The Former Central Bank of Nigeria Governor, Professor Charles Chukwuma Soludo, has disclosed that the fundamental challenge currently facing Nigeria is that the nation’s economy is stuck with myriad of problems.
Professor Soludo, who is also a member of the recently constituted National Economic Advisory Council (EAC), disclosed this on Tuesday at the biennial economic summit organised by the Covenant Christian Centre, Lagos to commemorate Nigeria’s 59th Independence anniversary celebrations.
Faulty Institutions: While delivering his speech on “economic and institutional restructuring for the next Nigeria”, Soludo first stated that the Nigerian legal and institutional foundation is weak, and it lacks the capacity to contain the current economic realities. According to him, it will be difficult to have a competitive and prosperous post-oil economy with the same legal and institutional foundation designed for consumption of oil rent. Soludo stated “You can’t build a 100 storey-building upon a foundation of an old bungalow.”
- Addressing the post oil Nigerian economy, the former CBN Governor disclosed that the Nigerian economy needs a national rather than federal response. Soludo stated that the link between law, constitution, institutions, judiciary and economic transformation seems to be the weakest link in the country’s design to national agenda.
- Soludo stated that every government (past and present) have tried their brand of economic restructuring or diversification and yet, the economy remains tied to life-support of oil, peasant agriculture and largely informal services sector. Professor Soludo disclosed further that Income inequality, poverty, and unemployment remain major defining features of the Nigerian economy.
Population surge: Speaking further, Soludo stated that while oil will be history in less than 20 years, the pressures of population surge builds up. The former CBN governor disclosed that if the current population trend continues, there will be about 400 million Nigerians in 2050. If this happens, Soludo stated that this means 400 million Nigerians will have to survive and prosper in a tiny but declining land mass (923,000 sqkm) and Nigeria will have the highest population density in the world among the top ten most populous countries.
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- While emphasizing that the Nigerian economy is stuck, the former CBN governor said the world is not waiting for Nigeria. Specifically, Soludo stated the Nigeria is still at the low ebb of industrial revolution and struggling with stages of growth and development (Rostow’s growth model), the world is now on the 4th Industrial revolution with digital economy.
- According to him, while electric cars are fast replacing diesel/petrol cars, Nigerians are still building petrol stations; small shops and huge shopping malls together with e-shopping. Hence, ordinary Nigerians who can’t explain what has hit them, resort to all sorts of criminal activities to survive.
Stuck in Debt Cliff: Providing further insight on the Nigerian economic woes, Soludo stated that repositioning Nigeria requires deploying a gamut of legal-regulatory-governance regimes, macro and sectoral policies and programmes to alter the spatial/geographical concentration of economic activities, structure of production from primary to industrial and post-modern service sectors and dynamic human resource as engine of sustainable development.
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- The former CBN governor disclosed that at the macro level, the fundamental challenge currently is that the economy is stuck at a very low speed lane in the context of a debt cliff with little fiscal space, while monetary policy is at near its limits, and low savings-investment trap, with rising unemployment and poverty.
- According to him, reducing poverty and employment generating trajectory in the short-term requires serious heavy lifting, with major difficult choices and extraordinary coordination ahead.
- In sum, Soludo stated that the alternative future that we see is one without oil, and where other exhaustible natural resources play very little role.
- While stating that Nigeria earns almost as much from oil exports as it earns from remittances from its Diaspora, the country cannot export illiterates in a world driven by digital revolution.
- Soludo stated that the easiest way to waste the future is to continue to churn out millions of semi-illiterate, largely unemployable citizens, most of whom see criminality as the only route to escape the poverty trap or drug as the opium for solace.
- According to him, with an urbanization rate of over 5%, the conflagration that might ensure when hundreds of millions surge to the cities but can’t find jobs, housing, water and food can only be imagined. “Soon, the rich won’t be able to sleep because the poor, homeless and hungry are awake”. Soludo stated.
What should be done: While providing details on the possible solutions, Professor Soludo stated that among other things, Nigeria needs to create a productive progressive and construction of a world without oil.
- Soludo stated that a stable and more efficient system Political-governance arrangements that ensure participation and ownership of the Nigerian project by all citizens of the federation is required.
- The former CBN governor also said the devolution of powers according to the principle of subsidiarity and variable geometry is pertinent. According to him, Nigeria must move away from the current system of unitary-federalism, with its choking concentration of powers and responsibilities at the inefficient centre; thereby giving power back to the people.
- In addition, Soludo stated that the contents of the Nigerian Constitution should define a new fiscal federalism that is consistent with devolution of powers and which alters the incentives faced by economic and political actors.
- Soludo also stated that the “dining table politics” or “you chop I chop” must stop to fix the broken political ideologies.
- In his concluding remarks, Soludo asserted that the future without oil is possible, but this will be powered by the country’s greatest asset—human capital plus technology which guarantees security, prosperity and happiness.