Former CBN Governor, HH Muhammadu Sanusi II has said the Nigerian government needs to focus on reforms that enable a better business environment and also called for economic diversification through maximizing technology as means to generate revenue away from crude oil.
Muhammadu Sanusi II disclosed this at the Kadinvest 5.0 Summit in Kaduna on Tuesday morning. Sanusi said the Nigerian government’s role in the economy should be small, both in absolute and relative terms. Sanusi cited Nigeria’s GDP per capita and tax revenue per capita, at $2,400 and $75 respectively, while development spending is just $36 compared to Kenya at $280 tax revenue per capita, and development spending of $280, despite having 90% of Nigeria’s GDP per capita at $2,151.
“Government needs to multiply its tax revenue, the government needs to spend on business environment reforms,” he said.
(READ MORE: Can Agriculture replace Oil in Nigeria?)
Solutions for Nigeria:
He said that the diversification made colonial Nigeria an economic success, based on the trading sector and the diversity of Nigeria’s export base, including palm oil, groundnuts, cocoa, tin, hides and cotton, and others. He added that the diversity of export meant Nigeria was less vulnerable to terms of trade shocks driven by one export in particular.
“Nigeria has suffered boom and burst periods due to oil valuations. It affects us in direct and personal ways. The government needs to understand the importance of wrong and adverse economic decisions on the human being,” he said.
Sanusi cited inflation numbers, saying Nigeria ignored inflation numbers of 2%, instead of breaking down the CPI and seeing how it affects millions of people who spend on food from minimum wages and how a 2% inflation growth wipes out earnings.
He compared Nigeria’s growth in the past 40 years with countries similar to countries like Malaysia. He added that Malaysia’s export base has been diversified from commodities to manufactured goods in the past 30 years.
By 1979, Malaysia’s top 2 exports were Crude Rubber and Cork and Wood. By the year 2000, Malaysia’s top 2 exports were Electrical Machinery and Office machines/Automated Data Processing equipment. Malaysia’s GDP per capita grew in the same period from $41 to $4,045. Compared to Nigeria’s GDP per capita, which increased from $345- $2,655 from 1985-2015, but failed to diversify export base as Crude Oil was Nigeria’s top export for the period.
“We were growing, but we did not diversify and that explains the huge level of poverty. It also explains the vulnerability of the economy to shocks,” he said.
Sanusi added that the failure to diversify explains the relativity of Nigeria’s slow pace, compared to Nigeria’s growth for the same period.“We have not moved in all these years. This is the difference between us and Asia, they moved!”
(READ MORE: Sanusi gets another major appointment)
On growth and structural change:
Sanusi made a case for a change of mindset with technology adaptation. He added that the wide usage of smartphones does not mean Nigeria has leapfrogged development, as we are not a producer of technology but primarily, a consumer.
He added that Nigeria is yet to leverage on the investments in the telecoms sector. “Infrastructure in Africa has become increasingly decoupled from tech training. Someone who uses a smartphone to produce a Nollywood movie is producing! We need to invest in human capital to boost technology innovation, the smartphone is a ticket to wealth… Every excuse Nigeria has to not grow, Indonesia and Malaysia had. We need to move away from a consuming attitude( with technology) to production,”
On Power generation for productivity:
“In a low-income environment, income elasticity is far more important than price elasticity. People would pay for electricity if they could use it to earn,” he said. “Look at electricity as an economic resource, look at how much you could make. There is a difference between not earning a thing and earning something.”
He cited how China focuses on two major metrics, which are; the number of employed and the number of those with access to electricity, citing the per capita contribution of electricity to production needed to move people away from poverty.
He encouraged skilled jobs that leverage technology, which would enable growth and also remove the pressure of Oil money on the states.
“Youths need an environment that has been created to give them skills. We need to invest in broadband as an economic resource,” he said citing the importance of skill transfers in developing broadband infrastructure.
On patterns for structural changes:
Sanusi said East Asia has moved from agriculture to manufacturing and later services, majorly from the informal to the formal sector. However, in Nigeria, the bulk of a similar change has been in the informal sector.
“Manufacturing GDP in Africa has fallen from 14% in 1990 to 10.1% today. Formal job creation has been modest. This is partly because of a mistaken view that Africa can simply leapfrog manufacturing to become a service-based economy. We have declining activity, while the rest of the world has increased activity”.
He added that an enlightened industrial policy will translate to meaningful job creation. He concluded that Nigeria needs to link infrastructure development to economic growth. “You have to make sure your projects are linked, you don’t just build a road here, a rail line there, an airport there without knowing how there are going to translate into an economy.”
He also mentioned that Nigeria’s Public Debt has risen, and due to high inflation he cannot see how the CBN can keep expanding its balance sheet. He urged the FG to spend more time creating the environment through reforms that will attract the investments while also fixing the balance sheet.
Nigeria’s Ngozi Okonjo-Iweala close to being announced as new DG of WTO
Ngozi Okonjo-Iweala is expected to be announced as the new DG of the World Trade Organisation.
Nigeria’s former Finance Minister, Dr Ngozi Okonji-Iweala, is close to being appointed as the new Director-General of the World Trade Organisation (WTO).
According to Reuters, a group of ambassadors also known as “troika” has proposed Ngozi Okonjo-Iweala to lead the WTO giving her a clear path to becoming the first woman to head the WTO since it started 25 years ago. The three ambassadors are thought to wield significant powers in determining what is a very “intricate and opaque” process.
Most Nigerian Media houses have already announced NOI as the winner of the process even though this is yet to be made official by the WTO.
The winner for the role of DG of WTO is expected to be announced formally by the WTO later today.
However, there appears to be a new twist, in the expected announcement of her emergence as the new Director-General of the WTO.
The United States through its representative at the WTO has insisted that the South Korean candidate is still in contention and that Washington will not recognize Okonjo-Iweala as the consensus candidate for appointment as Director-General.
As a result, the General Counsel of WTO, postponed the announcement of a new Director-General until November 9, after the US presidential election, after further consultations would have been made.
The announcement of Okonjo-Iweala, who is reported to have gotten the support of a vast majority of members states, including the EU, Japan and China, as the new boss of the World Trade Organization, would have been a huge boost for Africa
Kano State presents N147.9 billion budget for 2021 fiscal year
Governor Ganduje has presented the total sum of N147.9 billion as Kano State’s proposed budget for 2021 fiscal year.
Kano State Governor, Abdullahi Ganduje has presented the total sum of N147.9 billion as its proposed budget for 2021 fiscal year before the Kano State House of Assembly today.
Presenting the budget tagged “Budget for Economic Recovery and Sustainable Development,”Governor Ganduje said the budget is in furtherance of his administration’s vision for diversification of the state sources of revenue which will engineer development in the future.
Backstory: Recall that Nairametrics had earlier reported the drive and optimism by Kano State government to boost its Internally Generated Revenue. This might probably explain why IGR increased by almost 10% between 2020 allocations and proposed estimates for 2021.
What you should know: The breakdown of the budget verified by Nairametrics showed the following key highlights:
- The total budget increased by approximately 7.0% from N138.279 billion in 2020 to N147.935 billion in 2021.
- Capital expenditure for the periods under view increased by 10.93% from N60.485 billion to N67.095 billion.
- Recurrent expenditure also increased from N77.79 billion to N80.839 billion, indicating a 3.92%. increase for the periods under view.
- Internally Generated Revenue (IGR) increased by approximately 10% from N24 billion to N26.395 billion during the period under view.
- A breakdown of the budget showed that the Education sector has over N37 Billion representing 25% of the total budget while the health care delivery service has over N25 Billion representing 17% of the total budget.
Why Okonjo-Iweala should win the WTO DG role – Prof. Moghalu
Professor Kingsley Moghalu has thrown support behind Dr. Ngozi Okonjo-Iweala to win the World Trade Organization top job.
A former Deputy Governor of the Central Bank of Nigeria, Professor Kingsley Moghalu, has publicly canvassed support for Dr. Ngozi Okonjo Iweala to win the World Trade Organization (WTO) top job.
The former professor of public policy at Fletcher School, Tufts University, made the disclosure via his official Twitter handle, as seen by Nairametrics
Prof. Moghalu made a strong case for why Africa’s candidate should be considered for the top shot, noting that the need for Africa to get a better deal in the world trading system should be a major criterion in selecting the next WTO DG. He also believed that correcting this negatively skewed trade deal will help tackle poverty and underdevelopment in Africa.
The dynamics of world trade are rigged against Africa, keeping the continent poor and undeveloped. In this piece for Project Syndicate @ProSyn I make a strong case for why Africa’s candidate, @NOIweala, should be selected as the next Director-general of @wto https://t.co/G4Fyxd1z91
— Kingsley Moghalu (@MoghaluKingsley) October 26, 2020
What you should know
Nairametrics had earlier reported that Nigeria’s Ngozi Okonjo-Iweala and South Korea’s Yoo Myung-hee have emerged as the last two candidates for the top WTO job.
Prof. Moghalu also disclosed that the final selection decision is expected this week or very early next week.
Prof. Moghalu said, “The dynamics of world trade are rigged against Africa, keeping the continent poor and undeveloped. In this piece for Project Syndicate @ProSyn, I make a strong case for why Africa’s candidate, @NOIweala, should be selected as the next Director-General of @wto.
“The final selection decision is expected this week or very early next. Alongside the case for why the African candidate Okonjo-Iweala is best placed to lead WTO, I make the case for the continent more broadly as to how and why it must get a better deal in the world trading system.”
What this means
If finally selected for the top job, the opportunity will present Dr. Okonjo the platform to solve some global trade-related issues, one of which is Africa’s trade position with the rest of the world.