‘Government must build pillars of economic growth’
Vice President of the World Bank, Oby Ezekwesili, speaks to our reporter in Cape Town, South Africa. Excerpts below.
Economic competitiveness in Africa
Looking at the many
indicators of economic competitiveness, one will see a whole range of
things that have to do with the quality of the country’s macro-economic
and sectoral policies and institutions, as well as governance and
regulatory systems, particularly the cost of doing business in one’s
neighbourhood.
In all these,
Nigeria still has a huge agenda to accomplish and the areas of specific
focus are numerous. Therefore, the earlier the government starts to
tackle these obstacles and constraints to business, the better for the
country.
Productivity does
not just happen without those obstacles being tackled. When one looks
at the progress recorded so far in the information, communication and
technology as well as the telecommunications sectors, for example, it
was because there were important policies and regulatory systems put in
place by the government for the private sector to see the signals and
move in to invest.
However, in the
energy sector, the situation is in the opposite direction. Even with an
important piece of legislation, really operationalizing the Energy
Sector Reform Act has not happened, because the Petroleum Industry Bill
(PIB) is still pending before the National Assembly for approval. So,
that gap is there. Therefore, private capital will not go into that
sector until the confidence about trustworthy and credible regulatory
systems as well as the legal framework is in place.
Gaps in useful skills
If one looks at the
issues about the human capacity, the skills and entrepreneurship
matters a lot for productivity. Nigeria is struggling with skills
adequacy, particularly the quality and their relevance to areas of
need, because of the poor state of her education system. The issue of
infrastructure deficit in general is huge, and the government needs to
address this as urgently as possible. For a nation like Nigeria, the
4,000 mega watts (MW) of electricity currently being generated and
distributed is just inadequate to power the economy and drive
productivity in key sectors.
Looking at the
important sectors like agriculture, which accounts for some 45 percent
of the gross national product (GDP), enough focus is not given to
ensure that all obstacles to its growth are removed. But, one thing
that one knows for a fact is that institutions, policies and good
quality, effective and efficient public investments are the key things
needed to facilitate the process of economic growth in any country.
Priority for the economy The government must pursue an all-inclusive
growth of the country’s economy.
This is essentially
saying that government should not desire the growth to only affect a
small section of the population, but everybody.
When one looks at
most economies in Africa with natural resource endowments, the tendency
is for them to allow that sector to be the only game in town.
In the case of
Nigeria, petroleum has been the dominant natural resource, and
government tends to focus all its attention to this sector, to the
neglect of the other key sectors. But, government needs a change
towards diversifying the structure of the economy. For so long, the
continent, and Nigeria in particular, has talked about diversification,
but this does not just happen.
There are certain
important policies and measures that the government needs to take to
bring it on. In the agriculture sector, for instance, which is still
the mainstay of more than 60 percent of the country’s population, what
quality of policies does the government have? Or what kind of framework
for investment is in place? What kind of institutions are there to
enable the regulatory underpinnings of a functional agriculture sector?
By the way, the agriculture sector in Africa, based on the World Bank’s
analysis, is the most viable private sector, and government needs to
see it as such, because it is business.
Right now, what
countries are learning is that, if one follows the World Bank
Comprehensive Africa Agriculture Development Programme (CAADP), which
looks at agriculture from four principle pillars, namely markets and
infrastructure, land and water management, food security and
vulnerability as well as technology and research, one would ensure that
the quality of investments, institutions and policies that enable the
interaction between the farmers and the private sector, whether in
terms of the commercial agriculture investment and the role of the
government as well as the systems that allow these interactions to
function in a coherent manner to support agricultural expansion and
productivity as well as improvement in the yield from agriculture.
If government wants
to address the joblessness situation in the continent, and Nigeria in
particular, the agricultural sector is where focus needs to be on, to
remove all the bottlenecks and constraints to operators in that sector.
One cannot use
platitudes to do it. It must be through concrete and specific
strategies. Nigerians in Diaspora and infrastructure development The
World Bank is currently working on the possibility of establishing
Diaspora bonds as a response to resource gaps in dealing with the
challenges of infrastructural development. Africa has a need to spend
some $93billion annually on this. But, currently about $45billion is
being spent, leaving an additional need for about $48billion. When one
looks at the sources of domestic revenue mobilization by governments in
Africa, it is probably hitting the limits of what they can have.
So, it requires the private sector to come in as a part of the combination to tackle the infrastructure deficit.
But, as part of
that private sector initiative, there is a huge population of citizens
of the continent that are in other territories of the world, who are
remitting an average of $23billion into the continent. Therefore, they
represent a very important growth population to target, to see how much
more can be raised to help address these development finance gaps that
the continent has.
The bank is still
looking at how that process could be facilitated through countries
floating those kinds of bonds for their own citizens abroad to
subscribe.
The technicalities
of how the process will work are still being worked out, to identify
the incentives that would underpin the attractiveness of those kinds of
bond instruments. But, the theoretical construct is that these
remittances happen, though, sadly, right now they go towards
consumption, and that there is some space for determining how much of
the money spent can be redirected into the process of building some
medium to long term funds required for investment in the continent’s
development process.
The countries that
have done that are those that have moved ahead, namely Kenya, Zambia,
Liberia, and Sierra Leone, where the policy environment towards their
Diaspora is very strong.
These countries are
providing the capacity and training their Diaspora get exposed to that
is fundamentally global class, which makes a big difference to the
quality of governance. The World Bank hopes to partner with the African
Development Bank (ADB) and the International Finance Corporation (IFC).
Since 2007, it was
discovered that the Diaspora was an important development community
that was missing in the World Bank’s engagement and relationship with
Africa. But, over the last few years, the bank’s relationship with the
Diaspora has grown significantly.
World Bank and women in Africa
The bank’s 2012
flagship report, The World Development Report (WDR), is going to be on
gender, focusing on the many levels of the optimal and productive use
of women in economic policy development to bring about growth.
The report will be
looking at the issues that have to do with access to quality education,
training and finance as well as related kinds of issues. It will also
look at the involvement of women in the whole policy arena in decision
making as well as the impact of education to health outcomes.
What we see is that
when women are educated, they tend to delay decisions on certain issues
till such a time they can make the right choices, particularly the
decision on when to get married. So, they are not like people who do
not have any choice. And that is important, because then it will enable
the woman to make the right choices concerning her children’s education
and their health needs.
All these work
together to improve the possibilities of accomplishments of the
families, and by extension, the society. Therefore, the woman is a
major factor in economic development, which is why it is normally said
that investing in women is smart economics. It is not something one
does on the basis of sentiments, because 50 percent of the population
is women.
If one does not invest in women and get them to the point where they
are participants in the economic growth strategy, to enable them
deliver at their best, one is basically operating at less than optimum.
