The Main Obstacle To Nigeria’s Development, By Uddin Ifeanyi

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Against the backdrop provided by what the “gig economy” is doing elsewhere, the bigger threat to our country could be described in terms of the dearth of innovative capacity that numbers this miserly portend. There is a consensus around how the oil economy was responsible for, and has continued to hurt our local situation…

What are the challenges before Nigeria?

2020 is next door. A couple of years back, timelines for crossing significant economic and social thresholds looked like an eternity away. And it was the wont of our public policy wonks to write out ambitious shopping lists for the country’s advancement. Deadlines were expansive. First 2010. Then 2020. The lofty “visions” that had these years as their dates for achievement have all been scrupulously observed in the breach.

The challenges remain.

With nearly 200 million people, the domestic market is large — potentially. Larger than the United Kingdom (61 million people), and Germany (82 million) combined. It does not suffer the problems of an ageing populations (lower tax takes as a proportion of pension payments, the need for a shift in medical procedures and the definition of care, etc.) that’s threatening to cripple Western societies. It is not burdened by the shift in dependency rates that has upended pension schemes, and national balance sheets elsewhere. Nor has it yet begun to think of the values at stake in the culture wars that these trends have birthed.

Ideally, most global businesses should be struggling to have skin in the local game. But the positive similarities and differences with developed and emerging economies only go so far. With a significant portion of the population barely eking out a living, there is only so much that may be sold to them. Corruption levels are high, of course. But the one lesson from the happy economies in central and eastern Europe is that with a generally positive operating environment, businesses will willingly incur the tax that a corrupt leadership represents. In this context, reforms to the economy matter no less than finding sustainable ways to fund investments in social and physical infrastructure across the country.

…the current failures of the domestic economy, and their nature explain why businesses invested in the local economy are largely legacy operations. Over the many years in which these have operated, they have resolved the burden on their operations…by honing the skill of passing on the high costs from running less efficient process lines to the market.

In part, the current failures of the domestic economy, and their nature explain why businesses invested in the local economy are largely legacy operations. Over the many years in which these have operated, they have resolved the burden on their operations, from structural impediments to competition locally, by honing the skill of passing on the high costs from running less efficient process lines to the market. These structural impediments are often experienced in terms of limited to non-existent physical infrastructure. But they also include the fact of a large youthful population with limited competences. Nearly two-thirds of Nigerians aged 15 – 24 years are neither employed nor engaged in work at levels of competence commensurate with their skill sets or qualifications. And a significant number of these are also not in school or receiving any form of vocational training.

Against the backdrop provided by what the “gig economy” is doing elsewhere, the bigger threat to our country could be described in terms of the dearth of innovative capacity that numbers this miserly portend. There is a consensus around how the oil economy was responsible for, and has continued to hurt our local situation — as a part of the economy (accounting for only 9.61 per cent of domestic output growth in the first quarter of this year), the oil and gas sector has few positive links with the country. Nonetheless, the failure of efforts by successive governments to wean the economy off its addiction to oil exports does suggest either a different or a deeper ailment.

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Estimates differ on the size of the Nigerian middle class — and of the more affluent classes above it. But browse-through estimates on mobile devices (household incomes of circa US$10,000 per annum) put this at about 10 per cent of the population. So, we have about 18 million nationals able to afford “Western” lifestyles. These provide the bulk of local consumer demand.

…the main challenge of the Nigerian state is one of limited affluence, and the concerted efforts of those thus situated to stave off challenges to their sinecures. Is it surprising that the people no longer trust this cohort? Not really.

This cohort are, also, like the oil sector of the economy, an exclave. Not just in terms of their consumption patterns — annual summer vacations abroad, children shipped off to expensive finishing schools in Switzerland, etc. They have, like the oil and gas sector, also shaped domestic policy for much of the country’s post-independence period. Members of these income groups have advocated, and subsequently appropriated diverse subsidy programmes (pump-gate petrol prices, naira exchange rate, university education, etc. all originally justified in terms of interventions in support of the poor and vulnerable segments of the population) that have resulted in sub-optimal domestic resource allocation decisions. Outside of formal sector employment, they have also negotiated tax exemption schemes that made sense, as long as the global market for crude oil exports supported revenue inflows that allowed governments bear these subsidies.

In this sense, the main challenge of the Nigerian state is one of limited affluence, and the concerted efforts of those thus situated to stave off challenges to their sinecures. Is it surprising that the people no longer trust this cohort? Not really. Much of the cynicism that passes for hard-to-explain voting outcomes (when you hold the rigging steady) here is the expression of the people’s loss of faith in their putative leaders. The exchange of monies before polling (a key index of this) is therefore significant, in the extent to which it is a popular gauge of the net present value of the expectations of a electorate from the four years in which each candidate should be in office.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.

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