By Joshua Ayodele Ajayi
ALL societies normally strive for survival and growth. This is with a view to improving the life chances of their people, through the purposeful exploitation of their endowment. The ultimate goal is the creation of better access to means and standards of livelihood for the people, for whom these endowments exist. The orderliness and proper management of societal structures which will provide the enabling environment for the citizenry to engage in lawful economic activities is of utmost importance towards achieving these goals.
Towards this end, the government, whose duty it is, to protect the citizens and help harness societal resources for their benefit is expected to identify and continually update its knowledge about the needs and preference of the people. The aim of course, is to ensure the design and implementation of demand-driven policies and programmes, in consonance with the wishes of the people.
Unfortunately, Nigeria’s experience in the last 50 years is a mixed grill of more failures than successes. The last straw was the last six years (2009-2015) when bad behaviour at all levels, of both public and private sectors graduated from bribery, corruption and illegal enrichment to outright stealing. But to fashion a way forward out of the current economic crisis, it is important to take a retrospective look at where we are coming from. This throws up the fundamental questions: How did we get where we are now? What lessons, if any, have we learnt? And what are the chances that we will ensure that we utilize today’s opportunities to get us to the ‘promised land’?
The answers are not far-fetched. For instance, before independence in 1960 Nigerian economy was characterized by the dominance of exports and commercial activities. The industrial sector was virtually non-existent. Raw materials, comprising agricultural produce and minerals were exported to the industrialized nations. This continued into the pre-oil boom era (1960-1970) when agriculture contributed about 65 per cent of the GDP and represented almost 70 per cent of total exports. Indeed, agriculture provided the foreign exchange needed to import raw materials and capital goods. The peasant farmers produced enough to feed the entire nation.
It was during this period that the First National Plan (1962- 68) was put together. Its overriding objective and that of the subsequent ones-2nd, 3rd and 4th (1970-85) was to achieve a rapid increase in the standard of living of the average Nigerian and put Nigeria on the list of developed countries in the world. Specifically, the short-term plans were meant to increase income-per-capita, ensure more even distribution of income, reduce the level of unemployment and increase the supply of high level manpower. Others included the diversification of the economy, guarantee balanced development and the indigenization of economic activity.
Good enough, the oil boom era came. The discovery of oil in the mid-fifties however, created serious structural problems in the economy. In 1971, the share of agriculture to GDP was 48 per cent. But some six years later in 1977 it had declined by over 50 per cent to 21 per cent. The contribution of oil to the economy was 90 per cent of the GDP and 85 per cent of total exports. Sadly, by 1974 Nigeria had become a net importer of basic food items! Food production became a problem as rural-urban migration increased. On the flip side, foreign exchange was no longer a constraint to development. Government, therefore, got involved in virtually all aspects of the economy, including ownership and control of critical sectors such as petroleum, mining, banking, insurance, clearing and forwarding.
Before long, the era threw up its own challenges. Corruption, theft, real estate speculation, outright looting of government treasury and other fraudulent practices prevailed. Private accumulation of ill-gotten wealth intensified. The gap between the rich and the poor widened. The economy became heavily dependent on imports. It was, therefore, not too surprising that the private sector remained weak despite the oil boom. The economy registered negative growth between 1978 and 1986, except in 1979 and 1985. Inflation and unemployment rates escalated. Yet, the austerity measures adopted by the Obasanjo/Shagari regimes did not arrest the deepening economic crisis. External loans increased. Industrial capacity utilization declined from 74 % in 1981 to 31% in 1989. Manufacturing growth reduced from 15% in 1981 to 3% in 1989. It was so bad that restructuring the economy was inevitable.
Yet, the Structural Adjustment Programme (SAP) introduced in 1986, which emphasized privatization, reduced government expenditures, adoption of a realistic exchange rate policy, reliance on market forces, adoption of appropriate pricing policies for petroleum products and public enterprises did not meet its lofty objectives. The private sector that was meant to serve as an engine of growth was unable to respond adequately to achieve increased production, create employment and stabilize prices.
But instead of heaving a sigh of relief, Nigeria’s economic crisis worsened with the global financial meltdown of 2007-2008, the worst since the General Depression of the 1930s.The stock market crashed. The banking sector had 10 out of the 24 banks grappling with non-performing loans, poor corporate governance and weakness in capital adequacy and illiquidity. There was drastic decline in revenue receipts by the three tiers of government. Hope seems dimmed with the global crash of oil prices and Nigeria losing 40 per cent of oil revenue that used to come from the United States. Russia has kept going despite its internal crisis. Canada and Iraqi oil production and exports have risen.
The interplay of this scenario has led to 50 per cent fall in the value of our local currency, the Naira. Revenues from oil exports, non-oil exports and private remittances from abroad and foreign direct investment (FDI) fell. All be it, the current economic challenge is the last opportunity to get it right.
. An excerpt of a lecture delivered by Mr. Joshua Ajayi, the former MD of UAC, at Bells University, Ota COLAMS Annual Lecture