O N the anniversary of the independence of Nigeria, as we count our blessings, it is important to equally reflect on our problems and way forward.
Nigeria occupies the seventh position in the list of world largest countries by population, yet the country is unable to maintain a position in the 20 largest economies. Russia, Japan, Germany, to mention a few, are among countries with smaller population, but with dominance in the global economy. In 2014, Nigeria was declared the largest economy in Africa with GDP for 2013 standing at N80.3 trillion (then $509.9bn), compared to that of South Africa, which was $370.3bn. Currently (2016) South Africa is the largest economy in Africa, worth around $301bn, compared to Nigeria, worth $296bn (BBC, 2016). This indicated that over the same period, South Africa lost 18.6 per cent of its worth, while Nigeria lost staggering 41.8% of its worth. Further, the plummeting of naira has continued, losing more than 40 per cent of its value.
While overpopulation on one hand has been indicated as part our problem, it is a well established fact that mismanagement is our biggest problem. If overpopulation is all the ills, then China (a population of 1.4 billion, first in world population ranking but fourth in land mass ranking) should not be competing as the world biggest economy. The sheer size of Nigeria can be better understood when you consider its population (recorded as between 174 and 183 million) against that of the second biggest African country, Ethiopia (about 99 million). Indeed, what are the factors militating against the rise of the giant of Africa?
The problems of Nigeria are multidimensional and, indeed, more than what one page of analysis can address. However, it is important to consider some things which other countries in similar situation have managed to do, which improved the economy, created jobs and ensured prosperity.
A country with huge population should take good advantage of its manufacturing sector. The manufacturing capability of Nigeria is under exploited. While China employed different mechanisms to ensure population control, what is certain is that the existing population have been reasonably engaged (unemployment rate of four per cent at its worst in 2016), compared to Nigeria (unemployment rate of 13.3 per cent). Sometimes, the world of production is a game of number. While there are few critics of the style of the Chinese, it suffices to say that with the abundance of human resources, China took over every industry where possible, producing for home consumption and exporting to other countries. For example, between 1980 and 2016, China progressed from producing five per cent of the world steel to 50 per cent, or simply put, China produced in the past two years what the UK has produced since industrial revolution (Conway, 2016). Appropriate increase in manufacturing, rather than mere importing and consumption, would improve the Nigerian economy, including its foreign reserves.
Other than manufacturing, there are other areas where the size of Nigeria is of potential benefit, but this article can not exhaust all. For example, the size of the country should be a leverage for negotiating better deals, in goods and services. A large market is the dream of investors and business organisations because more units of goods and services can be sold.
It would be important to touch on some action plans that would benefit the country.
Firstly, education and training of the population is essential, and should be from the early years. The Programme for International Assessment (PISA) ranked Shangai on China central coast as the best in the world, in studying mathematics and science. The approach should be strategic and should include vocational training aiming to produce skilled workers to fill carefully identified sectors and industries.
Secondly, financial support for small businesses should be a priority. Small businesses are the back-bone of the economy. Most of the dominant economies are overwhelmingly small businesses; and they represent a high percentage of all firms in the countries; 90 per cent in China, 99 per cent in the UK, 99.7 per cent in the US. In Nigeria, while about 97 per cent of businesses employed less than 100 employees (Ariyo, 2008), it was identified that the percentage of small businesses with appropriate line of credit and loans from financial institutions was only 2.87 per cent in Nigeria compared to 22.91 per cent in South Africa and 42.79 per cent in Brazil (Onyeiwu, 2015). In addition, government should have tax incentives for businesses. It is equally important to monitor both process and outcomes of such financial support.
Further, a credible legal system is crucial to attracting businesses and investments. If a contract of goods and services is signed between two parties in different countries, there are various international terms under which the contract could be signed. However, one of the countries would be identified as the jurisdiction for settling disputes. Usually, this would be the country with the greater part of the business activity. To a great extent, in international business, a contract is only as strong as the jurisdictional legislations permit. Investors want to be sure that if and when things go wrong, appropriate compensations can be received. This requires a non-corrupt, non-porous and indeed effective judicial system.
The energy sector in Nigeria must be made to be dependable. Power is the lifeline of production. The current situation makes production of goods and services very expensive at the best and in some cases, unachievable.
In addition, a safe and secure environment is necessary to advance business interests and create jobs. This area continues to be a major problem in the case of Nigeria, particularly considering terrorism and social unrest. Finally, the government must stem all forms of corruption and mis-management.
- Dr Adekunle is a public affairs analyst.