Nigeria’s Constitution discourages economic diversification, says Moghalu
•Advocates devolution of fiscal autonomy to states
By placing ownership of natural resources exclusively in the hands of the Federal Government, the 1999 Constitution (as amended) is, ab initio, a disincentive to economic diversification, according to former Deputy Governor of the Central Bank of Nigeria (CBN), Prof. Kingsley Moghalu.
In a paper titled, “Economic Diversification and the Wealth of Nations: Lessons and the Path Forward for Nigeria” and delivered at the yearly conference of the Nigerian Economic Students Association (NESA) in Port Harcourt, Rivers State, the Young Progressives Party (YPP) presidential candidate in the 2019 general elections noted that the unitary setting hampers a regional approach to economic diversification and management.
He canvassed a constitutional restructuring that devolves fiscal autonomy to the states to engender competitive manufacturing and the diversification that drives it.
According to Moghalu, Nigeria witnessed its best broad-based economic growth in the First Republic when resources were under regional control rather than its subsequent boom and bust cycles that were driven by reliance on oil rents.
He advised the economic policy makers to assist government in developing targeted export policies and incentives that spur diversification, adding: “Achieving economic diversification in Nigeria would require a comprehensive and joined up approach to economic policy, rather than the silo approach we have seen for many years.”
The CBN ex-official insisted that the most populous black nation cannot achieve development unless it made economic diversification the central thrust of its plan, while recommending a policy based on a clearly deﬁned vision that sets out the balance between the role of the government and that of the market.
Moghalu, therefore, stated that the Economic Advisory Council (EAC) to the President would need to become a full-time body because “managing Nigeria’s economy to transformation would require capable hands that work on it full-time, doing the granular work and analysis that will drive policy.”
It is important, he maintained, that the council and the rest of the country’s economic management apparatus, “acquire and establish strong competence in industrial policy if our economy is to become truly diversified.” He supported his argument with the models of nations like Malaysia, Thailand and Chile.
The erstwhile presidential aspirant favoured a competent political leadership that understands and prioritises economic development backed by capable team and bureaucracy, and not crony capitalism of vested interests.
The political class, the keynote speaker added, needed a better understanding of the imperatives of long-term structural economic transformation with emphasis on periodic development plans and industrialisation. He warned against undue pressure from the Bretton Woods institutions, which in the past, led to a decline in structural economic thinking.
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