Menu

Professor Kingsley Chiedu Moghalu, OON, Founder & President, Institute for Governance and Economic Transformation, and former Deputy Governor, Central Bank of Nigeria, on November 15, 2017 gave the keynote address titled, “The Challenge of Economic Growth in Nigeria” at the 5th Goddy Jidenma Foundation Public Lecture, at the Nigerian Institute of International Affairs, Lagos. The following are his 14-point recommendations for Nigeria’s economic growth and transformation, as excerpts from the lecture here below. Kingsley_Moghalu_Jidenma_Foundation_Public_Lecture_2017.[1].

1.    Nigeria must establish an economic philosophy from which its economic vision will be derived, and set out a vision that will drive economic policy and management. Such a vision must make clear the respective roles of the state and the market, and its position on capitalism and its various adaptations – entrepreneurial, crony capitalism, state capitalism, and welfare capitalism. The economic ecosystem will operate and be managed within this framework.

2.    Economic management should be overhauled. The President should establish a full-time Council of Economic Advisers, headed by a Chairman that will serve as Chief Economic Adviser, that researches and monitors the economy 24/7 and advises the President on actions to take to enhance economic growth. This council, composed of 5 or 6 members, should be Nigeria’s economic team. Ministers holding economic portfolios should not be members of this team; rather they should focus on execution and the achievement of targets set by the President, as advised by the Council of Economic Advisers. The Council’s members should have expertise in the main areas of economic growth ambition or policy such as fiscal policy (in particular taxation reform), industrial policy, trade policy, energy economics, and economic history, economic philosophy and political economy.

3.    From 2019, the Federal Government of Nigeria should establish a concrete economic diversification plan with a concrete path to a post-oil future for Nigeria, based on emerging global trends.

4.    This plan, akin to the Saudi Arabian government’s economic diversification plan, should include a clear strategy with interlinked policies – trade, industrial, fiscal – and far-reaching structural and governance reforms of the Nigerian National Petroleum Corporation that could include partial privatization (with share listed on the stock exchange for purchase by ordinary Nigerians and not by government-related cronies). In doing so, the interests of local communities in oil-producing regions must be protected – for example, by ensuring a set-aside in private ownership of the NNPC by members of the communities in the oil-producing regions).

5.    To create millions of jobs within a four to five-year period, Nigeria should establish a public-private partnership private equity and venture capital fund to support job-creation through access to entrepreneurship capital. This fund should be established with not less than N500 billion, with contributions from the federal government and private sector funders, and be run on a for-profit basis as a private company by private sector managers. Mutual accountabilities must be established between the government and private sector partners, and for the operating entity.

6.    To reduce unemployment in a strategic and systemic manner, the recommendation above (Recommendation #5) should be combined with a fundamental overhaul of Nigeria’s educational system to cut the system’s propensity to produce graduates who will join the long lines of the unemployed. A two-track educational system should be established at secondary school level, one track going into vocational skills training, the other going into tertiary institutions reconfigured to produce graduates in applied technology and entrepreneurship subjects in a ratio of 70:30 to non-technology or entrepreneurship subjects.

7.    Nigeria’s tax authorities should follow the ownership trail of Nigeria’s estimated 140 million mobile telephone lines to bring operators in the informal economy in the tax net and the formal economy. This approach will generate dramatically increased internal revenue and reduce the need for external indebtedness. In return, the government must enter into, and deliver on, a solemn social contract with the Nigerian people to provide our citizens with the most basic goods of security, access to education and quality healthcare, and infrastructure.

8.    The Federal Government of Nigeria should cease all new foreign borrowing. Considering the government’s declining revenue profile, further indebtedness is not sustainable and will likely lead to a debt crisis.

9.    The FGN needs to establish a “hedging” arrangement to manage the risks of oil price volatility.

10.    The Federal Government of Nigeria should institute “smart protectionism” using tariffs to protect infant industries in Nigeria for a seven-year period, under the auspices of the Special and Differentiated (S&D) provisions of the World Trade Organization treaty. The government should subsidize manufacturing, but with incentives and accountabilities from manufacturing companies in terms of their exports to the ECOWAS, African and broader global markets. No export orders, no subsidies.

11.    The Constitution of Nigeria should be amended to make the Development Bank of Nigeria a first-line charge to the Consolidated Revenue Fund of the Federation. This will enable the Bank to provide funding for big-ticket infrastructure items at single-digit interest rates.

12.    Economic planning in Nigeria should henceforth take a regional approach based on economies of scale from the six geopolitical zones, based on the competitive and comparative advantages of the zones.

13.    Power policy in Nigeria should henceforth prioritize industrial clusters such as Aba, Kano, Lagos, Nnewi, and Onitsha. Nigeria needs to make massive investments in renewable energy that can serve households.

14.    The Land Use Act should be abolished. Doing so will help improve access to capital in the economic system because freehold land ownership will provide additional levels of collateral for bank or other forms of borrowing to start businesses. The law has outlived its usefulness and creates bureaucratic bottlenecks in the economy, especially in the area of investment.

Conclusion

Nigeria has failed to achieve sustained economic growth largely because of a failure of political leadership. The absence of competent leadership, which must for a developing country include a solid understanding of economic and public policy, prevents real economic progress.

From crude oil-revenue dependency to excessive recurrent expenditure, from political interference in the central bank to returning Nigeria closer to debt peonage, Nigeria’s political leaders have stymied Nigeria’s economic development through a combination of incompetence and the servicing of their vested interests.

I have made several recommendations in this lecture, but the most important I save for the last: that we need a new generation of leadership that is visionary, intellectually and technocratically competent enough to meet the challenges of economic growth in a competitive global economy of the 21st century. That appears to me to be the pre-condition for achieving the other recommendations.

The fundamental solutions to our crisis of economic growth and development lie in leadership. Not the politics-as-usual of the past, but a new kind of politics of ideas. It will take this kind of politics to produce the vision and political will to undertake the necessary economic and institutional reforms.

It will take this kind of politics to educate and mobilize ordinary Nigerians to new ways economic transformation and their enlightened, collective self-interest in supporting the creation of a new economic paradigm that dramatically cuts down joblessness and poverty. It takes knowledge, which is the true wealth of nations, to even know where to begin, how to proceed, and the direction in which we should be headed.

Why are the wealthy nations rich and the poor, like our country, impoverished? I have attempted to provide answers and indicate the path which, in my view, we must follow.

It’s time to make our economy, creating jobs for the 30 million Nigerians that have none, Job # 1.

It’s time to reclaim Nigeria’s future from the limitations of our present.

It’s time to place the leadership of Nigeria in the hands of those with the knowledge and competence to create that future.

That, ladies and gentlemen, is the path to the future that our children deserve. Anyone who tells you that anything matters more your livelihood and your welfare is not being straight with you.

Thank you.