Business
Special Independence report: Like politics like Economy – Troubled and unstable
By Emeka Ejere
After independence, Nigeria was regarded as a potential economic power house that would become the giant of Africa. Nigeria was the largest producer of groundnut and palm oil, and second largest producer of cocoa in the world.
Industrial estates were springing up across the country and the policy of import substitution industrialization, ISI, was transforming into an industrial hub. The regions were competing for development and the federal government only played a little role in the economy, as regions controlled their resources and paid only taxes to the centre.
Then, oil came and the changed its economic direction as it became the main stay of the economy and economic power was centralized. State creation further balkanized the regions and weakened them from playing major role economically. Corruption, population growth, political violence and ambitious projects became the order of the day.
After several oil booms in 1973, 1980, 1991, 2002, and 2021, Nigeria is poor, debt ridden, and insecure.
All the dreams and promise at independence have all but vanished. Nigeria has become beggarly, and Nigerians are looking for the slightest opportunity to escape to other countries that were even less endowed than Nigeria. Insecurity, poverty, industrial crisis, poor education etc are daily issues. Practically, Nigeria has become a failed expectation.
Economically, Nigeria is in a precarious state, with all the important indices pointing to an economy headed for catastrophic collapse.
The country is rated as the poverty capital of the world, with over 102 million of citizens living below poverty line. Unemployment is conservatively at 33.3 percent; inflation is at 20.52 percent, with benchmark interest rate just raised by 150 basis points from 14 percent to 15.5 percent, while exchange rate has hit N735/$, with the takeoff of political campaigns.
Data from the Debt Management Office (DMO) showed an inexplicable rise in Nigeria’s total public debt from N12 trillion inherited by the Buhari Administration in 2015 to the present debt profile of about N42 trillion as of April 2022, an amount representing 83.9 percent of the country’s real Gross Domestic Product (GDP) put at N72.39trillion last year.
Perilously, debt servicing exceeded retained revenue by as much as N310 billion in the first four months of 2022, the first time the country’s debt service-to-revenue ratio would hit or exceed 100 percent.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, while presenting the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper before the House of Representatives Committee on Finance, put the aggregate expenditure of the government for 2023 at N19.76 trillion, revealing that the Federal Government may not be able to fund capital projects in the 2023 fiscal year unless it borrows more than N11 trillion.
The country is at the lower tail of the ladder in terms of ease of doing business, forcing businesses to relocate to Ghana and other neighbouring nations. With foreign reserves rabidly depleted and the quest for foreign currency largely unmet, oil/gas prices instability and weakened manufacturing sector crisis, analysts see Nigeria’s aspiration for industrialisation as a far cry at 62 compared to where it was at independence or viewed alongside other nations on similar economic pedestal at independence in 1960.
Experts opine that for Nigeria to be relevant in a dynamic world, it must have a GDP of over a trillion dollars, with the manufacturing sector contributing at least more than 21 percent. However, the Manufacturers Association of Nigeria (MAN) is worried that the sector that should propel job creation, productivity and economic growth is encumbered by a series of challenges as it recorded a dismal 9 percent average contribution to the GDP in three years, from 2019 to 2021.
Power generation still hovers around 5,000 mega watts (MW) for a country of over 200 million people, with frequent national grid collapse compounding the problem. South Africa, a country of about 59 million people generates 58, 095MW.
This year alone, petrol subsidy is going to gulp about N6 trillion just because the four state-own refineries are comatose despite several billions spent on turn around maintenance (TAM) annually. Unlike other major oil-producing nations, rather than benefit from higher oil prices provoked by the Russia-Ukraine war, Nigeria is lamenting spiraling subsidy bills, even as an industrial scale theft of crude is depriving it of this windfall.
Historically, over the past six decades the Nigerian economy has transformed from a basically agrarian economy to an economy driven largely by services and oil and gas. While the agricultural sector contributed an estimated 60 percent to the country’s GDP in the sixties, its contribution has reduced to about 26 percent presently.
Conversely, the services sector has grown significantly since independence and now contributes over 57% of the country’s GDP. These are indications of a significant structural change in the Nigerian economy since independence. The service sector contribution to employment generation and revenue to government has risen sharply over time.
In the oil boom era, Nigeria became so blessed economically to the extent that the then Head of State, Gen. Yakubu Gowon, declared that the problem of the country was not money but how to spend the money.
The country subsequently built a number of refineries and started forgetting about agriculture as the groundnut and cocoa pyramids disappeared. The north was not producing groundnut anymore and the southwest was not producing cocoa anymore, thereby laying the foundation of the present day economic misfortune that is befalling Nigeria.
To further compound the problem, the military rulers of those days converted Nigeria from regional system of government, where every region could develop at its own pace, to the federal system of government, where everyone has to depend on federal government for sustenance. The military regime of Gen. Ibrahim Babangida, then introduced the Structural Adjustment Pragramme, SAP, from which Nigeria has not recovered till today.
Education
In the area of education, data from the United Nations Children Fund (UNICEF) showed that 18.5 million children are out of school in Nigeria, the highest rate in the world. And the situation is not likely to change anytime soon, with yearly budget for education between 2019 and 2021 hovering around 6.5% and the one for the current year at 5.4%, far below the 25 percent of annual budget recommended by the United Nations Educational, Scientific and Cultural Organisation (UNESCO).
In comparison, though Ghana and South Africa have not actually met up to the recommended 25 per cent by UNESCO, they have done far more than Nigeria, allocating a maximum 23 per cent and 16.7 per cent respectively.
The resultant inability of government to live up to its obligations in the sector accounts largely for the frequent industrial actions by tertiary institution-based unions, such as the Academic Staff Union of Universities, the Academic Staff Union of Polytechnics and the Colleges of Education Academic Staff Union, with government officials not bothered as their wards school abroad.
This has overtime fueled the high demand for dollars to pay for foreign education, with negative implications for Nigeria’s foreign reserves and exchange rate. According to UNESCO, about 76,338 Nigerians were studying abroad as of 2018, the highest from an African country.
Nigerians spent $378.77 million on foreign education between January and May 2022. The figure is contained in data obtained from the CBN, calculated based on the data provided on the amount spent on educational service under the sectoral utilisation for transactions valid for foreign exchange.
Healthcare
Before Nigeria became dependent on oil, there was little medical tourism in the country. Medical services in the country was comparable to what obtained elsewhere and was available. Foreign doctors were coming to work in the health sector and Nigerian doctors were content working here.
Medical tourism is gulping a chunk of the economy amid frequent doctors’ strike and high rate of brain drain. The World Health Organisation (WHO) puts the doctor-to-patient ratio at 1:600 standard. However, Nigeria’s doctors-to-patients ratio of 1:6,000 as of October 2021, falls far below the global recommendation.
Speaking at the maiden matriculation ceremony of 230 students of the Federal University of Health Sciences Otukpo (FUHSO), Benue state in 2021, Minister of Education, Mallam Adamu Adamu revealed that it would take Nigeria 120 years to have its required number of doctors if they do not leave the country.
The Nigeria Medical Association (NMA) has said unless drastic measures were deployed by governments to stem the tide of brain drain, the already bad national health indices may eventually spiral out of control, thereby leaving Nigeria at the bottom rung among the comity of nations.
According to the General Medical Council, which licenses and maintains the official register of medical practitioners in the United Kingdom, the number of Nigeria-trained doctors in the UK currently stands at 9,976. The figure does not include other doctors of Nigerian origin, who did not undergo medical training in Nigeria, which currently has the third highest number of foreign doctors working in the UK after India and Pakistan.
According to the Association of General and Private Medical Practitioners of Nigeria (AGMPN), harsh living conditions in Nigeria have put life expectancy at 54 years as of March 4, 2021, a far worse situation than in Togo, Ghana and South Africa.
