By Jérôme-Mario Utomi
It is no longer news that across the world there is a persistent call to nations, regions and continents to move towards a more varied structure of national production and trade, as there is no This is not only a strategy to encourage positive economic growth and development, but with a view to increasing productivity, creating jobs and providing the basis for sustainable growth that reduces poverty.
What has raised concerns, however, is the paltry number of nations and leaders, especially in Africa as a continent that has responded to these relentless appeals.
The well-cited report by the World Bank Group which, among other observations, notes that economic diversification remains a challenge for most developing countries and is arguably more important for lower-income countries as well as those whose the savings are small. , landlocked and / or dominated by dependence on raw materials.
She argued that for these countries, economic diversification is inextricably linked with the structural transformation of their economies and the achievement of higher levels of productivity resulting from the movement of economic resources within and between economic sectors.
Take the example of Africa, apart from its inability to diversify which has made it an aid recipient continent, continually turns to continents such as; Asia, Europe and America for aid after almost 60 years of independence, failure, in my opinion, explains why Africa as a continent despite being the second most populous continent in the world (1,2 billion people), represents only 1.4% of global manufacturing value added in the first quarter of 2020.
Further, the effect of the continent’s failure to diversify is signaled by the painful reality that out of about 54 countries that make up the continent, only South Africa has qualified as a member of the BRICS, an acronym coined for an association of five major emerging national economies. : Brazil, Russia, India, China and South Africa.
While the article laments this challenge, it is relevant for the current discourse to point out that this tragedy is well entrenched and has spread its wings in Nigeria as a country.
To illustrate this claim, as part of the transformation agenda, reports indicate that former President Goodluck Ebele Jonathan, through his Coordinating Minister, Dr Ngozi Okonjo Iwuala, now Director General of the World Organization Trade Council (WTO) stressed the need to diversify the economy to promote inclusive growth and job creation.
The administration aimed to achieve the goal by investing in the sectors of agriculture, housing and construction, manufacturing, aviation, electricity, roads, railway solid minerals and technology. information and communication (ICT) by government and the private sector. These sectors added by the report would gradually transform the economy and create jobs while moving the economy forward in the right direction.
Sadly but expected, ideas and pontifications, like those of his predecessors, ended not only in frames but as a simple statement of intent.
Nonetheless, before getting to the heart of the matter of the current government’s economic decadences, particularly its long history of inability to design and implement a well-foreseen plan or to execute a shift to a more varied structure of production and domestic trade, let’s take a look at the January 2020 political commentary from one of Nigeria’s most respected newspapers.
Specifically, while lamenting (then) that Nigeria is a country that services its debt with 50% of its annual income, the report notes that the country would face another round of budgetary difficulties this year (2,920) with a mix of $ 83 billion in debt; increase in recurrent expenses; increased cost of debt service; sustained decline in turnover; and an approximately $ 22 billion debt plan awaiting legislative approval.
He added that it could be worse if anticipated shocks to the global economy, such as Brexit, the US-China trade war and the Federal Reserve Bank’s interest rate policy, take a turn for the worse. . The country’s outstanding debt, currently at $ 83 billion, comes with a huge debt service allowance of over N2.1 trillion in 2019, but is expected to increase in 2020.
This challenge stems from the country’s income crisis, which has not abated over the past five years as borrowing has persisted, an indication that the economy is poised for recurring difficult results, the report concluded.
Unfortunately, because no one heeded these warnings, the following paragraph lays bare the consequences of such failure and the failure of the federal government.
Recently, a report noted that the federal government made a total of 3.25 billion naira in 2020, and on which it had spent a total of 2.34 billion naira on debt service during the year. year. This means that 72 percent of government revenues have been spent on debt service.
It also places the debt service to government revenue ratio at 72%. According to the report, a review of the budget performance of the 2020 finance law in 2019 shows that the federal government achieved total revenue of 3.86 billion naira. During the year, debt service swallowed up N2.11tn.
This puts the federal government’s debt service-to-revenue ratio in 2019 at 54.66%. This means that between 2019 and 2020, the federal government’s debt service-to-revenue ratio fell from 54.66% to 72%. The report concluded
Indeed, the question can be asked as to why the country’s income crisis has remained unchanged for the past six years.
In this context, the answer lies in the fundamental recognition that there is a country known for its dependence on crude oil and with a leadership system devoid of accountability, transparency and precision.
The truth is that given the slow growth of the economy but the appalling levels of unemployment in the country, the current administration, in my opinion, will continue to face difficulties in accelerating the economic life cycle of the country. nation until it considers industrialization or productive collaboration with the private sector. organizations that have excess capital to create jobs.
Another alternative recourse will probably be to transfer part of the functions of job creation and infrastructure provision / development to state and local authorities via restructuring / structural interventions. While the first option (industrialization) may offer a considerable solution, the second and third options (restructuring / productive collaboration with private organizations) have more reward potential in political and socio-economic terms as well as reduced risk.
To achieve such a feat, electricity (electricity) and other road infrastructure must be addressed. Notably, doing none of this or continuing on the weak growth of the economy will amplify the painful consequences of the policy mistakes made by previous administrations that did not invest during the period of rapid economic growth.
The very key, both the state and the federal government must invest in agriculture and increase its capacity so as to provide an essential element of productivity policy and require a dual focus on improving the quality of governance, strengthening government capacity to resolve coordination failures and facilitate information gathering, as well as improving the design of interventions based on robust to weak information, implementation capacity and politico-economic problems.
It should not be forgotten that “in the 1960s and just before the oil boom of the 1970s, agriculture contributed 60% to Nigeria’s gross domestic product (GDP), 70% to exports and 95% to dietary needs ”.
Above all, our leaders must internalize the fact that diversifying income from what development experts say will offer the nation options to reduce financial risks and increase national economic stability: like a decline in one source of income. particular could be offset by an increase in other income sources.
Jerome-Mario Utomi is the Program Coordinator (Media and Public Policy), Advocacy for Social and Economic Justice (SEJA), Lagos. He could be contacted via [email protected]/08032725374.