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Bringing back double-digit economic growth

Digital Economy

For the first time in our politico-economic discourse, aspiring for double-digit economic growth is taking centre stage, but this is belated. Pundits are talking about it and it was a subject of discourse at the just concluded Nigerian Economic Summit Group conference in Abuja. It appeared in party manifestos and presidential candidates have given it a mention. Former Governor Donald Duke was the first politician from whose lips I heard the DDG. Unfortunately, he has withdrawn from aspiring to lead the nation.

That politicians make pronouncements doesn’t equate to their being knowledgeable on achieving what they spout, recent history confirms this. To them, it’s for vote catching, not that they are schooled in such economic niceties. So, looking up to politicians would amount to beaming the light in the wrong place.

Fortunately, economists have come forward to join the discussions on DDG. As in economic matters, two clear positions have emerged as to achieving DDG. In a report that was published on its website, the World Bank reiterated that Nigeria could return to the path of stellar growth that was achieved in the first decade of this century if we deepened the policies in place of the first decade.

On the other hand, a seasoned economist writing on the national economy postulates that DDG will be achieved by building on what has been put in place in the last eight years. In eight bullet points, he laid out reasons for his optimism, which is more or less about Nigeria building on Buharinomics. Let’s investigate some of the economic points raised. Let’s be clear that Buharinomics is a departure from the liberal economic policies pursued in the first decade.

The first reason given is the coming on board of a number of projects, mostly infrastructure, including the Dangote Refinery which is not infrastructure. He mentioned the Lekki Deep Sea Port, the 2nd Niger Bridge, and Calabar Port as adding to economic activities. Do they? The use of infrastructure does not add to economic activities directly, they lubricate existing economic activities. How much more economic activity has the Lagos-Ibadan Rail or the 2nd Niger Bridge added? What the 2nd Niger Bridge does is make the passage of existing goods easier, not exactly add to it. But the Dangote fertiliser or petrochemicals and refinery add directly to GDP. Remember we are debating not just minuscule GDP improvements, but stellar growth to double digits.

The renowned economist is hinging DDG on business cycle boom that comes after a bust; unfortunately, this is not Nigeria’s story. The country’s story is a commodity-bust story, specifically crash in oil prices. This has been the trigger for the two previous recessions Nigeria has suffered. Also we have remained a depressed economy after exiting the 2016/17 recession, by not returning to any boom. This premise for a DDG is nonexistent. Our counterparts in Asia do not experience recessions as we do, meaning boom-bust cycles are for mature economies in the West and Japan.

The third policy on which a DDG is hinged is the famed import substitution policy of this administration. The ‘produce what you consume and consume what you produce’ import substitution policy pursued for the last 60 years, and not six years has delivered grief and it has made Nigeria an import-dependent insular economy unable to export manufacturing products. Without the export of items manufactured within the country, the ISIP is just one leg of a bipod; the reason we are always under forex pressures once oil prices crash.

Only nations that have in place industrial export with their import substitution being industrialisation have achieved DDG. A comparison of South American countries steeped in ISIP and Asian countries steeped in export-led industrialisation shows a clear path to DDG. Expecting policies that have not worked to spur Nigeria’s annual growth above three per cent to deliver double-digit economic growth is laughable. Yet, there is a suggestion for a new policy; a forced cashless policy that has been wrapped with currency redesign and limit on cash withdrawals. No one is sure how this will work in an economy that has a large informal sector that is cash and carry based. Other economists are skeptical about the wisdom of the forced intervention, offering not to bet on it spurring DDG.

Buharinomics and Emefielism are not going to deliver laudable single-digit growth, not to speculate delivering double-digit growth. These are twin babies that should be put away with the bath water in 2023. Let’s beam our attention on the recommendations of the World Bank as published in a report available on their website. Paraphrasing, the report states that “the hard won income gains of the 2000s evaporated between 2011 and 2021 due to lack of deeper structural reforms, global shocks, conflicting macroeconomics policy and increasing insecurity.”

The report continues by saying that “attracting private investments requires a solid macroeconomic foundation which has been weakened in recent times. Nigeria can become a growth star if it implements a comprehensive set of bold reforms in a timely manner.”

There is hardly a sounder prescription than that given by the World Bank, asking us to go back to what had worked for us and delivered between six per cent and eight per cent growth for the country for almost a decade and half. Simply put, move away from the statism, multiple exchange rates, and fuel subsidy; then in subsequent years deepen the reforms.

We should no longer talk of the between six to eight per cent growth, we are looking at scaling up to double-digit growth for decades so as to create quality jobs that will lift millions into the middle class. Not poverty reduction, but serious societal wealth creation for Nigerians and the rest of Africa.

New mental attitudes would be needed for this; old habits and ideologies would have to be shed, meaning our journey to DDG starts from within before it can emanate outside of us. We need to restructure our mental attitudes from bottom-up. This will give room for more export economic life beyond oil and gas.

A well-thought-out rearranging of the polity is also necessary; not a hasty one but one that addresses the contradictions in the values of our peoples. These contradictions are bearing negatively on peace and security that is needed for sustained transformation. Economic gains can be wiped out through the blow out of political issues

While the World Bank has advised us to deepen the structural reforms done in the 2000s, the bank did not give details. To deepen and protect the economy from oil shocks, attention should be shifted from demand control of forex market to intensifying supply of the dollar into the economy through sectors other than oil and gas. RT 200BN is a step in this direction, albeit a belated one. By joining the global supply chains beyond crude oil Nigeria’s GDP will have avenues for new growth.

Doubling the manufacturing sector’s contribution to GDP from 13 per cent to 25 per cent is of great importance. Investment in heavy industries, being done by the Dangote Group and BUA, is a right step in this direction. Bottom-up investment in the transportation industry, as opposed to assemblage currently done by Innoson should be addressed. We can start by producing in the country the many parts needed in motorcycles and tricycles. Cottage industries can spring up to produce primary parts for these means of transportation with the potential to contribute immeasurably to GDP.

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