Strategic Economic Plans and Growth Indices in Nigeria

 
altSeveral ten-year plans did not take up the full period of time assigned to them (Almost, if not all failed and were abandoned). Although, it could be seen that Nigeria’s economic plans didn’t actually fail, the nation had only succeeded in finding a million ways that didn’t work. In USSR, the initial five-year plans were created to serve in the rapid industrialization of the Soviet Union, and thus placed a major focus on heavy industry.

The plans were developed by the Gosplan based on the Theory of Productive Forces that was part of the general guidelines of the Communist Party for economic development. Fulfilling the plan became the watchword of Soviet bureaucracy. The same method of planning was also adopted by most other communist states, including the People’s Republic of China, whose products had flooded the Nigerian market today. In addition, several capitalist states have emulated the concept of central planning, though in the context of a market economy, by setting integrated economic goals for a finite period of time.
 
 Nigerian plans included economic forecasts, policies toward the private sector, and a list of proposed public expenditures. Plans did not constitute commitments by public departments to spend funds. Although Nigerian political leaders made decisions about general objectives and priorities for the first plan, foreign economists were the main authors of the actual document. Its authors favoured decentralized decision making by private units, disregard of major discrepancies between financial and social profitability, and high economic payoffs from directly productive investments (as opposed to indirect returns from social overheads). They discouraged increased taxes on the wealthy (out of a fear of dampening private incentive), and advocated a conservative monetary and fiscal policy emphasizing a relatively small plan, openness to foreign trade and investment, and reliance on overseas assistance. Foreign aid was set at one-half of public sector investment.
 
The global economic crisis had its impact on indices that contribute to growth and development, notably employment and production. Although Nigeria is set to consider or carry out the blueprint for the implementation of the vision 20:2020 economic plans, effective 2010, its sufficiency and success would be determined in its ability to cut job loss and reduce unemployment rate as well as increase the country’s production of consumable and export produce. However, the antecedents of previous plans, notably the first national development plan which the colonial government undertook no serious comprehensive planning, could mean another expected failure of our economic plan towards the vision 20:2020, a shadow implementation, or lack of it. These earlier plans experienced incomplete feasibility studies and inadequate evaluation of projects, accompanied by meager public participation, followed by excessive political intervention in economic decisions. Moreover, insufficient attention was paid to the small indigenous sector, and the machinery for implementing developments in the public sector was unsatisfactory.
 
In spite of the global financial crisis, the Nigeria’s financial sector witnessed a near reliability in operation until the CBN’s reconsolidation drive that unveiled the dearth of good banking ethics and unjustified capital structure in the banking industry; this could result to an adverse effect for an industry that should aid government in executing its economic plans. Some banks in the sector had since commenced with a mass sweep of its work force in a bit to remain in business; this would colossally drive up the unemployment rate, a critical issue in determining the success of an economic plan. The country and the sector need and must identify new sources of growth to replace the jobs lost. Unemployment is a measurement tool against growth, thus, a plausible consideration for a rapid production would boost growth and eventually cut down the effects of unemployment on development.
 
As noticed in past economic plans, blueprints, strategies, (whatever names they were called) their failures had not been in the process of implementation, but rather in the failure to identify the key indices of implementation as well as non compliance to underlying economic ideas or principles. There would be need for policies to improve education, align worker skills with employer demands and the promotion of green jobs or technological skills. In line with the Vision 20:2020 guidelines for the next ten years, the blueprint should focus on the importance of greener and socially inclusive growth. However, care must be strengthened on the failures of past economic plans which were implemented in the interest of the “masters”. The first development plan of 1946 clearly shows the arrays of focus of the budgeted/planned N110 million for a period of ten years; instead of giving attention to industrial development as did by the soviet union, priority was given to transportation and communication which aided the movement of our cash crops to furnish the industries in Europe.
 
Most African nations, including Nigeria, have been rated as “third world” seemingly for the perpetual “state of crisis,” usually portrayed in terms of the continent’s failure to keep pace economically with other parts of the so-called developing world. In Nigeria, the objectives of the rolling plan were to reduce inflation and exchange rate instability, maintain infrastructure, achieve agricultural self-sufficiency, and reduce the burden of structural adjustment on the most vulnerable social groups. In a scenario where the key indices to growth and development are not taken into serious consideration for decades, one is left in awe as to whether Nigeria is fast becoming a “Fourth World” nation, lacking even the ability to feed her own populations and, rather than gaining ground, rapidly falling behind other Third World regions. Thus, it is imperative for Nigeria to engage in critical project management that could play a significant role in the planning, execution, monitoring, and control of the many projects that have been identified during the articulation stages as paramount in attaining lofty goals of the Vision 20:2020. And in doing that, the nation must bear in mind the need to create jobs, improve infrastructure (including power and alternative sources of power), and, provision of tax holidays to boost production and encourage industrialization.
 
Perhaps, Nig
eria must be cautious of past “Economic Errors” of successful administrations in formulating economic plans, strategies or policies; one of such errors is the manipulation of, and exercising huge influence over interest/bank rates, manipulating bills rate and the control over the supply of credits. But the government, through its regulatory institutions, is not the author of interest rates. Interest is an inherent feature of the capitalist economy. It represents the premium people place on consuming the same goods sooner rather than later, with present goods always commanding a higher price than the same goods later. Borrowers pay interest; savers earn interest: the market rate of interest reflects people’s preferences. What the government does do is distort rates. By artificially lowering rates, the government fools investors into thinking that investment today will pay off in future consumption (drawn out of savings). When that moment doesn’t arrive, the government either has to keep the game going (thereby causing prices to rise) or curb the flow of credit by increasing rates (thereby bringing about an economic downturn). The government tries to keep the system “liquid” for its member banks, but in doing so, it further distorts the rest of the economy. In either case, the interest rate is not set by the government but only maladjusted by the government.
 
In Nigeria today, as it were in most South-East Asian countries, the most significant obstacles to business activity and expansion emanate from poor governance. Businesses often face burdensome licensing and opaque registration requirements, volatile law-and-order conditions, endemic rent-seeking behaviour and corruption, and insecurity in the enforcement of contracts. Within this environment, small businesses which have more limited access to capital and political connections tend to carry a disproportionately heavy burden. However, it is expected that the Vision 20:2020 economic blueprint must focus attention in facilitating a level playing field that allows small businesses to prosper towards generating employment, increasing opportunities for women and the poor, and ensuring globally competitive exports and supply chains. A projected Economic Plan aimed at bettering the economic life of a nation should provide a strategy to support investment and enterprise in three primary components: analysis, advocacy, and public-private dialogue. In Indonesia, the Philippines, Vietnam, Cambodia and Sri Lanka, the Economic Governance Index (EGI) serves to identify those aspects of governance that determine the investment and enterprise competitiveness of localities. Moreover, the results of the EGI feed into collaborative processes among government, business, and civil society, to reform regulations that constrain investment and the growth of private enterprise.
 
 Although the Vision 2020 blueprint could be seen as yet another economic “panorama”, but rather, it should be viewed as a test of our economists’ ability to save the nation from its economic crisis. Many analysts see that the Malaysian government has made it past the 1997 Economic crisis. The crisis caused the degradation of the Malaysian currency (Regent) by half of its value. Yet, against all expectations and in less than two years the Malaysian economy broke out of the crisis and was put once more on a road to achieving booming high growth rate in comparison with the other tigers that were stricken by the same crisis. The Secret of Success: Fixation of the Currency and Regulating Foreign Capital; the secret of the economic takeoff that Malaysia witnessed lies in the Protective Policies and Procedures taken by the government on top of which was the fixation of the Regent against the U.S. dollar at the value 1 U.S. Dollar = 3.8 Regent. The government also prohibited the transfer of any Malaysian currency abroad and placed strong regulations about the inflow and outflow of foreign capital. Moreover, the Malaysian government downsized government’s public expenditure, offered state firms for privatization to Malaysians and not to foreign companies, and made encouraging taxation allowances.
 
Nigeria’s Vision 20:2020 Economic Blueprint, no doubts, stands the test of time as one of the best policy ever written for a nation faced with economic downturn. However, a plausible implementation of a lucid strategy of this kind will require the considerations of some form of restrictions that would be better viewed as “External Aggressions”. This restriction policy had paid well for many countries striving to survive their various economic blows. The Malaysian government has held on to these policies up to date for two reasons. First, the policies were successful in achieving the targeted goals, especially stopping the degradation of the currency. Moreover, the taxation policies increased the local demand which led to the increase in consumption and eventually the rise of spending and investments. Second, the policies prevented any new attempts to bid on and broker with the local currency that will degrade its value.
 
Whatever the method of economic reform or plans adopted, rapid growth in a globalized environment requires a well-functioning infrastructure including especially electric power, road and rail connectivity, telecommunications, air transport, and efficient ports. These had been experienced in the rapid development of Malaysia where the provision of infrastructure paved way for local entrepreneurs to contribute to nation building through the provision of jobs, local subsidy to wealth lost on foreign goods, rapid industrialization and improved exports. One cannot overemphasize the role of local entrepreneurs in economic development. A society that begins its development with a sizable group of local entrepreneurs is way ahead of the game. Malaysia, Indonesia, and India’s strategies should serve as a reference point to our economists on the need to look inwards towards considering indices that would set Nigeria on the pace to becoming one of the top economies in the future.
 
 
Salim Salihu Muhammed

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