To Get Rich is Glorious: How Nigeria can achieve inclusive economic growth and shared prosperity

If you take a brief journey through the history of the World, you will notice that on the grand scale, it is really a story of empires and kingdoms and how they have spread their ideologies to shape the way we think, interact and perceive the World.

From the great Egyptian civilization to the Mali Empire of Western Africa, to the Chinese Empire, Roman Empire, Great Britain, and recently USA (with China close on its heel), these empires have at one time or the other “ruled” the World and exerted significant influence on large swathes of people and geographies. The one common thread a keen observer may notice is that all these empires had economic power first before they achieved what we may call “global political or diplomatic power.” Whether Mansa Musa with his substantial gold reserves or the Chinese empire’s control of World trade in the 1200s or even the USA with its masterful command of the New World Economic Order post World War II.

Bringing this close to home means that we need to become economically empowered both on a macro and micro level for Nigeria to globally assume an influential position. Although Nigeria is a large economy by the sheer size of GDP, recent statistics place Nigeria as the World’s poverty capital. As we can all attest around us, numerous financial challenges are manifesting in various ways. As we are concerned with seeing a strong and globally recognized nation, it is imperative to discuss the ways Nigeria can rise to a position where she can dictate and not be on the receiving end.

Overview of the Current Situation

Nigeria has an abundance of vast reserves of human and natural resources; despite this, the current realities do not reflect this inherent abundance and make every observer wonder what the issues are. In my opinion and all things kept constant, I believe that what has resulted in this situation is the faulty structure of the Nigerian economy. The economy is structured so that the most vibrant sectors are not very inclusive, and as such, a large section of the population is excluded from “productive activities.” This phenomenon has mostly been attributed to the Resource curse, i.e., the discovery of resources resulting in neglect of agriculture and manufacturing, leading to a decline of those sectors and a rise in structural issues such as widespread unemployment, poverty, and the attendant consequences. Some others have blamed it on the fact that the federal government exerts significant control over the most productive industries; With reinforcement from both legislation and the will of the “elite class” that benefit from it, this situation has persisted. Hence the Nigerian economy is primarily set-up as a crony capitalist system that rewards those connected to the power source or, as we say, “the National Grid.”

As a result, even though Nigeria’s economy is growing on an aggregate basis, on a per capita basis, we are nowhere near the wealthy countries. Also, poverty and income inequality persist, leading to societal tensions and clashes. This also means that a small subset is driving the economy, and the majority of the people are not able to contribute significantly to economic and productive activities or benefit from the growth. This is also intensified by the failure of essential sectors such as education and healthcare (clearly a discussion for another day).

Recommendations: A look at some policy approaches 

Having presented a brief analysis of the current situation, I will go ahead to put forward some strategies that can help us address the issues and put Nigeria on the path to prosperity.

  1. Focus on the rural base: The base of Nigeria’s economic pyramid is where most of our population lie. Interventions targeted at that population will go a long way to stimulate the economy. Traditional poverty eradication interventions have utilized a “charity” driven approach and have ignored people’s innate capacity to be entrepreneurial and productive. We need to support the sectors that these people are engaged in, such as agriculture, fishing, petty trade, with the aim of increasing their productivity through new technology, improved knowledge and methods, and financial support. For example, this will help ensure we can achieve food sufficiency as a nation – since most of the food is produced by smallholder farmers – and will generate raw materials for our potential industries, thus creating an industrial value chain in Nigeria. In the past, China did this with the Household Responsibility System (HRS), which led to the rural revolution that reduced poverty and increased rural incomes.
  2. Support Rural Industry: State Governments, in partnership with local governments, can identify a crop or product that they have a comparative advantage in and support the LGAs to open industries jointly owned by the State, LGA, workers, and private financiers. For instance, Kafanchan can open a ginger processing factory that manufactures ginger oil and ginger tea; they will leverage the abundance of ginger nearby as raw materials, ensuring a steady supply. This will solve logistical issues of having to move goods cross country and increase the Value-Add, thus resulting in IGR for state and LGA, dividends for private owners, and incomes for both farmers and workers. China also successfully achieved this with Township and Village Enterprises (TVEs), which increased revenues for both municipal governments, towns, and residents.
  3. Designate Locations of Excellence and Innovation (LoEIs) within Nigeria: The concept of LoEIs will be areas that will be designed to attract Foreign Direct Investment (FDI) in specialist areas of industry. For instance, Abeokuta can be designated as a “Health LoEI,” which will imply that the Federal Government (FG) will work with the State Government to attract Multinational Health Companies, pharmaceuticals, R&D firms, and health technology firms to invest in Abeokuta. These firms will receive tax-exempt status and other preferential incentives to attract them and allow them to grow and recoup their investment. The effect of this is that new jobs will be created, Nigerians will become specialists, and there will be a possibility for technology transfer to Nigerians, who will then go on to start indigenous companies. Nigeria has implemented similar initiatives in the form of Oil and Gas Free Zones and Export Processing Zones, but they are focused on Crude Oil and promoting export; what I propose will focus on non-oil sectors and ensuring we can meet local demand before considering export. Also, through this system, Nigeria can be a world leader in these industries. UAE and Dubai have done this with Dubai Health City.
  4. Rethink our Engagement with International Development Partners (IDPs): Nigeria’s engagement with IDPs has been beggarly, reactive, and on the donors’ terms. We need to start asserting ourselves by identifying our priority areas and choosing the donors we can partner with to get financial assistance and technology to solve our challenges. Alongside the capital intensive projects such as roads and bridges, we should also encourage the Development partners (especially new ones like China) to introduce new and innovative business models and transfer some industries in line with the “Flying Geese” hypothesis. Ethiopia is currently engaging with China in this way, and Chinese firms are moving the labor-intensive end of garment manufacturing to Ethiopia.
  5. *Invest in Quality Education and Upskilling*: Nigeria should invest in training and upskilling the younger generation with core technical skills to make them employable. Skills like software development, AI, robotics and data analytics can make them relevant in the 4th industrial revolution and provide a talent pipeline that makes Nigeria a choice emerging economy for companies looking for new growth areas.

At this point, it is vital to ask, “what role can the youth play?” as the young people constitute the largest demographic of Nigeria’s population and have been slated since time immemorial as “the Leader’s of tomorrow.” To this, I will put forward three points

Recommendations: The Role of Youth

  1. Focus on gaining technical and economic skills that can make us get jobs and even start companies. With COVID and previous trends, work is becoming virtual and with the right skills, Nigerian youth can get cross-border jobs, earn foreign income, and improve Nigeria’s economy. In some countries like Jamaica, young people are already involved in shared services and outsourcing.
  2. Focus on creating value-adding companies and move from addiction to Non-profits. Nigeria is gaining attention as a prime location for Venture Capital; in 2019, USD 377 million was raised by Nigerian startups, up from USD 178.3 million in 2018. Clearly, this is the best time to be a Nigerian founder as there is financial support and an ecosystem to help young people create Unicorns (companies valued at USD 1 Billion). With this support and attention, young people can create businesses that can invigorate the Nigerian economy and create shared prosperity.
  3. Focus on creating networks and ecosystems that will provide support. We cannot overemphasize the value of networks in life, and it is time that Nigerian youth start supporting each other and collaborating. We also need to consider models like crowdfunding to support business or innovations (and not BBN evictees).

Conclusion

In conclusion, a lot is required from both the Nigerian government and people to place Nigeria on the path to prosperity and global power. We can do it if we put our head down, mind our business, and focus on profit.

– Nnamdi Ifechi-Fred

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