President Goodluck Jonathan

Kunle Aderinokun

A child born 52 years ago, if not a grandfather today, will soon be one and be savouring the fruits of his labour after years of hard work. But such is not the case for Nigeria, which attained nationhood in 1960 and till date is yet to find her feet.
Nigeria’s economy is akin to a year-old child, who is learning how to walk, and still wobbling and fumbling.

Indeed, the performance of the economy has been that of ups and downs. Having come this far, it is not where it is expected to be. Since independence, successive governments have adopted different kinds of fiscal strategies but none has been able to take the nation to the proverbial Promised Land. As it stands, the economy is still going through teething stage.

For all intents and purposes, from the military regime to the democratic rule, the nation’s economic managers have only been able to run systems that could provide growth rates that were non-inclusive, the so-called growths have not created jobs and transformed the economy for the better. 
Government after governments have pilloried Gross Domestic Product (GDP) figures that are not realistic. The GDP growth rate, which provides an aggregated measure of changes in value of the goods and services produced by an economy, averaged 4 per cent between 1960 and 2010.

From 2005 to 2012, the growth rate averaged 6.8 per cent reaching an all-time high of 8.6 per cent in December of 2010 and a record low of 4.5 per cent in March of 2009. The growth rate closed the fiscal 2011 at 7.4 per cent and stood at 6.28 per cent in the second quarter of this year.

Cosmetic Growth
But all these growth rates have just been more or less the book values because the indices that have produced the growth were not derived from manufacturing sector activities and such growth could not be considered to be real.

The manufacturing sector, expected to have contributed to the growth, has remained near-comatose with capacity utilisation at low ebb. In fact the contribution of the sector to GDP is somewhere below 5 per cent.

For the avoidance of doubt, the capacity utilisation of the manufacturing sector in the 1970s and early 1980s was about 70 per cent and had crashed to about 38 per cent as at July 2011; having dropped from 42 per cent some months earlier, according to the Manufacturers Association of Nigeria (MAN).

Accusing fingers have been pointed at the Central Bank of Nigeria (CBN) for its tight monetary stance, which operators said had discouraged banks from providing manufacturing concerns and industries, the requisite financing.
The federal Ministry of Finance was not spared also, as it was blamed for not making favourable policies for local manufacturers.

Resource Curse
Well, what else can one expect from a country that derived 95 per cent of its revenue from oil? The life of the economy is dependent on oil. Few years after the discovery of oil in the 1950s, attention was shifted from agriculture, which used to be the mainstay of the economy.

But the oil has rather been a curse than a blessing, as the dependence on it has made the nation to be utterly unproductive. More importantly, it has also bred corruption.
Besides, the sharing of oil revenue has made the states, some of which were known to generate revenues independent of the central government, to be lazy. There were even reports that some of the states could not meet their obligations including payment of salaries to the workers.

The proceeds of oil shared monthly among the Federal Government, the state and local governments, as approved by the Federation Accounts Allocation Committee (FAAC), usually include monies in the Excess Crude Account.
Keeping excess oil proceeds in the ECA had been a subject of controversy, to the extent that the states are in court against the Federal Government to get a ruling to allow the sharing of all the monies that comes into the government’s coffer.

They were also in court to stop the Federal Government from deducting from them the Federation Account to offset subsidy payments as well as for the funding of the Sovereign Wealth Fund (SWF).

Although the states had contributed to the $1 billion seed fund for the establishment of SWF, they are opposed to deduction from their account to continue to fund.

The SWF is set up for a variety of macroeconomic purposes. The fund is generally used to facilitate the saving and inter-generational transfer of proceeds from non-renewable resources such as oil and gas and also help to reduce the impact on the nation of the inevitable boom and bust cycles driven by changes in commodity export prices.
The Fund, which is scheduled for launch this month, had its board members constituted recently.

Growth Indices
However, activities the oil and gas, which is the  bedrock  of the economy has been hampered by non-passage of the Petroleum Industry Bill (PIB). The National Assembly is now planning to conduct a public hearing on the bill.

As lacklustre as the economy may be at independence and many years after, the tele-communications sector, one of the major drivers of the economy, has fared well; albeit with some snags.

The growth in the sector has been exponential especially with the advent of GSM in 2001; thanks to the liberalisation policy of the government, which has indeed paid off.

Key to Power
The success in the telecoms sector is therefore expected to be replicated in the power sector when the privatisation of the 18 successor companies of Power Holding Company of Nigeria (PHCN) is concluded.

Right now the financial bids for the generating companies have been opened and winners have emerged for acquisition as well as concessioning of the generation companies (Gencos).

Come October 10, this year, the financial bids opening for the distribution companies (Discos) will be conducted. It is expected that the conclusion of the exercise will open vista of opportunities to all and sundry and change the old order of things.
Essentially, the outcome of the privatisation of power assets is all-important as the success   is critical for all the sectors and will help in determining the direction the economy will go.