Prof. Sheriffdeen Tella (Lecturer, Department of Economics, Olabisi Onabanjo University) and David Adonri (Chief Executive Officer, High Cap Securities Limited)
Anytime Nigeria’s growth rate rises, or is reportedly adjusted upward by the World Bank and its allies, no matter how marginal, the government makes noise. This is because the country lacks a planned growth trajectory. The government is determined to achieve a US$1tn economy by 2030 but is not committed to a specific annual growth rate. The Ministry of Budget and Economic Planning projected that the private sector is expected to derive about 86 percent of the investments required to meet the target. Achieving the target requires a national coordination plan, and the private sector’s role requires comprehensive government support. Periodic spasms of economic growth cannot deliver the economic development a $1tn should deliver.
Economic growth is meaningful only if its benefits are widely shared through productive employment creation, poverty reduction, equitable income distribution, financial inclusion, and universal access to economic opportunities. That is why the concept of inclusive growth has gained ground over the last two decades. Countries are no longer evaluated on growth performance, measured by GDP (output multiplied by price), but on the extent to which such economic growth improves welfare across different socio-economic groups. Over more than two decades, Nigeria’s economic growth has coexisted with rising youth unemployment, intensifying poverty, inequality, social exclusion and regional disparity. Moreover, the growth rates have been below five percent.
When China launched its “Reform and Opening Up” policy in 1978, it was deliberate about what it intended to achieve. It focused on opening up the economy from a centrally planned form to liberalisation, particularly the industrial sector, encouraging full participation by the private sector. From 1978 through 2005/2010, GDP growth averaged 10 percent per year. That was for about three decades. According to data from the government and the World Bank, the economy grew consistently at 10 per cent and peaked at 15.2 per cent in 1984. From 2010, the economy began to slow down. This is the kind of GDP growth Nigeria should be interested in, and it is such sustainable economic growth that translates into economic development. What made the growth sustainable?
Additional reports show that over the same period, China added more than 250 million new jobs, with over 100 million jobs routinely generated every 10 to 12 years in the period. Following the adoption of homegrown structural economic adjustment and reform of State-owned Enterprises in the late 1990s, there was a massive shift in production towards private and informal employment. International Monetary Fund reports explained that while the public sectors shed jobs, the industrial, construction and service sectors added over 92 million jobs within six years of 1995 to 2001.
In the country’s Five-Year Plan, emphasis was placed on manufacturing and technology sectors, having taken care of agriculture and food production at the start of the revolution in 1949. We note that China has an Economic Development Plan. The Global Development Plan was the 15-year Millennium Development Goals, succeeded by the current 2016-2030 Sustainable Development Goals, and the African Union Economic Development Plan is the 50-year Agenda 2063, which started in 2013 and will end in 2063. In all these Plans, I can confirm that Nigerians and residents of Nigeria were involved in their production.
Where is the Nigerian Economic Development Plan? Renewed Hope Agenda belongs to President Bola Tinubu and cannot substitute for a national economic development plan. President Muhammedu Buhari launched a national plan on the eve of the departure of his government; where is it? We wasted resources on President Musa Yar’Adua’s Vision 20:2020, which was left on the shelf till today. Have we wasted resources on producing a Buhari government-sponsored national plan? What a wasteful country! We have not failed to plan but failed to implement plans so that our leaders’ successes will not be measured by the provision of those plans. What a beautiful country! The following tells us how we move forward henceforth.
Only industrial growth that generates employment and households/business incomes can bring out multiplicative and sustainable growth. Sustainable development is not in infrastructure of multi-billion superhighways, airports, and multiple city bridges. When industries are financed to generate jobs and incomes, the eventual revenues or profits will build bridges, superhighways, and airports that will subsequently provide the personal gratification being craved for. Getting our priority right in the economic development trajectory is important. If we develop the industrial sectors, they in turn can be used to develop the transport infrastructure to promote delivery of their raw materials and distribution of their final outputs. This has been demonstrated, for example, by Dangote Industry through its involvement in road construction in Lagos State.
An article by Wimpey and Islam published in 2013 explained how China was able to answer the global job constraints. The article posited that China was able to provide jobs for about seven million college graduates yearly, and what the government did was support the growth of small and medium-sized firms as well as promote entrepreneurship among young graduates. Power infrastructure was given priority in the initial industrial reforms over and above transport infrastructure like airports and mega roads.
A survey conducted between 2009 and 2011 on job creation in China showed that private sector firms in some 25 cities created about 10 million jobs with the establishment of small- and medium-scale manufacturing industries and service firms. The results showed that employment growth rates are remarkably similar across firms of different sizes, with small (5-19 employees), medium (20-19 employees), and large firms (over 100 employees) all growing their workforce at about nine percent annually. There are ways by which China gives support to their firms, particularly those that engage in exporting products.
In many instances, we have suggested support for the establishment and growth of small- and medium-scale manufacturing businesses and service firms. The economic policy reforms at the inauguration of the current government regarding the removal of subsidies, harmonisation of the exchange rate, and naira devaluation actually killed and reduced Nigeria’s SMEs. No policy has been put in place to resuscitate and promote new ones. They are the businesses that generate most jobs as they are usually many and labour intensive. They are the ones that require production interventions in terms of financial inclusion or credit at low interest rates and some period of moratorium on repayment of such credits.
The Bank of Industry should concentrate about 80% of its credit interventions on such manufacturing businesses, just as the States can create funding agencies for them with transparent operations. Such businesses should be based on local resources or raw materials to prevent forex problems in their operations. In the case of China, such businesses form the initial basis for the massive industrialisation we are witnessing today. That is why there are a lot of lessons to learn for the growth and development trajectory of other countries, which are documented and available in many studies or reports reposited in libraries, the internet media, and in the cloud. Infrastructural development should support industrialisation, and that is financial infrastructure.