President Goodluck Jonathan must overcome many obstacles to achieve a rate of investment that will provide a satisfactory rate of economic growth, especially in per capita terms in his bid to transform the Nigerian economy. These obstacles comprise a complex set of both internal and external factors. Economists are agreed that the basic restraints on growth are embedded in the very structure of the society – external conditions that hinder the export of Nigeria‚Äôs products or limit the availability of financial assistance from abroad – also can restrain growth.
The focus today is on internal issues that may negate the drive to become a mature economy, which can take Nigeria to where the President is dreaming of. The President has promised to undertake a massive transformation of the economy, and this he must realise can only be accomplished by Nigerians and the minister he chooses to work with. The expectation is that the President is not hoping for help from outside our shores because none is there for him to take on a platter of gold. He has to mobilize competent Nigerians to do the job.
The state of the economy has been aptly described by development economists as interlocking sets of vicious circles that perpetuate economic stagnation and poverty. One of these vicious circles involves the savings investment gap: productivity is low because investment is low; investment is low because domestic saving is low; saving is low because income is low; income is low because productivity is low. Breaking out of this circle requires a collective action by the Nigerian people.
Developing long-term savings habit in Nigerians to create capital for mass investment has been an issue. How the President intends to achieve this is yet to be seen. If there are enough savings, long-term loans can be sourced locally by industries for production.
The President is also well aware that power, transportation, storage, communications and education are inadequate and have to be addressed frontally, because they are indispensable to modern industry and agriculture.
The lack of this capital in the country is a bottleneck to economic development. Inadequate transportation and communication facilities block the exploitation of attractive resources located in the interior regions across the country. Nigeria is currently losing up to one third of its agricultural output because farmers in the country lack storage facilities to protect against spoilage, rodents, and other wastage. Will the President resolve all of these in four years?
The absence of electrical power thwarts the establishment of the many cottage industries dependent on it, as well as impeding community and urban development. The President and his Economic management team must realise in developing policies and strategies that the efforts of countless, mostly private, entrepreneurs gave Western Europe and North America the momentum to move into and beyond the take-off stage of economic growth. These entrepreneurs eagerly searching for new profit opportunities, combined factors of production in new ways and on a broader scale than ever before in history to produce new products for emerging markets.
Later, a large class of business managers arose to promote and administer the expanding private enterprise sectors of these economies. Today, the professional preparation for careers in business is commonplace in the United States and is gaining recognition in Western Europe and Japan. This is not the case in Nigeria.
In contrast, Nigeria at the moment generally lacks a business class that is willing to invest in new long industrial enterprises and has the know how to manage them. Nigerian businessmen are more of traders and merchants engaging in foreign trade, wholesaling, and retailing rather than in manufacturing with the exception of few. They tend to be speculative, looking for quick profits in real estate or monopoly market situations in telecoms, banking; preferring to invest in land and rearing their children to be land owning aristocrats, soldiers, lawyers, and diplomats instead of business executives. The challenge is how to groom entrepreneurs in the country for long-term investment and development purposes. How does this government intend to promote venture capital and encourage those with ideas to own companies in order to lift the economy beyond the poverty line?
This is not the time for government to get involved in setting up industries but to develop policies that will encourage both local and foreign investment. Lacking private entrepreneurs, the government must take the lead in formulating and implementing national development plans which the country has abandoned over the years. Here, another problem arises: the shortage of trained government administrators. The result is often incompetence, worsened by endemic bribery and favoritism as typified in the civil service. The response time of the civil service in the country is anti-business. Many who wield wide range of powers are not ready to lose it so they favour policies that continue to focus on the public sector instead of having a private sector-led economy.
This has resulted in the ineffective systems of taxation that failed to mobilise financial resources for capital formation. This is also responsible for decisions that allocated investments in ways that do not promote economic growth; public enterprises are operated at a loss, draining off scarce capital rather than creating it. Will the President and the economic team be bold enough for a total civil service reforms?
Old ways and new ways live side by side in the Nigerian economy, and in most places, the old ways remain dominant. Pre industrial attitudes toward work and belief in Nigeria are very hard to change. And yet, they must be changed if the economy is ever to achieve take-off: the government must develop the motivation and discipline in the Nigerian workers that are essential to industrial production; peasants must become commercial farmers, open to technological innovations in agriculture if Nigeria is to make a head way. .
Poor motivation, high turnover, absenteeism, and a generally sloppy performance characterise the average Nigerian worker. Undoubtedly, peasants offer the most stubborn resistance to changing their ways. Getting them to use commercial fertilizers, improved seed strains, crop rotation schemes, etc., requires a time consuming educational process that is likely to be only partially successful. Will the economic team return agricultural officers to the farms to help train and educate the Nigerian farmers? What about cultural blocks that are often elusive and hard to identify; the land tenure and ownership question? Nevertheless, these must be overcome because pre scientific, traditional attitudes and beliefs act to reinforce the vicious circles of poverty that plague the nation.
The President, not someone else, must put on a thinking cap and take effective charge.