This column has consistently argued that the Private Sector and free markets are the best paths to prosperity for millions of Nigerian citizens, whether Rich, Middle Class or Poor.
The government at the centre obviously feels otherwise with its attempts to reshape large swathes of the Nigerian economy with what often feels like economic experiments, the implications of which are often barely thought through.
Nigerians are naturally the Guinea pigs as these experiments unfold, suffering one hardship or another from border closures that have led to the inflation rate jumping to a 17-month high at 11.6 percent in October, from the 11.24 percent seen in September thanks to rising food prices, to an ever expanding list of banned items being rolled out on an almost daily basis.
Amidst all these, there is scant evidence that the statist approach of the Government is yielding any positive results. As a matter of fact the opposite seems to be the case, with economic growth from 2016 stuck at the lowest levels (around 2% per year), since at least 1999.
This clearly shows that policy choices do matter, and Nigeria can if it chooses adopt the right policies to achieve 7 percent plus growth and lift millions out of poverty.
It means accepting that abrupt border closures in a global world and in a country with thousands of thriving border communities that have traded for centuries across the artificial lines drawn up by colonialists won’t work. It didn’t work in the past, it won’t work today and clearly will be a losing proposition in the future as Africa becomes more integrated by trade in the future, following the signing of the Africa Continental Free Trade Agreement of AfCFTA.
The Government crows that it is trying to protect domestic industry, however it is only shifting the inefficiencies of some domestic producers to consumers in the form of higher costs. It is worrisome that the Nigerian government thinks it can stimulate domestic production through an abrupt border closure, without first tackling issues local manufacturers face such as fostering an easier environment for doing business by providing (or allowing the private sector to provide) infrastructure such as road, rail and power or cutting red tape.
The Federal Government can reform the land use act today and get an immediate boost from the transformation that it will give to the Nigerian economy. It can choose to attract private capital into priority infrastructure projects by identifying assets it wants to sell, or partner with the private sector to develop or concession them and removing bureaucracy that stalls it from happening.
Data released by the National Bureau of Statistics on Friday revealed the Nigerian economy expanded by 2.28 percent for the third quarter of 2019.
In the first quarter of 2019, the Nigerian economy expanded by 2.01 percent, and in the second quarter it rose 2.1 percent. Effectively after 9 months average growth rate is 2.13 percent for an economy with a lot of slack, which is far from full employment.
This is frankly unacceptable and one would have expected the government to change direction, instead it seems to be doubling down on policies that have increased poverty, inflation and unemployment.
Today, Nigeria is in essence being shepherded along by the muddling hands of the State and achieving developed economy type growth rates (2% and below), with 3rd world infrastructure and quality of life.
It is not a surprise that one of the only bright spot in the GDP report of Friday was the Information and Telecommunications Sector (ICT), which has largely been spared of Governments intervention, despite spirited attempts by the Minister of Communications to set data rates by fiat which is largely outside his purview and above the head of the regulator the NCC.
Growth in the ICT sector in the third quarter was up a healthy 9.88 percent, due to expansion in the subscriber base by 9.5 percent to 177 million subscribers. Telecommunications & Information Services under Information and Communication grew by 12.16 percent in the third quarter of 2019 from 11.34 percent in the second quarter of 2019.
On the other hand the trade sector with full on Government intervention slumped into recession in the third quarter according to the NBS, as the trade sector which comprises of whole and retail trade contracted quarter- on quarter by -1.45 percent, after declining in the second quarter by -0.25 percent.
This came as no surprise to most analysts as they had predicted earlier in October 2019 that the sector would be in recession again due to the border closure and poor government policies.
Trade contributed 14.69 percent to the Nigerian economy in the third quarter of 2019, compared to 6.73 percent for Telecommunications and Information Services.
It would be much better for the Nigerian government to dissipate its energy on thinking about big ideas like working to attract the likes of Intel or Samsung to build the first Semi-Conductor plant making chips in Nigeria, or committing to being the African hub for manufacturing Electric Vehicles and all other renewable energy components such as solar panels, and wind to serve the broader African market.
The embarrassing fixation on rice, and closing of orders will be looked upon 20 years from now as a sad chapter in Nigeria’s economic history.
