Oshikoya: Halfway to Vision 20: 2020

IN December 2009, the Vision 20:2020 Economic Transformation Blueprint for Nigeria was published. According to the document, the visioning process involved active participation of a broad spectrum of Nigerians and stakeholders, with a list of heavy timbers and calibres of people. The blueprint is intended as a long-term plan for stimulating Nigeria’s economic growth and launching the country onto a path of sustained and rapid socio-economic development. The blueprint articulates Nigeria’s economic growth and development strategies for the 11-year period between 2009 and 2020. As we are now in 2015, this provides an opportune time to start a review of the progress of towards Vision 20:2020.

   The grand vision is “a large, strong, diversified, sustainable, and competitive economy that effectively harnesses the talents and energies of its people and responsibly exploits its natural endowments to guarantee a high standard of living and quality of life to its citizens.” 

   The Vision has three pillars. First, it aims to guarantee the productivity and well-being of the people. Under this pillar, the blueprint sets out people-oriented goals, focusing on pro-poor policies and programmes in agriculture, with special focus on small-scale rural farmers; universal basic education, vocational and technical education; enhancement of primary health care system; and improving the availability and affordability of housing. The targets and current reality under this pillar include: a poverty target rate of 21% by 2015; that is two out of 10 Nigerians, as against the current six out of 10; a life expectancy rate of 60 years in 2015, as against the current 52 years; infant mortality target of 30 per 1,000 live births in 2015 as against the current 85; a medium human development index (HDI) in 2015 as against the current low HDI of 152 as defined by UNDP.  The HDI is a composite index, which measures progress in three basic dimensions of human development: a long and healthy life, knowledge and a decent standard of living.

    The second pillar aims at optimizing the key sources of economic growth via economic diversification, transformation of production and exports structure from primary commodities to processed and manufactured goods, and enhancing efficiency and productivity in value adding sectors for global competitiveness. While a regional cluster-based approach to industrialization was adopted, high priority sectors identified include petro-chemicals, non-metallic minerals, food and beverages, and textiles; low priority sectors were electrical and electronics, and motor vehicle and miscellaneous assembly. The targets and current reality under the second pillar include: a GDP target of more than $400 billion, with an average growth rate of 13.8%; the reality is that of a GDP of $510 billion, less with the decline of the naira exchange rate, has been achieved but due more to the statistical rebasing exercise, and an average growth rate of 6.5, which is half of the estimated targeted growth rate.  A target ratio of 20% of foreign exchange earnings coming from non-oil sectors by 2015; the reality is that oil sector still accounts for more than 90% of exports earnings. A target of 10% share of GDP was envisaged for the manufacturing sector as against a reality of 7% with the re-based GDP. The domestic refining capacity of 750,000 bpd was expected by 2015 versus the installed capacity of 445,000 bpd, which still run on less than 30% of installed capacity.

    Its third pillar emphasises fostering sustainable social and economic development. The principles underlying this pillar include a redistributive fiscal policy to improve revenue profiles and fiscal sustainability of states and local governments; providing public sector goods of critical infrastructure; and strengthening transparent and accountable democratic governance. The blueprint notes that “over the years, Nigeria has experienced modest economic growth driven primarily by the non-oil sector. The oil boom and associated income derived from oil exports have not translated into sustainable development and wealth for its citizens. The key challenges facing the sustainable social and economic development of Nigeria are the weak infrastructure base, especially power and transport, corruption, macroeconomic instability, security of lives and property, over-dependence on oil revenues, and poor governance.” 

   The measurable targeted indicators under the third pillar include: inflation rate of less than 9% by 2015, which appears to be broadly on target but is expected to increase with the devaluation of the naira exchange rate, which is now at N210 to $1, as against N148 to $1 when the blueprint was prepared in 2009. A targeted ranking of ease of doing business index of less than 80 was envisaged as against a current rank of 170; the rating on the corruption perception index of less than 60 was the target compared to the current rank of 136. Power generation capacity of 20,000 mw by 2015 was planned versus the current reality of less than 5,000 mw.

   In a speech on Vision for Sustained Prosperity in Nigeria to the Atlantic Council in the USA in October 2014, the Finance Minister and Coordinating Minister for the Economy (FM/CEM) re-confirms the key evidence of a vicious cycle of inequality, insecurity, corruption, poor infrastructure, and institutions in Nigeria. We shall quote extensively the words of the FM/CEM on these issues. “…The inadequate infrastructure is holding back economic growth by at least two per cent per annum…Absence of adequate infrastructure in Nigeria, particularly poor electricity supply adds a massive 16 per cent to business costs in Nigeria compared to two per cent in South Africa, five per cent in China and 10 per cent in India… Second, in spite of recent progress in economic diversification, Nigeria remains highly dependent on oil. Some 70 per cent of government revenues come from taxes on the oil and gas sector, and oil and gas make up more than 90 per cent of exports…Third….inequality;  we face the challenge of economic inclusion and high youth unemployment. The pattern of growth in our economy is highly unequal. In other words, growth is fast but inequality has increased. …In Nigeria, the (Gini) coefficient rose from 42.9 in 2004, to 48.8 – where 100 implies perfect inequality by 2010…Such disparity in equality fuels social tensions and violence in the society… Closely linked to this economic exclusion is the jobless growth trend that we have observed in recent years. Whilst jobs are being created in Nigeria, they are not being created fast enough to absorb the 1.8 million new entrants into our labour force each year (Vision 20:2020 indicates that 4.5 million graduates enter the labour market), leaving several of our youth unemployed…”

    The FM/CEM continues: “Our maternal and infant mortality rates are high, and we have large numbers of children out of school. The absence of social safety nets leaves the unemployed highly vulnerable to poverty…Fourth, corruption continues to be a challenge, and happens to be one of the most talked about problems of the country. But what is not often said is that corruption in Nigeria is neither peculiar to Nigerians only nor is it limited to public officials diverting government resources…So the private sector is also culpable…There is also the corrupt theft of our oil by an international mafia comprising Nigerians and foreigners which is creating significant revenue shortfalls for the government. We are losing up to 100,000 barrels of oil per day to theft from onshore and swamp operations alone. This amounts to several billions of dollars, if you do the math…Fifth is the security challenge we presently face, particularly the Boko Haram insurgency, which reached a crescendo when over 200 schools girls of the government secondary school in Chibok, were abducted from their dormitories last April… Over a thousand Nigerians have lost their lives to these insurgents this year… Lastly, there is absence of appropriate institutions that will translate economic policies into practical solutions which can yield concrete results…” 

     It is interesting to note that the afore-mentioned statement of the FM/CEM simply confirms the words of Joseph E. Stiglitz, Economics Nobel Prize winner and former Chief Economist of the World Bank, in The Age of Vulnerability, which states inter-alia that: “Regardless of how fast GDP grows, an economic system that fails to deliver gains for most of its citizens, and in which a rising share of the population faces increasing insecurity is, in a fundamental sense, a failed economic system. And policies, like austerity, that increase insecurity and lead to lower incomes and standards of living for large proportion of the population are, in a fundamental sense, flawed policies.”

    With wealth and fruits of economic growth increasingly concentrated in a few hands, what essentially has been missing in Nigeria is prosperity economics of inclusiveness, which is founded on a virtuous cycle of shared, secured and sustainable growth and development. As noted in Prosperity Economics: Building an Economy for All by Jacob Hacker, a Yale University Professor and Nate Loewentheil: “Prosperity economics has a distinctive goal: shared prosperity. It also has a distinctive prescription: policies and institutions that broadly distribute opportunities for economic success, create the preconditions for productivity among all workers, and provide the broadest possible space for people to shape their own economic lives through voice in the workplace and through democratic politics. Shared prosperity, in other words, is a means as well as an end. As we all share in the production of prosperity, we all share in its rewards. The central idea of prosperity economics is this: Our prosperity is generated by everyone.” 

• Dr. Temitope Oshikoya, an economist and chartered banker, writes from Lagos.