Working to drop the poverty trophy -By Olugbenga Jaiyesimi

Last fortnight’s article, How Nigeria became poverty champions, remains incomplete if not followed with an article that suggests means and ways of dropping the poverty trophy. We are about to reclaim the title from India considering the daily negative economic news from Nigeria. There is a need to come up with ways of getting out of this preposterous race to the bottom to join the prosperous league of nations. It has been a painful follow-up because it’s a rehash of several submissions that have taken up space in the media in recent times and I do not wish to sound like a broken record.

We cannot carry on in this manner, in our economic environment and expect different results and there is evidence that that is what the authorities intend to do. Those in authority want to intensify what they have implemented for the last seven and half years, which dropped millions into poverty despite the rhetoric of lifting 100 million Nigerians out of poverty. I draw this conclusion from a report titled, Imagine Nigeria exploring the future of  Nigeria. It postulates for Nigeria for another 30 years. It’s a statist document that wants more and more government interference, despite this interference being the bane of this regime.

To interrogate how to move forward beyond 2023 we must make a diagnosis of the root cause or causes that have plagued the last seven years despite spirited efforts seen in proclamations such as the Economic Recovery and Growth Plan, ERGP, and Economic Sustainability Plan, ESP. How come an economy that grew 7.5% on average over 10 years of presidents Olusegun Obasanjo and late Musa Yar’Adua in spite of the global financial meltdown of 2007 to 2010, fail to achieve a modicum of growth all through the seven years of the President, Major General Muhammadu Buhari (retd.)? Growth under Buhari is put at an average of 1.1% per annum (August edition of Lagos Business School Breakfast session)

Answer. On assumption of power in 2015 the new team did not only change the dirty water, they threw out the baby that delivered the 7.5% growth and replaced it with a lifeless ‘baby doll’, the dead hands of government. Their actions emanate from their economic philosophy of dirigiste statism. This has resulted in further muddying of the economic waters through accumulation of humongous loans because this statist government is impelled to ‘borrow no matter what the cash flow of government says. Government has become a dead weight on the economy.

This highlights how economic philosophies matter. A statist philosophy has led us into a debt crisis. A liberal economic philosophy that allows the private sector to really take charge translates into lower government expenditure and debt because a lot of slack is picked up by the private sector. I say look no further than the multibillion-dollar Dangote Refinery and imagine if it were to be government executed. The private sector-led telecoms revolution swelled government revenues rather than incurred government debt.

Nigeria has once again proved the various dicta about government. The dead hands of government have succeeded in dousing the latent engines of growth that exist in the economy and had propelled us to the largest African economy. If we continue this way we will lose this trophy as well.

Another saying is that government is a necessary evil yet in Nigeria we tend to want government in all spheres of our lives. The earlier we learn the lessons of the past few decades that Nigerian governments are not purveyors of national transformation but are the main obstacle to national transformation. Politicians like paying lip service to private sector-led development but behave as masters to the private sector. I call for a change, government must become servants to the private sector, not masters. Our salvation lies in the private sector, not in government interference.

How do we exit the poverty league? We have to recover the baby that was thrown out, that is the economic policies that delivered 7.5% annual growth for over a decade. In Nigerian political discussions, we seem not to take economic growth rates serious except it results in recessions and exiting recessions becomes an achievement. Meanwhile, a rising gross domestic product acts as a rising wave that lifts all boats—both ocean liners and fishermen’s canoes. Also, a crashing GDP means the tide going out leaving boats stranded on the sea bed.

A policy thrust that kicked started the 7.5% average growth in the early 2000s was the return of market determination of the naira value on assumption of office by Obasanjo. Apart from the liberal economic team he assembled, he sent out the message that liberal economic policies were back in place and investors were pleased. The government in place held to this policy and ensured continuity until indiscipline from 2011 to 2014 ensued, leading to the change in government. This change led to a change in economic policies and a change in growth. I posit that if the change of 2023 returns to liberal policies we should expect a return to higher growth despite new headwinds.

The next target for the economy should be nothing short of achieving double-digit growth. By introducing programmes left undone in the stellar years of 2000 to 2012 we should be able to achieve double-digit growth. This includes serious attempts to increase our exports of high-value goods which have been the Achilles heel and missing link in achieving currency stability. This is being addressed by the CBN Road to 200BN Program. A lot hinges on the success of this program. It is not an end but a step on the ladder of addressing the weakest link in Nigerian economy, that is our dependence on oil proceeds for forex needs of the rest of the economy.

A poor score of the 2000 to 2012 period is the abject performance in infrastructure acquisition safe in telecoms. However, the current infrastructure champions are leading us into what was captured in John Perkins’ book, Confessions of an Economic Hitman—a debt trap. In addition, the current means of infrastructure acquisition is going to deliver infrastructure at a piecemeal pace. Our need for the triangle standard railway backbone, Lagos-Calabar-Kano, would require laying 8,000 kilometres of rail lines. If sped up we are hardly laying 200kms per year, meaning 8,000 km will be completed in 40 to 50 years.

We cannot continue at this crawling pace with other unbuilt infrastructures such as high-speed rails and 100,000 megawatts of electricity amongst others. This requires us going on an infrastructure blitz by first putting the horses ahead of the cart in our endeavours (Infrastructure blitz: Putting the horse before the cart, April 12, 2022). Whenever we get infrastructure acquisition right Nigeria is guaranteed an annual contribution to GDP growth of about 5% directly from expenditures and activities to put the infrastructure in place. Later comes the add-on to economic growth by utilising the infrastructure in economic activities.

The change of 2023 must send the message out that liberal market policies that worked between 1999 and 2012 are back with the government stepping aside for the private sector to lead the charge in deed, not in words alone. Next Nigeria has to work out means of not allowing politics to trump economics. It has become obvious that the organisation of the polity is affecting the economy as seen in country-wide insecurity. The report on the Future of Nigeria also alludes to this, in the last paragraph of page 12, it states inter alia, “…all sectors in the society must come together to discuss priorities… and engender a grand national narrative for a renewed and rebranded country.”

Dr Jaiyesimi writes from Sagamu; jerry3jaiye@gmail.com