…Wants Restructuring of Country’s Economy Hinged On a Sustained Growth of Seven Per Cent

…Predicts Rich Soon Won’t Be Able to Sleep Because the Poor, Homeless, Hungry Are Awake.

Former Central Bank Governor, Professor Charles Soludo has posited that the country’s biggest asset is its growing population which is projected to be the third largest in the world in the next years, arguing that Nigeria needed to restructure its economy to meet the huge demands of the projected rise in population.  

Delivering a speech at The Platform lecture in Lagos with the theme “Re-Designing the Nigerian economy With New Ideas,” Soludo asserts that “In sum, the alternative future that we see is one without oil, and where other exhaustible natural resources play very little role. The future economy will be driven by people—our youths and technology. Nigeria’s people/youths remain its potentially greatest asset— potentially renewable resource for productivity, huge market, and even export.”

“Yes, the next bigger than oil export earner for Nigeria will (potentially) be its human capital. Currently, Nigeria earns almost as much from oil exports as it earns from remittances from its Diaspora. But we cannot export illiterates in a world driven by digital revolution. The easiest way to waste the future is to continue to churn out millions of semi-illiterate, largely unemployable citizens, most of whom see criminality as the only route to escape the poverty trap or drug as the opium for solace.

“The urgency of the moment is warranted by the context of the new and complicated realities. Oil will be history in less than 20 years’ time but the pressures of peculiar demographics and geography are upon us,” says Soludo who was recently named a member of the newly constituted Economic Advisory Council by President Muhammadu Buhari.

“If current trends continue and you believe the population figures, then the future may be overwhelming. By the time a child born today turns 30 (about 2050), there will be about 400 million Nigerians and when she is 80 (about 2100), there will be about 752 million Nigerians (third-largest population in the world).

“All these people will have to survive and prosper in a tiny but declining land mass (923,000 sqkm) – declining due to desertification and erosion, and Nigeria will have the highest population density in the world among the top ten most populous countries.

“Lagos is estimated to be home to some 88 million people by 2100 crammed in barely 3,345 sqkm of land (or 26,307 persons per sqkm—a nightmare! Lagos is clearly unsustainable in the long run and risky for its business concentration).

“All these people will need land, housing, water, food, power, education and health facilities, sewage and waste disposal, transportation, and yes, job, jobs! The population is very youthful with 43% between 0-14 years old; 53% between 15-65 years and 4% over 65 years.

Arguing that “the world is not waiting for Nigeria,” Soludo lamented that while “The world is on the 4th Industrial revolution with the digital economy,” “we are struggling with the first stage of Rostow’s stages of growth.” He contends that “Artificial intelligence together with other future technologies such as robotics, synthetic biology, computational science, nanotechnology, quantum computing, 3D and 4D printing, internet of Things, cognitive science, self-driving vehicles, etc— will surely produce totally different social and economic configurations than what we know today.”

“While electric cars are fast replacing diesel/petrol cars, many of our people are still building petrol stations; small shops are proliferating while agglomeration in terms of huge shopping malls together with e-shopping is the trend; automation is upon us, etc. Ordinary people, who can’t explain what has hit them, resort to all sorts of criminal activities to survive.

Most futurologists, the former CBN Governor says, believe that with “billions of people being added to the global population, only new systems for food, water, energy, education, health, skills development and job creation, economics and governance will avert potentially disastrous consequences for humanity and the environment.”

“Economic restructuring strategy of the future, therefore, entails thinking through the alternative future scenarios and mapping out alternative possible proactive responses.

“In which areas/sectors does Nigeria proactively position to become global leaders by the end of 2050 or the century? Closer home, Nigeria has signed the African Continental Free Trade Agreement (AfCFTA). Insularity won’t be an option. The name of the game of the future in an increasingly integrated world is innovate/compete or die.

“Let’s break it down. The economic restructuring of the future is about positioning Nigeria to compete and win in an increasingly complex world thereby guaranteeing the security, prosperity and happiness of the 400 or 752 million Nigerians, in a world without oil.

“It will require deploying a gamut of legal-regulatory-governance regimes, macro and sectoral policies and programmes to alter the spatial/geographical concentration of economic activities, structure of production from primary to industrial and post-modern service sectors, from peasant to commercial agriculture, from exhaustible natural resources to renewable and dynamic human resource as engine of sustainable development; etc.

“With a current GDP of about US$400 billion (down from $540 billion) and negative per capita income growth (with rising unemployment and poverty), the restructuring of the future would entail transformational changes to generate and sustain broad-based growth of at least 7% (from recent 1-2%) which is required for poverty reduction and employment generation.

“Put differently, if we target to be a middle income country of say, US$7,500 per capita by 2100 (from about $1,930 currently), then we need a GDP of over US$5.5 trillion by 2100 (thereby requiring double-digit annual growth). The agenda to do this won’t just require thinking outside of the box—it would require thinking without the box at all: big, bold plan and action!

“At the macro level, the fundamental challenge currently is that the economy is stuck at a very low speed lane in the context of a debt cliff with little fiscal space, while monetary policy is at near its limits, and low savings-investment trap, with rising unemployment and poverty. To get to poverty-reducing and employment generating trajectory in the short-term requires serious heavy lifting, with major difficult choices and extraordinary coordination ahead. Surely the governments at all levels have their jobs cut out for them, and we won’t dwell on that here.

 “With an urbanization rate of over 5%, the conflagration that might ensue when hundreds of millions surge to the cities but can’t find jobs, housing, water and food can only be imagined. Soon, the rich won’t be able to sleep because the poor, homeless and hungry are awake.

“By the way, who says that we can’t have smart population policy that encourages people to have the number of children that they can train, and also ensure reliable population census using biometrics rather than the political population figures we have? Whatever the case, the challenge is how to deliberately optimize the potentials of the huge youthful population to be highly productive at home and competitive/exportable abroad.

“An educational system with 21st-century curricula powered by technology that guarantees one youth, one to three skills might be a winning strategy. As the Western population ages and declines, they would need productive labour and Nigeria can smartly position to become the largest supplier of such labour- indirectly through outsourcing or directly. Nigeria would have to leapfrog the industrialization ladder and services sector to provide urban jobs and rely upon smart technology to grow the food to feed the hundreds of millions.

“Peasant agriculture has little future especially as the population density surges with a rapidly declining plot of land per capita. If Nigeria prospers relative to its neighbours, it would witness a surge in-migration from other African countries under the free movement of goods and person protocol—with all the further complications for existing facilities,” Soludo quips.

Positing that the country needed to devolve powers to the regions to free resources for development, he says, “Since 2005 when we delivered the Democracy Day Lecture and in several of our previous articles (see “Nigeria Without Oil”; a three-part article on the back page of ThisDay entitled “Reconstructing Nigeria for Prosperity”, “The Political Economy of Restructuring the Nigerian Federation”, etc) we have elaborately demonstrated how the current Constitution and its institutions stifle innovation and competition and hence inimical to rapid economic transformation in a post-oil world.

“We showed how Section 162 of the Constitution has created a perverse Lottery Effect, destroyed the incentive for wealth creation on the part of governments and foisted an indolent culture of entitlements. As opposed to the productive, self-financing regions of the First Republic, all the tiers of government now converge at Abuja every month to share largely oil revenue. Except perhaps Lagos State, hardly any other state or local government or even the FGN can fund its recurrent expenditures without oil money.

“Add to the above the suffocating concentration of powers at Abuja (see the long list of items on the exclusive and concurrent lists of the Constitution). Consequently, the federal government is saddled with hundreds of parastatals and agencies trying to inefficiently micro manage the entire country, with the recurrent expenditure of FGN plus debt service exceeding federal revenue. Abuja imposes common rather than minimum standards.

“It sets the same wage to be paid by states irrespective of their incomes—of course on the assumption that the oil money will always be there to pay for it. FGN maintains federal marriage registry, issues drivers’ license—which should be local government affair, runs primary and secondary schools, etc.

“We have centralized policing even with state governors as ‘chief security officers’—and expect the future 400 or 752 million Nigerians to be secured from Abuja. The Federal Government has exclusive right over all minerals, while the Land Use Act grants the Governors the right over land. To get to the solid minerals, you must have access to the land and the conflict between State and community powers over land vis-à-vis the federal right to what is underneath it has not been resolved.

“The enduring conflict, as well as the continuing flow of oil rents, have combined to provide little incentive to develop solid minerals. The list is long and we don’t intend to rehash it here. By trying to keep everyone in check, Abuja has inadvertently held the entire country down,” he says.