Growth Today, Gone Tomorrow?
Nigeria must begin to look towards the next round of reforms in order to underpin her current economic growth.
The football match in Kano between Nigeria and Angola for the sole Group “E” ticket to the 2006 World Cup started on a high note when the Super Eagles captain, Austin ‘Jay Jay’ Okocha scored the opening goal in the early minutes of the match. But as the game progressed, Nigeria’s national team relapsed to the signature malaise that has become symptomatic of such opportunities in our national experience – our independence in the 60s, the oil boom of the 70s, the return to democracy in the 80s and the June 12 elections in the 90s. At each of these times, Nigeria had prospects for a new beginning and like the Super Eagles we bungled each one of them. The consequence is that we surrendered our leadership of the continent just as the Super Eagles relinquished their leadership of Group “E” to the Angolans and with it the ticket to the World Cup.
I am using the performance of the Super Eagles in Kano as a metaphor for economic growth and development in Nigeria, especially as it concerns the ongoing reforms summed up in NEEDS (National Economic Empowerment and Development Strategy). We can see the efficacy of some aspects of the reforms by simple things like the fact that letters sent through Nigeria’s NIPOST now arrive the post office box on time and (I heard) that banks now take government contract papers more seriously in considering credit for contractors because of the government’s Due Process mechanism in public procurements. Economic reforms have also brought a measure of macroeconomic stability. But it is in “the affairs of the belly” that the economic ‘seismograph needles’ must also begin to move because in the final analysis, successful economic reforms do not only show in macroeconomic growth figures and international credit ratings but in people’s daily lives too.
I recall that the Babangida administration introduced the Structural Adjustment Programme (SAP) in 1986 with its major elements drawn from the (in)famous Washington Consensus – a set of policy reform instruments imposed by political and financial Washington on developing countries of Latin America, and later sub-Saharan Africa. During the SAP era, macroeconomic indicators showed that (for the first time in two decades) Nigeria’s economy recorded back-to-back GDP growth for three years but Nigerians remained poorer until the Abacha government rolled back the programme in 1994.
Nigeria’s GDP has recorded a post-NEEDS growth rate of 7% since 2003. A number of other post-NEEDS statistics from Dr. (Mrs.) Ngozi Okonjo-Iweala and Prof. Charles Soludo (Governor of the Central Bank of Nigeria) shows that the numbers are finally beginning to look good. Not to mention the favourable credit ratings by Fitch and Standard & Poor’s. But the problem with macroeconomic growth figures is that they may not tell the whole story about poverty. Nigeria’s National Bureau of Statistics (NBS) says that the poverty rate in Nigeria has reduced to 54% from about 80% but a further examination of that figure could steer us away from obdurate narcissism. And hubris. Poverty is characterised by unemployment, income inequality, medical neglect, undernourishment, illiteracy and premature mortality. This is definitely not an exhaustive list but it helps to focus on some particular indices that demand attention in our growth strategy.
My point is that NBS will do well to track and provide figures that show the unemployment rate, Gini coefficient (measure of income inequality), average life expectancy at birth, change in per capita food consumption (bread, vegetables, meat, milk and fruits), illiteracy and numeracy rates (including student/teacher ratios, class sizes and the rate of improvement of educational facilities), mortality rates (including doctor/patient ratios and the rate of improvement of health facilities) and the misery index. (The misery index was devised by the Democratic Party’s candidate for the 1976 US presidential elections, Jimmy Carter, by adding the inflation rate to the unemployment rate). As in much of (post-Washington Consensus) Latin America, these figures will give us the big picture on the true state of affairs and help the reforms team in rethinking Nigeria’s economic reforms going forward.
The prevalence of poverty easily leads to the ephemerality of growth with its attendant impressive numbers thereby making a mockery of economic reforms. This growth evanescence is usually caused by insufficient levels of critical complementary factors like infrastructure. That is why successful reforming economies undertake a “big bang” approach of underpinning economic reforms and at the same time reduce high incidences of poverty through a massive investment in the construction, reconstruction and rehabilitation of physical and social infrastructures. The remarkable efforts of the economic reforms team will pale to insignificance if it is not supported by good roads, regular power supply, clean running water, good public schools and hospitals, and an efficient rail system. These growth drivers deliver the quick wins of reforms.
In addition to providing the backbone for sustained economic growth, such large-scale development of infrastructure creates emergency public employment. That is what the New Deal reforms did for the United States in the 1930s through its Public Works Administration. In his book, Development as Freedom, Amartya Sen (Winner of the Nobel Prize for Economics in 1998) also made a significant point that the successful East Asian economies “went comparatively early for massive expansion of education, and later also of health care, and this they did, in many cases, before they broke the restraints of general poverty.” The operative phrase is “massive expansion”.
The debt relief from the Paris Club and increasing revenues from high crude oil prices means that we have more money to implement such a programme. But even more importantly, Okonjo-Iweala’s fiscal management regime, the Due Process mechanism put in place by Oby Ezekwesili (now Minister of Solid Minerals), Nuhu Ribadu’s EFCC and with Soludo at CBN (to monitor money supply and control inflation) all ensures that we have the appropriate institutional framework to get it right. This leads me to another crucial point.
The economic reforms team has some of Nigeria’s finest brains and we are seeing some of the fruits of their efforts. But there are other crucial components of reforms that must be in play so we can pluck the low hanging fruits of economic reforms from infrastructure development. Successful reforms do not start and end in the Ministry of Finance. We also need knowledgeable, radical reformers in such ministries as Education, Health, Power, Transport, Water and Works to lock in the necessary complementarities of reforms and create a platform to significantly reduce poverty in such a way that growth not only endures but also improves the lives of our people and lead us confidently into the next round of reforms.