NationalMirror State of the economy Our Reporter July 4, 2013 It is no longer a secret that the Federal Government is facing daunting challenges on the state of the economy. The economic situation is obviously not as rosy as some government officials would want the public to believe. Indeed, critics have drawn attention to the imminent collapse of the country’s economy except urgent measures are taken to reduce the bloated cost of running government, diversify the economy and increase crude oil production. To the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, however, the fundamentals of the economy are strong. The economy is buoyant and safe from danger. But at a recent meeting of the FG Economic Team, the same minister did aver that the economy was shaky and that drastic measures were needed to stave it off from irredeemable crisis. This has raised widespread suspicion that the government is seriously weighing the possibility of imposing belt tightening measures on hapless citizens who have been at the receiving end of poor governance as well as grave public sector ineptitude and corruption. The Nigerian economy was touted as the fastest growing economy in the world in 2010. It is, however, difficult to measure the impact of the said growth on job creation, poverty level, power supply, infrastructure deficit, insecurity and corruption. Between 2005 and 2010, the country averaged a quarterly Gross Domestic Product (GDP) growth of 6.71 percent, which reached an all time high of 8.29 percent in December 2010. The level of inflation surged to 12.6 percent in January 2012 largely as a result of the partial removal of petrol subsidy. In August 2011, the level of inflation was 9.3 percent, 10.0 percent in September, 10.5 percent in October and November, and 10.3 percent in December. The persisting high level of unemployment in the country has been attributed to the structural disequilibrium in the economy, with growth in consumerism and sectors that encourage rent seeking, which leaves the key productive and high employment generating sectors performing far below their capacities. Similarly, Nigeria’s unending power sector crisis has been visibly responsible for the poor performance of the real and informal sectors of the economy, especially as it concerns job creation. The economy has also been adversely affected by high interest and exchange rates. The global financial meltdown, while sharp practices in the capital market have also restrained investors’ drive for shares. The Jonathan administration sought to change agriculture to business and encourage private sector participation in the value chain. The Minister of Agriculture, Dr. Akinwunmi Adesina, was quoted as saying the country loses over $10 billion annually due to the loss of its 1970s market share in oil palm production, groundnut and cocoa. The country still relies heavily on food imports. Overall, however, while there could be a semblance of macro-economic stability, the human development components of the economy are most discouraging. The reform agenda of the FG revolves round the four cardinal anchors of ensuring macro-economic stability and sustainable growth; implementing structural reforms, strengthening public institutions and investing in priority sectors. But the reforms are hindered by lack of political will, politicization of the implementation process, over dependence on external expertise and political corruption. The bureaucracy in Nigeria is still grossly inefficient and hardly effective when it comes to pursuing serious economic and political reforms that can truly transform the nation. To avert further danger, therefore, the FG should recognize reduction of the cost of governance as one of its foremost priorities. A situation where about 74 percent of annual budgets get sunk into recurrent expenditure is unacceptable. The planned merger of some government ministries, agencies and departments (MDAs) performing similar functions should be accelerated. In addition, the country’s overreliance on oil as a major revenue earner is a gamble that cannot be sustained for too long. Earnings from oil should be used to diversify the economy and provide the requisite infrastructure and hospitable business climate that can boost the real and informal sectors and improve the living condition of the populace. The level of poverty and destitution in the land ought to be of utmost concern to the government.
Posted on: Thu, 04 Jul 2013 07:25:50 +0000
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