by Bayo Ogunmupe
When the Islamic Development Bank rated Nigeria the third fastest growing economy in the world last April, it elicited widespread interest and approval. This classification was based on Nigeria’s GDP figure of US$64 billion.
According to the report, with a growth rate of seven per cent in 2011, Nigeria stands behind Mongolia with 14 per cent growth and China with eight per cent rate of growth. Indeed, with elation, Nigerian government officials were quick to tell the nation that we have graduated from a low-income country to a medium income one because of the improved per capita income, which according to the Federal Ministry of Planning, has increased from $1,200 to $1,400.
As it was to be expected, this generated divergent opinions, ranging from repudiation and excited acceptance. However, economists insist that the classification is misleading and capable of goading members of the Federal Executive Council and the National Assembly into self-delusion since the reality everywhere does not support the false statistics being bandied about.
Meanwhile, we export only oil, both in crude form and sometimes, refined quantities as well. But in spite of the huge sums of money realised from oil, how do we explain our budget, which is always in deficit? Indeed, economists explain economic growth to mean the capacity of an economy to supply increasingly diverse goods to its population based on advanced technology with necessary institutional and ideological adjustments.
There are three dimensions to growth. One, the gradual and consistent rise in output over time. The measure of output is the Gross Domestic Product (GDP), which is the aggregate of an economy’s yearly value of output of goods and services within a given period of time, usually a year.
Two, the availability of relevant technology and infrastructure as conducive factors of growth. The quantity and quality of technology in a country determines the power of the economy to produce and supply goods and services to the people, otherwise the economy like ours, will be import dependent. However, import driven growth usually dislocates other fundamentals such as the purchasing power of the currency.
Indeed, the most critical of the dimensions of growth is the nature, quality and power of the institutions driving growth.
Thus, no meaningful growth will occur in an economy if fiscal institutions are weak. Available data show that Nigerian output has been on a gradual rise now, particularly since the ascent of Lamido Sanusi as the Central Bank governor. Despite obvious challenges, economists aver that the GDP revision will see Nigeria where Argentina was when she joined G20. It isn’t surprising therefore that our policymakers are positive that by 2020, Nigeria would join the league of 20 most advanced economies. Thus, all things being equal, we are on the right course to prosperity.
But can we say that the Nigerian economy is growing. The GDP rate of growth is often touted as an indicator of the general health of the economy.
A consistent rise in the rate of growth of GDP shows that an economy is buoyant. This will be reflected by an increase in employment, a rise in the purchasing power of the people and a higher standard of living, since such conditions don’t operate in Nigeria, it means the economy isn’t growing. When an economy is not growing, it will be declining, in other words, a decreasing rate of growth leads to rise in unemployment, as witnessed in Nigeria since the advent of the meltdown of 2008. Thus, the economic condition in Nigeria is moving opposite of positive growth. As a result, Nigeria is declining economically in spite of our huge revenues from oil. This decline in our well-being is attributable to the activities of the enemies of the Nigerian economy.
First of such activities is the failure by government officials to produce regular electrical power to service the economy. This failure has been deliberate, and is being done for personal gain either for money or such that a generator supply company may continue to operate. Such other enemies of the nation are those who want to curb the autonomy of the Central Bank of Nigeria (CBN). In any event, the present CBN model that price stability is its main objective, is based on a huge body of empirical evidence regarding the positive impact of central banking independence on economic performance, especially in achieving lower inflation rates. Central Bank autonomy also boosts fiscal discipline without any additional costs or sacrifices in terms of output or reduced growth. The shift towards central banking independence has become the norm since the banking crisis of 2008, and we should follow suit or fail.
Indeed, experience has shown that nations with independent central banks attract more investment because indices such as GDP, exchange and interest rates tend to be stable, thereby enabling investors to make long term investment commitments. Thus, it is no accident that the period when Nigeria achieved a superior economic growth coincided with when the CBN became more independent of political maneuvering. Thus, those seeking to alter the CBN charter are part of the enemies of the economy. Lamido Sanusi is not going to be CBN governor forever. Don’t change the CBN Act because of jealousy. What we need is a law regulating donations. Because we know they want to destroy CBN because it donated N100 million to the victims of the Kano bomb blasts. We share the feeling that the manner governors, ministers and the presidency is doling out money to the public is wasteful and unacceptable.
Finally, many of the flawed growth patterns in our economy involve fiscal distress, contrary to the prevailing wisdom of today, some degree of Keynesian demand management in this transition to a sustainable growth pattern is not in conflict with restoring balance to the economy.
Thus, the real enemies of the economy are those who stoke unrest by refusing to employ enough policemen for Nigeria. Being about 168 million in population Nigeria needs 1.68 million policemen.
Unfortunately, we can only boast of 377,000 cops, a number, which is less than one third of our needs. Any wonder Boko Haram has unleashed terror on the country three years on? Perhaps, the only way to stop the enemies of the country is to change the personnel of government every four years. This can be achieved by changing the ruling parties in each state and the federation every four years. Stability is critical to the economy because terror scares away investors from the country.
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija
This piece was first published in The Guardian