The economic recession of 2016 wasn’t lost in transit while the nation entered into the New Year. Sound policies devoid of the usual “Nigerian factor” coupled with a stable polity, would increase economic growth in 2017. As we enter the New Year, there are reports that “Nigeria’s economic prospect brightens as brent oil prices hit US$58/barrel.” And in the same breadth, “Purchasing Managers Index (PMI) reading in the manufacturing sector raises hope of Nigeria’s economic rebound.” It is also predicted that there will be “increased foreign exchange inflows expected in 2017 to stabilize the Naira.”
Clausewitz defines policy as “the guiding intelligence of modern statecraft,” while other strategic thinkers regard it as the grand concept of any serious human enterprise. Whichever way you look at it, policy is a serious business and it should be well crafted devoid of ambiguities for an economy that is in recession. I’ve reflected in this column that no policy can exist in a vacuum. For a policy to succeed, it must take into consideration the environment in which it operates. In 2017, all economic policies should seek to increase growth. Modulating economic policies with “politics” so that only few political loyalists close to the “corridor of power” are beneficiaries will negatively affect growth in the New Year. If “politics” is at the heart of every policy, predictions about the nation’s economic growth in 2017 will only be an academic exercise.
The federal government must address fiscal and monetary policy inconsistencies in the year 2017. Since directives have been issued at the beginning of the year by the federal government concerning the application of new duties on luxury goods and those which have local substitute, it should be sustained. I agree with financial experts that “such increase in duties may help bolster non-oil revenue.” While such a policy could support the federal government’s import substitution drives, as well as help in diversifying public finances away from over-dependence on crude oil receipts. I hope these policy initiatives will have positive impact on the economy. The economy will only react positively to these policies, if they are formulated to address economic challenges, not political goals.
Local production of rice has commenced in full swing. Smuggling must be curbed as it kills manufacturing industry, if it’s unchecked. It’s reported that import duty on rice has been raised from 10% to 60%. Hmm, this isn’t a bad policy, provided the federal government can sustain it. I hope the quantity and quality of “Lake Rice” produced by Lagos and Kebbi states, including Abakaliki rice can be improved. This must be sustained to meet the demand for this staple food item by Nigerians. I read that the “Lake Rice” was about N12, 000/ bag during the last festive season in December 2016. I hope this price can be sustained for the next 7 years or more. Don’t say it is impossible. It is possible, because I’ve lived in a nation where the price of food item was the same for years. Let me digress a bit.
Perhaps, you’ll remember that a few centuries ago, the first industrial revolution gave man the vantage position from which to virtually control his destiny. This became evident considering the manner the first industrial revolution invalidated Thomas Robert Malthus, an English cleric and scholar’s prediction on famine, and that with increased human population and a fixed land space, agricultural production will decline. Since land is a constant factor in agricultural production, the cleric’s view would have been true. But due to the industrial revolution that followed, Malthus prediction was incorrect because of increased efficiency provided by mechanical advantage of machines.
Let’s go back to the main theme. In 1982, I was a naval engineering student at the Naval College of Engineering, Lonavla, India. Lonavla is a hilly town located between two cities- Pune and Mumbai, and they’re all under Maharashtra state. The cost of potatoes/kg was only two Indian Rupees (Rs) in 1982. When I graduated from the College in 1986 and came to Nigeria to undergo my machinery watch keeping onboard a seagoing vessel, a kilogram of potatoes cost Rs 2/-. When I returned to India in 1987 for a two-year electrical engineering specialization program in a place called Jamnagar, Gujarat State, one kilogram of potatoes was still Rs 2/- only. This was the cost of one kilogram of potatoes till I left India for good in 1989. Within a period of 8 years, one kilogram of potatoes was only Rs 2/-. How did India achieve this feat of ensuring stability in the price of one of their staple food items within a period of 8 years? Technology and a consistent agricultural policy would’ve been responsible for price stability during the period.
Today, technology considered by experts as the primary index of economic power. Technology among other factors is the dividing line among developed, developing, and less developed countries. Technology as a factor of production has become very prominent since the end of the Cold War, such that nations with the desire to prosper have shifted from military power to economic power. Thus, the value of a nation’s currency is of more strategic importance than the strength of its army. Anyway, the federal government should find ways and means, to encourage production of machineries using indigenous technological capability, no matter how crude they may be. That is why I respectfully advise the federal government to ensure that its policies ginger activities within the capital goods sector in the New Year.
I read that the steel industry is set to receive a boost in the year 2017.With the Chinese government’s investment of about US$100 million in a scrap and billet manufacturing plants in Aba, I hope the federal government’s policies will enable our steel products meet international standard in terms of cost and quality. Finally, the federal government is to sustain efforts in carrying along the private sector in formulation of its economic policies.
MA Johnson
