As the citizenry groan under collapsing social services, stakeholders in the Nigerian project should better bend over backwards to develop its human capital , aside growing the economy, as the road map out of the current mess.
This is coming on the heels of the findings by the National Bureau of Statistics (NBS) that more people continue to slip into the poverty bracket over the last three years despite government’s implementation of the Economic Recovery and Growth Plan (ERGP). The NBS, for instance, in its latest data, puts the number of jobless Nigerians at 20.9 million in 2018, an uptick of 3.3 million or 19 per cent on the 2017 figure of 17.6 million.
This is in tandem with the recent World Bank ranking of Nigeria as 152 out of 157 countries on its first-ever Human Development Index. Also, the Brentwood Institution said Nigeria had overtaken India as the nation with the highest number of extremely poor people. The report showed that about 87 million Nigerians are in extreme poverty, with six of the citizens falling into extreme poverty every minute.
This is hardly surprising when one considers the fact that “practically all social sectors, organisations or segments are collapsing”, says Mr. Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry (LCCI).
He lamented that this arises because “the government today does not have the resources to take proper care of Nigerians through social investment.”
This, unarguably, has led to “hunger, disease, voidness, idleness, illiteracy, corruption, aimlessness, ignorance, visionlessness, crookedness, insecurity as well as exploitation”, the giant evils, identified by Mr. Fola Adeola, a former Managing Director/ Chief Executive Officer of Guaranty Trust Bank ,to be troubling the economy
Speaking recently in Lagos at the 2019 Vanguard Economic Discourse: “Human Development Index Vs Economic Growth; Nigeria’s Policy Options”, Adeola, argued that there was need to systematically and comprehensively deal with those evils for the inclusive growth of human capital and economic development to happen in the country.
His words: “We need to develop our human capacity first so that we can produce because any country that does not produce cannot grow or develop.
“Nigeria’s problems cannot be solved by its abundant resources but rather by the quality of its human resources which have what it takes to fix the country and the political will to act decisively and proactively to place it in the right direction. This, of course, cannot be done if human capacity building is relegated.
“Human development costs money, so there is no denying that economic growth is important. Without money, you cannot fund healthcare or raise living standards or provide education.
“In fact, looking at our current GDP per capita, it is clear for all of us to see that our GDP has to go up for there to be any meaningful change in the fortunes of the population. To that extent, it is possible to say that economic growth is necessary for sustained human and social development. Let us be clear, however, that neither triggers it. You can have consistent GDP growth year-on-year for five years and you still find poverty among the people and poor education among the people. Successful economic policies may not trigger or ensure human development.
“Economic growth does not address how the money is spent, what investments are made in people and what disparities exist. If social policy is not targeted and deliberate, human development does not necessarily follow and without human development, sustained economic growth is impossible. How can countries produce in a knowledge economy if the people are uneducated and unhealthy? The answer is simple, they cannot. So, we must produce and we must ensure that our people are taken care of out of this bounty.
“This is not a start-up sovereign state, and not a nation in any real sense and deeply plagued by fundamental evils which, if not addressed, will ensure our ruin.
“The role of the government is to respond to and create an enabling environment for the needs, challenges and aspirations of its population to be addressed and that is why, if there are barriers to these, taking them down must be the foundation of policy. That is why they are called policy interventions.
“Their singular purpose is to remove the barriers from national attention. The choice of the word “evils,” as a matter of fact, ‘giant evils’, in describing our particular barriers denotes the function of their depth and destructiveness and it is deliberate. To call them challenges will be a lie. It will cause us to underestimate their pervasiveness and leave any responses we may craft inadequate to address their ruin. If we are running away from the insufficiency of GDP and HDI (Human Development Index) as foundations for policy, then we must run towards the kind of brutal honesty that will compel us to strive for a different existence.”
Also speaking at the occasion, the Managing Director of Heritage Bank Limited, Ifie Sekibo, pointed out that the desired economic growth would require a change in policy for lending to the energy sector to ramp up power supply. This, he believes, would improve the level of economic activities and deliver positive impact on the standard of living for the citizenry, adding that
there is no light at the end of the tunnel for the power sector growth except there is policy shift:
“As banks, we are today roughly exposed to the energy sector and power sector combined by about 35 percent and those exposures are ones that we don’t see any light at the end of the tunnel, to the extent that they are challenging. The exposures are already impaired in the banks’ books. And if they are impaired in the banks’ books, the problem then becomes how are we going to ramp up energy requirement without headroom within the banks and this is one problem we need to deal with or one thing we need to talk about; what kind of policies to deal with it?
“No matter the kind of policies we want to formulate for energy solution, if the banks are not able to extend more money to that sector, the possibility of growth in that sector is very slim.
“To add to the problem is an interesting financial reporting concept which we are just about to implement called the International Financial Reporting Standard ( IFRS) Nine. Strangely, it practically takes out the appetite to carry on extra weight where a particular sector is not performing well.
“If we cast our minds back, until the banks step in to begin to deliberately advance funds to certain sectors of the economies, they were in comatose including agriculture.
“So the first point I am trying to push across is for policy revisit on how to deal with certain constraints which sometimes are regulatory, but how do you legislate beyond the regulation to allow for some headroom to enable growth to take place. As usual, bankers will say ‘give us some forbearance; narrow the Non Performing Loans (NPL) down to where they will be reasonable.’
“However, the reality is that regulation has set the NPL not to be more than five percent. Today, the truth is that on the average, banks in Nigeria are beyond that limit.
“As bankers , what we look at is your cash or your ability to borrow or reserves kept with us, or documents or some other means that we can account for. But the elephant, which is a sour point in this country, is the minimum wage. For me I look forward to the minimum wage because it will swell the bankers’ balances, more money will come to the accounts of the customers and so it is interesting.
“But the challenge is that it will increase our liquidity, and if it does increase our liquidity, yes there will be more money to spend, but there is one interesting measurement for economic growth and that is money supply measurement. If that goes on, the effect is that there will be inflation.
“Once there is inflation, it means that the money that we are hoping that we get, goes through the roof by increased prices and we are just going to lose that money without even getting the benefit of that increase.
“Of course, the regulators will, almost immediately, find a way to mop that up so that they can keep inflation within parameters that are reasonable.
“I have to push these two fixes for us to know that, yes there is need for economic growth and human development, but the policies surrounding each of these need to be developed further.
“Policies that have direct impact on what is left in my bank account and savings is actually one of the parameters for which we need to develop further in terms of what new things we can bring on board as well as what technology we can invest in, either based on our savings or investment in one way or the other.
“If we are unable to create policies that don’t address what is left over after we take care of the developmental social problems, then we wouldn’t have solved the problem.”
Yusuf , in reinforcing the fact that close affinity exists between economic development and human capital, stated: “If you look at all the leading economies today, there is a correlation between the size of their economy and the welfare of their citizens. The correlation may not be 100 per cent, but clearly, there is a correlation.
“When we talk about human development index (HDI) or the quality of human life, it requires a great deal of investment and you need resources to make that investment.”
Highlighting the inadequacy of resources at government’s disposal for development, and the need to encourage private sector investment in the provision of social services, Yusuf said:
“Look at the story of Nigeria today; practically all our social sectors, organisations or segments are collapsing. The public school system has practically collapsed. The public health institutions have also practically collapsed…”
“We find a situation today where you have more private schools in many of the states than there are public schools. We are also faced with a situation where we now have more private hospitals than the public hospitals. That goes to show the role that the private sector is playing even in the social sector space.”
“It also underscores the fact that the resources of the state are dwindling by the day and making it difficult for the government to discharge some of its fundamental obligations in the social space, namely issue of education, health and even security.
“It is very important that we also deal with the issue of resources. The government today does not have the resources to take proper care of social investment. We have to deal with this in two ways.
“We need to deal with the issues of tax and import duty to support the private sector’s contribution to social investment, in order to grow the capacity of this economy.
“This is because this economy needs funds to grow; we need to grow investment because it is from investment that we can grow revenue, it is with revenue that you can develop education, health services, and support security forces.
“Investment is key, so all our policy equipment that can support micro-enterprises, indigenous investors, FDI, everything should be put on the table because if you do not grow investment space, there is no way you can grow the revenue and there is no way you can increase employment.”
In his contribution, Dr Doyin Salami, a former member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) believed that Federal Government should set target about the vision for the country,
He said: “We need growth in order to achieve development. Let me state a few things; we need to set targets. For example, two per cent of the Chinese population are currently below the poverty line, and the Chinese say in two years even the two percent below poverty line would have been moved above the line of poverty. What is our own target?
“This is important because in the absence of target there is no direction . What is the vision for Nigeria?”