Nigerian Economy: Growth Analysis

This morning a friend of mine told me he had the opportunity of moving out of the country but refused because he has a plan here Nigeria. I began to wonder and these came to my mind.

Some of Nigeria’s major problems are tension, high poverty rate, insecurity, persistent criminal activities, poor electricity supply, unemployment, lawlessness, injustice, mismanagement of funds, corruption, to mention a few.

Though there are positive ratings and outlooks of growth, there are strong doubts about its sustainability, given the record of poor governance, the volatility of crude oil and agricultural production and pricing, and the risks posed by the inadequacies in infrastructure, energy, credit, security and political stability. Thus the economy clearly has potentials, but the capacity to harness them for sustained, optimal and efficient growth is what really matters. 

The Nigerian economy which was characterized by poor growth performance arising from inadequate plan implementation and economic mismanagement since 1970 has in the last decade witnessed an upward turn following the return of democratic governance. The macroeconomic indicators have become strong and given the current policies of fiscal consolidation and tight monetary controls, the growth outlook could be stable up to 2016. However, there are major drawbacks. The efforts to diversify the economy and develop other sectors outside petroleum have met with failure since the 1990s and there have been massive mismanagement of huge oil revenues.

There are questions about the kind of growth that has been fostered since the period of structural adjustment program, which has been unrelated to the well-being and human development of citizens. Several policy recommendations have been proffered to actualize the potentials of the economy, which include improvement in the governance of both public and private sectors by reducing the cost associated with corruption, such that funds are more optimally deployed to drive growth and development. 

In spite of the numerous setbacks in economic growth there is still a basis for optimism that the economy can still be Africa’s growth tiger considering its enormous human and natural resources. This has already started to manifest as the country is currently ranked as the fastest growing economy in Africa. Although several problems have been identified to be responsible for the economic predicament in the country, such problems are not immutable as they have been surmounted in several Asian countries. The economy can therefore rank among the top twenty in the world with time, but what cannot be clearly stated is the exact time it would take it to get there.   

There are more reasons to believe that Nigeria can overcome the unimpressive growth performance of past decades. Certain reforms that are required to facilitate growth have been undertaken. The prospects now look better than they have been in the past decades. The economic reform measures have at least reduced the distortions that characterized policy decisions at the macro level, and the economy is more open now than it was before the reforms with vastly improved access to the world market. Private sector participation in the economy has increased appreciably as government continues to divest interest from business ventures. However, micro reforms have been quite slow, but progress is gradually been made, while public services and infrastructure need to be given more

attention. The judicial system can be improved upon to make it effective and successful in enforcing laws. The extent to which these changes can be effected would depend largely on the pressure on government by civil society. 

The ultimate and more critical concern is the extent to which political reforms can be carried out in order to entrench peace and stability in the country. Democratization has taken place and individuals can now express themselves within or outside political parties, although the process of democracy is beset with unhealthy rivalries and monumental corruption by political office holders. Sustained economic growth and development ultimately depend on the success or failure of democratic process and institutions in Nigeria.