Towards Sustainable Economic Reforms

True economic sustainability encourages the responsible use of resources. This involves not only making sure that the country or business is making a profit, but that the operation is not creating environmental concerns that could cause harm to the balance of the local ecology. In most scenarios, the measure of economic sustainability is presented in monetary terms. The worth of assets and resources in dollar figures is common, as is identifying the amount of return generated by the efficient use of those resources.

The idea is to aid in identifying areas of the operation in which resources are not being utilized in the most efficient manner, and take the steps to correct the situation. In other words, it is a form of monitoring and evaluation device to measure the efficiencies of government and businesses in managing the available economic resources.

There is the need to state here that there is nothing like economic reform without peace; with or without abundance of mineral resources. More so, no amount of economic wealth can buy any nation peace if injustice is exhibited by the people who were e(s)lected to lead. No doubt, the slogan – “if you want peace, then work for justice” – simply illustrate that people who are treated unjustly will prevent the attainment of peace (as currently been experienced in North African and Arab nations today) until the wrongs to which they are subject are righted. Real economic reforms can only strife with peace which is more than armistice, more than the cessation of violence. Peace is unity and harmony. In a peaceful world, people are all pleased to cooperate with government and its policies to work, making infrastructure grow and protecting them, living and sustaining healthy living, developing entrepreneurship, supporting goals and aiding the attainment of government’s implementation of budgets.

With economic sustainability, the goal is to establish profitability by ensuring efficient use of available resources. A failure to track expenses and justify expenditures will also have adverse effects on the long-term stability of the economy, as well as hamper accountability; causing chaos as to the truthfulness or otherwise of government’s one-quarter spending of its annual budget on the National Assembly alone. A healthy economy is essential for a sustainable and liveable community. It provides the resources that allow residents and the people to prosper. It brings employment and a solid tax base to support services, leading to healthier lifestyles and greater opportunities for personal fulfilment. With a strong economy we can achieve a higher standard of development, provide more services, and enjoy an overall higher quality of life with appreciable per capita income and reasonable earnings to meet the needs and wants.

It is true that the Nigerian economy has received accolades from international financial organizations with respect to its growth over the year; how true is the economic livelihood of its populace who have starved their whole live over poor wage or delay and inconsistency of such wage? Many wage workers don’t receive their wage in months, yet economists assess the growth rate as encouraging. We have become used to a constant thirst for growth. We constantly want more of everything, and we want it faster. But where does that all lead? From a purely mathematical perspective, a GDP growth rate of 6.0% in 2008 to 6.9% in 2009 could be seen to be satisfactory enough; thanks to rise in oil demand which brought oil recovery price to US$83.00 per barrel from a decline of US$60.70 per barrel in the last quarter of 2009. It was also assumed that annual growth rate between 2010 to 2014 is put at 7%, with estimated oil demand to rise from 376,000 barrel per day in 2009 to 493,000 barrel per day in 2014; however, can a mono economic Nigeria maintain a stable economy void of violence and constant attacks on oil installations through this projected period?

Economists have identified a country’s debt profile as a vital criterion in measuring its growth and development. Much could not be said on the truthfulness of Nigeria’s debt profile with conflicting figures from Nigeria’s Debt Management Office (DMO) and other financial and data report agencies; one is left at awe as to the sustenance culture of the country’s data experts in supporting the government’s reform programs. Although the DMO has constantly told Nigerians that the rising debt profile is nothing to fear, assuring the country that the 19% debt to GDP is also favourable. Well, it’s true that there is no way any country in the world could avoid borrowing, it’s also true that a country can invest the borrowed funds into translating the benefits of economic reforms into welfare improvements for citizens, in improving the domestic business environment, and in extending reform policies to states and local governments, build roads, railways, power etc; this could contribute to more feasible economic turnaround than spending one-fourth of a country’s budget on salaries, wages, allowances and other running cost of one arm of government – the legislature, as alleged by the Central Bank of Nigeria.

Lest we forget in a hurry, the 2003 reform program, National Economic Empowerment and Development Strategy (NEEDS), was said to focus on four main areas: improving the macroeconomic environment, pursuing structural reforms, strengthening public expenditure management, and implementing institutional and governance reforms. No doubt, the reform brought notable achievements, but it seems to have faded away with the government that created it without adequately addressing the unemployment problem, power, youth empowerment, as well as diversification from oil dependence. Policies, whether economic or political, are expected to be a going concern, initial steps of a much longer journey of economic recovery and sustained growth whose success should not be claimed by the initiator nor those that contributed to it. Besides, sustainability has to do with the concept of building on the vision of an initiator and paving way for others to build upon in order to attain the desired goal. How can economic recovery be achieved with different reforms that are actually photocopy of plans save for their names?

Today, Nigeria is faced with tough economic reforms like reducing debts of the petroleum, improving power production, increasing investment in education and information and communication technology, limiting foreign borrowings, identifying and producing alternative power, cutting subsidies, boosting security for lives, property and against financial crimes, curbing legislature spending and consulting the International Monetary Fund (IMF) in its fiscal and monetary policies. Before the last financial year, Nigeria is seen to have poor record in fulfilling the Fund’s fiscal and monetary recommendations; however, with cogent reforms in the financial sector since last year, the country is believed to be having taken a right step into building a sustainable platform that could aid the country in its economic recovery strives.

No doubt Nigeria’s GDP rate is growing impressively and is expected to grow towards 10%; the effort of the Central Bank of Nigeria (CBN) in reviving the financial sector may be hazardous and overheat the economy. In the first phase of saving “failed” banks in the country, the CBN pumped in $4 billion to help recapitalize the banks; this is nothing compared to the $14 billion worth of toxic debts that the Asset Management Company of Nigeria (AMCON) is purchasing from “bad banks”. One may not be at awe on the rising inflationary trend in the country from 11.80% in December 2010 to about 12.10% in January 2011 because the liquidity flow in a bid to save banks and make the financial sector buoyant is enough to justify the rising inflation trend today. As noticed earlier, the debt-to-GDP ratio may be minimal, the country may consid
er the need to reduce its excessive borrowings or risk carrying the title of a hyper-inflation nation.

Although an early economic step had been taken in increasing the Monetary Policy Rate (MPR) by 250 basis points, the CBN could also consider the need to force the deposit rate to a further step lesser than the treasury bill rate to checkmate the risk and return portfolios of commercial banks; the government and economic team must also consider the need to support local manufacturing sector and encourage the involvement of all Nigerians in the drive to resuscitate the agriculture in all nooks and cranny of the country. This gesture will lead to improvement of infrastructure and transportation in the country. What is more? There is an urgent need to intercept the unemployment pandemic by involving jobless Nigerians in comprehensive research and development.

Salim Salihu Muhammed
[email protected]

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