The pathway to fixing the Nigerian economy is to invest in human capital and create a conducive environment for the private sector to grow and create jobs, writes Obinna Chima
With crude oil production capacity of about 2.5 million barrels per day, Nigeria ranks as Africa’s largest producer of oil and the sixth largest oil producing country in the world. The country is also the largest economy in Africa.
However, regardless of its abundant resources, the country continues to face a myriad of problems.
Nigeria has also found it difficult to convert its unique advantages into economic and social benefits for majority of her citizens.
In fact, the country has been described as a prime example of resource curse, a situation where wealth from naturalresources leads to poor economic growth and development and an increased likelihood for civil and ethnic tension.
Even though almost 90 per cent of Nigeriaâ€™s earnings are tied to oil, a recent report by the World Poverty Clock had revealed that Nigeria has overtaken India as the poverty capital of the world. That is, the country has the greatest number of persons who live in extreme poverty, which is to say those that live on less than the equivalent $1.90 (N600) per day.
According to the African Development Bank, 152million Nigerians, in an overall population of about 190 million, meet the criteria of absolute poverty.
In addition, youth unemployment in the country is close to 80 percent, which has manifested in the increased level of ethnic and religious unrest in the country.
More worrisome is the fact that shortage of power supply in the country continues to make efficient business operations in the country extremely difficult, thereby stiffling economic growth. Although power generation capacity from the grid has peaked at about 7,000 megawatts (MW), distribution capacity is still at about 5,000MW. The federal governmentcurrently estimates national energy demand at 22,230 MW.
Just like the power sector, the situation in other sectors such as education, health, sports are not different.
This plethora of challenges have been identified as factors that have over the years hindered the country from achieving inclusive growth and experts have stressed that Nigeria can only achieve prosperity when government fashion out appropriate policies to address them.
Knock for ERGP
As part of efforts to address the issues highlighted, the federal government had last year developed the Economic Recovery and Growth Plan (ERGP). It is a Medium-Term Plan for 2017 â€“ 2020 that was expected to help restore economic growth and put the economy on the path of sustainable growth. The ERGP builds on existing sectoral strategies and plans such as the National Industrial Revolution Plan, and the Nigeria Integrated Infrastructure Master Plan. It is also consistent with the United Nationâ€™s Sustainable Development Goals (SDGs) as, according to the government, it addresses SDGs three dimensions of economic, social and environmental sustainability issues.
In fact, the main priority of the economic recovery plan is to stabilise the macroeconomic environment with low inflation, stable exchange rates and sustainable fiscal and external balances. This it expects to achieve by aligning monetary, trade and fiscal policies in a coherent manner and effective coordination.
But reviewing the ERGP, the Chairman, Bill and Melinda Foundation, Bill Gates, recently criticised the governmentâ€™s economic blueprint, describing it as a document which identifies investment in the people but fails to reflect it in its implementation. Gates described Nigeria as one of the most dangerous places in the world for child birth.
He also identified Nigeria as the fourth worst country in maternal mortality rate in the world, saying the largest black population was only better than Sierra Leone, Central African Republic and Chad.
Gates described Nigeriaâ€™s fiscal system as one that was built on low equilibrium and hence, produces low levels of service, moreso as people pay low levels of tax, adding that his foundation has its biggest office in Africa in Nigeria with over $1.6 billion invested in the country so far.
Noting that Nigeria has a veritable economic potential, Gates said it was up to the country to maximise such potential by investing in its people whom he described as its greatest resource.
He also admonished the government to invest in healthcare, education and human capital, emphasing that investment in infrastructure on a long-term basis must go hand in hand with investment in people, promising to assist Nigeria in attaining higher equilibrium anchored on transparency through investment in the people.
â€œThe most important choice you can make is to maximise your greatest resource, the Nigerian people. Nigeria will thrive when every Nigerian is able to thrive.
â€œIf you invest in their health, education and opportunities-the â€˜human capitalâ€™ we are talking about today-then they will lay the foundation for sustained prosperity. If you donâ€™t, however, then it is very important to recognise that there will be a sharp limit on how much the country can grow.
â€œNigeria is one of the most dangerous places in the world to give birth with the fourth worst maternal mortality rate in the world ahead of only Sierra Leone, Central African Republic and Chad. One in three Nigerian children is chronically malnourished.
â€œI urge you to apply this thinking to all your investments in your people. The Nigerian Government Economic Recovery and Growth Plan identifies â€˜investing in our peopleâ€™ as one of three â€˜strategic objectives.â€™ But the â€˜execution prioritiesâ€™ donâ€™t fully reflect peopleâ€™s needs, prioritising physical capital over human capital.
â€œTo anchor the economy over the long term, investments in infrastructure and competitiveness must go hand in hand with investments in people. People without roads, ports, and factories canâ€™t flourish. And roads, ports and factories without skilled workers to build and manage them canâ€™t sustain an economy.
â€œRight now, Nigeriaâ€™s fiscal situation is at what you might call a low equilibrium. In return for low levels of service, people pay low levels of tax. We hope to help you reach a higher equilibrium rooted in effective and transparent investments in people. This equilibrium would trigger a virtuous cycle,â€ Gates said.
On his part, the President of Dangote Group, Aliko Dangote challenged the federal government to take the lead in investment in health, education, infrastructure and human capital development, pointing out that it is only when this is done that the country will be able to raise a crop of committed Nigerians.
â€œFor Nigeria to truly compete globally, we must prioritise investments in the health, education and opportunity of our people alongside other critical areas like infrastructure. Together, these are the inputs that will make Nigeria richer.
â€œYou my friends in government must lead. When you do, you will have committed Nigerians like myself joining in the effort. In Nigeria, we have largely achieved growth by extracting natural resources and are now building on that through our physical infrastructure. But we must also remember that it is our young people that will drive our future success.
â€œBy 2050, Nigeria is projected to have the worldâ€™s third largest population. For this next generation to thrive as adults and drive economic progress, we need to invest in their health and wellbeing, and in their ability to learn and apply new skills in an ever-changing global economy.
â€œThat, at its core, is what we mean by â€˜human capitalâ€™ â€“ healthy and productive and well educated young people â€“ who are then enabled to succeed, lift up themselves and their families and contribute to society through their own ingenuity,â€ he said.
But Vice President Yemi Osinbajo said the federal government was expanding the frontiers of its investment in health, education, adding that for government effort to yield desired results, it must be driven by healthy and educated people.
â€œAnd because this is the 21st century, we know that it is also important to ensure that our young people are being prepared for the economies of the future, not the past. This means that STEM education is critical, and that technology must lie at the heart of every one of our educational offeringsâ€¦,â€ he said.
Path to Progress
To a former Deputy Governor of the Central Bank of Nigeria (CBN), Professor Kingsley Moghalu, Nigeria needs a worldview that can help it realise its potential.
According to Moghalu, â€œAs in individuals, so it is for countries. Those that have well developed worldview, with global strategic intent in a competitive world, tend to perform better than those that donâ€™t.â€
He attributed Nigeriaâ€™s economic poor performance to lack of this essential worldview, especially lack of economic philosophy.
â€œNigeria has failed to achieve high-quality economic growth because the countryâ€™s economy is managed mostly on an ad-hoc, reactive basis. It is a â€œsurvivalâ€ economy in which most governments that held political power have had no real economic vision or a strategy to execute such a vision successfully,â€ Moghalu submitted.
He added that though Nigeria has a national policy on science, technology and innovation, this has practically no impact on Nigeriaâ€™s economy, arguing that this is because there is no policy support for moving the products of innovation into the marketplace through mass production and marketing distribution, and because the incentives for innovation are not yet strong enough in intellectual property law and regulation.
He disclosed that patents and other kinds of intellectual property are the engine drivers of knowledge economy.
â€œThe absence of a link between science, commercialised indigenous innovation, and economic and business activity is a fundamental obstacle between Nigeria and a quantum leap to prosperity. This gap is all the more tragic because science and technology is one area in which African countries such as Nigeria can quickly develop global competitive advantage over the Western world and even Asia.â€
He further revealed that Nigeriaâ€™s economy lacks complexity in the extreme, which is why the country remains the greatest importer of petrol, while it exports crude oil.
Furthermore, Moghalu advocated that Nigeria should have an established worldview; establishment and consistent application of clear economic philosophy of entrepreneurial capitalism in the context of a developmental state, as the guiding framework for the Nigerian economy; constitutional repeal of the Land Use Act that traps wealth of Nigerian citizens in the hands of government choking grip of state bureaucracy; reforming the Nigerian National Petroleum Corporation into a partially privatised company; deregulating the downstream petroleum sector; and avoid further foreign loans which has put us back into a debt trap that will mortgage the future generations of Nigeria.
Clearly, the country needs good governance, increased investments in human capital as well as policies that would incentivise the private sector so as to enhance job creation.
In addition, Nigeria will not be able to sustain her current levels of population, which has been estimated at about three per cent, and economic growth without enhancing its infrastructure.
Investing in infrastructure will drive economic growth, provide jobs, and deliver vital services to the country and majority of its citizens.