World Bank’s fresh economic salvo – Punch

By AdvocateNews on 09/12/2019

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For millions of Nigerians wallowing in economic misery, their hope of escaping from the clutches of poverty in the near future looks exceedingly bleak. Their fate appears sealed with a damning new report by the World Bank projecting that more people will soon fall headlong into extreme poverty. In the 2019 Nigeria Economic Update Report, the global institution stated categorically that 30 million more Nigerians might slide into poverty by 2030, a possibility in the face of the current realities. To avert this prediction coming to pass, the country’s leadership should be willing to adopt new strategic initiatives devoid of the current half measures.

The gloomy salvo from the World Bank is not surprising. It reinforces the deep-seated malaise afflicting the economy, whose underbelly is its import dependency. The country imports the goods it is supposed to be self-sufficient in. They include petroleum products, food, palm oil, textiles and ethanol. This is illogical. This import binge puts enormous pressure on the domestic economy, especially as the manufacturers are closing down, leading to serious unemployment. The outcome is entrenched poverty.

Already, Nigeria is the global capital for extreme poverty. In 2018, it displaced India in that ignominy with 87 million of its estimated 200 million plunging into misery, which is measured by living below $1.90, about N583.20 a day. Every minute, six Nigerians sink into poverty, says the World Poverty Clock, so that, by early December, 94.8 million have entered therein. If the rate is not reversed, Nigeria will be home to 25 per cent of the extremely poor on earth by 2030. This is mortifying.

Integral to the report is the assertion that after emerging from the 2016 recession, economic growth has remained at a low ebb – 1.9 per cent in 2018 and 2.0 per cent in 2019. The Federal Government officials pathetically trumpet this as an achievement. Conveniently, they forget that population growth is consistently averaging 2.6 per cent, making nonsense of the little gains they are wont to prematurely celebrate. For 2020 and 2021, growth is projected at 2.1 per cent. If oil price, which is currently at over $60 per barrel, were to fall to $50 per barrel, another recession is a possibility.

All this makes an upward economic swing almost forlorn. The Central Bank of Nigeria and the National Bureau of Statistics put the inflation rate at 11.61 per cent, in addition to a jobless rate of 23.1 per cent. Youth unemployment/underemployment stands at 55.4 per cent, all this in an oil-dependent economy with a 2018 GDP of $398 billion.

The report laid bare the mess. “Nigeria’s labour force is growing rapidly,” it stated. Although government created 450,000 jobs in the preceding year, five million new entrants arrived in the labour market, the World Bank said. Seven hundred thousand workers lost their jobs that year. A new NBS report said an average of 18 bank employees lost their jobs daily between January and September 2019, although some new hands were also engaged.

Take manufacturing too, an area in which other economies focus on for job and wealth creation. The CBN states that it averaged just 5.54 per cent from 2007 to 2019. In contrast, a report by global consultancy, PriceWaterhouseCoopers, states that 20.27 per cent of Poland’s workforce is employed in the manufacturing sector. For China, manufacturing accounts for $2.01 trillion of its $14.04 trillion GDP. For Brazil, with a GDP of $1.86 trillion, manufacturing accounts for 28.5 per cent; it is 26 per cent of India’s $2.59 trillion GDP.

Out of Nigeria’s 36 sub-national governments, only 10 attempted to create jobs of any kind or provide an enabling environment for private entrepreneurship to thrive, the report averred. By their primitive dependence on oil money from the centre to meet their needs, the national economy is lagging behind its peers. Everywhere in the country, there is acute misery. With poor social investment, the country’s human development indices are among the worst in the world. In particular, education and health are not easily accessible to the majority. Energy, roads and rail transport give a cause for concern because they are in a state of acute shortage, an impediment to economic growth.

The report said, “Economic and demographic projections highlight the urgent need for reform.” The alternative or inaction is dire – perish. This is the crux of the persistent distress, the resistance to change. Without a radical restructuring of the economy, more woes abound for the overburdened population.

Undoubtedly, immediate reform has to centre on reviving domestic production, the comatose power industry, the oil industry and rail transport. According to the PwC report, the proven catalysts for reviving manufacturing in the US after years of downturn are workforce quality, tax policies, the regulatory environment, and transport and energy costs. “Unlock 21st century tools such as Big Data, automation, and artificial intelligence,” it advised countries. By doing these, India has moved significantly in manufacturing and consequently wealth creation, the PwC said.

To redeem the situation, President Muhammadu Buhari, who plans to lift 100 million Nigerians out of poverty in the next 10 years, and his economic team, should move fast. First, he should open up the economy; this is crucial. The railway sector, the maritime industry, downstream oil industry (refineries), and the Ajaokuta Steel Company should be privatised. These are sectors capable of boosting the economy and creating jobs. On its part, government should prioritise the provision of infrastructure, especially critical economic highways, high quality education and health services.

As it is, state governments have failed their citizens. Only a few of them are moving in the right direction. It ought not to be so. There are abundant opportunities to attract foreign investment to their states; after all, Nigeria is a federal entity, which makes it easier for them to implement their own agenda. Instead of begging for crumbs from the centre, they should become independent economic units by opening up their states through resourceful and creative governance.

Posted 09/12/2019 07:01:48 AM

 

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