Last week, the National Bureau of Statistics (NBS) released an abysmal 2.11 percent growth for the fourth quarter of 2015. It completes the poor 2015 growth pattern, averaging 2.8 percent for the year, and compares unfavourably to the average of 6.2 percent recorded in 2014.
The 2.11 percent growth rate recorded for the last quarter of 2015 has three important features that should get us worried. First, this is the lowest level of growth since the turn of the century – in almost two decades. Second, this is the first time growth will decline by as much as 4 percentage points year on year since the turn of the century. Third, given population growth of about 2 percent, it means that per capita income growth is flat.
Let us examine each feature in detail. Between 2000 and 2015, Nigeria’s economic growth has followed a 4 percent and above trajectory except in 2002 (3.8%), and 2005 (3.4%) in annual terms, according to World Bank data. It is this trajectory that made Nigeria one of the fastest growing economies in the world in the last decade, and the same growth rate that helped to make the country the largest economy in Africa.
But the growth posted last week is only the fourth time since the 1980s that growth will decline by at least 3 percentage points year on year. The earlier three episodes were 1983, 1986 and 1991, periods characterized by violent swings in economic growth. More importantly, at 2 percent population growth rate, it means, for the first time since the turn of the century, per capita income growth is flat. If this trend continues, then the middle class that has expanded significantly in the last 10 years will begin to shrink and those at the poverty threshold begin to expand.
Now, contrary to some arguments put forward in the last week, the restrictions on foreign exchange by the Central Bank of Nigeria (CBN) cannot be solely responsible for the weak growth recorded. Policy inertia should take a much larger blame.
Looking at the course of governance in the last year, from the euphoria of the few days after the election of March 28, the statement “you campaign in poetry, you govern in prose” by Mario Cuomo, an American Democratic politician, has become a metaphor for President Buhari’s government. The poetry of the All Progressive Congress (APC) campaigning was full of optimism, Eldorado and beautiful promises, and emotional displays of perceived ability to solve all Nigeria’s problems with some form of body language. However, the prose in governance shows unpreparedness, policy divisions and disclaimers.
The divisions we have seen are rooted in the fact that the Action Congress of Nigeria (ACN) wing of the party wrote the manifesto while the Congress for Progressive Change (CPC) has the President at the helm of affairs. So, while the ACN camp was leading industry players and preparing plans for reforms, including the removal of petroleum subsidies, the focus of the CPC camp was the sole recovery of stolen monies. What do I think of some of the policies? At any point in time, there is no greater policy urgency than the removal of petroleum subsidies in Nigeria. It has never worked, it is not working and it will never work. Shikena! On the feeding of all primary school students (I presume only in public schools) and the provision of N5000 per month for unemployed graduates, these are symptoms of hastily prepared economic proposals based on irresponsible arithmetic, especially when the feeding programme has already failed in Osun.
But the greatest damage was done during the mergers of the party when it became obvious that a CPC candidate at the helm of affairs will not permit changes to the political economy structure of the country, a key policy plank of the AC wing over the years. In the absence of any semblance of change to the manner in which our Gross Domestic Product (GDP) is generated, all that can be done, are tweaks here and there.
The Nigerian economic potential is waiting for a leader that will break the foundations of oil dependence. That foundation started with the consolidation of military rule in 1970s. It is a top to bottom approach to economic progress and development, but it is not working in Nigeria. This approach follows that the centre, effectively interpreted as the presidency, can through annual budgets, policies, including agricultural and industrial, drive productive activities and therefore growth across the country. In the context, the federal government is the omni-knowledge, omni-policies, omni-competent, omni-director, and omni-sciently, but in the real sense, what we have is omni-shambles.
Of course, this article is about the difficulty of governing, especially when all permutations about oil price are thrown out of the window. But it is also about reminding the government that difficult choices need to be made. The focus on corruption is important, but as important as it is, it cannot be a substitution for a comprehensive economic strategy. The focus on corruption is a fixation on the allocation of Nigeria’s resources and how it was mismanaged, but not on how to grow it. Corruption will help ensure that Nigerians receives value for existing resources, but will never help grow it. Remember that corruption is as a result of both lack and greed. The current fight focuses on the greed element. After the battle is won, we may just realise that it is more difficult to win that motivated by lack if our incomes are not rising.
Ogho Okiti
