Source: Telegraph
At a special session on Thursday, pre-marking the nation’s 53rdIndependence Day anniversary, senators struck a tone that has become routine for years: Nigeria’s progress was far too dismal more than five decades after independence.
“Here we are today worried about our dear country,” said Senate PresidentDavid Mark. “We are genuinely worried and concerned. This cuts across party. It has nothing to do with party at all.”
Majority of the lawmakers, like most Nigerians, agreed with Mr Mark’s sentiment.
They all blamed failure of leadership that, for years, has failed to translate Nigeria’s booming wealth into improved life standards for its people.
More than five decades on, while the government – now the fourteenth since 1960 – insists that the economy is at a record best, with key indicators soaring ahead of developed nations, basic life markers have barely improved. The National Bureau of Statistics (NBS) said unemployment stands at 23.9 per cent, a figure widely disputed; while poverty remains widespread with more than 70 per cent living on less than a dollar a day, according to the World Bank.
But despite those concerns, President Goodluck Jonathan, at a media chat on Sunday, said Nigerians were better off today, 14 years into its current democracy; a credit he gave to his party, the ruling Peoples Democratic Party, PDP.
“On the over all, before the PDP administration, even directors had no mobile phones, but with the PDP administration of Obasanjo, all have phones,” the president said, highlighting the GSM reforms.
Long history of economic troubles
Nigeria, by far the largest country in Africa by population, and occupying a land area of 923,768 square kilometres, has its economy structurally classified into three major sectors namely primary (agriculture and natural resources); secondary (processing and manufacturing); and tertiary (services sectors).
The economy, characterised by structural dualism, is an admixture of subsistence and modern farming, while the industrial sector comprises modern business enterprises which co-exist with a large number of micro-enterprises employing less than 10 persons mainly located in the informal sector. The agricultural sector has not been able to fulfil its traditional role of feeding the population, meeting the raw material needs of industries, and providing substantial surplus for export.
The contribution of the agriculture sector to total GDP has fallen over the decades, from a very dominant position of 55.8% of the GDP in 1960-70 to 28.4% in 1971-80, before rising to 32.3%, 34.2% and 40.3% during the decades 1981-90, 1991-2000 and 2001 – 2009, respectively (see Table 1). The fall was not just due to a strong industrial sector which is displacing agriculture but largely as a result of low productivity, owing to the dominance of peasant farmers and their reliance on rudimentary farm equipment and low technology.
Nigeria’s economic aspirations have remained that of altering the structure of production and consumption patterns, diversifying the economic base and reducing dependence on oil, with the aim of putting the economy on a part of sustainable, all-inclusive and non-inflationary growth. The implication of this is that while rapid growth in output, as measured by the real gross domestic product (GDP), is important, the transformation of the various sectors of the economy is even more critical. This is consistent with the growth aspirations of most developing countries, as the structure of the economy is expected to change as growth progresses.
Successive governments in Nigeria have since independence in 1960, pursued the goal of structural changes without much success. The growth dynamics have been propelled by the existence and exploitation of natural resources and primary products. Initially, the agricultural sector, driven by the demand for food and cash crops production was at the centre of the growth process, contributing 54.7% to the GDP during the 1960s.
The second decade of independence saw the emergence of the oil industry as the main driver of growth. Since then, the economy has mainly gyrated with the boom-burst cycles of the oil industry. Government expenditure outlays that are dependent on oil revenues have more or less dictated the pace of growth of the economy.
As the years go by, the consequences of that mono-item economy have shown on several indicators. For a start, annual budget implementation have habitually remained dismal, leaving a huge infrastructure gap, with the blame often on revenue shortfall due to the volatility of the oil market.
Looking back, it is clear that the economy has not actually performed to its full potential particularly in the face of its rising population. Oil-rich Nigeria has been hobbled by political instability, corruption, inadequate infrastructure, and poor macroeconomic management, but in 2008 began pursuing economic reforms.
For the large part, Nigeria’s former military rulers failed to diversify the economy away from its over-dependence on the capital-intensive oil sector, which provides 95% of foreign exchange earnings and about 80% of budgetary revenues.
Following the signing of an IMF stand-by agreement in August 2000, Nigeria received a debt-restructuring deal from the Paris Club and a $1 billion credit from the IMF, both contingent on economic reforms.
Nigeria pulled out of its IMF program in April 2002, after failing to meet spending and exchange rate targets, making it ineligible for additional debt forgiveness from the Paris Club. In November 2005, Abuja won Paris Club approval for a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments – a total package worth $30 billion of Nigeria’s total $37 billion external debt. Since 2008 the government has begun to show the political will to implement the market-oriented reforms urged by the IMF, such as modernizing the banking system, removing subsidies, and resolving regional disputes over the distribution of earnings from the oil industry. GDP rose strongly in 2007-11 because of growth in non-oil sectors and robust global crude oil prices.
President Jonathan has since established an economic team that includes experienced and reputable members and has announced plans to increase transparency, diversify economic growth, and improve fiscal management.
Lack of infrastructure and slow implementation of reforms are key impediments to growth. The government is working toward developing stronger public-private partnerships for roads, agriculture, and power. Nigeria’s financial sector was hurt by the global financial and economic crises, but the Central Bank governor has taken measures to restructure and strengthen the sector to include imposing mandatory higher minimum capital requirements.
Much of the effort however, has been blighted by abuses and large scale corruption. According to Transparency International, Nigeria ranked 147 out of 179 countries in 2007; 121 out of 180 in 2008; 130 out of 180 in 2009, 134 out of 178 in 2010; 143 out of 182 in 2011; and 139 out of 176 nations in 2012.