Download the nigerian economy in distress

THE NIGERIAN ECONOMY IN DISTRESS: POLICY
CHOICES FOR BUHARI’S ADMINISTRATION +
By
Akpan H. Ekpo++
+
++
Inaugural lecture organized by the Centre for Financial Journalism at the
Civic Centre, Lagos, March 17, 2016
Professor of Economics and Director General, West African Institute for Financial
and Economic Management (WAIFEM), Lagos.
Email: [email protected] Web page: www.akpanhekpo.com
The views expressed herein are mine; the usual disclaimer applies.
This lecture is dedicated to one of the world’s best Revolutionary Marxist Scholar
Comrade (Professor) Eskor Toyo who passed away on December 7, 2015
1
OUTLINE
• INTRODUCTION
• PROGNOSIS OF THE NIGERIAN ECONOMY:
- Morphology of Growth
- Performance of the Economy
- Social Indices
• CONCEPTUAL AND THEORETICAL DISCOURSE
- Role of the Poblic Sector
- Measuring Economic Performance
- Role of Private Sector
- Policy Choices For Buhari’s Administration
• CONCLUSION
2
1. INTRODUCTION
• Nigeria’s neo-colonial status.
• Macroeconomic and Social Indices compared with
similar countries in 1960.
• Reason for under-development and poverty.
• Policies of Various regimes (1999 – 2015).
• 16 years of neo-liberal economics and the PDP.
• APC and the Change Mantra.
• Objective of the lecture.
3
2. PROGNOSIS OF THE NIGERIAN ECONOMY
Morphology of Growth
•
Table 1: Nigeria: Sectoral Contribution to Real GDP at 1990
Constant Prices, 2012 – 2013 (Q1 – Q2) in %
Item
Agriculture
Solid Mineral
Crude Petroleum &
Natural Gas
Manufacturing
Telecommunication &
Post
Finance & Insurance
Wholesale & Retail
Trade
Building & Construction
Hotel & Restaurants
Real Estate
Business & Other
Services
Q1
34.47
0.33
15.80
Q2
40.69
0.38
13.86
1.12
7.29
3.96
7.28
4.07
23.39
Others
2013
Q2
40.06
0.40
12.90
Q4
38.20
0.37
12.59
Total
39.21
0.38
13.76
Q1
33.69
0.34
14.75
3.53
6.73
7.12
7.01
4.20
7.05
1.14
8.53
3.98
8.37
3.98
17.12
2.92
18.81
2.83
20.66
3.37
19.92
3.96
23.75
3.95
17.32
3.01
0.69
2.03
1.07
2.21
0.56
2.03
1.12
1.68
0.53
1.73
0.84
2.09
0.47
1.70
0.83
2.19
0.55
1.85
0.95
3.27
0.74
2.10
1.09
2.39
0.60
2.12
0.60
6.74
6.81
6.76
6.13
6.58
6.66
6.74
Source: National Bureau of Statistics, Abuja.
4
2012
Q3
42.62
0.43
13.42
2. PROGNOSIS OF THE NIGERIAN ECONOMY
(CONT’D)
Table 2. Nigeria: Sectoral Growth of GDP (1990 Constant Prices)
2012 – 2013 (Q1 – Q2) in %
2012
2013
Item
Agriculture
Solid Mineral
Crude Petroleum &
Natural Gas
Manufacturing
Telecommunication & Post
Q1
4.37
11.65
-2.32
Q2
4.21
11.72
-0.73
Q3
3.89
12.61
0.08
Q4
3.62
13.59
-0.79
Total
3.97
12.52
-0.91
Q1
4.14
12.00
-0.54
Q2
4.52
11.84
-1.15
5.17
34.06
7.59
29.38
7.78
31.57
7.70
32.44
7.55
31.83
8.41
24.53
6.81
22.12
Finance & Insurance
3.57
5.01
4.08
3.48
4.05
3.61
5.18
Wholesale & Retail Trade
8.42
8.65
9.62
11.19
9.61
8.22
7.44
Building & Construction
13.28
12.73
11.52
12.55
12.58
15.66
14.87
Hotel & Restaurants
11.45
12.30
12.33
12.54
12.15
13.61
13.69
Real Estate
Business & Other Services
9.34
7.67
10.81
11.26
10.24
9.11
11.09
10.46
10.44
9.69
10.06
8.63
10.88
11.33
Others
Real Growth at Basic
Prices
Non.oil Growth
4.97
6.34
4.84
6.39
5.25
6.48
5.57
6.99
5.18
6.58
5.37
6.56
5.06
6.18
8.14
7.63
7.55
8.21
7.88
7.89
7.36
5
Source: National Bureau of Statistics, Abuja.
2. PROGNOSIS OF THE NIGERIAN ECONOMY (CONT’D)
Table 3: Nigeria: GDP at 2010 Constant Prices: (%)
Distribution, 2014 – 2015
2014
2015
Item
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Agriculture
19.65
20.89
26.63
23.86
22.90
19.79
21.12
26.79
Industries
27.36
25.96
24.20
22.66
24.93
25.65
24.52
23.51
Services
52.95
53.15
49.16
53.48
52.15
54.56
54.36
49.70
Source: National Bureau of Statistics, Abuja.
6
2. PROGNOSIS OF THE NIGERIAN ECONOMY (CONT’D)
Table 4: Nigeria: Real Growth of GDP by Sector, Year–on–Year, 2014–2015 (%)
2014
2015
Item
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Agriculture
5.53
3.68
4.47
3.64
4.27
4.70
3.49
3.46
Industries
4.84
8.97
5.43
7.96
6.76
-2.53
-3.31
-0.13
Services
7.20
6.54
7.61
6.15
6.85
7.04
4.67
3.97
Real Growth Rate
6.21
6.54
6.23
5.94
6.22
3.96
2.35
2.84
Non-oil Growth Rate
8.21
6.71
7.51
6.44
7.18
5.59
3.46
3.05
Source: National Bureau of Statistics, Abuja.
7
PROGNOSIS OF THE NIGERIAN
ECONOMY (CONT’D)
Before the rebasing exercise, agriculture contributed
more to GDP (almost 40%) followed by wholesale and
retail trade (20%); manufacturing almost 4%; all sectors
grew positively during the period.
The economy remained at the primary stage of
production.
After rebasing, the contribution of agriculture to GDP
which stood at 26.6 per cent in the 3rd quarter of 2014
increase slightly to 26.8% in the 3rd quarter of 2015.
The growth of the agricultural sector dropped from
4.47% in the 3rd quarter of 2014 to 3.46% in the same
quarter of 2015.
•
•
•
•
8
The industrial sector’s contribution to GDP declined from 24.2% in the 3rd quarter
of 2014 to 23.5% in the same quarter of 2015. Through out the 3rd quarter of 2015,
industrial sector’s growth was negative . An unhealthy situation given the
importance of manufacturing in driving growth and development.
The services sector now dominates in terms of its contribution to GDP. At almost
53% in the 1st quarter of 2014, it increased to almost 55% in the same quarter of
2015. The sector now contributes more to GDP than any other sector of the
economy.
Does this imply structural transformation? No. This phenomenon in an economy
like Nigeria is known as tertiarization.
Poor quality of services and the complexity of the new 2008 Social National
Accounts.
After rebasing at 2010 constant prices, the structure of the economy was not
transformed; data revealed that agriculture remained dominant while manufacturing
contributed less than 10% to GDP.
The rebasing made Nigeria a middle-income country with implications.
No longer entitled to IDA loans which attracts concessionary rates and longer
period of payment.
Also largest economy in African and among the top 20 in the world.
•
•
•
•
•
•
•
•
9
•
•
•
•
•
•
The morphology of growth shows positive growth trajectories
averaging about 5% for the period 2000-2014.
Growth reduced in the last 2 quarters of 2015 to an average of 2.5%
due to falling oil prices and the adverse global environment.
Within this context, policy-makers warned of an impending
recession if certain measures were not taken hence the unorthodox
monetary and exchange rate policies of the CBN.
Growth has not resulted in economic development as all other
macroeconomic and social indicators are moving in the wrong
direction.
Growth is only a necessary condition for development. It may not
translate to development without government intervention.
Growth needs to be double-digit and sustained for at least 15 years
to have a dent on poverty reduction.
10
•
•
•
•
From 1970 inflation has been fluctuating between double and singledigits. What is important is for an economy to know its inflationary
threshold. There are economies with double-digit inflation but
growing such as Brazil.
The rising rate of unemployment makes mockery of the positive
growth trajectory during the period 2000-15. The rates of
unemployment and underemployment now stands at almost 30%
and rising among youths and as more school leavers are thrown into
the labour market.
The high rate of unemployment, declining productivity in the last 3
quarters of 2015 and inflation nearing double-digit show that the
economy is in the phase of stagflation – a preclude to a recession if
urgent measures are not taken.
Based on the low score of the EPI, rising misery and discomfort
indices, the performance of the Nigerian economy has been
unsatisfactory for the period 2006-2015.
11
2. PROGNOSIS OF THE NIGERIAN ECONOMY (CONT’D)
Table 5, Nigeria: Real Sectoral GDP Growth after Rebasing, 2010 – 2013 (%)
Item
2010
2011
2012
2013
Agriculture
2.92
6.70
2.94
2.9
Mining & Quarrying
2.41
-4.78
-12.81
-12.8
Manufacturing
17.82
13.46
21.80
21.7
Construction
15.71
9.44
14.22
14.2
Trade
7.21
2.21
6.64
6.6
Arts, Entertainment & Recreation
48.3
27.36
14.93
14.9
Finance & Insurance
-26.93
21.02
8.63
8.6
Real Estate
0.43
5.65
11.98
11.9
GDP Growth
5.31
4.21
5.49
5.5
Source: National Bureau of Statistics, Abuja.
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 Performance of the Economy
Table 6: Nigerian Growth of Selected Macroeconomic Variables, 1970 – 2014
Year
1970
1975
1980
1985
1990
1995
2000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Un
1.3
43.5
16.1
1.0
3.6
51.6
14.5
11.6
8.6
6.6
15.1
12.1
11.8
10.3
12.0
8.4
8.1
25.01
-5.20
4.2
8.3
12.8
-0.3
5.3
3.4
8.2
6.8
6.3
6.9
7.8
4.9
4.3
5.4
6.5
3.1
4.1
6.4
6.1
3.5
1.8
13.1
11.9
12.3
12.7
14.9
19.7
21.1
23.9
25.7
29.5
28.0
Sources: (i) Central Bank of Nigeria Statistical Year book.
(ii) National Bureau of Statistics
(ii) World Bank
13
44.2
91.9
51.9
11.0
49.0
18.9
62.2
29.6
32.1
36.6
55.8
8.5
-5.4
33.8
-42.8
10.0
-6.2
48.1
80.3
47.6
12.4
45.9
19.4
48.1
24.3
43.0
44.0
57.8
17.5
8.0
10.3
-40.1
6.3
0.8
31.0
40.2
46.9
27.6
58.1
88.2
63.9
68.9
56.4
59.5
62.3
56.0
35.7
39.4
32.8
33.8
30.6
• Performance of the Economy (CONT’D)
Table 6: Nigerian Growth of Selected Macroeconomic Variables, 1970 – 2014
14
• Performance of the Economy (CONT’D)
Table 7: Nigeria; Selected Financial Deepening and Other Performance Indicators, 1999 – 2014 (in %)
Year
M2/
GDP
CPS/
GDP
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
13.4
13.1
18.4
19.3
19.7
18.7
18.1
20.5
24.8
33.0
38.0
20.2
19.3
19.4
18.9
19.9
9.2
7.9
11.1
11.9
11.1
12.5
12.6
12.3
17.8
28.6
36.9
18.6
16.9
20.4
19.7
19.2
Savings
GDP
5.93
5.74
7.08
7.60
6.61
6.99
9.01
9.37
13.04
16.95
23.25
10.90
10.37
11.24
10.81
13.49
Inv./
GDP
Def/
GDP
CU
24.0
22.2
23.5
27.6
23.3
31.8
25.9
22.5
22.4
24.6
20.5
6.09
1.55
3.21
3.87
2.04
-1.51
-1.10
-0.55
-0.51
-0.20
-3.27
-2.04
-1.83
-1.37
0.00
-1.10
34.6
36.1
42.7
54.9
56.5
55.7
54.8
53.3
53.3
53.8
55.1
56.2
-
Sources:
(i) Statistical Bulletin, Central Bank of Nigeria, Abuja
(ii) Regional Economic Outlet: Sub-Saharan Africa Fostering Durable and Inclusive
Growth, IMF April 2014
Notes: CPS = Credit to the Private Sector; Inv. = Investment; Def. = Deficit; CU = average capacity
utilization.
15
• Performance of the Economy (CONT’D)
16
• Performance of the Economy (CONT’D)
Figure 2: GDP growth and Inflation rate (1970-2015)
17
• Performance of the Economy (CONT’D)
Figure 4: GDP growth and Unemployment rate (%) 1970-2015
Source: World Bank national account, OECD national account, CBN and NBS
Gdp growth data for 2014 and 2015 represented July 2014 and July 2015 respectively.
18
• Performance of the Economy (CONT’D)
Figure 5:
19
Table 8: Nigeria Economic Performance Indicator, Misery and Discomfort Indices, 2006 – 2015 (%)
Year
EPI
MI
DI
2006
76.1
34.8
29.7
2010
68.2
30.3
34.8
2013
67.6
50.8
37.2
2014
73.8
55.08
33.4
2015
68.0
57.27
36.7
Source: Calculated by Author
20
21
• Social Indices
• We consider Nigeria’s human development index (HDI)
as measured by the United Nations Development
Programme (UNDP). HDI is “a summary measure for
assessing long-term progress in three basic dimensions
of human development: a long and healthy life, access
to knowledge and a decent standard of living” (UNDP,
2013). Nigeria’s HDI value for 2012 is 0.471 which is in
the low human development category.
• Nigeria is positioned 153 out of 187 countries and
territories. Between 2005 and 2012, Nigeria’s HDI value
increased from 0.434 to 0.471, an increase of 9 per cent or
an average annual increase of about 1.2 per cent. Table 9
below reviews Nigeria’s progress in the HDI indicators.
22
• Social Indices
Between 1980 and 2012, Nigeria’s life expectancy at birth
increased by 6.8 years, mean years of schooling increased by
0.2 years and expected years of schooling increased by 2.4
years. Nigeria GNI per capita increased by about 34 per cent
between 1980 and 2012. When Nigeria’s HDI ranking is
compared to ‘similar’ countries, the results are mixed.
23
A survey (NBS, 2013) on the performance of the Millennium
Development Goals (MDGs) shows mixed results. The tracking
of the MDGs performance is utilized as a proxy for
achievements or otherwise regarding social indicators.
• The economy has done well in the areas of Grade 6
completion rate, under-five mortality rate (per 1000 live
births), infant mortality rate (per 1000,000 live birth) and
maternal mortality rate (per 1000,000 live birth) over the
period 2004 – 2012 (see Table 11).
• However, the country has not performed satisfactorily in the
following areas:
-Proportion of population using improved drinking water.
-Proportion of population using improved sanitation facility.
-Improved drinking water piped into dwelling, plot or yard.
•
24
Table 9: Nigeria: HDI Trends Based on Consistent Time
Series Data, New Component Indicator and New
Methodology
Year
Life Expectancy
At Birth
Expected Years of
Schooling
Mean Years of
Schooling
GNI per capita
(2005 ppp )
HDI Value
1980
45.5
6.6
-
1,571
-
1985
45.9
8.4
-
1,202
-
1990
45.6
6.5
-
1,274
-
1995
45.1
6.5
-
1,303
-
2000
46.3
7.2
-
1,285
-
2005
49.0
79.0
5
1,540
0.434
2010
51.4
9.0
5.2
1,928
0.462
2011
51.4
9.0
5.2
2,017
0.467
2012
52.3
9.0
5.2
2,102
0.471
Source UNDP. Human Development Report 2013
25
Table 11: Nigeria: Selected Social Indicators as Per the
Millennium Development Goals (MDS) Tracking 2004 – 2012
(in %)
MDG Indicator
2004
2008
2012
2015
Proportion of Population Using Improved Sanitation Factory
38
53.8
33.7
70
Proportion of Population Using an Improved Drinking Water
57
55.8
57.4
77
Maternal Mortality Rate (Per 100,000 live births)
800
545
350
250
Proportion of Birth Attendant by Skilled Health Personnel
36.3
38.9
53.6
100
One year Olds Fully Immunized against Measles
50.0
41.4
55.8
100
Infant Mortality (per 1000 live Births)
100
75.0
61.0
30.3
Under – Five Mortality Rate (per 1000 Live Births)
201
157
94.0
63.7
Grade 6 Completion Rate
82
-
87.7
100
Literacy Rate of 15 – 24 Years Old, Women
60.4
80
66.0
100
Notes: *2015 as benchmark
Source: NBS, Abuja
26
3. CONCEPTUAL AND THEORETICAL DISCOURSE
•
There is need to briefly examine salient conceptual and theoretical
issues in order to better locate the structure and performance of the
Nigeria economy. In economics, it is broadly stated the total output of
an economy can be represented by an aggregate production function:
27
Role of Government
………………….. (1)
Where:
Y = aggregate output
K = capital input
L = labour input
T = technology
R = Other Resources
The arguments (inputs) in equation (1) can come from economic agents
such as the households and their families, private sector and government. In
the long-run as the inputs change, the economy, all things being equal will
move to a higher production possibility frontier. Let us manipulate equation
(1) by indicating that:
28
Where
G = government or state.
In equation (2), government has been endogenized as an input with the
assumption that capital and labour are provided by the private sector (Ip) thus:
……………………………………………………… (3)
In growth terms, we state that:
…………………………………………………
Where:
29
(4)
……………………………………………… (5)
y/p = income per capita which is a proxy for economic development
+ indicates that an increase in the input would increase growth in GDP and income per capita.
Let us decompose G. into:
,
y  g 5 (Gcap, Gcur , I p ).................................(6)
y
p
30
 g 6 (Gcap , Gcur , I p )................................(7)
3.1 Measuring Economic Performance
The trend of selected macroeconomic variables such as the rates of inflation
and unemployment, the lending rates, the growth in GDP as well as its per capita
components would give indication as to whether an economy is performing well or not.
Scholars have suggested ways of measuring economic performance. follows that a
consistent and transparent indicator of overall economic performance would help guide
all stakeholders particularly citizens, politicians and policy-makers to make more
informed decisions by viewing the big picture of the economy.
31
The Economic Performance Index (EPI) is a simple but
powerful macro indicator which measures the performance of
an economy’s three primary segments namely: households,
firms and governments. The EPI consists of variables that
impact on all three sectors simultaneously:
-the inflation rate as a measure of the economy’s monetary
stance;
-the unemployment rate as a measure of the economy’s
production stance;
-the budget deficit as a percentage of total GDP as a measure of
the economy’s fiscal stance; and
-The change in real GDP as a measure of the aggregate
performance of the entire economy (Khramor and Lee, 2013,
p.3).
•
32
The score can be calculated annually, quarterly or
monthly by taking a total score of 100 per cent
subtracting the inflation rate, the unemployment rate,
the budget deficit as a percentage of GDP and finally
adding back the percentage change in real GDP – all
weighted and calculated as deviations from their
desired values.
• Another measure of economic performance is the
misery index (MI). The MI is simply the sum of the
unemployment, inflation and bank lending rates less
the percentage change in real GDP per capita. “A
higher misery index score reflects higher levels of
“misery” (Hank, 2014).
• Another simple measure of economic performance is
the Discomfort index (DI) which adds the rates of
33
inflation and unemployment.
•
3.2 ROLE OF THE PRIVATE SECTOR
•
There is no doubt that the private sector is one of the engines of growth. The sector
takes and/or gauges its risk before venturing into any kind of investment. In the
Nigeria context, the private sector is still emerging hence it is yet to fully maximize the
opportunities provided by government.
•
Nonetheless, the organized private sector as one of the economic agents
attempt to predict government. Whether it has succeeded in doing so
empirical manner.
The Nigerian private sector is not so much
manufacturing semi-and finished goods. The sector concentrates in
selling, assemblage and packaging.
•
It is necessary to state that the private sector is not in business to promote economic
development. For the private sector, the bottom line is profit – development is either
a second or third best for the most part. In other words, if development occurs
through growth, then the economy can reproduce itself thus guaranteeing more
profit.
•
Nevertheless, the Nigerian private sector has come from a chequered history. The
large firms seldom patronize the capital markets for investible funds. It is, still
therefore, not surprising that the stock market is still dominated by banks and other
financial institutions.
34
must always
or not is an
involved in
buying and
4. POLICY CHOICES FOR THE BUHARI’S ADMINISTRATION
•
By policy is meant government intervention in the economy. Based on government
failure in Nigeria over the years, is policy still relevant? In a series of published technical
papers, the relevance of policy was established (Ekpo, 2011; Ekpo, 2012). This confirms
the importance of not just government but also the essence of planning. Planning does
not negate the role of the market. “It is not a question of the state versus the market,
but how best the state can use the market to fundamentally transform the economy and
improve the living standard of Nigerians “(Ekpo, 2011, p. 316).
•
To address this issue, it is important to understand the nature of the state. There are
various notions of the state but the one that concerns us here is the developmental state
defined as one that sets economic development as the top priority of government policy
and designs effective instruments to promote that goal. According to UNECA (2011)
“The emerging consensus is that a developmental state is central to the process of
accelerated growth and social transformation of any country”. Variants of a
developmental state exist in Malaysia, Japan, Singapore, India, China, Brazil, and so on.
•
A developmental state looks for the right mix between the state and the market,
powering and controlling the market and market forces to prevent market failure, and
supporting private agents and entrepreneurs to realize their full potential and to
contribute to economic development (UNECA, 2011, p.111).
35
POLICY CHOICES FOR THE BUHARI’S ADMINISTRATION
(Cont’d)
•
President Buhari’s political party, the APC, came into power with the mantra of
change. The party had a manifesto with imputed economic blue print. The APC is a
social democratic party hence it aims to improve the living standards of Nigerians
through the development of state capitalism by collaborating with the private sector.
Therefore, the change is not systemic.
•
Consequently, the government must be strategic if it wants to fast – track Nigerian’s
development. From the previous analysis, it is clear that the Nigerian economy is in
distress. The economy is on a tip of a recession. While no economic blue-print has
been made available but based on the party’s manifesto, pronouncements by
government as well as the draft 2016 budget, President Buhari has several policy
choices both in the short and medium terms:
36
POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)

Massive Investment in Hard Infrastructure. Investment in power particularly would
enhance growth and generate employment. It would result in the establishment of
new micro and small-scale industries as well as sustaining existing ones. The release
of the funds for infrastructure in the 20116 budget would enhance liquidity in the
system. Construction of both urban and rural roads; repairs of existing roads,
construction of rural roads would generate jobs.

Employment Generation – Unemployment has reached a crisis situation hence
government must formulate policies and strategies to address the problem. The 2016
budget estimates provide for the recruitment of 500,000 teachers. The visible hand of
government must recruit persons into all the security agencies such as the Police,
Army, Air force, Navy, Immigration, Customs, etc. The multiplier effects of
government employment would grow the economy and then check the pending
recession. The new workers would earn wages, pay taxes to the government and
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demand goods and services.
POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)

Investment in Housing Construction- The rebased GDP indicates the sluggish growth of
the housing sub-sector. A revamp housing sector for all levels of income through the
mortgage process would stimulate growth and generate employment. Employment in
the housing sector would involve both skilled and unskilled labour.

Changing the structure of the economy. Though this is long-term, the effort must begin
as of yesterday. The economy despite the rebasing exercise still remains at the primary
level of production. It is essential that agriculture be large–scale and mechanized so
that its contribution to GDP would be less than that of industries but still enough to feed
the domestic economy. Government should create the right environment for the
economy to industrialize. It is through industrialization that a modern knowledge-based
economy can be built. The economy must be diversified away from oil. The oil sector
needs to be linked to agriculture, chemical and pharmaceutical industries. The Nigerian
market is large enough to absorb whatever is produced in the economy.
38
POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)

Provision of Social Services.
The provision of running water, health services,
sanitation etc is nothing to write home about. The provision of basic social services
even with user charges would go a long way in improving the living standard of
Nigerians.

Rebuilding the Public School System. It is only the public system that can produce
the mass of literate Nigerians who would aspire to acquire various skills at the
tertiary level. For now, the public school system at all levels has collapsed. No
country grows faster than its manpower training institutions.

Build Strong Institutions.
around personalities.
The existing institutions are not only weak but built
It is necessary for government to ensure that rules and
regulations are obeyed.
It is strong institutions that would encourage both
domestic and foreign investment because issues of legal framework and property
rights would be domiciled in strong institutions.
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POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)

Growing the Real Sector. The modernization of agriculture and industrialization
of the economy would generate employment as the economy grows. A vibrant
real sector would result in the diversification of the economy with multiplier
effects to the economy. To ensure the growth of the real sector, lending rates
must decrease to single-digit.
Government has the power to break the
oligopolistic structure of banks by forcing ‘competition’ in the sub-sector.

Aggressive Monetary and Fiscal Policy.
The Central Banks ought to pursue
aggressive monetary policy that would reduce to near single – digit lending
rates in order to revitalize the real sector. If inflation is not a major challenge in
the near future then the MPR should be reduced drastically to force its impact
on lending rates. On the fiscal side, government must reflate the economy by
spending hugely on infrastructure and creating jobs.
monetary and fiscal policy is essential.
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The co-ordination of
POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)

Economic Distress and Nigeria’s Federalism
The thirty-six state economies must play their role in putting the Nigerian economy
on the path of growth and development. States must also design strategies and
programmes that would attract investors as well as generate employment. Nigerian
states should operate under competitive federalism so as to help the wider economy
to grow and develop. For now, the states depend heavily on the centre.
•
The above narrative provides two main options for the Buhari administration –
Economic Nationalism and fine-tuning - the existing framework. Economic
nationalism connotes the need to strategically depend on domestic resources with
selective engagement with the outside world would result in some element of
change.
Fine-tuning the existing framework would maintain the status quo.
Economic Nationalism would incorporate elements of a developmental state
economic philosophy. It is that philosophy that would address the following
questions:
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POLICY CHOICES FOR THE BUHARI’S
ADMINISTRATION (Cont’d)
What is happening to education?
-What is happening to health?
-What is happening to employment?
-What is happening to the provision of other basic needs such as
running water?
-What is happening to infrastructure such as power?
-What is happening to poverty and inequality?
•
Sustained growth (even if it is inclusive) is only a necessary condition for
development. Hence, it is best for our leadership, policy-makers and technocrats to
search and work towards inclusive development within the context of a
developmental state economic blue-print. Anything else would be a return to the
status quo implying the continuation of the development of underdevelopment –
increased poverty, backwardness and misery.
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5.0
CONCLUSION
• Relevant macroeconomic and social indices show that the Nigerian
economy is in distress. The morphology of growth indicates an
economy with positive growth trajectories but no development. The high
rates of unemployment combined with reduced output in two quarters of
2015 suggest an economy in the sphere of stagflation – a prelude to a
recession. The global environment such as the slow growth in China and the
sluggish recovery in Europe further worsens the situation.
•
However, it must be noted that market capitalist economies are subject to
periodic recessions no matter how best they are managed. Consequently, if
the global economy is in a recession, the Nigerian economy would experience
same at least as a client. However, certain policies could cushion the effect of
such a recession.
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Conclusion (cont’d)
• The Buhari administration has several policy choices; a few have been
discussed in this lecture, that is, economic nationalism within the context of
a developmental state economic blue-print and fine-tuning the existing neoliberal framework. Economic nationalism would bring about some changes
since it involves massive investment in hard and soft infrastructure, the
provision of basic amenities to Nigerians, the building of strong institutions,
among others.
• Fine-tuning the existing system would be maintaining the status quo. It is
expected that President Buhari has a committed team that would put the
economy on the path of sustained growth and inclusive development. If
not, the county’s permanent work-in-progress would continue.
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Table A1. Nigeria: Rates of Unemployment And
Underemployment
Year
Old (1)
New (2)
ILO (3)
Underemployment(4)
(2)+(4)
2010
21.4
5.1
1.9
16.3
21.4
2011
23.9
6.0
2.2
17.9
23.9
2012
27.4
10.6
7.6
16.8
27.4
2013
24.7
10.0
7.1
14.8
24.8
2014
25.4
7.8
4.8
17.5
25.4
2015 Q1
24.3
6.4
2.1
17.9
24.3
2015 Q2
26.5
8.2
4.0
18.3
26.5
Source: National Bureau of Statistics, Lagos.
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Table A2: Nigeria: Domestic And External Debt 1999 – 2014
(N’Billion)
Year
Domestic Debt
External Debt
1999
794.81
2577.37
2000
898.25
3097.38
2001
1016.97
3176.29
2002
1166.00
3932.88
2003
1329.68
4478.33
2004
1370.33
4890.27
2005
1525.91
2695.07
2006
1753.26
451.46
2007
2169.64
438.89
2008
2320.31
523.25
2009
3228.03
590.44
2010
4551.82
689.84
2011
5622.84
896.85
2012
6537.54
1,026.90
2013
7118.98
1,373.58
2014
7904.02
1,631.52
Source: Central Bank of Nigeria, Statistical Bulletin, vol.25, December, 2014
46
Thank you for your attention.
[email protected]
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