Attaining economic growth of 10 per cent and above in a nation that celebrated two to three per cent annual economic growth for seven half years seems like aspiring to build castles in the sky. Double digit growth in a nation whose policy-makers do not know what works for the economy is near impossible as decision-makers move from one end of the economic philosophy spectrum to the other. In a country led by those with a groundnut pyramid mindset that birthed phoney rice pyramids.
Growing at over 10 per cent per annum for upwards of 20 years, barring unforeseen global shocks, is a must for the Nigerian economy if we are to join the middle income nations. It is achievable and my optimism is on the premise that Nigeria achieved sub ten pc growth for over 10 years before lapsing into current sub three per cent annual growth.
We cannot wish DDG into being, it must be deliberate, just as putting the first satellite in orbit (Sputnik) was. DDG should be our own Sputnik aspiration. This requires revolutionary thinking to reconceptualise strategies. Old thinking cannot deliver DDG, this old thinking is seen in the minds of current policy-makers. In their Medium Term Development Plan 2021-2025, they have as the second vision ‘’improved economic competitiveness with an annual GDP growth of 3.8 per cent. Our policy-makers angling for sub 4 per cent growth between 2021 and 2025 means a lost decade 2015 and 2025, with the economy stagnating. A decade of population growth higher than economic growth and 2015 GDP being higher than 2025 GDP.
From the above we see the need for the first revolutionary move, the stepping aside of government. The Nigerian government has been described as a criminal enterprise by Catholic Bishop Mathew Kukah. People that have not produced or built anything beyond their careers should stop heading policy. The Nigerian government is limiting the possibilities of what can be on the economic front. The limiting effects of Nigerian governments have kept us at 5,000 megawatts of electricity while African countries of lesser size are generating 50,000 megawatts.
I tender no apologies for a total government step aside to achieve a minimised government presence in our lives. Apart from having been described as a criminal enterprise they have also been identified as a most inefficient spender among other opprobrium and vilifications. A change at the top come 2023 is not bringing change to the civil service that has a culture of misappropriation and budget padding.
New perspective is important and Nigerians should see themselves as being in the place America was after US independence in 1776. The vast territory was sparsely occupied and unconnected from the East coast to West Coast. What was the US government role in catapulting this vast country into prosperity? It was by adopting strong libertarian principles of minimal government and laissez-fairism. This allowed people and investors to pour in and finance the developmental needs of the new nation.
Nigeria should also operate as a special economic zone to the rest of sub-Saharan Africa the way China allowed the Special Economic Zones of Shenzhen and Xiamen to galvanise the rest of communist China. In these zones central planning was out and free market capitalism in. The African Continental Free Trade Area affords us the opportunity to adopt this Chinese example and capture markets larger than Nigeria’s 200m.
To deliver this transformation I would prefer an Aliko or a Samad, who together moved cement production from five million metric tons per annum to 50 million tons, for they and others to be at the helm of formulating possibilities for the nation’s economy. They are doing a repeat in petroleum refining capacity after repeated government failure. Such a feat is not limited to the industrial sector as we find many examples in education, health, entertainment and sports. This will be the first in series of moves that will be necessary to deliver on double digit growth.
While advising we not burn bridges and abandon traditional sectors of agriculture or oil and gas, we need to realise that DDG can come only from creating and promoting new sectors aggressively. This is explained by the diminishing marginal product theory as whatever additional efforts we put into agriculture production will contribute less and less to GDP growth unlike what fertiliser or refined products export would. This is the reason efforts at agriculture by this administration have not had much effect on GDP growth rate.
In these traditional sectors some new steps must be taken if they are to add to growth. One is intense value addition before sending the goods abroad. A recent example is our polishing sesame seeds before export. A second need is improving productivity in the agricultural sector. Rather than increasing acreage under cultivation only we must get more out of existing land under cultivation. I am certain this will not be achieved by our ministers of agriculture but by local and foreign agripreneurs.
Focus must be placed on moving industrial capacity utilisation from current 50 per cent to 90 per cent, it’s 80 per cent in other countries. This idle capacity is one of several low-hanging fruits which will contribute to growth with little nudging. No country has achieved DDG on being insular and because of our large market, no need to manufacture for export. The United States created avenues for manufactures from Africa to access US markets with the African Growth Opportunity Act, yet Nigerian companies never sought to gain access to US markets the way other African countries have.
Also no country has achieved DDG with only local capital, Foreign Direct Investment has always played a major role yet we rolled back the hands of the clock and put in place business unfriendly monetary and fiscal policies leading to a collapse in FDI in the last decade. We then went on to tweak our ranking of Ease of Doing Business as though that will bring businesses back. It isn’t at least in the quantum we need for DDG. Meanwhile, Nigeria has been stuck at the same ranking of Ease of Doing business for four years. Compare Nigerian and Indian rankings, both were around the same ranking of 141 and 142 respectively in 2014. Fast forward to 2022, Nigeria is at 131 while India is at 63rd position. One country has been paying lip service to improving ease of doing business.
No country has achieved DDG on resource boom either, because commodity prices later crash putting a stop to the growth. On the other hand, countries that achieved DDG for over 10 years have done so through industrial routes, not industries to meet local markets alone but for exports. Thanks to Aliko Dangote for having this in all his recent investments, meaning this is not mere intellectualism.
Enough of this broad take on DDG and suggest specifics. There are low -hanging achievable fruits with nairanised and domesticated infrastructure acquisition, cultural and cuisine exports, educational and health tourism. Let’s see other pioneer areas we can explore. There is a shift going on in the world supply chain. The West is moving away from China and Nigeria has to key into replacing China in the global supply of complex goods.
How easy is it for a nation that did not join the simple goods supply chain that AGOA afforded it to now participate in production of more complex items like electronics, phones, laptops, etc? A way out is to intensify our participation in heavy industries using the Dangote-Rabiu blueprint. We can learn copper ore from Zambia and supply copper cables to the world too. Same can be done with iron ore from Guinea or bauxite from Ghana. These heavy industry sites that gulp lots of power and can be used as nodes for power generation to feed into a multi grid power option. Indeed prioritising investments in heavy industries as being done in cement and fertiliser for export would deliver spikes to our double digit growth aspirations.
If Nigeria achieves half the expectations of the CBN RT 200 BN programme, amounting to $25bn non-oil exports per year, that alone contributes five per cent to growth as it is not captured in earlier GDP. Imagine over the years growing our exports to exceed the RT 200 BN targets then non-oil exports alone adds above five per cent to growth annually. Additional benefit is that non-oil exports create jobs unlike oil and gas exports. It’s indeed a poverty buster.
