Nigeria Attaining Trillion Dollar Economy — Dr. Jaiyesimi

Nigeria was grouped with other trillion-dollar economies — Mexico, Indonesia and Turkey—in the acronym MINT. Buoyed by oil prices, Nigeria’s gross domestic product approached $0.6 trillion in 2014. However, for the past seven years, hopes that Nigeria would cross that milestone of $1 trillion have been dashed.

There is no talk of Nigeria becoming one of the 20 largest economies in the world. The international community is not talking about it nor is the Nigerian intelligentsia. Yet, it is a trillion-dollar-plus economy that will pay for human capital development, infrastructure and directly lift a hundred million people out of poverty.

At a trillion-dollar economy, Nigeria’s per capita GDP rises above $4,000, making us a middle-income country. Yet this is just the beginning and not the destination. The destination being $12,500 per capita GDP. Such a target eliminates cherry-picking. It is an objective way of assessing leadership better than ‘OBJ gave us GSM’or ‘Buhari built 2nd Niger Bridge.’

That the Nigerian economy glided past South Africa and breached the half-trillion-dollar mark was not directly from the proceeds of oil at $100 per barrel. Nigeria’s GDP was $160 billion in the year 1999 (using 2010 USD). By the year 2015, when oil prices had receded from $100, Nigeria’s GDP was around $464 billion, a three-fold growth in 15 years. If we factor in the contribution of $100 oil, the growth would be fourfold!

For the better part of the 2000s, oil prices were well below $100. Also, Nigeria’s daily crude oil production was low due to the Niger Delta crisis. Meaning the growth that occurred in the 2000s was never from high oil income. Nigeria went through the global recession caused by the financial meltdown of 2007–2010 hardly skipping a beat. The $100 oil that pushed the economy to $0.6 trillion was the icing on the cake. There were underlying things going for the economy other than $100 oil.

It is inevitable that Nigeria will attain trillion-dollar status. The question is how soon we will arrive there. At current GDP growth of under 3%, we will be there around 2050 with a population of 400 million, meaning more poverty. At a GDP growth rate of 7%, as achieved between 2000 and 2014, a trillion-dollar economy will be achieved within 10 years with a population of 250 million and a per capita GDP of $4,000.

If we achieve double-digit GDP growth, which should be the target of any politician aspiring to lead this country, as achieved by Asian economies, catapulting them to first world status. If this is sustained, we can be a trillion-dollar economy by 2030.

The first time our economy had prolonged growth was in the 1970s and it was due to oil largesse. The second time was in the 2000s and some commentators, particularly those in government, ascribe it to oil, as happened in the 1970s. They seem to be saying that without a good oil income, Nigeria cannot be a trillion-dollar economy. I disagree with this and place the spike of the 2000s as the result of we, the people, ignoring the government and going about our businesses, therefore, contributing immensely to the prolonged high growth of the 2000s. It included the remittances of Nigerians in the diaspora. It included the entertainment industry spawned by the youths. It included foreign investors like OLAM, who introduced polished sesame seed exports, Nigeria’s number one non-oil export.

Nigeria has no business growing below 4% with annual growth in labour population of above 3% of able-bodied 18–30-year-olds. If the new uptakes into the labour force each morning go out and hustle, it theoretically translates into 3-4% annual growth. That’s the reason large populations invariably have large GDPs. This is the real foundation of economic growth, not the one we have been searching for in the last seven years.

To this base percentage, we can now factor in our investment in human capital development that’s been on for five and more decades, from five universities in the 1960s to over 150 universities. This should have a multiplier effect that should add percentage points to the 3% base hence the baseline should easily be moved to 6%. I believe something like this was in play during the period 2000 to 2014.

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From the 6%, with appropriate levers, we can sustain the 10% ddgg— double-digit growth— everything being equal; unfortunately, as the saying goes, everything is never equal in economics. Why is this so? What are the obstacles to Nigeria not being able to soar? Most believe it has to do with our polity but it isn’t, after all, countries with differing polities such as Chile and China have achieved the same economic progress.

I believe it is mental and our acquisition of a particular mindset that has introduced structural defects into both our economics and politics. Big government and a people so besotted with perpetually underperforming governments is responsible. If only the scales could drop from our eyes that salvation doesn’t lie in the dead hands of the government but in our hands. Also, because of our fealty to government, we have always allowed politics to trump economics with most believing you have to get politics right before economics will self-correct; hence false hopes placed in polity restructuring as the silver bullet.

Moreso we have actually achieved growth rates of 7% and above and, with the right levers, we could have moved to 10% and above growth. However, a change in administration and government policies depressed the growth of the economy to barely 2% from a high of 7%. The change in administration was necessitated when the weakest link in the Nigerian economy played its hand and the bottom was allowed to fall out of the economy. That’s the reason non-oil export of more complex goods is so vital to the economy to prevent the recurrence of such. Once this is in place sustained ddgg is possible.

How did we get to this sorry state of being continually besotted with the government? It was not like this in pre-colonial and colonial times. Responsible for this transformation is socialism and imbibing the Marxist philosophy of citizenry needing protection from the capitalist entrepreneurs in society. So the commanding heights of the economy must be in the hands of the government and not in the hands of individuals— or the private sector— so that individuals do not become too rich. Moreso, the colonials were capitalist, so capitalism was not good. We also came to believe the government knew it all. These were the prevailing sentiments of the 50s and 60s that influenced and allowed the growth of big government.

Second is the remnants of a Slave Master Mentality in the country. The country rolled over to these sentiments easily because of the persistence of SMM in our culture. Masters (politicians in government) are needed over slaves (hoi polloi). The masters owe the slaves the barest minimum for slaves survival and keep the rest of the societal wealth. The other side of the coin is that those enslaved lose their personal sovereignty. They abdicate the planning for their lives to their masters. Like what activity to carry out daily, what to grow and how to grow it. Socialism looks so attractive to a slavish mind. When you begin to look at our society through this prism you start to understand and unravel our politicians.

The mix of these two undercurrents in the Nigerian milieu led to a general acceptance of big government leading to this toxic environment with hawkish politicians at the top. An entrepreneur, like Elon Musk, would rather emigrate to the USA than the toxic Nigerian environment.

There is a book published at the heights of socialist glory in 1944, The Road to Serfdom by Friedrich Hayek. It could easily be titled Road from Slavery to Socialism. It encapsulates the relationship between slavery and socialism in the reverse. It is time to execute a U-turn and not be envious of individuals who create wealth. Government or the state is now a dead weight on the economy so a fast way to a trillion-dollar economy is getting the government and it’s dead weight out of the way. To do this will require the restructuring of our mindsets, not the polity.

Dr Jaiyesimi writes from Sagamu and can be reached via 08123709109