regions competed by focusing on sectors of comparative advantage and the results were glaring. What lessons can we learn from that era?

This is basically a guided question. The comparative advantage both in theory and practice still subsists. What we should learn from the era is to avoid their political mistakes. The sustenance of their economic growth and development, based on their comparative advantages, depended critically on political stability. The regional leaders toyed with political stability and they lost virtually everything.

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The long-term impact of political rivalry between the regions and the eventual military intervention, is significant reason why Nigeria is behind its comparator countries in all indices, both human and economic. We must not again toy with our current political dispensation. Whatever changes are needed, should be dialogued and common grounds reached for a united Federal Republic of Nigeria.

Nigeria has had many development plans. From the National Rolling Plans, Vision 2010, Vision 20-2020;  NEEDS and the current ERGP.  Why were they not successful?  Is there a disconnect between regimes in terms of passing the visions to successive governments and making Nigerians to own those visions and plans?

We need consistency in whatever we are doing through monitoring and evaluation and various mechanisms available for peer reviews. This will assist us to continue to improve on the chosen trajectory. When there is cause for change of strategy, it must be reasoned out and effectively planned and resourced; just like the Indians are now doing by transiting from the Planning Commission to a think tank, Niti Aayog, with the central strategy to bring in the states into full policy making for the attainment of the SDGs.

Many economists agree that MSMES are the engine of growth.  How can that sector become effectively operated in our country?

The MSMEs businesses are like ‘pass my neighbour’ type of electric generating sets; too many in numbers and too small in scale to be able to experience meaningful growth and take minimum advantage of efficient operations. Official estimates are that the number of persons in micro enterprises is roughly 37 million, small enterprises 68,000 and medium, 5,000. This means that micro enterprises account for 99.8 percent while small and medium account for 0.2 percent. The MSMEs are also said to account for 84 percent of employment in the country. The engine room needs to be recalibrated.

An in-depth study of the MSMEs needs to be undertaken to determine how best we can migrate most of the Micro operators to Small and Medium enterprises, where business activities and finances can be separated from the daily family living. The use of digital technologies, especially in financial services can assist with the upward movement of the Micro enterprises. In the immediate, improved fire services and sensitization on the dangers of fires, especially market fires are critical.

The MSMEs are the most vulnerable to the loss of incomes, property and whole livelihoods arising from the seasonal and predictable market fires. Attempts to minimize the impacts of these fires on the vulnerable groups, appears to me to be a superior alternative or at least a good supplement to the policy of point and pick an individual for empowerment.

It is recognised that Nigerians are hardworking but poor electricity supply has held them down. Even the privatisation of the generation and distribution segments has not helped much.  What else can be done to change the narrative?

Electricity is critical to living and growing. There is no known substitute for it. While alternatives to fossil fuel are promising with new technological advances, we must make proper use of what we have now. There appears to be much misunderstanding between the Government, Gencos and Discos. The regulatory body should wade in to minimize the crisis so as to improve on electricity supply, through efficient generation, transmission and distribution. We need electricity as critical infrastructure to unlock the potentials of the Nigerian entrepreneurs, attract foreign investors and to initiate any sustainable growth of the economy, as well as improve on our human development indicators.

Ajaokuta Steel: Activist appeals to FG to revive Rolling Mill(Opens in a new browser tab)

For over 30 years, Nigeria’s multi-billion dollar investments at Ajaokuta Steel Complex has been wasting away.  Steel is critical to industrialisation.  What do you think should be done to give the economy the full advantage of that steel complex?

I think that what must have been happening to Ajaokuta Steel complex, is possibly akin to the recently exposed P&ID contract scam. The government has to decide on the appropriate public-private-partnership, concession or outright privatization.