Building and Sustaining a Strong Economic Future for Nigeria
Iconsider it a great honour and privilege to have been invited as the Keynote Speaker on the occasion of the Dinner to celebrate the 25th Nigerian Economic Summit here today in Abuja. The organisers told me they wanted a speaker who was an active participant at the first Summit held a little over 25 years ago and who is still active today.
When I went back to read the Report of the 1st Nigerian Economic Summit which kicked off on 18 February, 1993, my first reaction was one of humility and thanksgiving to God that I am still here 25 years later; I never realised that so many out of that very first batch of Summiteers had since passed on. May their gentle souls rest in perfect peace.
My second reaction however was one of disappointment that some of the exact same economic issues and problems that plagued Nigeria then are still being debated here 25 years later. I am not claiming that we have not achieved phenomenal progress in certain areas such as telecommunications, commercial and investment banking, Pension reform and other service sector pursuits such as Information Technology, Music, Film, Art and Fashion.
The harsh reality is that whatever gains Nigeria achieved in income per capita over the course of the last two decades are slowly being wiped out, as falling annual per capita incomes have become the norm in every single year since 2015. Macroeconomists measure broad aggregates and the numbers do not lie. The investment and GDP statistics used here were obtained with the assistance of Dr Yemi Kale, who heads the National Bureau of Statistics.
In a nutshell, falling living standards appear to have come to stay in Nigeria and so hoardes of Nigerians continue to join the ranks of the extremely poor year after year, at a time when several African countries are successfully lifting more and more of their own people out of poverty. World Bank data confirms that the African countries who have been most successful (Top ten) at reducing extreme poverty over the course of a 15-year period spanning Year 2000 to 2015 are Tanzania, Chad, Republic of Congo, Burkina Faso, Congo DRC, Ethiopia, Namibia, Mozambique, Rwanda & Uganda.
When the earlier Summits were being held in the 1990s, some of the most popular comparisons by presenters were those between Nigeria and Malaysia, Indonesia and various other Asian tigers. Today, we can clearly benefit from case studies on poverty reduction emanating from Africa’s top 10. The same can be said for
THISDAY Newspapers Limited. education, healthcare and infrastructure where Nigeria does not feature in Africa’s top 10 in terms of rapid positive change.
Indeed, Nigeria now leads the world in two appalling statistics: 1) the largest number of school age children out of primary school (10.5m); and 2) total number of persons living in extreme poverty (90m approx.). It was not so in 1993.
There is a frightening and ominous link between these two sets of statistics because children who are ill-equipped in terms of basic primary education are likely to be the most difficult to integrate into a 21st Century economy. Many of them were born into poverty and will remain in poverty unless we do something urgently to rescue them. Even more worrying are the regional disparities that show up when socioeconomic data is disaggregated. For instance, the WAEC May/June 2019 WASSCE results show that nine out of the top 10 States with the best results are from the South East and South-South zones - Lagos State is the only top 10 entrant from outside these two zones. Conversely, of the bottom eight States on this same Exam results chart, five are from the North West, whilst three are from the North East zone.
In the 1990s, rapid economic growth eluded many Sub-Saharan African economies. In 2018, the average GDP growth rate for Sub-Saharan African economies was 2.4%, but if you exclude the two largest economies (Nigeria and South Africa), who are both laggards, then the GDP growth rate for the rest of Sub-Saharan Africa immediately leaps up to 5%. We therefore no longer need to go to Asia to learn lessons about rapid growth. We only need to look to Ivory Coast and Senegal in West Africa which grew at 7.40% and 7.0% respectively or to Ethiopia and Rwanda in East Africa, which grew by 8.50% and 7.20% respectively in 2018.
The fore-runner of GDP growth is the Investment/GDP ratio. If there are little or no investments today, then there will be little or no growth in a couple of year’s time. The double-digit growth of 2002 came on the back of the very high Investment/GDP ratio of 35% recorded in year 2000, which was the first full year following the restoration of democracy. Thereafter, the long term trend for Nigeria’s Investment/GDP ratio has been a near-continuous downward slide. By 2012, the Investment to GDP ratio had slid all the way to below 15% and so GDP growth rates were bound to fall sharply after 2013.