Nigeria Content Online

It is nearly
impossible, discussing options for rapidly growing this economy without
encountering the link between growth and poverty alleviation. Often,
however, this connection is made in less than direct ways. Three
important documents on the prospects for frontier economies on the
sub-continent make this point differently. The Commission for Africa
Report quotes US President John F. Kennedy (“If a free society cannot
help the many who are poor, it cannot save the few who are rich”) in
making its point that “reductions in poverty do not come without
economic growth”. The NEEDS paper sought to “lay a solid foundation”
for the domestic economy on a platform that combined “sustainable
poverty reduction, employment generation, wealth creation, and value
reorientation”. On the other hand, the NEPAD Framework Document argued
for the design of “effective poverty reduction programmes” because
there is nothing inherent in the process of global growth “that
automatically reduces poverty and inequality”.

New background

These
sub-narratives have become important as we prepare to choose leaders
across the country for the next four years. Besides, there’s new
background to the discourse. China snuck in on the world. Several years
after Deng Xiaoping took their collective foot off that economy’s gas
pedal, most references still described the Chinese achievements as
miraculous. India, almost 20 years after its government began
dismantling the “licence Raj”, proves this lie. There is something done
well by governments that changes permanently the lives of their people.

In our case, it is
increasingly looking like the question to answer is “How do we put
money in the pockets of our people?” In its October 2010 World Economic
Outlook, the IMF argued that the world economy can only move down the
recovery trajectory on the back of “two fundamental and difficult
economic rebalancing acts”. One of the legs of this high-wire act
requires “Many emerging market economies, most notably China, which
relied excessively on net exports” to “now rely more on domestic
demand”.

In the domestic
instance, positive trade balances provide plenty of room for this
rebalancing. The central deliverable is to move spending away from the
external sector and the traditional emphasis on oil exports in favour
of increased spending on final consumption. How? The easiest way is to
do this, as is attested to by just about every “expert” on this economy
is to remove infrastructure constraints. This way, capacity increases
in manufacturing, for example, could drive new labour needs, and the
necessary growth in consumer spending. But here, there is a further
problem! No matter how competent and well meant, any investment in
physical infrastructure will require considerable lead-times before the
final projects come on stream. And a further lag between then, and when
industry begins to build inventory, as the prospects of new capacity
become real. Add to this China’s obvious dominance of production in the
real sector. It apparently has all the comparative advantage now, which
might argue against any prospects of real immediate gain from investing
in these sectors. So, rebuilding physical infrastructure is a
medium-term agenda: way beyond the ken of the four-year electoral cycle.

Resolving the dilemma

Where, then, may we
find the low-hanging fruits, and the quick-wins that can be delivered
over the next four years? It is important we do this, because only then
can we hold the next administration to a clear set of time-bound
deliverables. One way towards resolving this dilemma would be to
respond to the question: “Could reforms to our social infrastructure
(removing archaic laws, improving the criminal justice system, etc.)
help kick-start a transition from the agrarian foundations of the
economy to a service-based economy?” We would obviously have to by-pass
the manufacturing stage (where China currently has such a compelling
dominance).

Alas, there is nothing by the way of tested answers to most of these
questions. But that reforms along these lines are necessary, no one can
deny. Nor can anyone contest the urgent need for their implementation.
Similarly, neither import restrictions designed to protect “domestic
industries”, export promotion initiatives to advance the interests of
the latter, nor import waivers (from arcane rules) granted to political
cronies would do. Government has proved inept at these tasks since
independence, and more so in the last four years.