Nigeria's Macroeconomic Framework for an Independent Economic Recovery

alt The prospects of Nigeria’s 49 years of economic independence and strategies for charting a way forward for the future lies within the fable or veracity of the macroeconomic framework aimed at transforming a decaying economy into a global leader come 2020. Economics is about people, their work, their ownership of productive assets or lack of it, their share of what they produce, what they buy and sell, their accommodation, their recreation, in fact every element which we describe as quality of life, flows from the structure and management of the economy.

 

A flash look through US President Obama’s economic plan, A Blueprint for Economic Recovery, principally focused on creation of new job now- and sustainable economic growth and prosperity for years to come. The blueprint is projected to create jobs with targeted investment in affordable health care, clean energy and education; cuts takes for middle income families by more than $1.7 trillion over 10 years; cuts the deficit by nearly  two-thirds in four years; and cuts non defense discretionary spending as a percent of the economy.

 

President Yar’Adua is set to follow the footsteps of the American in same direction come October 1, 2009 in putting life to the vision 20:2020, and is expected to launch an economic independence framework, Nigeria’s economic blueprint that would see the coordination of strategic imperatives, processes and macroeconomic scaffold aimed towards an economic transformation. In shaping our policies it is imperative that we be mindful of both trends in the global economy, within which Nigeria is a small player, and of the limitations in the availability of resources. The failure of past development plans, strategies, visions, or plans are not unconnected to inappropriate use of our scarce resources and abuse in their management, corrupt practices, and above all, governments failure to commitments in term of continuity of previous economic plans which contributed in no small measure to the country’s current poverty rate standing at 76% growing from 46% over the last 13 years. The proposed economic recovery imperatives shall not be seen to create economic growth without attention given to growth indices; energy, education, and health care delivery.

 

Globalization brings important opportunities but also real dangers and constraints to the economy. In integrating Nigeria into the global economy, we need to struggle for an effective regulatory system that will promote development and equity. Nigeria requires an annual investment of $10 billion to be able to generate 2,000 mega watts of electricity. In other words, Nigerians shall meet the 6,000 mega watts target by 2012 having judiciously invested $30 billion with effect from January 1, 2010. Taking a mono-economy revenue dependant nation whose production drifts around 1.3 million barrels of crude oil per day, and oil price of around $70 per barrel, revenue of $21.84 billion is expected to be generated from crude oil sales alone per annum.

 

However, the success of Nigeria’s macro-economic frame work must also consider how to source the $120 billion to tackle the country’s decayed infrastructure. For a plausible result of government economic stimulus, strategic investments in key sectors is very vital. The US economic blueprint of April 2009 indicated strategic sectors that would rebuild her economy over the next 10 year as Education, Energy and Health Care reform. This clearly shows the vivacious importance of these key indices in nation building. A true economic recovery plan should not only make education available, but accessible and affordable to a larger portion of the country’s citizenry. A reliable economic stimulus should be able to promote energy independence, call for investments in energy efficiency and clean energy to launch a sustainable job creation and make the country a global technology leader.

 

Although it will take some time to turn around the fall outs from the failed policies of the last 20 years dished with frauds and scams perched around $2.3 Trillion, doubled national debts and an insignificant rate of job growth, Nigeria can make its economic independence stimulus plan a reality by restoring fiscal responsibility in all facets of the economy. For an effective economic independence delivery, a possible reduction in non-economic votes, non-defence discretionary spending, reduce health care costs, reduction in personal executive luxury costs, etc, could mean a judicious spend of the required $150 billion annual expenditure into key econmic sectors; education, energy, health, employment, that would drive the nation into the realms of the 20 top economies by 2020.

 

From this premise, it is expected that the mission of the government
continues to be the fundamental transformation of the Nigerian economy in order to give power to technological growth; eliminate poverty and the extreme corruption in the system; generate productive employment opportunities for our people at a living wage and ensure balanced Nigerian economic development through production of energy, reliable health care and functional education system. We understood the past processes of economic plans and do not underestimate the problems that we inherited and acknowledges that we will not overcome these in a short period. Progress should be made in the provision of basic services and in the macroeconomic stabilization; however, we have a long way to go, particularly, in the transformation of the economy.

 

The World Bank’s latest GDP growth projection for Sub-Saharan Africa for 2010 is 4.1%, compared with 1.6% for high income countries as a group and 4.4% for developing countries (East Asia and Pacific) as a group excluding India and China. Taking account of all of these, our economic policies should be geared towards a competitive, fast growing and developing economy which creates sufficient jobs for all work seekers; a redistribution of wealth, income and opportunities in favour of the poor and the historically disadvantaged; a society in which sound health, education and other services are available to all; an environment in which homes are secure and places of work are productive; the popular involvement and participation of all Nigerians in the economy and in economic decisions.

 

A better consideration of these growth indices could be a soul saver, taking cognizance of the fluctuation of oil prices as well as the dramatic shift in commodity prices which is projected to carry strong effects across countries, as growth among oil exporters falls; a projected fall to 3.3 percent from the 6.8 percent boom of 2008. At the same timecommodity dependent economies will slow into 2009 as demand and international commodity prices continue to fall, as we have been witnessing in the Nigerian context. This fall in commodity prices has more of its adverse effects on an importing dependant nation, and in turn will mean an increase in the importation of commodity goods which will not be a favour for the country’s trade balance.

 

In pursuing these objectives the emphasis of the economic independence strategy could be on four critical areas of work. These are central to a possible launch and implementation of what I would term RDP (Rural Development Plan). The first is the promotion of investment for sustainable job creation (sustainable in the economic and environmental sense). The second is to ensure the continuous link between growth and development. The third is to ensure that we establish new social and economic relations that empower and encourage technological knowhow. The fourth is to integrate all components of the economy Urban/Rural, Women/Youth and families into sustainable and meaningful economic activity. The extent to which this work succeeds and the extent to which we succeed in attaining each of these four objectives is the measure of the impact of our commitment to the economic policies on transformation.

 

To this end, I believe at 49 years of independence, we could put a touch of sense to the country’s macroeconomic framework towards the elimination of poverty, create jobs, provide useable and sturdy energy, and improved health care delivery as well as reliable and sustainable education in order to shrink the UN statistics which showed that about 2/3 of Nigerians lack access to electricity, about 63% of Nigerians are illiterate, and about 25 states in the country are currently in a state of power crisis. Although it is alleged that, on average, only 18% of the population has access to modern energy, local technological competence is growing at a geometric progression regardless of government support and inadequate financing. Without doubt, this crisis has been the epitome of the reasons behind the shrink in industries and economic potentials of the country in recent times.

 

Although it may be believed that the country is at a crossroad, the proposed economic blueprint, if taken as another wingding to share “democratic dividend”, will not only put the country at a standstill, but would lead to a dire state where all sectors and infrastructure remains at a comatose and limiting the chances of enlisting the country among “advanced developing nations”, talk more of being among the 20 most developed economy by 2020. Forty nine happy cheers, Nigerians!


 Salihu Muhammed

[email protected]

 

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