Where are we with regards to sustainable development?
The recent United Nations (UN) General Assembly has come and gone. These days we never seem to go anywhere without exposing ourselves as bungling incompetents. Some of it was on display in New York recently.
Beyond the very public humiliation, we have to address ourselves to the enormous challenges that we face in terms of climate change and sustainable development in general.
Lake Chad is drying up with grim rapidity; the Sahara is galloping into our country with the speed of a Janjaweed horseman. The ecology of the Niger Delta is dying. Millions of livelihoods are being threatened by these environmental catastrophes.
Sustainable development has been defined by the UN as “development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.” In line with this definition, sustainable growth can be understood to mean a rate of growth in output that can be maintained over a sustained period of time without creating other significant challenges, particularly for future generations.
In our day and age, growth – the increase in quantitative output largely as measured by GDP – is not synonymous with development. The latter is understood as structural transformation of the economy as it translates into livelihoods and higher quality of life and standards for the generality of the populace. Sustained growth levels are good for the economy because they put the national production system in full throttle, generating higher incomes and boosting aggregate demand. Lower levels of growth, on the other hand, can lead to goods deflation, industrial layoffs, labour surpluses and higher levels of unemployment, higher public sector debt and general feelings of hopelessness.
The LSE Growth Commission on British industrial growth, headed by the economist Philippe Aghion, defines economic growth with emphasis on its inclusive and distributive elements and its capacity to empower citizens: “Economic growth is the increase in a country’s capacity to produce goods and services. We care about such gains because they lead to improvements in citizens’ material well-being through higher consumption, greater leisure and/or improved public services. We prefer these fruits of growth to be as inclusive as possible rather than for them to be appropriated by a small, fortunate slice of society.”
Growth and development are, of course, intertwined. It is inconceivable that human development could be achieved without significant and sustained increases in output growth. But this is not to say that growth will automatically usher in development.
For example, many years ago, it used to be said in Brazil that “the economy is doing well but the people are not.” An economy can very well in quantitative out growth even as the generality of the populace continue to lament worsening living conditions.
This phenomenon of growth without development is particularly pronounced in the case of Nigeria. Some years ago, the World Bank published a country report on Nigeria that characterised our development trajectory as one of “jobless growth.”
Today, most of our economists agreed that the economy is currently on the path of recovery from recession. Unfortunately, the misery index for Nigerians appears to be reaching despair levels. Growing insecurity across the country, deepening poverty, polarising inequalities and rising unemployment, particularly among the youth, leaves most Nigerians unconvinced that their life-chances are improving.
In our day and age, sustainable growth must be seen as an inseparable part of human development. But it also has to be understood that the process is not automatic. Governments must make conscious and deliberate efforts to channel growth processes in a manner that serve the goals of sustainable human development. Policies must be built to ensure sustainable harnessing of natural resources through technology choices that protect the environment and optimise natural-resource utilisation for present and future generations. Issues of equity must also be taken into account.
Thinking of equity in sustainable growth requires us to focus on three forms of equity.
First, there is what we would term vertical equity – the relationship between rich and poor and across the various segments and classes of society.
Equally important is what we would term horizontal equity – the relations between various groups and regions within a country. For example, in Nigeria there is a widening economic gap between the North and the South.
In our country today, the highest incidences of poverty and youth unemployment are to be found in the North. There is also the phenomenon of intergenerational equity. This refers to the obligation of present generations to utilise the country’s national patrimony in a manner that leaves something for future generations.
The World Bank created the Commission on Growth headed by Nobel laureate Michael Spence to report on the nature, dynamics and sources of growth for developing countries and to suggest possible frameworks for driving successful growth strategies.
According to the Spence report, the most successful countries with regard to sustained growth are countries that are hooked on to the global economic marketplace.
Such countries also tap into the knowledge economy and are particularly strong on human capital. In addition, they enjoy macroeconomic stability. They tend to also possess a high level of savings while also being oriented towards heavy investments in terms of both public and private investments.
Successful growth countries also implement effective strategies for rapid structural diversification and continuing structural transformation. Growth-driven countries also provide effective market incentives while maintaining flexible labour markets.
Equally crucial is the quality of political leadership in their ability to make strategic choices while articulating a coherent growth strategy. They also have to be able to communicate the new vision so as to get buy-in from the citizenry, in view of the short term sacrifices involved in high investment rates.
Leaders of high growth countries also have to maintain a persistent, determined focus on the goal of inclusive long term growth; build consensus among stakeholders; and create “pragmatic, effective and, when needed, activist government over time.”
Also important is fostering effective institutional development that are strong both on regulation, upholding norms and ensuring effective delivery within a transparent environment.
While these principles apply universally, Spence cautions that countries such as those of Africa may be hampered by their small size, landlocked and isolated geographical location and long history of dependence on natural resources, ethnic divisions and institutional weaknesses of the political state.
Ultimately, growth is about markets and private sector investment operating creatively in an environment created by effective government. In this context, inclusiveness is accorded the highest importance in driving the growth process. By inclusiveness we are referring to the requirements of equity, equality of opportunities, and social protection in market and employment and wage-labour transitions. The authors of the Spence Report believe “in the strongest possible terms, that inclusiveness is an essential ingredient of any successful growth strategy”; a necessary ingredient without which the entire process could derail.
There is empirically grounded evidence that growth is a necessary condition for poverty reduction in developing countries. The case is established that it is arithmetically improbable that poverty reduction could be effected in the poorest countries merely through redistributive strategies without commitment to high growth.
We agree with Dani Rodrik of the Harvard Kennedy School of Government when he asserts that those who wish to promote rapid growth in their countries have to give ultimate consideration to “first order principles”.
According to him, “first-order economic principles—protection of property rights, contract enforcement, market-based competition, appropriate incentives, sound money, debt sustainability….Good institutions are those that deliver these first-order principles effectively”.
He also makes the important point that igniting growth is not the same as sustaining it. Igniting a growth process requires a mix of reform policies while sustaining it requires institutionalisation of mechanisms that ensure the resilience of the economy in full awareness of local constraints and opportunities while driving economic dynamism and building capacity for resilience over the long-term.
The Sustainable Development Goals (SDGs) took effect from January 2016 as principles of collective development action agreed by the United Nations for the period leading up to 2030.
It is a successor to the Millennium Development Goals (MDGs) that covered the period from 2005 to 2015. The principal architect was, in fact, none other than our own Amina Mohammed, who was eventually promoted to the exalted position of Deputy Secretary-General of the United Nations.
The SDGs comprise a series of internationally agreed targets focused on 17 Development Goals: Total elimination of poverty; zero hunger; health; quality education; gender equality; clean water and sanitation; renewable energy; good jobs and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption; climate action; life below water; life on land; peace and justice; and partnerships for the goals.
Nigeria is a signatory to the SDGs. We must place them at the heart of our national development agenda if we are to make wholesome progress in the years ahead.