WHERE IS NIGERIA’S ECONOMY HEADING TO?
WHERE IS NIGERIA’S ECONOMY HEADING TO?
As Economy Grows, Mass Poverty And Unemployment Deepen While The Wealth Of The 1% Increases
By Chinedu Bosah
President Goodluck Jonathan gave his administration a pass mark in his October 1st Independence Day speech wherein he stated that Nigeria economy is making progress. According to him what indicate this progress include the Gross Domestic Product (GDP) has increased by 7.1%, an improvement in electricity supply, creation of jobs through Youwin Project, etc.
“Nigeria’s real Gross Domestic Product (GDP)”, Goodluck Jonathan stated, “has grown by 7.1 per cent on average.” He went further to say, “It is also significant that the GDP growth has been driven largely by the non-oil sector. In pursuance of the main goals of the Transformation Agenda, a number of reforms and initiatives are being pursued in key sectors of the economy with a view to consolidating the gains of the economic growth.” But all key indicators have shown that the living conditions of working people have gone from bad to worse and the growth never impacted on the lives of the masses.
AN EPHEMERAL GROWTH
Fuelled by a rise in the price of crude oil, this growth is weak and may be unsustainable in the long run. The industrialized countries of Europe as well as China who buy Nigeria’s crude oil are currently in the throes of an unfolding world capitalist economic crisis. A deepening of the crisis in China, Germany or any other country leading to further contraction in industrial production could bring oil prices crashing down. In the situation in Nigeria where the huge oil proceeds almost entirely end up in the fat bank accounts of members of the capitalist ruling class instead of being ploughed into the economy to create jobs, jumpstart industrialization and repair broken public infrastructures, such a worsening of world crisis would have cataclysmic consequences for Nigeria’s economy and the working masses especially.
This scenario is entirely possible because the Nigerian economy is largely dependent on crude oil sales, which accounts for over 95 per cent of export earnings and about 80 per cent of government revenues. Agriculture, which used to be the mainstay of the economy has been neglected since commercial exploitation of oil began. As a result, Nigeria has emerged as a net importer of food by spending an average of N24.5 trillion annually. Agriculture contributes about 42% of the GDP and employment for more than 70% of the productive population, yet a token N79 billion (1.6%) of the total 2012 federal budget was allocated to it.
Over 95% of Nigeria’s crude oil production activities is in the hands of a handful of multinational oil companies. There is already apprehension amongst the ruling class as “rising dependence of the U.S. on internal supply of fuel has made the country’s crude oil import from Nigeria to slump from 810,000 barrels in the previous year to 361,000 in July”, Guardian newspaper of Tuesday, 23 October 2012 reported. The Minister of Finance, Mrs. Okonjo Iweala summed up this fear, “Yes, every Nigerian should be concerned about these developments. There has been a spate of studies, articles and other information on increased availability of Shale gas and more oil in the U.S. due to more exploration.”
Alongside this Brent crude, the lighter sweet grades that Nigeria produces, which has had an advantage in the world market is now being undermined by the growing sophistication of more refineries that can refine heavier, cheap and sour grades of oil into superior petroleum products. This, coupled with more control of the Libya oil by imperialism after the death of Muammar Gaddafi, puts Nigeria in a more difficult position. The ruling elite will desperately try to sustain the sales of crude oil at the current level despite growing threat to its crude oil since it is the main stay of the economy. But if the sales of oil are affected, the ruling class will make the working class pay for the shortfall through cuts.
A GROWTH NOT FELT BY WORKERS AND POOR MASSES
The reality is that the so-called growth in Nigeria’s economy has only benefited a few leading to the rise of a small group of extremely wealthy capitalist class. Few of these are involved in any legitimate business. A majority are corrupt politicians, private contractors and pure rent-taking swindlers of all shades and hue. Such is the level of degeneracy of capitalism that it is these elements, just 1% of the population, who are befitting from economic growth by cornering the largest chunk (over 80%) of the collective wealth of the whole country while the workers, artisans, small shop owners, market men and women and farmers who work their fingers stiff daily have nothing to show for their labour.
The extreme gap between the income of the few rich and the majority poor in Nigeria over the last 30 years alone is colossal. According to the “Nigeria Poverty Provide Report 2010” – a survey carried out by the National Bureau of Statistics (NBS) and whose report was released in February 2012, about 112.5 million Nigerians are living in poverty (i.e. less than $2 per day) out of a population of about 163 million. Also income inequality measured by the Gini-coefficient rose from 0.429 in 2004 to 0.447 in 2010 suggesting greater income inequality.
The report also found out that whereas between 1980 and 2010 the proportion of extremely poor Nigerians increased from 6.2% to 38.7% and the proportion of the moderately poor increased from 21.8% to 30.3%, on the other hand the proportion of the non-poor decreased from 72.8% to only 31% within the same period. This shows the incredible widening in the gulf between the richest few and the vast majority of poor over the last 3 decades, the impoverishment of vast sections of the middle class and the concentration of wealth in the hands of a tightening circle of a handful of billionaires.
This also explains why within this ocean of mass poverty and destitution called Nigeria, one person, Aliko Dangote – who got most of his money from favourable government policies and a monopoly on cement and sugar production – is ranked as the 76th richest person in the world and the richest man in Africa with a net worth of $11.2 billion (2012 Forbes billionaire list). Despite the giddy growth in the economy over the past years, public infrastructures remain in a sordid state of disrepair. Roads, electricity, education, health and housing are fast collapsing. Instead of pumping the increased wealth now available into developing public infrastructures, the sing-song of government is to privatize them.
“Our country’s power supply situation”, said Jonathan in his 2012 Independence Day speech, “is improving gradually”. This, the federal government hopes, will be sustained by the private-sector-led power generation, transmission and distribution. Electric power supply is a concern to many Nigerians given the importance of electricity to their productive lives. Electricity has become so epileptic that even big companies relocate to other countries due to very high cost of generating electricity, while some are folding up. The slight improvement recorded in the past few months have been largely due to the increased water level in the dam as a result of the raining season.
According to Chairman, Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi, “power generation will drop by 300 megawatts after rainy season and this will partly cancel the improvement in electricity supply experienced recently in some parts of the country.” If the raining season is largely responsible for the slight improvement in some areas, it then means the improvement is not sustainable as we approach dry season. Just recently, some companies associated with very privileged Nigerians and former leaders who contributed to the crisis confronting the working masses have won bids to buy the unbundled distribution companies of Power Holding Company of Nigeria (PHCN) despite the obvious and woeful failure of many privatized companies. But privatization is no solution. Christopher Anyanwu, the former Director General and a die-hard advocate of privatization admitted in 2009 that only 10% of the 400 privatised firms were assessed to be on relative sound footing!
The transportation sector is not in any way different from other sectors as it comes with a sorry tale. It is one sector the government is fast relinquishing its responsibility to private sector under the Public Private Participation (PPP). However recent failed experiences of PPP have put paid to the lie that only the private sector can develop public infrastructures like roads. A good example is the Lagos-Ibadan expressway, a major road that links Lagos, the commercial city of the country to other parts of the country which was concessioned to Wale Babalakin, a privileged member of the capitalist class and Chairman of Bi-Courtney Highways Services Limited since 2009 to repair and collect toll for decades. Till this very moment, no major construction work has yet commenced.
“This road was given to Nigerian banks to finance, but they don’t have a long-term contract. We were holding meetings upon meetings, but you discover that all they can give is money for a year or two and you need money for 15 years. We are making headway because a bank in South Africa has shown interest” (Sunday Tribune, 17 July 2011), Babalakin lamented.
In the same scenario, the ACN-led Lagos State Government also awarded the construction of 49 kilometer Lekki-Epe road to company called HITECH. Actual construction started in 2007 and till this moment, just about 2.5 km of the road was expanded yet a toll plaza has already been erected for the collection of toll.
A JOBLESS GROWTH
This growth has not led to job creation. Instead mass unemployment and retrenchment in both public and private sector is on the rise. Over 28 million youths are said to be unemployed according to government statistics. However the figure is higher in reality.
“Nigeria is witnessing”, MAN President, Chief Kola Jamodu complains, “very daring state of unemployment. Statistics show that 22 out of 100 Nigerians are out of job. It is even worse with under-employment.”
To reverse this ugly situation, the government hope to create 50,000 new jobs and 6,000 young entrepreneurs in 3 years with Youth Enterprises With Innovation in Nigeria (YOU WIN), project that was launched in 2011. The Jonathan-led government will provide cheap interest loans to supposed young entrepreneurs as a means of creating jobs. However on the basis of entrenched culture of nepotism in government, most of the loan assistance would most likely end up in the hands of some members of the ruling political party, Peoples Democratic Party (PDP) as gratification while those that are serious beneficiaries will be confronted with harsh economic realities conditioned by lack of basic infrastructure. It is sometimes misconstrued by some technocrats that lack of entrepreneurs is one major reason jobs are not created. Hence, throwing money at supposed entrepreneurs, which is largely aimed at patronizing favoured candidates, particularly in the present collapsing state of infrastructure is like lottery that will not make much impact.
UNDER CAPITALISM, THINGS WILL ONLY GET WORSE
The intensification of neo-liberal capitalist policies of privatization has inflicted on Nigeria one of the worst social indicators in the world. 12 million children at not in school; one in five children die before the age of five; about 69% of the population live in relative poverty and with a life expectancy, according to CIA World Factbook 2012 estimate, of 48.95 years for male and 55.33 years for female.
The growing state of poverty vis-Å•-vis the growing cost of living and the deplorable state of infrastructure is perhaps one of the most prominent indicator that the Nigerian economy is heading to the precipice. So also is the widening gap between the few rich and the poor. Despite growing poverty, between 2008 and 2012, customized state-of-the-art jets that cost between N2.4 billion and N9 billion owned by business moguls, preachers and politicians have increased from 50 to 200. In the same vein, workers earn poverty wage of N18,000 minimum wage structure while just about 17,000 political office holders earn more than N1.3 trillion annually.
It could not have been different under capitalism wherein the profit and greed of a few are protected at the expense of the vast majority of Nigerians. The only way out of this capitalist logjam is a planned socialist economy wherein the commanding heights of the economy are nationalized and placed under the democratic management and control of workers/experts and communities. This kind of pro-working people arrangement will enable the economy to be planned towards meeting the needs of all, instead of the profit of a few.