• Wednesday, February 28, 2024
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BusinessDay

Why Nigerians are poor!! (2)

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Thus far, we have seen some, though not all reasons accounting for high rates of poverty, unemployment, inequality and social exclusion afflicting our nation. I have often wondered what kind of elite hopes for “peace and security” in a nation in which there are one hundred million people living in poverty? It is highly unlikely, indeed probably impossible for Nigeria to enjoy sustainable peace or law and order until we address the lop-sided economic growth that creates billionaires in units and poverty and destitution in hundreds of millions!

Another cause of endemic poverty and desperation in Nigeria is our low industrialization. Economic history suggests that nations (especially those with large populations such as ours) are unlikely to create jobs and a large middle class without industrialization-those sectors that create jobs in significant numbers (manufacturing, mining, modernized agriculture, agro-processing and agro-allied industry, construction) are all dependent on a strong industrial and technology base. There are many reasons why we haven’t been able to create sustainable industrialization with the most notorious been the abject shortfall in electricity supply. Compare Nigeria’s 4,000 MW power supply with Algeria’s 11,000MW; Egypt’s 24,000MW; South Africa’s 40,000MW; the UK’s 80,000MW; Brazil’s 100,000MW; and Germany’s 120,000MW! Nigeria’s Vision 2020 target of 40,000MW is South Africa, our main regional competitor’s current power output. According to government’s power sector road map, Nigeria’s per capita power consumption is 7% of Brazil and 3% of South Africa-while Brazil generates 100,000MW for 201million people and SouthAfrica generates 40,000MW for a third of our population, Nigeria generates 4,000MW for 160million people!

There are other factors behind impaired industrialization besides power-poor transport infrastructure (road, rail, ports and air transport); constraints around money, credit and finance (especially high interest rates and high inflation); very weak public services-security, water, postal, ports, immigration, customs etc. all of which in addition to the cost of alternative power generation raise the cost of operations for our businesses and render them globally uncompetitive. Of course every expense devoted to these otherwise unnecessary spending is one taken away from what may have been deployed towards employing one additional worker, and only surviving and successful businesses can employ workers. There are also multiple taxes, charges, rates and dues, costs of regulatory overkill, absence of appropriate incentives for industrial enterprises, other costs associated with surviving a harsh investment climateand the costs of servicing corrupt officials!

Corruption has been a particularly destructive force for poverty in Nigeria and other African nations. In our case, the long term trend of rising oil prices since 1998, briefly interrupted in 2008-2009 due to global recession meant that the nation earned N60.9trillion ($380billion) from oil sales from 1999 to the second quarter of 2013. In terms of spending, the federal government expended N35.2trillion ($220billion) over the same period, with the equivalent figures for states and local governments being N25.4trillion ($158.8billion) and N10.5trillion ($65.9billion), thus the governments of Nigeria collectively spent N71.2trillion ($442billion) between 1999 and June 2013-the question is (even after discounting the sub-optimality of prevalent recurrent spending which we have already discussed) whether there is sufficient evidence of this expenditure in terms of infrastructure and services?

Let’s turn to how deficiencies in education, health and (lack of) social services have contributed towards impoverishing Nigerians! Our education system places insufficient emphasis on quality, skills and competences(often emphasizing quantity and zero costs ignoring the fact that worthless education may as well be free!); it is weak in science and technology education often mass producing ill-educated or barely literate graduates in arts and humanities; ignores the critical role of economics, management and entrepreneurship education in the context of developing nations; destroys innovation and creativity through outdated teaching methods instead of focusing on fostering the student’s own independent learning and creative thinking; and is insufficiently focused on adult, vocational and technical education. The critical issue in both education and health sectors remain unanswered questions about sustainable financing structures to guarantee both access and quality. And then we have a huge vacuum in social policy in terms of rural under-development, unemployment and disability benefits and care of senior citizens. In Northern Nigeria, the wilful exclusion of millions of young people from modern education and skills is a guarantee of large scale poverty and is now a threat to national security!

Finally we have recorded significant policy and implementation failures that have translated to massive poverty in the land-failure to leverage oil and gas resources to create a robust, diversified economy; failure to modernize agriculture; failure to formulate and execute a successful industrial policy; and (deliberate?) neglect of social investments and human capital especially through our treatment of education, health, rural development, urban mass transit and housing.

I end this segment as I did the first-objective readers will notice some efforts to redress some of the problems-power sector privatizationpromises to address in the medium and long term our chronic electricity deficit; modest investments in road and aviation infrastructure may be occurring; agriculture reform is likely to improve the outlook for sector modernization; inflation has declined to single digits; and a recently launched Nigerian Industrial Revolution Plan (NIRP) and National Enterprise Development Programme (NEDEP) is an attempt to remedy gaps in industrial policy and MSME development,but big problems remain unaddressed-corruption; education, health and social sector reform; effective policy formulation and execution in the public sector; and huge constraints in infrastructure and public services.

By: Opeyemi Agbaje