I hate to be the bearer of bad news, but Nigeria’s new President Muhammadu Buhari is beginning to act and sound like the original version of him that held power between 1984 and 1985.
That short reign by the ex military dictator had disastrous consequences for the Nigerian economy, although the administration exerted boundless energy on a so called war on indiscipline and corruption.
Consider the data in the chart above.
Between 1960 and 1980, the Nigerian (in red) and South African (in yellow) economy virtually tracked each other in terms of size and importance to the African economy as a whole.
However from 1980 to about 1984 (as can be seen on the chart), both economies took a turn for the downside and contracted as the commodity selloff during the period took its effect (South Africa was a major Gold exporter, while Nigeria was a major oil exporter).
While South Africa managed to resume its upwards trajectory of growth between 1984 and 1985, Nigeria continued its slide, which was made worse by the poor economic policies of the Military dictators of the time, starting from Buhari in 1984.
This was the era of essential commodities, dollar shortages and endless probes, (sounds similar to today’s news headlines don’t it?).
This poor understanding of the economy and general unwillingness to move Nigeria to a truly market based economy meant that for the next 25 years the South African economy was much larger than Nigeria’s, which did not surpass it (South Africa) again until the year 2010.
The bigger the size of an economy the wealthier the citizens are on a per capita basis. This is especially important if the population is growing fast like it is in Nigeria.
For example a man and wife have 10 children (equivalent to Nigeria’s population) and earn N1 million a month or N12 million per annum (equivalent to Nigeria’s GDP) in 2015.
This means the total people in the household 12 (man, wife and children) have to survive on N1million a year each (GDP per capita) or 12 people divided by N12 million.
If by 2019 (4 years later) the man now has 2 wives and 15 children (equivalent to the steady increase in Nigeria’s population that we are witnessing), but his income is still stuck at N12 million per annum (equivalent to little or no GDP growth like we just saw in the recent National Bureau of Statistics GDP report for Nigeria), then effectively the household is collectively poorer.
They are now effectively 33 percent poorer and will have to survive on an average of N666, 000 each or N12 million divided by 18 people (man, 2 wife’s and 15 children).
This is exactly what happened to Nigeria’s economy between 1980 and 1999 as growth collapsed while the population mushroomed leaving everybody poorer and the infrastructure and social cohesion destroyed.
Infrastructure spending especially by the private sector (now that the Government is basically cash strapped from falling oil prices) is a good way to boost growth rates.
Therefore it is with alarm that we are hearing hints of the cancellation of major private sector led projects such as the second Niger Bridge, Centenary city in Abuja, or even the Falomo mall concession.
This does nothing to grow Nigeria’s economy, or engender private sector confidence and job creation capacity in Nigeria.
The government should look to China, India and even recently in Egypt where big infrastructure projects have been catalyst for boosting incomes of the citizens and bringing people out of poverty.
We must begin to project ourselves as being serious in respecting contract and property rights, which is what the greatest economy ever seen on earth (the USA), is built upon.
Appoint Ministers, hold international economic summit
The government should also as a matter of urgency appoint its key Ministers, and hold an international economic summit in Abuja to attract investments and showcase Nigeria to the world, just like Egypt’s El Sisi has done.
It would be a shame and terrible legacy for this government if in 4 years (2019), South Africa’s GDP once again eclipsed Nigeria’s due to our unending capacity for inflicting own goals.