PREMIUM TIMES SPECIAL: Bitter Truths About Economy The Jonathan Govt. Does Not Want Nigerians To Know December 22, 2014 President Goodluck Jonathan making inaccurate claims at the World Economic Forum 2014 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 aquantitativemeasure. 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. Minister of Finance, Ngozi Okonjo-Iweala, has, until recently, claimed the Nigerian economy is in perfect shape In addition, several countries have introduced alternative measures of economic wellbeing that captures more holistically, all aspects of economic performance. Bhutan, for example introduced the concept ofGross National Happiness(GNH) in the 1970s. GNH measures economic performance in relation to four pillars: good governance, sustainable socio-economic development, cultural preservation, and environmental conservation. In the reckoning of Bhutanese authorities, if all the four pillars were performing, the sum total would be higher gross national happiness. Several factors affect real economic performance. The quantity and quality of a country’s labour force and its natural resource endowment all affect investment, production and consumption decisions of economic agents. In order to steer the economy in a direction that is over and above what is warranted by labour force and endowment, governments would normally introduce fiscal, financial and monetary policies that support the achievement of both a higher level of growth and qualitative improvements in livelihood. More importantly, because in today’s global environment, countries do not operate as islands unto themselves, developments in the global economy, especially those of major trading partners, international prices of imported and exported commodities, and the general flow of financial resources, all shape a country’s economic outcomes. While the latter are not within the control of a country, sound domestic socio-economic policies on health, education, environment security and infrastructure will improve the overall quality of life and the business environment so as to make the private sector flourish. Nigeria’s recent economic performance 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. Recent global developments, such as increase in oil prices (until the recent dip in prices); the shift in foreign investor’s interest to developing economies as growth in advanced economies reached saturation points, have helped Nigeria to attract foreign investments, especially in the non-oil sector. As a result, and notwithstanding poor policy choices, unprecedented corruption and theft of public resources, infrastructure deficiency and security challenge, economic growth during the first six years of this administration has been relatively good. However, the performance, as impressive as it may look, is poor when compared to growth during the first six years of civilian rule. In addition, real economic growth does not match the achievement of other oil producing countries with similar endowments as Nigeria. The facts speak for themselves 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. (Figure 1) 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.
Posted on: Mon, 22 Dec 2014 18:26:39 +0000
Trending Topics
Recently Viewed Topics
© 2015