First off, let me start by saying that I am absolutely thrilled by recent news reports citing Goldman Sachs that Nigeria could soon become the largest economy in Africa, overtaking South Africa, and eventually joining the new order of emerging economies, BRICS, coined by Columbia University Professor of Economics, Jeffrey Sachs, renaming it BRINCS. It is something every Nigerian should be proud of.
But why then am I not celebrating? Call it cautious optimism, but there is something about this development that has me holding back from bringing out the champagne bottles and popping them Dr Sid-style. The major reason for this is the fact that even though our economy has a GDP growing at estimated 8% per annum; it is not felt by the average Nigerian. As a matter of fact, this growth seems to exist only on the pages of newspapers and on the records of government agencies, banks and investment firms. Our growth is what economists call a “jobless growth”. The economy is growing, but jobs are not being added at the same rate as that growth.
The main reason for this is that the driver of this growth is our extractive industry, specifically the oil and gas sector. This is a sector that has capacity for high returns on investment: it provides products that are in continuous rising demand worldwide and it is an investor’s delight once gold has been struck, of which Nigeria is not lacking of in any way.
However, the oil and gas sector is one that is highly computerized and automated; hence it does not need large numbers of people working in it in order to achieve its optimal output. Even with the expected passing of the Petroleum Industry Bill into law, local content would not enable the absorption of as many unemployed people from the labour market as desired. This explains our “jobless growth”.
The kind of economic growth I am looking forward to is one that will be felt by everyone without a knowledge of economics, but who can testify that there is more money in his pocket, that his standard of living has risen and that the cost of living has gone down. What we urgently need is economic growth that has the capacity to raise millions of people up the economic ladder, and not just a lucky few of the highly educated.
I have continuously stated here that the number one economic driver of this type of growth in Nigeria would be agriculture and industrialisation built around it. Agriculture is still the largest employer of people in this country; unfortunately though, it is done at a subsistence level without any robust support from the government: no access to financing, no extension services, no new research to improve farming methods, etc. Government has in a nutshell, reduced its entire agricultural policy to importing grains and storing them in silos in the name of food security, at the federal level; and to distributing fertilizer at a subsidized rate towards the end of the rainy season at the state level.
Our potentials in agriculture are enormous. We are a country that has been blessed of God in land resources; however, we have so ignored this blessing to the extent that only 10% of our arable land is being put to use.
What we need is urgent action by government at all levels, from policy drafting to implementation in order to revive this once-cornerstone of our national economy. Unless economic growth is accompanied by increase in per capita incomes, creation of jobs and rise in living standards, it would even matter if we are the number one economy in the world based on GDP growth alone.
In my next post, I will discuss the second most important thing we need to generate economic growth that will be backed by job creation and rise in living standards.
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