Time for reset

Nigeria’s nascent democratic journey has lasted for 24 uninterrupted years, the first time in its history. Previous democratic interregnums did not last long enough due to incessant military incursions into governance to give us enough time and data to evaluate its impact on society. The debate on the success or failure of our democracy is raging, and opponents have enough data to back their claims. The jury still needs to be out on that. However, we have made some progress in our democracy, but many Nigerians are yet to connect personally with democratic values and dividends, making them question the idea and practice of democracy – or at least the Nigerian brand of democracy.

If the 2023 election campaign has done nothing else, it has spurred widespread calls for reform and renewal in just about every sector and institution in our country and to do things differently. Almost everything in these tumultuous election months – hyperinflation, economic crisis, deep poverty, poorly implemented currency exchange, fuel scarcity, high rate of “Japa” – grew out of problems swept under the rug for decades. Now the need to do things differently is urgent and imperative. The case for a reset is compelling and will require courage, clarity, and creativity. What matters to Nigerians is responsible, timely, and evidence-driven actions. This is what the incoming government owes Nigerians.

A quick critical review of the performance of our democracy in the core facets of society reveals startling facts as further justification for the call for a complete and total reset of our democratic governance to be fit for purpose. These facets include the economy, security, education, unemployment, social cohesion, morality and ethics, and healthcare. However, this column will focus on the economy and unemployment and visit the other issues in subsequent articles. Comparing the economic statistics in 1999 with that of 2022 will reveal some form of growth that, in isolation, may look like tremendous progress. Economists attribute the growth we experienced between 1999 to 2013 to oil and gas windfall and not out of any ingenuity or right policy decisions.

According to the World Bank, some of the economic statistics of Nigeria in 1999 were:

• GDP (current US$) of $45.6 billion at an annual growth rate of 0.58%;
• GDP per capita (current US$): $381.4;
• Inflation: 6.6%;
• Poverty headcount ratio at national poverty lines (% of the population): 54.4%.

In 2022, the same report indicated that

• Nigeria’s GDP (current US$): $448.1 billion;
• GDP growth (annual %): 3.4%;
• GDP per capita (current US$): $2,113.5;
• Inflation, consumer prices (annual %): 16.6%;
• Poverty headcount ratio at national poverty lines: 63% of persons living within Nigeria.

Comparing 1999 with the 2022 economic data, we can see that Nigeria has experienced significant economic progress over the past 23 years at the macroeconomic level and not necessarily at the microeconomic level. Some of the changes are GDP (current US$) has increased by 883%; GDP growth (annual %) has risen by 4.83 percentage points; GDP per capita (current US$) has increased by 454%; inflation, consumer prices (annual %) has risen by 10 percentage points; poverty headcount ratio at national poverty lines (% of the population) has increased by about 9% percentage points. It may seem like a good improvement at a cursory look, but given the period covered and context vis a vis what Nigeria’s contemporaries did within a similar time frame, we have mellowed our shout of Uhuru.

Furthermore, a more realistic comparison will be to compare our economic data within the past decade (2012 – 2022), and this reveals some dire results. The economic statistics of Nigeria in 2012 were:

• GDP (current US$): $460.6 billion;
• GDP growth (annual %): 4.3%;
• GDP per capita (current US$): $2,762.9;
• Inflation, consumer prices (annual %): 12.2%;
• Poverty headcount ratio at national poverty lines (% of the population): 53.5%.

Comparing these statistics with those of 2022 shows that the GDP has decreased by 2.7%; GDP growth (annual %) has decreased by 0.9 percentage points; GDP per capita (current US$) has reduced by 23.5%; inflation, consumer prices (annual %) has increased by 4.4 percentage points; poverty headcount ratio at national poverty lines (% of the population) has increased by about nine percentage points. This shows the dire straits our economy is in currently; therefore, we need to do something about it urgently.

If you compare the growth of two nations with similar circumstances, you will be worried about why our growth has been stunted. The two nations are Rwanda and India. Rwanda’s growth rate was -0.9% in 2007, but by 2016, it peaked at 9.4% and stabilised at 4.9-4.2% between 2021 and 2022. Within the same period, their GDP grew by 25% relative to 2007. India’s case is even more admirable. India did not only increase its GDP fivefold in the last 10 years but was able to lift more than 415 million people out of poverty in the past 15 years, whereas, during the same period, more Nigerians moved to multidimensional poverty.

The reasonable inference to draw from this picture is that there is something wrong with our economic model. We need a reset before we degenerate into economic slavery. The indices indicate that our economy is not working –low growth, high inflation, high unemployment rate, unfavourable balance of trade, GDP, and low FDI. We must stop the degeneration and reverse it to the path of growth. Tanzania, Ivory Coast, and Rwanda are getting it right. Whatever we must do to achieve a minimum of 5% growth per annum is critical and urgent.

The second problem is unemployment. Unemployment statistics in Nigeria could be better, as the country faces a high and rising level of unemployment and underemployment, especially among the youth. Nigeria has an unemployment rate of 27.1%, which means that about 21.8 million people are actively looking for work but cannot find any. Nigeria has an underemployment rate of 28.6%, meaning that about 22.9 million people work less than 40 hours a week or in jobs that do not match their skills, education, or aspirations. Nigeria has a youth unemployment rate of 40%, which means that about 14 million young people aged 15-24 are unemployed.

Nigeria has a low labour force participation rate of 56%. Nigeria needs to create at least 3.6 million net new jobs annually to reduce the unemployment rate to 5% by 2033, according to a policy memo by Agora Policy. This would require an average annual GDP growth rate of 7.5% and an employment elasticity of 0.523.

The good news is that the new administration acknowledges these challenges as real and present, and the ideas and the will to tackle it is now the issue.

The critical challenge our political leaders face is making Nigerians feel whole again, creating opportunities and hope for Nigerians, advocating, and expanding the frontiers of freedom, eschewing ethnic and religious bigotry, repudiating impunity, corruption, and uncertainties, putting Nigeria on the path of recovering our country socially, economically, and morally.

In the penultimate month of the inauguration of a new government, it is time to reset Nigeria’s economy. This reset should be built on three critical pillars. These pillars include restoring public confidence in the institution of government and its capacity to provide all citizens opportunity irrespective of tribe, religion, or tongue; re-prioritising our national priorities to focus on the economy, security, education, a new national-subnational relationship; and resisting playing politics with national development and fighting corruption.

The government should declare war on getting the economy right, especially raising money to make a difference. Once the economy is good, it will elicit both intended and unintended multiplier effects on every other aspect of the growth and development of Nigeria. The government must have a clear, smart economic goal and an overarching economic strategy to achieve the set goal. There must be clear revolutionary actions that will reset the economy. The first of such revolution should be rapid infrastructural development which should be evident to all Nigerians.

Spending on power, viable interstate highways, airports of truly international standards, scaling up train revolution, and other projects must explode. This can only happen if we can raise money as a country. The incoming government must find the money to make a difference in all critical areas. As it is often said, money answers all problems.

The second revolution is massive job creation. The Nigerian government must decide what clear strategy to create jobs. The bottom-up approach has not worked as intended and must be revisited. Therefore, I advocate for the top-bottom strategy, where the government encourages the establishment of many companies, industries, and small and medium-scale enterprises to boost production and create jobs. The government should resist providing only public sector jobs as it is not sustainable. This is counterintuitive because it makes the cost of governance high.

The last revolution is creating a sophisticated power and technology deepening strategy that will provide access to the internet, smart mobile telephony, and a sophisticated ID programme that will capture 99.9% of adult Nigerians that can be used to verify anybody instantly. This will be the backbone of cataclysmic change in Nigeria and provide the solid data infrastructure and base to move Nigeria into the technology age. The impact of this will be mind-boggling.

Nigeria has the BVN, NIN, and other forms of identification platforms currently. This needs to be harmonised and harnessed for Nigeria’s growth. The government must push to have almost every Nigerian captured in the ID programme and utilise the advantages of such data for economic progress. Imagine an organised ID system’s impact on instant loans to individuals and organisations, direct government interventions, like credits to citizens and businesses, ease of providing security, and increased confidence in doing business in Nigeria.