As at the time of writing this piece, it is too early to call the Presidential elections held last Saturday. Thoughit appears the election is a marked improvement over past elections, at least from the perspective of INEC. However, the violence experienced in some areas, underpinned by desperation and the connivance of some sections of the security agencies, is a reminder of both the high stakes of this election, and the politics of the past we would really like to put behind us.
Nonetheless, despite that two major presidential candidates in President Muhammadu Buhari of the All Progressive Congress (APC) and Atiku Abubakar, of the People’s Democratic Party (PDP) projects different visions of the future, either of them will have to deal with serious short and long term economic problems whoever is sworn in on May 29th.
Lets start with the long-term problems. Long-term problems are so defined here because the problems and the solutions go beyond the election cycle of four years. While whoever becomes president will be judged on these issues in 2023, it is also the case that the problems will remain in some shape or form. I will focus on five of the problems – poverty, unemployment, poor education, infrastructure deficit, and economic diversification.
Poverty will always be important in politics, both in the long and the short run. It is now a desperate situation, especially because Nigeria overtook India to become the country with the largest number of people living in extreme poverty in 2018. What also makes the situation more desperate in Nigeria is that while very large sections of the world are making progress and increasing their standard of living, Nigeria has retrogressed in the last four years of President Buhari’s presidency. A third reason for the desperation is that there is currently no semblance of the understanding required to drive down poverty, except you regard trader moni as some serious kind of policy. So, reducing, and continuously reducing the estimated 87 million people living in extreme poverty should be a priority for the next President.
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Tied to the reduction in poverty is reduction in the number of those unemployed. To understand the connection and start to solve the twin problems of poverty and unemployment, we should bear in mind the conclusions ofthe report. The authors argued that the rise in poverty in Nigeria is caused by low economic growth, high inequality, and population growth. To deal with unemployment and poverty therefore, the next President must seek to grow the economy beyond the miserable under 2% we had grown in the last three years, reduce inequality through a broad based economic growth, and deal with Nigeria’s continued rise in population. What will deliver high economic are sound economic policies that drive up investments in critical sectors of the economy, changes to the way businesses operate and invest, and increase in the productivity of Nigerians. Indeed, growth, investments, jobs, and prosperity depends on seriously thought through economic policies that address the dearth of both domestic and foreign investments and skills.
Forever also, successive governments have made an issue of physical infrastructure in Nigeria. Yes, without sustained investments in physical infrastructure, it will be very difficult to improve on the ease of doing business, reduce business costs, and drive up productivity. When successful, the reduction in the costs of doing business and the improvement in productivity that follows should make us more competitive. But there is one more thing. We also need serious and sustained improvements in education and skills. Currently, our poor education system is exemplified by the millions of out of school, and the poor education received by many more millions in school, especially those in public schools. It is an albatross that needs to be dealt with by the next President.
Finally, for the long-term economic problems, which is about making progress with economic diversification. The summary here for now is that making progress through economic policies that address the four issues above will also simultaneously address Nigeria’s dependence on oil and gas for our foreign exchange. So, from May, the new President can proceed either by resigning to fate or realise that without necessary reforms, growth will continue to slow, and unemployment continues to rise. Economic policies are powerful, and we should pursue ones that are thorough, have depth, and provide incentives that link solving the problems to associated rewards.
Now, in the immediate term, three issues are urgent. The rising national debt will have severe implications for fiscal policy and expenditure in the coming years. The President must note that we do not have the capacity to borrow like we have done in the last three years. The next President will also have to deal with the issue of fuel subsidies. I think everyone has come to the realisation that fuel subsidies is tantamount to giving Nigerians kobo, while the bosses at NNPC keep the naira. It is not sustainable, and totally removing the subsidy is best for the country and its finances. Finally, there is a decision on the power sector, to be made. Specifically the multi-year tariff order (MYTO) needs reforms in order to drive up investmenst and remove the strain on the power sector.
I thank you.
Ogho Okiti
