Nigeria Attaining Trillion Dollar Economy

Olugbenga Jaiyesimi

Olugbenga Jaiyesimi

Nigeria was grouped with trillion dollar economies;  Mexico, Indonesia and Turkey in the acronym MINT. Buoyed by oil prices Nigeria’s GDP approached 0.6 trillion dollars in 2014. However, for the past seven years hopes that Nigeria would cross that milestone of a trillion dollars have been dashed.

There is no talk of Nigeria becoming one of the twenty largest economies in the world. The international communitiy is not talking about it neither is the Nigerian intelligentsia. Yet it is a trillion dollar plus economy that will pay for human capital development,  infrastructure and directly lift a hundred million people out of poverty.

At a trillion dollar, Nigeria’s per capita gdp rises above $4,000 dollars making us a middle income country. Yet this is just the beginning and not the destination. Destination being $12,500 per capita gdp. Such a target eliminates cherry picking. It is an objective way of assessing leadership better than OBJ gave us GSM or Buhari built 2nd Niger bridge.

That the Nigerian economy glided past South Africa and breached the half trillion dollar landmark was not directly from proceeds of $100 oil. Nigeria’s GDP was $160 billion USD in the year 1999 (using 2010 USD). By the year 2015 when oil prices had receded from $100 Nigeria’s  GDP was around $464 billion dollars, a three fold growth in fifteen years. If we factor in contribution of $100 oil the growth would be four folds!

Oil prices  were well below $100 dollars for better part of the 2000s. Also Nigeria’s daily crude oil production was low due to the Niger Delta crisis. Meaning the growth that occurred in the 2000s was never from high oil income. Nigeria went through the  global recession caused by financial meltdown of 2007-2010 hardly skipping a beat. The $100 oil that pushed the economy to 0.6 trillion dollar was the icing on the cake. There were underlying things going for the economy more than $100 oil.

It is inevitable Nigeria attain’s trillion dollar status, the question is how soon we arrive there. At current GDP growth of under 3% we will be there around 2050 with a population of 400 million, meaning more poverty. At a GDP growth of 7% as achieved between 2000 and 2014, a trillion dollar economy will be achieved within ten years with a population of 250 million and a per capita gdp of $4,000.

If we achieve double digit gdp growth(ddgg) which should be the target of any politician aspiring to lead this country as achieved by Asian economies, catapulting them to first world status. If this is sustained we can be a trillion dollar economy by 2030.

The first time our economy had a prolonged growth was in the 70s and it was due to oil largesse. The second time was in the 2000s and some commentators particularly those in government ascribe it to oil as happened in the 70s. They seem to be saying without a good oil income Nigeria cannot be a trillion dollar economy. I disagree with this and place the spike of 2000s as the doing of we the people ignoring government and going about our businesses therefore contributing immensely to the prolonged high growth of 2000s. It included the remittances of Nigerians in diaspora. It included the entertainment industry spawned by the youths. It included foreign investors like OLAM who introduced polished sesame seed exports, Nigeria’s number one non-oil export.

Nigeria has no business growing at below 4% with an annual growth in labor population of above 3% of able bodied 18-30 year olds. If the new uptakes into the labour force each morning go out and hustle it theoretically  translates into 3-4% annual growth. That’s reason large populations invariably have large gdps. This is the real foundation of economic growth not the one we have been searching for the last seven years.

To this base percentage we can now factor in our investment in human capital development that’s been on for five and more decades, from five universities in 1960s to over a hundred and fifty universities. This should have a multiplier effect that should add percentage points to the 3% base hence the base line should easily be moved to 6%. I believe something like this was in play during the period 2000 to 2014.

From the  6% with appropriate levers we can  sustain the 10% ddgg everything being equal, unfortunately as the saying goes everything is never equal in economics. Why is this so? What are the obstacles to Nigeria not being able to soar . Most believe it has to do with our polity but it isn’t, after all countries with differing polities such as Chile and China have achieved same economic progress.

I believe it is mental and our acquisition of a particular mindset that has introduced structural defects into both our economics and politics. Big Government and a people so besotted to perpetually under performing governments is responsible. If only the scales could drop from our eyes that salvation doesn’t lie in dead hands of government but in our hands. Also because of our fealty to government we have always allowed politics to trump economics with most believing you have to get politics right before economics will self correct hence false hopes placed in polity restructuring as the silver bullet.

Moreso we have actually achieved growth rates of 7% and above and with the right levers we could have moved to 10% and above growth. However a change in administration and government policies depressed the growth of the economy to barely 2% from an high of 7%. The change in administration was necessitated when the weakest link in Nigerian economy played it’s hand and the bottom was allowed to fall out of the economy. That’s reason non-oil export of more complex goods is so vital to the economy to prevent the reoccurrence of such. Once this is in place sustained ddgg is possible.

How did we get to this sorry state of being continually besotted to government? It was not like this in pre-colonial and colonial times. Responsible for this transformation  is Socialism and imbibing the Marxist philosophy of citizenry needing protection from the capitalist’ entrepreneurs in society. So the commanding heights of the economy most be in the hands of government and not in hands of individuals or private sector so that individuals do not become too rich. Moreso, the colonials were capitalist so capitalism not good. We also came to believe government knew it all. These were the prevailing sentiments of 50s and 60s that influenced and allowed growth of big government.

Second is the remnants of a SlaveMaster Mentality(SMM) in the country. The country rolled over to these sentiments easily because of persistence of SMM in our cultures. Masters (politicians in government) are needed over slaves(hoi polloi). The Masters owe the slaves barest minimum for slaves survival and keep the rest of the societal wealth. The other side of the coin is that those enslaved lose  their personal sovereignty. They abdicate the planning for their lives to their masters. Like what activity to carry out daily, what to grow and how to grow it. Socialism looks so attractive to a slavish mind. When you begin to look at our society through this prism you start to understand and unravel our politicians.

The mix of these two undercurrents in the Nigerian millieu led to a general acceptance of big government leading to this toxic environment with hawkish politicians at the top. An entrepreneur like Elon Musk would rather emigrate to the USA than the toxic Nigerian environment.

There is a book published at the heights of socialiat glory in 1944, THE ROAD TO SERFDOM by Friedrich Hayek. It could easily be titled ROAD FROM SLAVERY TO SOCIALISM. It encapsulates the relationship between slavery and socialism in the reverse. It is time to execute a u-turn and not be envious of individuals who create wealth. Government  or the State is now a dead weight on the economy so a fast way to a trillion dollar economy is getting government and it’s dead weight out of the way. To do this will require the restructuring of our mindsets not the polity.

 

Olugbenga JAIYESIMI 08123709109 jerry3jaiye@gmail.com

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