PREMIUM TIMES SPECIAL: Bitter Truths About Economy The Jonathan Govt. Does Not Want Nigerians To Know Note: PREMIUM TIMES relied on Federal Government of Nigeria publications, International Monetary Funds and World Bank web sites for this report. As is well known, available figures, statistics and ratings show that the Nigerian economy has consistently maintained an unprecedented growth rate of 6-7 per cent under the Jonathan administration. They also show that the Nigerian economy is now the leading economy in Africa and the 26th largest in the world, with a gross domestic product of over $500 billion per annum. Statistical indicators are like a woman’s bikini, they hide or mask the most important details, while revealing what, to a casual observer, seem like a whole lot. Take for example real economic growth rate: a measure of how much the economy grew, in real terms. Real growth rate is essentially a quantitative measure. While it measures the total goods and services produced in a given year, it does not say anything about how the quality of life has changed, and whether or not available resources were used transparently and beneficially. As a result, economists have come to the conclusion that the growth rate of an economy at any point in time is meaningless unless there is a context to the discussion. Some ways of introducing context is to compare performance to another recent period or to the performance of peer countries with similar economic fundamentals. These two exercises should show whether or not in a particular epoch, a country’s performance is “unprecedented” or spectacular. Nigeria’s recent growth performance has mostly been shaped by improvement in global trends rather than sound economic policy management, which has actually taken a turn for the worse when compared to the first few years of civilian rule. During 2009-2013, the first five years of President Jonathan’s administration, real GDP growth averaged 6-7 per cent, a fact often touted by the government. But this record is much lower than that of the first five years of civilian rule (1999 – 2005), when growth averaged 11.1 percent. This is despite the fact that oil prices were much lower at that time than now, and foreign investors’ appetite for Nigeria was not as strong as now. The difference, it seems, is in the leadership and policy choices of the different periods. Therefore, President Jonathan’s achievement can hardly be said to be “unprecedented”. It’s actually poorer than his predecessor’s achievements in less benign circumstances. Many Nigerians have wondered how the high growth rates being reported are possible given the “facts on the ground” – to use a well-worn Nigerian phrase. Nigeria’s fiscal balances are much weaker than at any time since the beginning of civilian regime. In the first five years of President Jonathan, the fiscal account was in deficit, on average by 4 per cent of GDP. During the first five years of civilian rule in contrast, the fiscal balance was in surplus, on average, by close to 2 percent of GDP. Public debt stock is much higher than at any time since the Paris Club debt exit of 2006. In 2007, total public debt fell to N2,678b ($3.5b external debt from $36b, and N2.2b domestic debt). But as of end 2013, public debt has increased by more than 300 percent to N8,423b ($8.2b external, and $60b domestic). (Figure 3). If AMCON debt and other agencies are included, the total debt burden is now over N1 trillion. By end of 2014, Nigeria’s total debt should easily approach over $100b, most of which were accumulated in the past 6 years. Given the well-established negative correlation of debt and economic growth, how has growth been so strong? Nigeria’s foreign reserves have followed a pattern similar to the other indicators since the beginning of civilian rule. In the Obasanjo and Yar’Adua periods, reserves high enough to finance, on average over 7 and 10 months of imports respectively. However, in the six years of President Jonathan, it has declined to about 6.3 months of imports. Apart from the growth rates that do not match economic realities, there are serious questions about the quality of Nigeria’s growth. Sustained growth over the years has not made a dent on poverty, or led to broad-based improvements in living standards. While some indicators improved in the early post military era, many have now nose-dived, as no conscious effort has been made to skew policies in favour of socio economic wellbeing. Some examples: Life expectancy is just 54 years, eight years lower than in Ghana and 20 years lower than in Brazil. The rate of childhood malnutrition is 24 percent, more than eight times the rate in Mexico. Basic literacy among 15- to 24-year-olds is just 66 per cent, compared with 99 per cent in South Africa. Official estimates of poverty rate vary from 41 per cent to 56 per cent, depending on whether the poverty line is drawn at 2,500 calories per day or at US$1.25 per day. However, according to a recent study, 74 per cent of the population lives below the economic empowerment line. This is a more stringent definition than “poverty line”. As a result, there are still 32 per cent of the population that are above the official calorie-based poverty line but are not “economically empowered”. Reputation for widespread corruption remains high, ranking at 139th out of the 176 countries on Transparency International’s 2014 Corruption Perception Index. For full details kindly visit premiumtimesng/news/173629-premium-times-special-bitter-truths-about-economy-the-jonathan-govt-does-not-want-nigerians-to-know.html
Posted on: Mon, 22 Dec 2014 11:40:42 +0000