A couple of years ago, Nigerian economy was growing at between 6-7%, GDP rate. This was probably due to the fact that crude oil/gas, Nigeria’s main export earner, attracting 90% of foreign exchange, FX income and which constitutes about 11-14% of her GDP, was trading at over $100 per barrel according to data from the Economist magazine.
The most probable reason is that the oil boom and Nigeria’s fx reserve which at one point was estimated at about $60 billion attracted international portfolio and equity investors who came in droves to buy Nigerian bonds/ treasury which had a mouth watering yield of about 12%-an impossibility in the industrialized world.
By their very nature, portfolio investors are exactly what their name indicate-mere portfolio/ briefcase carrying businessmen trading in papers and other intangible financial instruments as opposed to entrepreneur investors who bring in machines and other equipments used for factory production of goods and in the process create employment for Nigerians .
Obviously, for many years, Nigeria had very few entrepreneurs as foreign direct investors, FDI in the real economy, but attracted hordes of portfolio/ equity funds managers who take flight with their investments at the slightest suspicion of instability like oil price volatility or conflicts in the polity arising from political differences leading to tension.
Nigeria also quickly booked a spot in the popularJP Morgan price index,owing to the excellent return on investments in bonds as opposed to manufacturing ,the economy was thus adjudged to be growing at attractive GDP levels of 6-7% earlier mentioned.
Unfortunately, it was only on paper that the growth was being recorded as new factories were really not being set up as such,neither were more people being gainfully employed, which is really what governance ,political leadership and progress in a society are about.
In that period , international trade was flourishing so well that trading in treasury bills/bonds and other financial instruments was the trend, and importation of goods rather than manufacturing; gaming the system via fake fuel subsidy invoices and crooked crude oil for refined products swaps schemes, as opposed to refining the 450,000 barrels of crude oil allocated for local refining, gained traction and thus became the new business paradigm, rather than the exception in Nigeria.
As the so called GDP growth was exclusive to the rich ,Nigerian masses were groaning in poverty owing to the socioeconomic hardship foisted on them by fake economic growth that had no local dynamics or bearing because it was not people centric and thus failed to make any positive impact on the lives of the ordinary folks.
As a result of the implementation of the aforementioned polices that were not oriented towards alleviating poverty through employment generation , factories closed down-185 textile mills in kaduna state and environ (according to minister of state for industry, Aisha Abubakar) plus tyre and battery manufacturing plants that were located in lagos, Sango Ota and surrounding areas.
In fact ,some of them-especially tyre manufacturers like Michelin, migrated to neighboring countries like Ghana where fiscal policies and infrastructure are conducive.
Associated with factory closures, is the loss of jobs and the current unemployment crisis( about 10.4%) besetting our country is a legacy of anti job creation policies of previous administrations.
As president Muhammadu Buhari mentioned in China during his current visit, the existing huge trade imbalance between Nigeria and the world’s 2nd largest economy, China has to be bridged and that can only be done if and when Nigerian business men and women start partnering with their Chinese counterparts to produce locally, the items that we are currently importing.
A critical facilitator or ingredient for such business relationship to blossom is stable supply of electricity and other infrastructure that enhance manufacturing such as transportation facilities like improved road networks, more modern railway lines and efficient sea and air ports to enhance distribution of goods.
The present situation, whereby the only business model is importation of Chinese finished products into Nigeria and export of our crude oil to China, does not augur well as it is antithetical to the erstwhile import substitution policy of Nigeria which president Buhari has vowed to pursue more vigorously.
Hopefully, apart from funds,one of the things that mr president and his team currently visiting China, would seek to borrow from the Chinese, is how they dealt with the inadequate power and energy challenges that initially hobbled her economic growth but was resolved and thereafter enabled China achieve the ‘ Great Leap’ that propelled her into the prime position of being the foremost factory to the world.
The construction of a dam over the famous Yangtze river (the 3 gorges dam) that stretches across four hundred miles and was responsible for most of the monsoons that led to loss of millions of lives,helped China achieve energy sufficiency, and therefore a good candidate for emulation by Nigeria as we benchmark that country for progress.
With the unprecedented N1.8 trillion allocated to capital projects in budget 2016, Nigeria can be transformed into a major construction site , especially if the $6 billion loan that is being vaunted as a promise from China for investment in infrastructure becomes reality.
From harnessing electricity through solar power and wind mill factories to be sited in the desserts adjacent to Katsina and Kano states, to converting the hydro resources abundant in Mambilla plateau in Taraba state, into a dams for generation of electricity power like the existing ones in Shiroro and Kainji area of Niger state. And by also taking advantage of the gas fields preponderant in the Niger delta,coupled with leveraging the huge coal deposits in Enugu state and environ for utility as coal mines, Nigeria would be able to power factories in partnership with Chinese investors for manufacturing of goods to satisfy our local consumption and perhaps with enough to export to neighboring countries.
Given the scenario above, it now behoves of each of the 36 governors and 774 local govt chairman nationwide,to woo and lure entrepreneurs to their domains by making them more investor friendly through provision of enabling environment like roads and electricity infrastructure, as well as incentives like tax holidays and private public partnership,PPP arrangements.
So,going forward, instead of focusing on the size of the budget set aside for a project , and the value of the contracts awarded-in terms of the quantum of funds to be disbursed as contract sum,let’s start judging our govts both at the federal, state and local govt levels by the number of jobs created through their development initiatives to determine their impact in their domain.
Currently, growth and progress in our economy are measured by the gross domestic product, GDP which is a sophisticated barometer of the sum total of volume and value of economic activities carried out in a specific period in a community or country. Experience in Africa, particularly in sub Sahara Africa,has shown that the method is kind of warped, as it mainly captures the fortune of the top 1% super rich and hardly reflects the misfortune of the 99% long suffering working and jobless masses in the middle or lower rung of the ladder whose economy is under ground and as such may likely not be captured in a regular GDP template.
During a recent debate on whether or not GDP is an optimal development indicator in Africa, following the palpable poverty manifesting on the streets in Africa , from Kano to Kigali,despite impressive GDP growth in Africa,it was reported that, that the immediate past Africa Development Bank, AfDB president, Francis Kaberuka, amongst others bureaucrats noted that GDP may not be a proper gauge. I would like to stretch that thought process further by adding that GDP is probably a deceptive measure of the state of the economy in Africa, as it does not directly or immediately reveal the number of people in the society that have roofs over their heads and food on their tables.
By applying a new rule, such as the number of people in employment as a yard stick for measuring progress and development in Nigeria,the true state of affairs can really be determined because every employed person is more likely to afford to rent or own a home and would also be able to have the proverbial three, 3 ‘square’ meals a day.
Another yardstick Nigeria could adopt for gauging progress in our society should be inflation rate. This reflects the hunger or poverty rate in the society because it is a direct measure of the cost of food,housing, transportation, health care and other essential utilities in the society. Following the current dislocations in the economy of Nigeria , inflation is about 10.8%, according to the latest figures from National Bureau of Statistics, NBS.
To get a clearer picture of how bad such inflation rate is,compare it to UK’s rate which is a mere 0.5%.
Clearly,from the foregoing scenarios, unemployment and inflation rates in a society would serve as better,more practical and realistic prognosis than the sophisticated GDP tool applied in the industrialized Western economies.
This is why it is very important to make a strong case for a paradigm shift to using jobs creation to asses the impact of our elected political office holders particularly for those in the executive arm of govt.
No longer would ministers and commissioners at the federal and state levels respectively,after the weekly or monthly federal or state executive council meetings, merely announce the value of the contracts awarded in terms of money to be expended.
Henceforth, emphasis should be on the number of jobs to be created and the impact of the projects on the people in the community in particular or society at large.
For instance recent data from the NBS and CBN indicate that about 518,000 people have joined the 8 million Nigerians who are unemployed in an economy with a work force of about 76 million people.
Going forward,Federal Executive Council, FEC and Executive Councils EXCOs at state govt levels should tell Nigerians after their weekly meetings,how many Nigerians their policies and programs have taken off from the list of millions of unemployed Nigerians .
That is the change Nigerians voted for and the least they expect now.
While l was researching this article , l came across a similar policy being applied by one of the state’s in the Niger delta.
In Delta state for instance, the governor, Ifeanyi Okowa, upon assumption of office embarked on implementing his campaign promise, tagged STEP-acronyms for Skills Training Entrepreneurship Program, which is a subset of his major mantra campaign-SMART.
In 2015,1070 trainees consisting of 664 males and 406 females were admitted into 116 training centres across the state, where skills as sophisticated as computer hardware repairs to practical ones like hairdressing, tailoring, cosmetology, events management and block and unlocking stones moulding were taught.
That does not sound like much but l’m told it is a continuous process of many circles.
The beauty of the SMART agenda is that it is the overarching Key Performance Indicator, KPI for the state govt.In other words the govt wants to be judged by the number of jobs created not just by the number of infrastructure like roads, schools and health care institutions.
Accordingly, the KPI is designed to capture jobs that are created directly and indirectly through the SMART and STEP programmes.
I particularly like the philosophy underpinning the initiative and therefore recommend it to other states and the federal govt because that is the best way to alleviate poverty since an employed person would have a roof over his or her head just as he or she would not go to bed in empty stomach.
In an economy that is recording over 12% unemployment and 14% underemployment according to NBS current data,making employment a KPI for govt is very remarkable and noble effort by Ifeanyi Okowa, the medical doctor turned politician.
Going by his campaign promise to create 500,000 jobs for unemployed graduates, President Buhari is also a job advocate.
Although the job promise is yet to be kept, l would like to believe that it is in the pipeline.
Consistent with his emotional attachment to Nigerian masses,for whom he is shying away from deregulating the petroleum sector, if l were mr president, l would as a matter of urgency change the nomenclature of the ministry of labour and productivity to the ministry of employment and productively to reflect more appropriately the key focus of this administration which is believed to be people centric.
Perhaps I should point out at this juncture that Nigeria would not be alone if she jettisons GDP as a tool for measuring progress and development.
In the Himalayan kingdom of Bhutan in East Asia , the KPI for development is not GDP, neither is it employment or inflation rating,but quality of life which is determined by Gross National Happiness,GNH which measures the level of happiness in the society.
The rulers of the country justify their unique measure by stating that it enables them strike a balance between material things and well being and this is why the people on the island are mostly happy.
Whereas it may not be feasible to go to the extreme of using happiness to measure progress in Nigeria as done in Bhutan which is a rural country with a tiny population of 750,000 ,living in an area less than 15000 sqmt , if we really want to embrace change,employment and inflation tracking can be good barometers of development in Nigeria.