Hoping Buhari Can Fix Nigeria’s Economy Is Looking More Like A Fantasy (READ)
President Muhammadu Buhari during his recently concluded trip to India, when asked to react to the claim that his administration is slow in the development of infrastructure, said “Where is the money? You must have known that the Federal Government had to help 27 of the 36 states to pay salaries. Nigeria cannot pay salaries. The Federal Government itself had to summon the governor of the Central Bank to see how it would pay salaries not to talk of the agreements we signed with foreign countries, counterpart funding and so on…Nigeria is broke.”
Contrast that with the comment by President Uhuru Kenyatta of Kenya, a poorer country, who said “infrastructure development is key to ensuring access to decent incomes and livelihoods to all Kenyans, especially the youth. I have no doubt that the expansion and modernization of our roads, airports, railways has brought jobs, and raised the level at which our economy – and the region’s – can compete,”
That Nigeria expends 80% of its budget and even borrows in addition, to maintain an incompetent public sector that makes up less than 15% of her population, at the expense of capital expenditure and or infrastructure development, and social safety net, which benefits majority of her citizens, is wrong headed. This trend is the reverse in progressive economies. For instance, the total public sector current expenditure as a share of GDP for Kenya, United States and United Kingdom are 20%, 25% and 37% respectively.
While bailing out the States to pay salaries was generous, however it was definitely not welded in sound economic strategy, but rather drove Nigeria deeper into the economic ditch. Suffice it to say that many observers have concluded that there was a causal link running from infrastructure investments to subsequent private sector productivity gains, and subsequent job creation. It should be recalled that during the recent downturn in US and global economy, a significant part of the US Recovery Act was devoted to infrastructure development, which may have contributed to the resurgence of the US economy.
According to a 2009 World Bank report, around the world, about two-thirds of all employees work in the informal sector- an unorganized segment of the private sector . This sector located mostly in rural areas, and includes the petty traders, farmers, artisans, cobblers, rural restaurateurs, hawkers of various goods and services etc., may be more than two-thirds in Nigeria. With the appropriate enabling environment, namely infrastructural development, such as provision of electricity, water, road and telecommunication networks, refurbishing schools and hospitals etc., the potential to exponentially invigorate economic growth and job creation is significant. A job creating vibrant economy is a cure for many societal ills, including corruption, terrorism, kidnappings, emotional instability and others.
According to reports of the World Bank and other local and international agencies, the pace of job creation under Buhari’s administration has been inadequate, leading to increasing frustration among underemployed Nigerian youth.
Therefore that President Buhari was dismissive of and lacked appreciation for the trans-formative role of infrastructural development in reversing Nigeria’s 25% unemployment and 50% youth unemployment rates, corruption and terrorism is unfortunate indeed. While President Buhari’s comments were ill advised, it importantly exacerbates the sagging confidence of both potential local and international investors in Nigeria’s economy!
JPMorgan recently excluded Nigeria from its local-currency emerging-market bond indexes, while Barclays Bank has indicated plans to delist Nigeria’s Federal Government bond, from its index, due to concerns about Nigeria’s economy.
Edward Oparaoji is a professor of pharmacy and chairman, Nigerian-American Leadership Council, a Washington DC Based think-tank. Connect with him on Facebook.
The opinions expressed in this article are solely those of the author.