Economy: Growth not yet inclusive

A lot of effort has been made to achieve that yet there is a very wide gap to cover based on available statistics. Similarly, though the economy in the last three years grew at between 6.4 per cent to 7.4 per cent, which is regarded as one of the fastest growth rate in the world, […]

A lot of effort has been made to achieve that yet there is a very wide gap to cover based on available statistics.

Similarly, though the economy in the last three years grew at between 6.4 per cent to 7.4 per cent, which is regarded as one of the fastest growth rate in the world, yet the stakeholders, including the government’s officials, agree that the growth has not been felt by majority of Nigerians. At the just concluded World Economic Forum on Africa held in Abuja, the focus by the world leaders was on how to attain inclusive growth and create more jobs worldwide.
The growth in real GDP which in 2011 was 7.43 per cent, declined in 2012 to 6.61 per cent, and in 2013 it was 6.4 per cent, according to the National Bureau of Statistics.
“Economic growth is expected to improve further in 2014, driven by agriculture, trade and services,” the IMF said in a report following consultations with Nigerian officials recently.
At the same time that the growth is appreciating on yearly basis, the country’s income inequality and poverty level is widening. It is reported that less than one per cent of Nigerians are controlling majority of the wealth of the nation; at the same time majority of the population is surviving on below 2 dollars (about N340) per day.
Lately, wealthy Nigerians have been making headlines in international media. Forbes magazine reported that 12 out of Africa’s 50 billionaires are Nigerians.
Another report, by the New World Wealth, said Lagos is home to 61 per cent of Nigeria’s 15,700 high-net-worth individuals (HNWIs).
This wide gap has been the source of many evils in the country with millions of youth on the streets without tangible means to earn a living.
Rebasing of GDP
On April 6th, 2014 the National Bureau of Statistics released the GDP statistics after the rebasing exercise. It showed Nigeria moving up in ranking to the 26th largest economy in the world and first in Africa. The country’s GDP increased by 89 per cent from $270 to $509 billion.
The new GDP breakdown indicates a structural shift in the Nigerian economy with the share of nominal GDP attributed to the agricultural sector declining from 30.3 per cent to 22 per cent, while there has been a three-fold rise in services from 23.6 per cent to 50.2 per cent indicating stronger diversification of the economy.
The telecom sector now contributes 8.69 per cent, manufacturing 6.83 per cent and entertainment 1.41 per cent, a sector that had previously never been captured. The number of the sectors under the rebasing increased from 33 to 46.
Although the rebasing is a good development and a plus to the Jonathan administration, the result is not quite welcomed by many analysts both within and outside the country. The president himself has expressed concern over the growth of the economy without the commensurate impact on the common man.
Insecurity as investors’ nightmare
From all indices, the economy has huge potentials for investors and the country has huge markets and purchasing power compared to many other developing countries. This makes many international investors become interested in Nigeria. In the last three years, President Jonathan and his ministers have travelled to many countries seeking for investors. Although some of them honoured the invitation, many are scared due to the increasing insecurity in the country. The Boko Haram insurgency in the North East has sent bad signal to many investors who were willing to bring in their huge investments.
Similarly, as election nears, some investors are waiting to see its outcome. The 2015 election is regarded to be among the toughest in the nation’s history because of the strong opposition against the PDP-led government. Beside the insecurity and election fears, the international investors are also wary of the corruption in the country which is affecting good governance and increasing the already wide gap of poverty and inequality.
IPPIS and GIFMIS came on board
The administration is able to introduce new reforms in the civil service’s salary and financial administration with the introduction of the Integrated Personnel and Payroll Information System (IPPIS) and Government Integrated Financial Management and Information System (GIFMIS).
Minister of Finance Dr Ngozi Okonjo-Iweala revealed that the policy has cut down the cost of governance with recurrent expenditure dropping from 74.4 per cent of the total budget in 2011 to 68.7 per cent in 2013.
In her presentation on the mid-term achievements of the President Jonathan administration in the country’s financial sector, the minister disclosed that the sum of N118.9 billion on payroll cost had been saved with the identification of about 46,821 ghost workers.
Dwindling oil revenue and corruption
Since 2011 oil revenue to the country has been dwindling due to the relentless attacks on oil and gas pipelines at the creeks and reduction in export figures combined with volatile global oil prices. At the core of the increasingly inefficient oil industry lays the political reluctance to renovate the sector, not to mention the large scale oil thefts which reduced in 2009 after the amnesty propramme. And the Petroleum Industry Bill is yet to be passed, even though the Jonathan administration has assured that passing the bill is one of its priorities.
 As of the first quarter of 2013, Nigeria’s gross revenue from oil stood at N1.85 trillion, a 30% dip from the third quarter of 2011.
With this trend of reduction in oil revenue, there are allegations of missing oil money. Suspended Central Bank of Nigeria Governor, Sanusi Lamido Sanusi has alleged that about $20 billion dollars is missing from the revenue account in the last one and a half years.
Gap still exists in job creation
Although the government claims it creates about 1.6 million jobs every year from its initiatives in agriculture and small and medium scale enterprises and SURE-P programme the gap is still yawning wide.
Okonjo-Iweala says the administration has created 1.6 million jobs on annual basis but that what is needed is about 1.8 million jobs on annual basis. The incident at the Nigerian Immigration Service recruitment exercise where more than 10 people died exposes the desperation in the job market in the country.