Editor's Pick- The Wealth of Nations

The news about countries accepting refugees from the far East and giving them sometimes a rousing welcome is least to say heart warming. In Europe , Germany has been the most receptive to the refugees fleeing the Syrian civil war which shows no sign of abating. While in far away South America, Brazil has recently processed over 8,000 visas and job permits for Syrian refugees even though many will never be able to reach that destination because of the cost of doing so.

In Nigeria, the  near civil war in the North East is taking it’s toll on the resources of the Nation as the continuation of the attacks have seen people fleeing their homes and  seeking refuge in safer places.

The Number of displaced persons affected by the insurgency in the North East of Nigeria has risen to over 3.3 million, with over 1.4m being children according to Unicef. Unicef has been struggling to vaccinate over 315,000 children over the year and arrange drinking water for 200,000 people, with schooling and counseling. It however, encountered funding problem having accessed only a portion of the $50 million for its operation across the Lake Chad region creating a shortfall in measles vaccination and aid.

The North East States of Borno, Gombe,Bauchi and Adamawa are the worst hit by the juggernauts in their quest to fight against Western education, aided and abetted by the high level of poverty in the region. The Nigerian economy has experienced tremendous growth in the last decade  of about 7% and this was evident in the rebased National Accounts which threw up Nigeria as Africa’s biggest economy  with a GDP of  $510 billion, while the level of poverty continued to increase, suggesting poverty and the economy have grown hand in hand. The widening gulf between the “haves and haves not” is seen to be the main culprit as development is certainly taking place without including everybody, leaving a situation whereby the wealthiest 1 % of the population control over 80% of the wealth mostly oil and gas, Telecommunications and Banking.

The real problem is not that of wide spread poverty per say, it is the gap in inequality! This is the problem facing the Government and society which needs to be dealt with in National planning. The prescription to ending the insurgency in the North East is to contain the gap between those parts of Nigeria more attractive to Private sector investors and other areas disadvantaged by what investors want such as lack of skills, infrastructure, security and acceptance of consumerism. Market forces will continue to ensure these opportunities are skewed in favor of big cities like Lagos , because it meets the requirements for investments, which many others do not. Good quality jobs are concentrated in Lagos, with the Lagos market alone consuming about 40% of daily petrol (PMS) quota for instance and this in itself tells the story.

The Structure of the Nigerian economy today is one heavily dependent on a mono product (Oil) while neglecting every other sector. This has created a “cartel” that drains this National asset through subsidies in the Oil and gas industry that are very costly and wasteful. The billions of dollars lost over the years are more than enough to build hospitals, roads, schools, empower farmers especially in the North East with  the capacity for growing sorghum, millet, cowpea, ground nut and sesame for massive agricultural development and the utilisation of  cheap labour. These would also help to create an enabling environment for businesses to thrive.

Today, with the slump in oil prices the Nigerian government is planning a quantitative easing program of N25 billion to reflate the economy and stave off an imminent recession. Already consumers are groaning from the effects of the economic decline which has eaten into most disposable incomes, which does not bode well for the big multinationals. For instance, Guinness and MTN have now become real life competitors even though they are in different industries, but by virtue of the fact that they share similar consumers, there is a real war for the consumer’s pocket (disposable income). For every bottle of origin or Stout I take, the less available to buy my MTN card and vice versa. That disposable income needs to grow for consumers to increase their spending power and for the economy to feel the multiplier effects of spending. 

The practice in the past where everything was imported from livestock to toothpick were imported should be stopped entirely, (Thanks to CBN efforts) because this is a huge leakage to the growth of our economy. Doing this has cost the Nigerian Government Billions of Dollars in lost revenue which could have been earned from taxes, from companies producing these items. Many of the world’s top economies have taken a protectionist stance at various times in their own favor and to the detriment of others. Take the US government which subsidizes its Farmers heavily, by ensuring the availability of genetically modified food. This hurts African farmers greatly leaving them largely unable to compete with their well-endowed and organized counterpart on the other side of the divide or China who subsidizes State owned company Huawei so heavily it is fast becoming a global leader. 

Nigeria needs to review some of its partnerships  and schemes such as AGOA ( African Growth and Opportunities Act) to ensure they are in its interest and also have a strategy  for  the World Trade Organisation (WTO). Legislation should be passed to create a framework which helps to kickstart and protect industries such as mining, entertainment, manufacturing etc. that will enable all other parts of the country to partake in the redistribution of wealth by engaging in the areas of specialization and comparative advantage.

With such steps taken, we may not need to welcome any more National migrants fleeing from the carnage of war, The number of Internally displaced persons will reduce  and Unicef perhaps will have a balanced budget for the Chad region as the Nigerian Nation launches it’s flight to wide spread economic prosperity.