Connect with us

Business Analysis

Nigeria’s Economy: The Path to Prosperity




By Kingsley Moghalu

It is a given that the incoming Federal Government of Nigeria will have to decisively tackle the macroeconomic challenges of a fraudulent and wasteful petrol subsidy regime; our debt, revenue and resource allocation crisis; and a broken foreign exchange regime, in order to get our economy back on track.

But, if we are to put our country on a firm path to prosperity, we must go beyond these well-known challenges because they are only symptoms of deeper, more foundational obstacles.
Three BIG ISSUES have kept us poor – the absence of nationhood, the absence of political will for real reform, and knowledge gaps in economic policymaking.
The links between these issues, on the one hand, and high rates of poverty and unemployment and low economic productivity, on the other, have not received adequate attention in the past.

Nigeria cannot become a wealthy, prosperous country without first becoming a nation with a shared sense of national identity and unity of purpose, even in our diversity. Development begins in the mind. When people agree on a common goal of prosperity, based on an inclusive sense of national identity, shared values, justice and equality before the law, they can collectively put their shoulders to the wheel and push in unison. This characteristic, sometimes described as “social cohesion”, can have a transformative impact in terms of productivity. Because our country has been fractured along ethnic and religious lines of primordial identity, our politics reflects this fractionalisation. Electoral outcomes create “Governments of Nigeria” that frequently (mis)manage the economy, not for purposes of real wealth creation, but for that of advancing group vested interests of class, ethnicity, religion, or partisan political affiliation. In essence, then, what passes for economic management has become mostly a “rewards” system for chosen cronies of multiple hues. A national economy managed in this manner, rather than on the basis of technocratic competence, cannot create the wealth of nations.

Moreover, the matter of constitutional reform back to real federalism has foundational implications for Nigeria’s chances at economic prosperity. The recent constitutional amendments signed into law by President Muhammadu Buhari, including giving states powers over electricity generation,  transmission and distribution, as well as to establish railway services, are a pointer to the potentially positive impact on our economy of an even more foundational constitutional restructuring of Nigeria. Such restructuring will also address questions of nationhood, equity and justice, creating a more durable foundation for development.

Political will to embark on necessary reforms to reverse state capture by vested interests requires the self-confidence and courage of elected political leaders. While it might be assumed that such political will can only come from a political leadership that emerges from “outside the system”, there is nothing that decrees — especially given the existential crisis of the Nigerian state and its economy — that it cannot exist, even if imperfectly, in a leadership that has emerged from “within”. Whatever its provenance, such political will depends largely on the decisiveness of an elected political leader, and is essential for our national economic progress because of the challenge of state capture.

See also  The Brawl by Sudan’s Generals and Implications for Nigeria

Perhaps the most tricky problem of economic policymaking in Nigeria is that of knowledge gaps. I use the word “tricky” advisedly, and based on both insight and experience. Most Nigerian political leaders have university degrees and Nigeria has thousands of brilliant economists, yet we have a suboptimal economy. This reality is due not just to the two big issues of a weak sense of nationhood and absent political will, but just as important, a frequent lack of fundamental understanding of economics and its relationship with the other social sciences, law, and technology to create a productive economy.

The first problem is that, even within the economics profession itself, there often is an emphasis on the technical and the mathematical, with little appreciation and application of a sound knowledge of economic philosophy and political economy as the necessary foundations of economic development and wealth creation. All successful economies are based on some sort of philosophical foundation or the other. The internal dynamics – and sometimes contradictions – of these philosophical leanings matter for economic policy, as do their differences. This, then, requires a certain amount of intellectual interrogation, a level of comfort with ideas and concepts, and their application to everyday economic policy challenges. Alas, this is only too rarely a habit of economic policymaking in Nigeria.

Let me illustrate this: Most Nigerians today believe in profit-oriented, market activity. We are dynamic and entrepreneurial. We are therefore mainly capitalist in persuasion, at least to varying degrees. But, you see, capitalism is a philosophy. If we fail to understand this, as we often do, we will copy capitalist societies who understand this, and then fail to create wealth for 200 million Nigerians the way these societies have done for their citizens. The wealth of a few and the poverty of many are the natural outcomes, because we are “doing” but without first thinking deeply. According to the Nigerian Deposit Insurance Corporation (NDIC), 99.4% of Nigerians who are banked have less than N500,000 in their bank accounts. From this we can see why, for the average Nigerian, an “alat” hitting his or her “acant” is a truly big deal.

See also  Letter To His Excellency, Gov.Yahaya Bello By Edward Onoja

In order for capitalism to create wealth, we must come to a clear, pragmatic understanding of the right balance between the state and the marketplace (this leans too much in favour of the state in Nigeria, thus distorting the economy), the essential bedrocks of successful capitalist economies (strong property rights as opposed to state ownership of land, an important factor of economic production, under the Land Use Act, an innovation-driven economy, and capital), as well as the four kinds of capitalism – entrepreneurial capitalism that is dominant in the United States, welfare capitalism that is practised in Europe, crony capitalism that is dominant in Russia and Nigeria, and “state capitalism”, an unlikely but functioning oxymoron that has been invented and practised in China over the past 40 years.

Another example: We are fixated on economic GDP growth. “The Nigerian Economy Will Grow by X % in 2023” is a frequent headline of economic news. But we have taken our eyes off the ball: Such growth must be inclusive. To be precise, this means it must be broad-based across sectors and anchored on a steadily increasing productivity of labour.

This misunderstanding takes us away from a more important focus on overcoming poverty with skilled human capital, jobs, and increasing GDP per capita. Nigeria’s GDP per capita is $2,000, and its average between 1960 and 2021 was $1,867.70. Comparisons with Malaysia, Indonesia, Thailand, Brazil and South Korea will make you weep, and I don’t want you to cry. Our economic policymaking, going forward, must understand the distinctions and the three stage-linkages between human development (literacy, water, health, skilled human capital), economic growth, and structural economic transformation. Economic growth without real human development is not just unsustainable. It will not be able to yield structural economic transformation. The latter means a shift from subsistence agriculture, commodities and mineral resources as a share of the GDP, to value-added manufacturing and export as an increasing part of GDP. This cannot happen without “productive knowledge” (PK), or skills. This means that educational system reform must become the number one priority for our medium/long term economic progress.

We were once tipsy with the “Africa Rising” myth, when the continent had not yet become an industrially productive economic powerhouse, with a significant share of world trade (only 3% today) and foreign direct investment (5%). Ten years ago, I argued in my book Emerging Africa: How the Global Economy’s ‘Last Frontier’ Can Prosper and Matter against the conventional wisdom that Africa was rising. The continent, I asserted, was simply emerging from the shadows, and setting out an agenda for its possible rise. “Rising” was more accurately applicable to Rising Asia – China, India, Malaysia, Thailand, Vietnam, etc. Looking back now, I take no pleasure in having been proved right.

See also  Footprints Without Imprints  

I would recommend two (in my view) critical executive education programmes for political leaders and economic managers in Nigeria (federal and state levels). The first is “Leading Economic Growth”, taught at Harvard Kennedy School by Professor Ricardo Haussmann and his colleagues. This course provides important knowledge and perspective on how to actually diversify an economy and achieve “economic complexity”. The second is “Macroeconomic and Financial Sector Management”, taught at the International Monetary Fund (IMF) Institute.
And then we have the matter of institutions. Without strong, independent institutions to uphold accountability and the Rule of Law, and to regulate the economy to create a level playing field for market players, a national economy cannot prosper. Institutions need to be independent, precisely so that they can work for the citizens and the economy broadly, and not for cabals or for partisan political interests. Where the latter is the case, the economy suffers because it weakens investor confidence, reduces both foreign and local investment, and promotes capital flight. But the truth is that institutions also cannot be strong, especially in an economy such as ours, without strong, competent individuals leading them.

These are the big issues as I see them, along with the immediate crisis of the petrol subsidy, irresponsible and untransparent borrowing, and a dysfunctional forex regime, all of which need to end as soon as possible, in order to stop the economic bleeding of our country. Alongside these reforms, however, we must also engage the heavy lifts – the even bigger work that must also proceed apace – of national consensus building and constitutional reform for greater national stability and prosperity. Nigeria can be the next China – on its own terms. The foundation can be laid over the next four years.

Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria, is the CEO of Sogato Strategies LLC, a global investment advisory firm, and President of the Institute for Governance and Economic Transformation (IGET), a public policy think tank.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business Analysis

Cash-less Policy: To Be or Not To Be



Central Bank of Nigeria CBN

By Ademola Bakare

Mr. Godwin Ifeanyi Emefiele, the Governor Central Bank of Nigeria (CBN), is no doubt the most misunderstood living Nigerian today, if his current travails as the helmsman of the nation’s apex bank are put under a klieg light.

For an impressive first term performance, President Muhammadu Buhari rewarded him with a second term.

The past eight years have been strewn with socio-economic challenges, which no doubt the Governor had himself admitted.

Evolving global and domestic challenges proved the mettle in Godwin Emefiele with the way he rose to the challenges spewing out programmes and policies that rescued the economy from recession in 2016.

This was few months after President Muhammadu Buhari assumed office.

He launched the Anchor Borrowers’ Programmme (ABP), suspending initially forty-one items which he later increased to forty-three from the official forex window to give bite to the backward integration economic policy of the government. He launched this to encourage local production of the products rather than outsourcing and frittering away the nation’s scarce foreign exchange. With the policy Nigeria came out economically stronger. 

But the global COVID-19 pandemic halted the trajectory. Instead of sulking, as confronted by the unfolding global socio-economic tragedy, and knowing also that the Nigerian economy was just crawling out of a recession, he speedily rallied the private sector to the rescue – the CACOVID. The move was indeed a succor. His initiative proved potent and immunized the economy from collapse. Aside this initiative was the deployment of Targeted Credit Facility to assist households and businesses to mitigate the effect of the lockdown. 

Now, and if we must recall, Emefiele assumed office with high expectation from Nigerians and critical stakeholders. At the time, international price of crude oil declined significantly to an abysmal $16/20 per barrel and the resultant capital flow reversals and acute shortage of foreign exchange.

See also  Full Text of President Buhari's Nationwide Broadcast

Stoutly built for the challenges, he rolled up his sleeves, solicited and got the support of the Bankers’ Committee, a novel collaboration in the Nigeria’s financial system. He secured a yearly five percent commitment of their annual profit as pool fund to provide credit facility for the resuscitation, development, and growth of the real sector – the MSMEs, the health sector, Power, and Aviation, among others. 

Health sector got N100 billion, while the Real Sector got N1 trillion. In fact, the COVID-19 pandemic exposed how weak and vulnerable the Nigerian economy was. The fiscal authority was caught napping, but for the swiftness and initiative-taking Central Bank of Nigeria, one can best imagine what would have become of the economy if Godwin Emefiele had not risen to the occasion.

Afterwards, he started erecting legs for the economy to breathe well. He launched the Loan to Deposit Ratio (LDR) policy and regulatory forbearance, 100- for- 100 Policy on Production and Productivity, RT 200 Programme to stimulate non-oil exports, the Creative Industry Financing Initiative (CIFI), Nigerian Electricity Market Stabilization Facility (NEMSF-2) for capital and operational expenditure of distribution companies (Discos) aimed at improving their liquidity status and aid recovery of legacy debt. 

He established Infrastructure Development Company (INFRACO) in conjunction the Federal Government to stimulate infrastructure development nationwide, to mention but few.

Recently, the Bank stepped up its cash-less policy initiative launched in 2012 by redesigning and reprinting three high-denominated banknotes – N200, N500 and N1,000. Governor Emefiele announced to the nation in October 2022 of his intention. Nigerians welcomed the news. More so that similar exercise was conducted about two decades ago.

See also  Of Public Intellectuals, the Nigerian Left and Blind Spots

The benefits of a cash-less economy are numerous, thus remain the best option for Nigeria, rated as one of the best financial systems in the world. Mr. Emefiele had said that the policy will help to check insecurity, corruption and economic sabotage, banditry and kidnapping as well as rein-in inflation.

However, developments that followed the implementation seemed to have thrown spanners in the implementation agenda, temporarily putting it on hold till December 31, 2023. Politicians conjecturally felt that the policy, launched on the eve of the general elections was targeted at them to squeeze them of needed electioneering funds. 

Three State governors, later joined by twelve other colleagues, took the Federal Government to court alleging that the policy was inflicting unimaginable pains on Nigerians. The Naira redesign/swap programme by extension would have (as was witnessed during the elections) reduced vote buying. The Bank was accused of playing politics with the policy, thus likely to hamper smooth electioneering process. Nevertheless, the CBN loudly restated its unassailable apolitical stance.

The strange meddlesomeness of the apex court in matters of monetary issues leaves one gaping, and still asking: where is the independence of the Central Bank of Nigeria? Its action foretells a repeat or forage in matters of CBN’s management of inflation or deployment monetary tools in future. 

As enshrined in CBN Act. 2007 (as amended), Section 18 says the Bank shall – (a) arrange for the printing of currency notes and the minting of coins; (b) issue, re-issue and exchange currency notes and coins at the Bank’s offices and at such agencies as it may, from time to time … and Section 19: (1) The currency notes and coins issued by the Bank shall be – (a) in such denominations of the Naira or fractions thereof as shall be approved by the President on the recommendation of the Board; and (b) of such forms and designs and bear such devices as shall be approved by the President on the recommendation of the Board, it did not say the Supreme Court.

See also  Letter To His Excellency, Gov.Yahaya Bello By Edward Onoja

The adversaries may have temporarily halted the full implementation of the cash-less policy, but they cannot abort the programme. Nations are fast developing their financial systems technologically, and Nigeria cannot afford to be left behind. What becomes of the fate of the policy or its implementation after December 31, 2023, will either advance the strides recorded in our financial system landscape, or obliterate whatever we may have laboured for in the past 12 years and months of full implementation.

The legislators are also threatening to amend the CBN Act just because of observed little glitches experienced during the implementation, which is normal with every new thing. They should however tread with caution so as not to throw the baby away with the bathwater.

Would the Supreme Court by the time it realizes it has erred, and usurped powers outside its authority, causing disruption in the planned implementation of the Naira swap, apologize to Nigerians? And would the politicians who politized the policy for campaign purposes, and not love for the Nigerian masses, leave the CBN alone to do its job? Only time would tell. 

Bakare writes from Abuja

Continue Reading

Business Analysis

NDIC Emerges ITF 2022 Best Employer in Human Resource Development  




By Tony Obiechina, Abuja 

The Industrial Training Fund (ITF) has conferred the award of “Best Contributing Employer in Human Resources Development” for the 2022 Service Year on the Nigeria Deposit Insurance Corporation (NDIC). 

The award was presented to the Corporation by the Director General, ITF, Sir Joseph N.

Ari, who was represented by the Abuja Area Manager and Deputy Director, Mrs.
Hauwa Mohammed, according to a statement by NDIC Director of Communications and Public Affairs, Bashir Nuhu on Sunday.

The ITF Boss disclosed that NDIC was the most compliant with the ITF Act through consistent periodic remittance of the statutory one percent of its total staff cost as stipulated by the Fund’s Act.


The DG appreciated the Corporation for its commitment and patronage of the ITF Training Centre, describing the NDIC’s commitment and partnership with the ITF over the years as worthy of emulation by other government agencies. 

Earlier in his acceptance remarks, the MD/CE, NDIC, Mr. Bello Hassan, represented by the Executive Director, Operations, Mustapha M. Ibrahim, appreciated the Management of the ITF for recognizing the Corporation as the best-contributing employer to the Fund. 

He promised the Corporation’s continuous collaboration with the ITF towards enhancing capacity building for its workforce, adding that: “the relationship between NDIC and ITF could be traced as far back as 1990. We, therefore, assure the ITF Management of our continued support’’ said the NDIC Boss. 

See also  Many Challenges of FMC Jalingo
Continue Reading

Business Analysis

Association Faults Bill Excluding NASS Staff from Contributory Pension Scheme




The Pension Fund Operators Association of Nigeria (PenOp) on Friday faulted the bill passed by the legislature, exempting the National Assembly Service from the Contributory Pension Scheme (CPS).
This is contained in a statement signed by Ms Olajumoke Akinwa, Media, Branding and Communications Lead, PenOp in Lagos.

Both chambers of the National Assembly recently passed a bill for an Act to amend the Pension Reform Act, 2014, to exclude or exempt the National Assembly Service from the CPS.

The bill also seeks to establish the National Assembly Service Pension Board and for Related Matters (HB 2025).

PenOp stated that the passage of this bill sets a dangerous precedent that will not augur well for hardworking Nigerians, working across the private and public sector, who depends on the CPS for retirement security and stability.

“More particularly, PenOp wishes to express grave concern regarding the way this bill was passed.
“The passage of this bill seems to have been unnecessarily expedited and shrouded in secrecy with very little engagement and input from critical stakeholders because it was passed during the National Assembly’s recess.
“Indeed, it is disturbing that this bill did not go through any public hearing, a key component of the legislative process that allows stakeholders to have their voices and opinions heard for possible inclusion in the process.
“If this was done, pertinent issues such as the amendment of retirement age, funding of pension liability and the potential debt burden on government; all of which are affected by this bill, would have been debated and brought to the fore.
According to the pension fund operators, the introduction of the CPS 18 years ago in Nigeria marked a departure from the unsustainable pension schemes the country had been operating in the past.
The association explained that the scheme had brought transparency, international best practice and guaranteed peace of mind to millions of pensioners.
It noted that for these reasons and many more, the need for the bill is indeed unfathomable and unjustifiable.
PenOp lamented that the exemption of any agency or group from the CPS holds grave consequences for the nation’s struggling fiscal position.
The pension fund operators said this will potentially upend the retirement security of pensioners who have given their blood and sweat in service to our great nation.
PenOp said: “therefore, without reservations, as a critical stakeholder in Nigeria’s pension industry, we consider the passage of this bill a procedural anomaly and legislative immorality.
“Hence, we call on all well-meaning Nigerians to note this grave anomaly and join us in calling on the National Assembly to reconsider its decision.
“We enjoin the Executive and Judiciary arm of Government to outrightly condemn this action.
“More specifically, we call on the National Economic Council, Minister of Finance, Budget and National Planning, Secretary to the Government of the Federation.
“Also, all relevant government stakeholders to look into this anti-people bill and ensure that it is not signed into law.
“Finally, should this bill proceed to the President, we call on him to kindly refuse to assent to it.
“This is in the interest of the people, the sustainability of the nation’s pension system and the flawed procedure in which this bill went through. (NAN)

See also  Ika Weekly Newspaper and a Catalyst for New Order
Continue Reading

Read Our ePaper

Top Stories

NEWS7 hours ago

Governor’s Forum: Tinubu Congratulates Abdulrazaq, Uzodinma, others on Leadership Choice

Share Post Views: 115 By Mathew Dadiya, Abuja President Bola Tinubu, Thursday congratulated the two governors who emerged as leaders...

CRIME7 hours ago

Security Operatives Kill One, Disperse Protesting Youths at Conoil offshore platform in Bayelsa

Share Post Views: 65 From Mike Tayese, Yenagoa A supposedly peaceful protest by youths of Sangana community in Brass Local...

CRIME8 hours ago

Troops Destroy Illegal 47 Refineries, Apprehend 65 Suspects – DHQ

Share Post Views: 125 The Defence Headquarters says troops of Operation Delta Safe (OPDS) have destroyed 47 illegal refining sites,...

DEFENCE8 hours ago

Tinubu ‘ll Change Security Architecture, NSA Assures

Share Post Views: 58 By Mathew Dadiya, Abuja President Bola Tinubu, Thursday met with the Service Chiefs and heads of...

Business News10 hours ago

CBN Debunks Report of Naira Devaluation

Share Post Views: 72   By Tony Obiechina, Abuja  The Central Bank of Nigeria (CBN), has debunked a newspaper report...

Uncategorized10 hours ago

Mrs Akume Confident of Nigeria’s Transformation Under Tinubu

Share Post Views: 83 Mrs Regina Akume, the elected member of the House of Representatives for Gboko/Tarkaa Federal Constituency has...

POLITICS10 hours ago

Adamu Tasks APC Governors on Adherence to Party Manifesto

Share Post Views: 70 Sen. Abdullahi Adamu, the APC National Chairman has charged governors elected on the party’s platform to...

NEWS10 hours ago

Gov. Hope Uzodinma Emerges New Chairman of Progressives Governors Forum

Share Post Views: 75 Gov. Hope Uzodinma of Imo has emerged the new Chairman of the Progressives Governors Forum (PGF)...

Business News10 hours ago

NEITI Hails Fuel Subsidy Removal, Offers Eight Strategic Considerations

Share Post Views: 136 The Nigeria Extractive Industries Transparency Initiative (NEITI) has lauded the political will and sincerity of purpose...

JUDICIARY10 hours ago

PDP Reserves Right to Suspend, Expel You, Court Tells Wike

Share Post Views: 80 A Federal High Court in Abuja on Wednesday told the immediate past governor of Rivers state,...

Copyright © 2021 Daily Asset Limited | Powered by ObajeSoft Inc