Beset by recession, the Nigerian government pins its hopes on expected positive growth by the third quarter of this year. With the economy contracting for the fifth consecutive quarter in the first three months of the year, local and foreign experts predict a modest expansion that will provide some comfort to a battered populace. But growth that fails to address the roaring unemployment will neither be sustainable nor ameliorate the deep socio-economic problems threatening the fabric of the country. There is, therefore, an urgent need to stimulate macroeconomic stability for sustainable economic growth and job creation.
At -0.52 per cent (year-on-year), contraction of the Gross Domestic Product in Q1 2017 was better than the 0.67 per cent recorded in Q4 2016 and better than the results of the three previous quarters. Negative growth is forecast to give way to positive GDP growth of between one per cent and 2.5 per cent beginning from the third quarter. While this optimistic assessment has been drawing enthusiasm from a government that has been caught badly off-guard by falling oil prices and a currency crisis, experts have warned that the gradual recovery may not bring the desperately needed succour unless growth is accompanied by significant job creation.
Growth without jobs is said by development economists to be the curse of emerging economies reliant on non-agricultural mono products. Nigeria provides a sorry example of this. While the previous government was reporting – and celebrating – growth rates of six to seven per cent between 2010 and 2014, unemployment was actually rising, hitting 25 per cent in 2014. This is not surprising since growth was driven principally by oil prices. With the crash in prices and attendant contraction, the latest figures by the National Bureau of Statistics showed that unemployment, which rose from 13.9 per cent in the third quarter in 2016 to 14.2 per cent in the succeeding quarter and underemployment correspondingly rising from 19.3 per cent to 21 per cent, had put more than a third of the labour force in jeopardy.
While unemployment is a worldwide problem with the number of jobless persons predicted by the International Labour Organisation to rise from 600 million to 1 billion in the next few years, mass unemployment presents a bigger challenge for a country like Nigeria with neither social security safety nets nor a cohesive social and political order. For so long as growth is predicated on higher oil volumes and prices, warns PwC, poverty and joblessness will continue to dog Nigerians. This is because, despite its disproportionate influence on public finances, the oil and gas sector contributed less than 11 per cent to real GDP in 2016 compared to agriculture’s 20.48 per cent in Q1 2016.
The choices before the government are simple: having wasted almost two years of his four-year term through inertia and inadequate planning, the Muhammadu Buhari administration should understand that growth without jobs only deepens social and economic inequalities, distorts the economy and entrenches poverty. What the economy desperately needs is massive infusion of investment, mostly Foreign Direct Investment, of between N25 trillion and N30 trillion that the World Bank recommends annually over the next 10 years and target a minimum of 7 per cent growth that the International Monetary Fund deems necessary for sustainable growth. The government is able to provide barely N2 trillion, most of which is borrowed, while it spends all its income and even more borrowing for recurrent needs. But public deficits could crowd out private investment and consumption, and hamper economic growth.
There is clearly no greater stimulant for economic growth than price stability, and nothing is more damaging to economic growth than inflation. It is clear that abundance of liquidity is having adverse consequences on the ability of monetary policy to influence demand conditions and thus stabilise the economy. Despite the concerns expressed by Henry Boyo, an economist, about the impact of excess bank liquidity on the effectiveness of monetary policy and the necessity to adopt dollar-certificates for the payment of dollar revenue among the three tiers of government to address oppressive burden of excess liquidity, there has been no serious attempt by successive governments to adopt this strategy. Yet, excess naira liquidity poses many risks, which demand the attention of policymakers.
Unless the government quickly, and very transparently, privatises and liberalises the downstream oil and gas, steel, railways, aviation and maritime sectors, it will never draw in the required FDI. Nor can the economy grow and create millions of jobs until a radical reform and review of the power sector that was corruptly unloaded unto inept operators by the Goodluck Jonathan administration is undertaken. Nigeria cannot dislodge South Africa or Egypt for long as Africa’s biggest economy with only 4,000 megawatts of electricity available on the national power grid compared to the former’s 42,000MW and the latter’s 24,700MW. Malaysia, through its Economic Transformation Programme 2011-2015, accorded priority to jobs and is creating 3.3 million jobs in 12 high-job-yielding sectors, while Singapore aims to create 25,000 to 30,000 new jobs yearly, despite a slowdown in job creation in the top performing economy.
Investment should be drawn into high employment generating sectors such as agriculture, which still contributes the most to GDP and jobs; mining, manufacturing, construction and transportation. This government should drop the national habit of slogan-rich initiatives that gulp so much money, encourage corruption and create very few jobs. It cannot sit in Abuja and run micro credit schemes. The massive FDI and jobs attracted for several years by the telecoms sector demonstrate the value of sensibly regulated sectors left to private capital.
Federal, state and local governments should stop their parasitic resource sharing template and become motivators of productive activities and job creation. States should remake themselves as self-sustaining economic units, promoting agriculture, mining, manufacturing, entrepreneurship and skills acquisition. Waste, a fraudulent budgeting and ostentatious living by public officials at public expense utilise funds that should have gone into social services and jobs creation.
There should be a more robust strategy to manage the foreign currency exchange market, just as we should end subsidies for religious tourists. Time is running out; the government should give major fillip to export-led growth, self-employment and entrepreneurship, with emphasis on agriculture, agro-industry and small firms in the informal sector. It should also reorient the educational curriculum at all levels to impart the knowledge and attitudes needed to promote self-employment and entrepreneurship rather than salaried employment.