Olusegun Aganga, Trade and Investment Minister
By Tony Anonyai
It has become very necessary, more than ever before, that we begin to focus on wealth creation in the new Nigeria of our dream. The underlying urgency to declare this subject-matter as an ‘article of necessity’ can therefore not be over-emphasised. Although, capable of being viewed from a wider perspective, I will dwell on three fundamental questions: why create wealth, how do we create wealth, and who should lead wealth creation? (Why, how and who creates wealth?). I expect that as we reflect on these questions and harmonise the ingredients that follow from their answers as a tripod for the emergence of a new Nigeria, our dream will be racing to reality.
Neither wealth creation nor wealth creation for nations is a buzzword. Adams Smith in his paper, “The Wealth of Nations”, gave a foundational perspective. He states that the wealth of a nation is expressed in “the combination of materials, labour, land, and technology”. This takes place in Nigeria in the most inefficient form. A 2006 World Bank publication - Where is the Wealth of Nations - states that the total wealth of a nation include: produce, natural, human and institutional capital. The Wealth Creation in Rural Communities (WCRC) initiative identified seven forms of wealth: Financial, natural, social, individual, built, intellectual and political. In Nigeria, the challenge is neither the correct definition of wealth creation nor the determination of what constitutes wealth for a nation. Clearly, our challenge is how effectively the components interact and whether their use is efficient. The International Monetary Fund (IMF) emphasises the wealth of a nation with regards to the efficient use of resources towards achieving economic growth and development that reflects in a better standard of living for citizens.
The ‘new Nigeria’ of our dream will evolve to its full potential when collective resources are judiciously put to work to achieve near-maximum value, or, at the least, well above-average output value from inputs. To continue in our old ways spell disaster for us now, and for future generations. Take for example, our current political structure, it has been commonly advocated that our present democratic governance structure is hugely expensive and unsustainable. The WCRC definition of political wealth as a critical asset class in a nation’s wealth creation effort is worthy of deeper analysis in Nigeria.
There is consensus opinion on why it is imperative that we create wealth. Some of these imperatives include infrastructural developmental needs, quality education, health care, national competitiveness, social security, and support for sustainable growth and development. Also, viewed from the perspective of generational equity, given the abundance of our national endowments, coming generations will not forgive us if we continue to deplete our natural resources without replenishing them. Countries around the world are building infrastructure with an eye on future generation. Yet, in Nigeria, most of our capital expenditure projects are executed with short term objectives.
Sadly, investment funds are continually exported to other countries. Take the health and education sectors for example. It is well known that families now generally exhaust their savings on overseas health care and education not necessarily for want of the best but to meet these basic needs. The implication is that what should have been spent locally with the attendant multiplier effect on our nation’s wealth and creating infrastructure is being exported to help countries that we are in competition with. It becomes more offensive when Nigerians go to Ghanaian universities and Indian hospitals. We have done badly on all indicators!
A 2012 report by Knight Frank and Citi Private Bank, titled ‘The Rise of the New Rich’ mentioned Nigeria as a ‘potential analysis’ country. The report noted that our GDP at a projected growth figure of 6.5% higher the average figure of 5.4% for Sub-Saharan African is not reflective in our quality of life. It further said that if the right things are done, Nigeria will emerge a wealthy nation. . Recently, CNN’s Fareed Zakaria in his book, “The Post-American World”, discusses ‘The Rise of the Rest’ and holds a positive outlook for Nigeria. Zakaria, chronicled world history citing the economic transformation of the BRICS countries, and tenaciously repeated his optimistic view, like many of us, that if the right things are done Nigeria will emerge a wealthy nation. A number of strategies can be articulated if clear objectives are defined but we know that objective definition and strategies make no sense if the strength of will and discipline of implementation is lacking.
Some questions highlight our nation’s wealth creation debacle. What do we produce? How modern are our production engineering facilities? How globally competitive, in terms of costs and quality, are our products? Is there any industrial revolution in sight that will improve the current local production process? How optimally have we created wealth from our rich natural resources? Has oil not really become a curse than a blessing? Is our human resource dutifully employed? How healthy are we? What is the life expectancy of the average Nigerian to guarantee sustainability of experienced workforce? Are we innovative and entrepreneurial? Are we building institutions with capacity that transcends beyond the efficiency or otherwise of whoever is in power? What is our savings culture? What policies are being pursued to improve capital formation? What is the cost and tenor of funds available for entrepreneurs? Does the legal system encourage investments? How do we ensure social security so that the threat of unrest does not continue to be a disincentive to would-be investors? Are the allocations on research and development judiciously spent? Are we funding education sufficiently? Does our current political structure support wealth creation?
It is likely that answers to these questions will explain why we haven’t done very well. And the consequences are all too obvious for anyone to see. We must stop our lamentation and begin to address these issues.
•Anonyai, FCA, is Director, Planet Capital Limited