• Thursday, May 23, 2024
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BusinessDay

Institutional weakness: Barrier to sustainable growth

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Over the years, Nigeria’s Corruption Perceptions Index (CPI) reflects a consistent struggle against corruption, depicted through the lens of human experience. Despite slight fluctuations, the scores indicate a persistent challenge in combating corruption within the country’s public sector.

While efforts may have been made to address corruption, the marginal changes in CPI scores suggest a need for more robust and sustained measures to instil transparency, accountability, and trust in Nigeria’s governance systems.

Q: “Amidst this whirlwind of growth, Africa found itself anchored to the ground, burdened by the ignominy of being the poorest continent.”

A commentator once wisely remarked, “Africa does not need strongmen; it needs strong institutions.” This sentiment echoes through the continent’s rich landscapes, teeming with potential and resilience yet marred by the shadows of poverty and underdevelopment.

Behind the veil of promise lies a sobering truth: while other continents march forward, Africa grapples with the weight of its challenges. This narrative is starkly illustrated by data from Statisticstimes, which reveals Africa’s struggle when compared to the economic powerhouses of North America (GDP per capita $3,923), Oceania (GDP per capita $2,793), Europe (GDP per capita $1,977), South America (GDP per capita $605), and Asia (GDP per capita $246).

Back in 1970, Africa (GDP per capita of $320) found itself ranked as the second poorest continent, surpassed only by Asia in terms of GDP per capita. But as the years unfurled, the gap widened, leaving Africa behind as others surged ahead.

Three (3) decades later, North America’s GDP per capita soared to an astounding $24,691, marking a staggering 529.39 percent increase. Oceania followed suit, leaping to $15,548—a surge of 456.67 percent. Europe witnessed its GDP per capita ascend to $13,323, a remarkable leap of 573.89 percent.

Even South America, amidst its tumultuous history, managed to climb to $3,923—a substantial increase of 548.43 percent. Meanwhile, Asia underwent a seismic shift, overtaking Africa and catapulting its GDP per capita to $2,565—an astonishing surge of 942.68 percent.

Amidst this whirlwind of growth, Africa found itself anchored to the ground, burdened by the ignominy of being the poorest continent. Its GDP per capita limped to a mere $823, a paltry increase of 157.19 percent—a sharp contrast to the soaring trajectories witnessed elsewhere.

To compound matters, none of the continents—South America, Asia, or Africa—managed to breach the world average GDP per capita rate of $5,497. But while others strode confidently forward, Africa found itself ensnared in a disheartening crawl, its growth stifled, and its dreams deferred.

Fast forward to 2024, and the landscape of global economics paints a stark picture of divergence. North America, Oceania, Europe, South America, and Asia witness remarkable surges in GDP per capita, soaring to $56,705, $44,153, $35,990, $10,167, and $8,532, respectively.

However, Africa’s GDP per capita experiences a more modest surge, reaching $1,942. This represents a significant disparity in growth rates, highlighting the challenges faced by the continent in harnessing its resources for sustained development.

These pose concerns among experts and professionals. Some experts and commentators argue that Africa is plagued by the resource curse, while others contend that the continent’s woes stem from poor resource management rather than any inherent curse. They question how resources, seen as blessings, could ever be considered a curse for a continent.

Indeed, resources hold the promise of prosperity, yet it’s the lack of effective management and institutional weaknesses that cast them in a negative light. It’s disheartening to witness abundant resources, ripe for growth, squandered amidst struggles and setbacks.

Regrettably, Nigeria, Africa’s fourth-largest economy, is in the shadow of this institutional weakness. In this context, “institutions” refer to the various structures, organisations, and systems within a society that govern and regulate its functioning.

In Nigeria, this includes government bodies, legal frameworks, regulatory agencies, law enforcement agencies, financial institutions, educational institutions, and other formal and informal mechanisms that shape how society operates.

One key defining and identifiable characteristic of a strong or good institution, which has been missing in Nigeria, is that a good institution is driven by ideas, a value system, and core operational mandates. Its effectiveness and efficiency are not only attributable to the proficiency of the person heading it but also to the mandate binding on the institution and everybody found therein.

As a result of this, recruitment into a functional institution is based on merit, not nepotism, bribery, and the quota system, which have conventionally characterised our recruitment process. The deliverables of good governance, without any contradiction, are achieved through institutions.

Consequently, the government’s policies, programmes, and projects are driven and implemented through synergistic inter-institutional interactions. Without good, strong institutions, the government’s policies, regardless of how good they are, would be partially implemented, if not ending on paper.

In contrast, weak or ineffective institutions can lead to corruption, inefficiency, inequality, and barriers to development. Drawing from this, conversely, it is very worrisome to know that the Nigerian state, like many other African counterparts, is failing at the end of its social contract.

Security of life and property, poverty, transparency, accountability, and the rule of law, among others, are some of the governance problems and questions that have plagued Nigeria for years.

The country is still grappling with the security challenges of banditry, kidnapping, and terrorism. Worse still, the poverty index, despite the abundance of resources at our disposal, compounds the challenges of governance in the country.

The Corruption Perceptions Index (CPI), reported by Transparency International, is a globally recognised measure of perceived corruption levels within countries. In 2023, Nigeria scored 25 points out of a possible 100 on this index. This score indicates a perception of significant corruption within Nigeria’s public sector.

When considering Nigeria’s historical performance on the CPI, the average score from 1996 to 2023 stands at 21.48 points. This average suggests that corruption has been a persistent issue in the country over the years.

Examining specific years, Nigeria reached its highest score of 28.00 points in 2016. This could imply some improvement or perceived reduction in corruption during that period. However, it’s crucial to note that even at its highest, corruption levels remained a significant concern.

On the other hand, Nigeria’s lowest score on the CPI was 6.90 points in 1996. This exceptionally low score underscores a period of heightened corruption perceptions, indicating a severe challenge in governance and transparency during that time.

Numerous poverty alleviation programmes have been implemented, including the National Social Investment Programme (NSIP) in 2016, the expansion of the Economic Sustainability Plan (ESP) in 2020, and the Youth Investment Fund in 2020.

Despite these efforts to combat poverty, the numbers show a steady increase over the years, indicating a persistent challenge faced by many Nigerians. Each figure represents more than just a statistic; it embodies the stories of individuals and families grappling with the harsh realities of deprivation and hardship.

Behind these numbers lie the aspirations, dreams, and struggles of countless people striving for a better life.

The essence of Nigeria’s struggle lies not merely in economic statistics but in the aspirations of its people, the dreams of its youth, and the resilience of its spirit.

It’s a call not for strongmen but for strong institutions that can pave the way for a brighter future—one where Nigeria can finally take its place among the world’s nations, standing tall and proud, with its potential fully realised.

Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).