Nigeria as 39th Largest Economy In The World, A Punch Newspaper Editorial

THE recent announcement of Nigeria’s climb to the position of the 39th leading economy in the world has the capacity to create a false sense of hope in a country whose population is beset by grinding poverty and teeming unemployment. For those who bear the brunt of excruciating economic hardship, it will be difficult to fathom any such growth.

News of the improved ranking may not have come as a total surprise. Prior to the announcement by the Minister of National Planning, Shamsuddeen Usman, there had been predictions of favourable performance by the Nigerian economy by international organisations. It is in line with such predictions that the Olusegun Obasanjo administration (1999-2007) set a target of 2020 to transform Nigeria into one of the world’s top-20 economies. Unfortunately, since the idea, code-named Vision 20-2020, was conceived and launched with fanfare, not much seems to have happened to facilitate the achievement of that target. In fact, with just eight years to the target date, everything points to a missed target.

Ordinarily, moving from the 44th to the 39th position in the world should give cause to cheer. After all, the movement of China and Brazil to the second and fifth largest economies in the world respectively was well heralded. However, before we start clinking glasses here, there is the need to find out the true nature of the growth.

Over the past 40 years or so, crude oil has gradually taken over from agriculture and manufacturing as the backbone of the Nigerian economy. From a position of the largest producer of palm produce, Nigeria now imports palm oil from Malaysia. The country has long lost her position as the second largest producer of cocoa – second then to Ghana – and is now behind Cote d’ Ivoire, Brazil and Ghana. The groundnut pyramids for which the Northern part of the country was noted have long given way to sand dunes, just as cotton, rubber and timber have also lost out as major income earners. Agriculture, which contributed over 60 per cent to the Gross Domestic Product of the country in the 1960s, now contributes a little over 40 per cent.

Similarly, manufacturing, which, at its height in the early 1980s, contributed 18 per cent to the GDP, has now fallen to a mere five per cent, according to latest figures from the National Bureau of Statistics. Figures from the Manufacturers Association of Nigeria indicate that over 900 companies folded up or relocated to other countries between 2009 and 2011 as a result of our unfriendly business environment. Nigeria continues to feature at the bottom rung of ratings on competitiveness of the business environment. The improved inflow of Foreign Direct Investment, the International Monetary Fund says, is “targeted mainly at the extractive sector, particularly the petroleum sector.”

Besides, the poverty rate in Nigeria has worsened. Over 112 million of Nigeria’s estimated 167 million population were said to be living in relative poverty last year. However, the NBS put the number of those in absolute poverty at 99.248 million or 60.9 per cent. According to Yemi Kale, the Statistician-General of Nigeria, “In 2004, Nigeria’s relative poverty measurement stood at 54.4 per cent but increased to 69 per cent or 112.518 million in 2010.” The same bureau puts unemployment rate for 2012 at 24 per cent, even though the Central Bank of Nigeria Governor, Lamido Sanusi, last year said that youth unemployment was 41 per cent.

Perhaps the only area that has been driving the economy is the oil and gas industry, which in itself still remains largely undomesticated and, as a result, underexploited. The whole growth that the government periodically bandies about is mainly about the oil industry, which, by nature, is volatile and subject to the vagaries of the international market. Besides, it employs far fewer people despite higher investments. The growth that Usman referred to, in the real sense of it, is not growth, but calculations based on improved oil prices, which, for the past few years, have verged at over $100 per barrel, while production has risen to 2.7 million barrels per day, according to Andrew Yakubu, the Nigerian National Petroleum Corporation boss. Although oil and gas accounts for more than 90 per cent of Nigeria’s foreign earnings, its share of the GDP stands at just 15 per cent

The current growth figure is in line with the government’s unhelpful penchant for flaunting statistics as achievement. Any growth that fails to transform the economy, create jobs and diversify the economy away from its perpetual dependence on primary commodities to a processing and service-oriented economy is empty. For Nigeria to start charting the course for real growth, the government must raise the level of infrastructure, currently in a state of decrepitude. The current challenges of insecurity arising from a combination of kidnapping, armed robbery, terrorism and piracy must be tackled. Capital only goes to where it is safe. No amount of foreign trips can attract investors into the country with a harsh business environment.

There is also the need for Nigerians to embrace farming, which has the capacity to absorb the greatest number of jobless people currently roaming the streets. For the economy to experience real growth, manufacturing has to move from its present five per cent to, at least, 15 per cent. This can only be done if the current unreliable power sector is stabilised. The advantage in dealing with power is that it has an unlimited capacity for job creation.

Finally, the government must also curb its propensity for importation and learn to depend more on locally produced goods. Diversifying the economy will also involve exploiting other numerous mineral resources with which the country is abundantly blessed. It is only when these are done and millions of Nigerians are lifted out of poverty the way China was able to lift over 400 million people out of poverty, that any report of growth would be taken seriously.