Restructuring the Nigerian economy
ALL economic indices attest to a negative trend in the Nigerian economy since the advent of the Muhammadu Buhari administration.
Direct Foreign Investment decreased by 20%, the stock market dropped by 15%, the Gross Domestic Product (GDP) which in 2014 surpassed that of South Africa for the first time dropped by over 25%, and the Naira crashed to the lowest level it had been in living memory.
Due to the weak economy, quality of life has been drastically degraded. The cost of living has virtually tripled.
Poverty is having devastating impact on the nation. Infant mortality rate is on the increase, and maternal mortality rate remains the fourth highest in the world.
At 53 years, life expectancy in Nigeria is one of the lowest anywhere. Never have the challenges been this immense, never has life been this gloomy.
The problem is monumental, but not intractable. Since things have not always been this bad in Nigeria there are many lessons we can learn from our past.
From about 1954 the three regions West, East and North embarked on aggressive economic reforms.
Banks were funded by the regional governments, and the banks in turn powered growth with loans to the other sectors such as mining, agriculture, housing, textiles, health, marketing, and education.
As historian professor Toyin Falola asserts in his book Economic Reforms and Modernization in Nigeria: 1945-1965, ‘economic development was the priority in every region, as Nigerians and their leaders saw their emerging freedom from colonial rule as an avenue for the banishment of poverty.’
There was no federation account, and no oil money from an excess crude account to be shared. The regions depended on their natural resources, and each region was known for its produce which was used locally, but which was also exported directly for foreign exchange.
Nigeria’s economy was strong as indicated by the low level of unemployment, and the currency which was then at par with the British pound.
Unfortunately this successful economic model would change, between 1959 and 1965 with the struggle of the regions for control of the centre, and later following the January 15th 1966 coup d’etat.
To paraphrase Falola again, ‘Nigeria’s focus switched from economic rivalry and fight for economic development to political rivalry and fight for political dominance.’
After the first coup, General Aguiyi Ironsi established a unitary system depriving the regions of both the economic and political autonomy they previously enjoyed.
General Yakubu Gowon who succeeded Ironsi intensified the unitary system of government. Future administrations, have hardly deviated from this retrogressive system.
For Nigeria’s economy to grow, we must abolish this inefficient and uneconomical type of governance.
A devolution of powers to the states and geo-political zones can solve the problem.
For example, fiscal devolution will give states untethered access to their mineral resources currently held in the Federal Government’s exclusive list. States will no longer need federal guarantees to attract foreign investment for major projects.
In a real federal structure, the Federal Government gets its revenue by collecting taxes from the multiple layers of economic activity generated in several states.
Another critical change that must occur in order to grow the economy is a need to focus on an array of products and resources; a policy generally referred to as diversification.
This nation’s dependence on oil as the source of 80% of its revenue is suicidal. The perennial weakness of the Nigerian economy is a factor of the operation of a mono-economy.
And when China and the other buyers of our oil find alternatives to crude oil as they will in the next twenty years, Nigeria’s economy may suffer an irreversible collapse.
Decentralisation of government will accentuate the production of various products from the different zones. Mechanised farming will greatly increase earnings from cash crops which abound in every state.
Additionally, the South East zone will thrive with crude oil and iron ore from Abia and Imo, as well as natural gas from Enugu, and Anambra.
The South West will prosper with bauxite from Ekiti, crude oil from Lagos, and bitumen and oil from Ondo.
In the south-south, processing Uranium in Akwa Ibom, Bayelsa and Cross River will be added to crude oil deposits which exist abundantly in Akwa Ibom, Bayelsa, Delta, Edo and Rivers States.
Devolution of powers will enable the states of the north like their southern counterparts to develop their mineral resources for economic prosperity.
The iron ore and copper in Jigawa, the copper in Zamfara, and bauxite from Kebbi will lift the North-West out of poverty. Economic change will happen even more dramatically in mineral-rich North-East and North-Central zones.
Adamawa’s iron ore and Uranium, Bauchi’s uranium, copper and iron ore, Borno’s uranium, Gombe’s Copper, and Taraba’s uranium with turn the north-east into an eldorado.
A similar monumental economic growth will take place in the North-Central with Benue’s iron ore and bauxite, Kogi’s iron ore and bauxite, Nasarawa’s copper, Kwara’s iron ore, Niger’s gold and, copper as well as Plateau’s uranium, copper and bauxite.
A structural readjustment of the economy along the lines enumerated here will elevate Nigeria from a struggling third world economy to a developed federation where states are able to fund social programmes such as education, low income housing, and health.
Road, rail and water-ways construction will become affordable through regional joint investment as exemplified in such triangular cooperation which exists today between New York, New Jersey and Connecticut in the United States of America. With new found wealth, states can handle their own security matters.
A secured and stable state will attract unlimited direct foreign investment. Strengthening the economy of states is an imperative for national development.
Our argument for fiscal devolution and state empowerment is enshrined in the irrefutable logic that the sum total of a part is always greater than its whole.
• Dr. Pearse is a senior lecturer, Department of English, University of Lagos.