Ngozi Okonjo Iweala has foresworn her economics By Dr. Ibraheem Dooba The World Bank has classified Nigeria as one of the poorest countries in the world. In the wake of this sad news, our know-it-all minister of finance has stepped in to explain to Nigerians why that is: We have too many people, she said. Indian is a middle-income country, one of the largest economies in the world like Nigeria, is a big economy, but the largest number of poor people in the world reside in Indian, China and other places. Leadership newspaper reported her as saying. And in her desperation to put Nigeria in good company, she lied. “Most middle-income countries, including Brazil have large number of poor people that is the reality of today and Nigeria is no exception. And when the World Bank president was talking he also talked about those countries. He mentioned that India is doing well and it has a large number of poor people,’’ she said. Actually, thats not what WB president said i.e. he didnt include Brazil in the same class with Nigeria. He said 2/3 of the worlds poorest are in 5 countries, Nigeria being one of them; and 80% are in 10 countries; theres no Brazil on the list. Kim said “the fact is that two-thirds of the world’s extreme poor are concentrated in just five countries: India, China, Nigeria, Bangladesh and the Democratic Republic of Congo. “If you add another five countries, Indonesia, Pakistan, Tanzania, Ethiopia and Kenya, the total grows to 80 per cent of the extreme poor,” he said If large population is our excuse, Brazil has more people than Nigeria. Why is it not on the top 5 or top 10 poorest countries lists? Whenever we are in unfavourable categories such as this, we blame our large population. But when were in positive groups such as one of the growing economies such as MINT, we dont credit our population (which we should do, if were honest), rather, the top government functionaries do some back slapping and attribute it to their efforts. NO! There are two main reasons why we had 6.6% (some people say 6.8%) economic growth last year. One reason is because were a developing economy. Historically, developing economies have higher growth rate than the developed ones. Last year, the United States economic growth was 2.4% in the last quarter. In the UK, it was 1.7% and in the third largest economy in the world, Japan, its 2.6%. Compare that with tiny Djibouti, whose growth rate was 6% last year - not very far from Nigeria. This is chiefly because Djibouti is a developing economy and theyre currently building a new large port. The second reason is our population. Nigeria is a huge market. This market stems from our population. A larger workforce increases how much a country can produce - and consume. Its the reason why ECOWAS countries are eager to have Nigeria as a trading partner - Nigeria can consume its own goods, others cant. However, if were to have real growth, we must improve on productivity. Because although population contributes to growth, its only up to a point without productivity. In Nigeria, our productivity is shit! We have lots of bodies, but theyre useless bodies. Greg Ip of The Economist explains this quite lucidly: A country is not rich, though, just because it has a lot of people—just look at Nigeria, which has 32 times as many people as Ireland but an economy of roughly equal size. The reason for this population/economic size disparity is that the average Nigerian is much less productive than the average Irishman. For a country to be rich—that is, for its average citizen to enjoy a high standard of living—it must depend on productivity, which is the ability to make more, better stuff out of the capital, labor, and land it already has. To improve our productivity and become rich, we need two things: capital (investment) and ideas. Therefore, these three variables (population, capital and ideas) are needed for real economic growth. Actually theyre two. That is, growth rests on population and productivity. But you cant have productivity without capital and ideas. Further, you can have capital but without viable ideas, you wouldnt go far. This is the reason why economic power shifted from Japan to United States in the 90s. Japan had exhausted its ideas. However, America created new ones, using the Internet as its launch pad. Ngozi Okonjo Iweala seemed to have forgotten these basic economic principles. She would have done better elsewhere as she actually did in a more intelligent OBJs government. But serving in GEJs government seems to have dulled her sharp mind. Its the reason she would call a budget in which they plan to spend more than 70% of the total on recurrent expenditure, as the budget of job creation. Job creation with less than 30% capital expenditure? Right now, the lady strikes one as a student taking OLevel course in Economics. Please follow me on Twitter @dooba123 Dr. Dooba is the National Director of Strategy for APC Patriots. He writes from 208B Samfa Plaza, Ndola Crescent, Wuse Zone 5, Abuja.
Posted on: Thu, 03 Apr 2014 22:58:17 +0000
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