For the first time in our politico-economic discourse aspiring for double digit economic growth DDG is taking centre stage, this is belated. Pundits are talking about it and it was centre stage at the just concluded Nigerian Economic Summit Group conference in Abuja. It appeared in party manifestos and presidential candidates give it a mention. Donald Duke was first politician from whose lips I heard DDG get first mention, unfortunately he has withdrawn from aspiring to lead the nation.
That politicians make pronouncements doesn’t equate to their being knowledgeable on achieving what they spout, recent history confirms this. To them it’s for vote catching not that they are schooled in such economic niceties. So looking to politicians would be beaming the light in the wrong place.
Fortunately economists have come forward to join the discussions on DDG. As in matters economic two clear positions have emerged as to achieving DDG. In a report that was published on its website the World Bank WB reiterated that Nigeria could return to the path of stellar growth that was achieved in the first decade of this century if we deepened the policies in place in the first decade.
On the other hand a seasoned economist writing in the National Economy postulates that DDG will be achieved by building on what has been put in place in last eight years. In eight BulletPoints he laid out reasons for his optimism which is more or less Nigeria building on Buharinomics. Let’s investigate some of the economic points raised. Let’s be clear that Buharinomics is a departure from the liberal economic policies pursued in the first decade.
The first reason given is the coming on board of a number of projects mostly infrastructure including Dangote Refinery which is not an infrastructure. He mentioned the Lekki Deep Sea Port, the 2nd Niger Bridge and Calarbar Port as ADDING to economic activities. Do they? Use of most infrastructure do not add to economic activities directly, they lubricate existing economic activities. How much more economic activity has the Lagos Ibadan rail or the 2nd Niger Bridge added? What the 2nd Niger Bridge does is make passage of existing goods easier not exactly add to it. Contrast with the Dangote Fertiliser or Petrochemicals and Refinery, these add directly to GDP. Remember we are debating not just minuscule GDP improvements but stellar growth to double digits.
The renowned economist is hinging DDG on business cycle boom that comes after a bust, unfortunately this is not Nigeria’s story. Nigeria’s story is commodity bust story specifically crash in oil prices. This has been the trigger for the two previous recessions Nigeria had suffered. Also we have remained a depressed economy after exiting the 2016/17 recession not returning to any boom. This premise for a DDG is non existent. Our counterparts in Asia do not experience recessions as we do, meaning boom bust cycles is for mature economies in the West and Japan.
A third policy on which DDG is hinged is the famed import substitution policy of this administration. The produce what you consume and consume what you produce import substitution policy ISIP pursued for the last sixty years and not six years. What it has delivered is grief as it has made Nigeria an import dependent insular economy unable to export manufactures. Without export of items manufactured within country ISIP is just one leg of a bipod. Reason we are always under forex pressures once oil prices crash.
Only nations that have in place industrial export with their import substitution industrialisation have achieved DDG. A comparison of South American countries steeped in ISIP and Asian countries steeped in export led Industrialisation show a clear path to DDG.
That policies that have not worked to spur Nigerian annual growth above 3% should be expected to deliver double digit economic growth is surprising. Yet there is suggestion of a new policy. Forced cashless policy that has been wrapped with currency redesign and limits on cash withdrawals. No one is sure on how this will work in an economy that has a large informal sector that is cash and carry based. Other economists are skeptical about the wisdom of the forced intervention not to bet on it spurring DDG.
Buharinomics and Emefielism are not going to deliver laudable single digit growth not to speculate delivering double digit growth. These are twin babies that should be put away with the bath water come 2023. Let’s beam our attention on the recommendations of the World Bank as published in a report available on their website. Paraphrasing they state that “The hard won income gains of the 2000s evaporated between 2011and 2021(read 2014 to 2022) due to lack of deeper structural reforms, global shocks, conflicting macroeconomics policy(read reversal of early 2000s policies) and increasing insecurity.
The report continues, ” attracting private investments requires solid macroeconomic foundations which have weakened in recent times( Buharinomics dismantled it neither has ease of doing business brought it back) Nigeria can become a growth star if it implements a comprehensive set of bold reforms in a timely manner” To be pugnacious I label it SAP 3. The WB went on to give advice on returning to stellar growth, advice they were reluctant to give due to criticisms they received over Washington Concensus strategies implemented in the 1980s and 90s. So they allowed us to proceed with missteps in Buharinomics and Emefielism.
There is hardly a sounder prescription than that given by the WB, asking us to go back to what had worked for us and delivered 6%-8% growth for the country for almost a decade and half. Move away from the statism, multiple exchange rates and fuel subsidy. Then in subsequent years deepen the reforms.
We should no longer talk of the between six to eight percent growth, we are looking at scaling up to double digit growth for decades so as to create quality jobs that will lift 200 million into middle class. Not poverty reduction but serious societal wealth creation for Nigerians and the rest of Africa.
New mental attitudes would be needed for this, old habits and ideologies would have to be shed, meaning our journey to DDG starts from within before it can emanate outside of us. A restructuring of our mental attitudes from bottom up, think not what your country can do for you think of what you can do for your country. And that there is much more export economic life beyond oil and gas.
A well thought through rearranging of the polity is also necessary, not an hasty one but one that addresses the contradictions in values of our peoples. These contradictions are bearing negatively on peace and security that is needed for sustained transformation. Economic gains can be wiped out through blow out of political issues
While the WB advised we deepen the structural reforms done in the 2000s the bank did not give details hence some suggestions.1) To deepen and protect the economy from oil shocks attention sould be shifted from demand control of forex market to intensifying supply of the dollar into the economy through sectors other than oil and gas. RT 200BN is a step in this direction albeit a belated one.By joining the global supply chains beyond crude Nigeria’s GDP wil have avenues for new growth.
2. Doubling manufacturing sectors contribution to GDP from 13% to 25%. Investment in heavy industries being done by Dangote Group and BUA are steps in this direction. Bottom up investment in Transportation Industry as opposed to assemblage currently done by INNOSON should be addressed. We can start with producing in-country the many parts needed in motorcycles and tricycles. These have become a permanent feature of our vehicular mix, yet we bring in Complete Knock Down parts for their assemblage. Cottage industries can spring up to produce primary parts for these means of transportation with the potential to contribute immeasurably to GDP.
To be continued.
Olugbenga Jaiyesimi email@example.com