GROWTH WITHOUT DEVELOPMENT IN NIGERIA: CONFRONTING THE ... · PDF fileGROWTH WITHOUT DEVELOPMENT IN NIGERIA: CONFRONTING THE PARADOX 1 By AKPAN H. EKPO 2, FNES + Paper presented at

GROWTH WITHOUT DEVELOPMENT IN NIGERIA:

CONFRONTING THE PARADOX1

By

AKPAN H. EKPO2, FNES

++Paper presented at the 43rd Annual ICAN Conference held at the International

Conference Centre, Abuja, 8 10, October, 2013

2Professor of Economics and Director General, West African Institute For Financial and Economic Management (WAIFEM),

Lagos, E-mail [email protected] The view expressed here are mine; the usual disclaimer applies.

OUTLINE OF PRESENTATION

INTRODUCTION AND MOTIVATION

CONCEPTUAL ISSUES

PERFORMANCE OF THE NIGERIAN ECONOMY: STYLIZED FACTS

43rd ICAN Annual Conference, Abuja

STYLIZED FACTS

CONFRONTING THE PARADOX IN NIGERIA

CONLUDING REMARKS.

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1. INTRODUCTION

Importance of Growth in India, China, Malaysia,

Indonesia, Singapore.

Growth versus Poverty.

Growth and Planning.

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Growth and Planning.

Role of the Public Sector private sector may remain the

engine of growth but sustained development must be

guided by a qualitative public sector consisting of

qualitative leadership, skilled technocrats and bureaucrats

Followership, growth and development

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1. INTRODUCTION (CONTD)

Growth employment generation and poverty reduction.

modernization and development .

Inclusive growth and development.

Nigerian economy and challenges

Nigerian economy- growth, rising unemployment and

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Nigerian economy- growth, rising unemployment and

rising incidence of poverty.

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2. CONCEPTUAL ISSUES

Growth, Inclusive growth and economic development.

Conventional notion of growth and inclusive growth. Whether growth is taking place or not:- what is happening to unemployment? - what is happening to education?

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- what is happening to education?- what is happening to the provision of health

services?- what is happening to the provision of shelter,

food and water?- what is happening to poverty reduction and

widening inequality

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2. CONCEPTUAL ISSUES (CONTD)

What is economic development?

- Not a linear process.

- Marked by more or less violent clashes, hasproceeded by starts and spurts, suffered set backsand gain new terrain.

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and gain new terrain.

- struggle for economic emancipation.

- process must be propelled by a group/classinterested in a new economic order.

- Group must see development as its utmost priority(development state economic philosophy).

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2. CONCEPTUAL ISSUES (CONTD)

The notion of inclusive growth is to ignore how the cake

should be distributed and rejects the multidisciplinary

approach to development; growth has always been inclusive.

All economic agents have always been involved in the

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process as the production possibility frontier shifts based

on innovations, ideas and knowledge and technology, an

economy moves to a higher growth trajectory.

Government would then worry about equity, fairness and

creating a conducive environment to sustain growth and

inclusive development.

2. CONCEPTUAL ISSUES (CONTD)

There cannot be economic development withoutgrowth but there can be growth (even if it isinclusive) without development

Real challenge facing development is how to

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Real challenge facing development is how toformulate strategies to poverty reduction.

Poverty reduction is a function of growth,distribution and the change in distribution.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY: STYLIZED FACTS

In 1980, the rate of inflation was 10%; rose sharply to40.7% in 1987 then plummeted to 4.7% in 1985.

During the period 1980 1985, the economy registerednegative growth rates with the rate of unemploymentslightly above 5% with negative real interest rates.

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Structural Adjustment Programme of 1986 and outcomes.

1987 1998 was characterised by sluggish growth ofthe economy, high lending rates and negative realinterest rates.

From 2000 2011 there was some evidence to bettermange the economy.

- inflation rates though double digit was within theacceptable threshold. 9

3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

- economy grew by almost (7%).

- rising unemployment rate (24%).

- output loss hence economy was producing

below its potential output.

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below its potential output.

- Growth was non-employment generating;

unemployment rate rose from 13.6% in 2001to 19.7% in 2009 and 24% in 2012 and it isprojected to keep rising (Figures for youth

unemployment even higher); jobless growth.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY

Figure 1

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3. PERFORMANCE OF THE NIGERIAN ECONOMY

Figure 2

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3. PERFORMANCE OF THE NIGERIAN ECONOMY

Sectoral contributions to growth in 2012 and 2013 (Q1and Q2).

- In 2012, agriculture contributed about 40% to GDP;comparing Q1and Q2 in 2012 to the same quarters in

2013, agricultures contribution dropped slightly while its

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2013, agricultures contribution dropped slightly while itsgrowth remained at 4%; decline is noticeable in 2012.

Agricultural sector has the potential to generate growthand employment.

The contribution of petroleum and natural gas averaged15%. But the growth of the sector was negative.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

Sector itself needs diversification apart from the widerdiversification of the economy away from petroleum.

Sector remains the major foreign exchange earner forthe economy.

Dangerous to depend on an exogenous source of

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Dangerous to depend on an exogenous source ofrevenue to finance development.

Contribution of manufacturing to GDP confirms theprimitive nature of the Nigerian economy; contributionhas remained at almost 4% in the last five years; for astart the contribution of manufacturing to GDP must beat least 25 percent.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

Telecommunication and post contributed 31.8% to GDP in

2012 and grew by 7% when compared to previous years.

The Transformation Agenda stipulates that the economy must grow at double-digit for structural transformation to take place.

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take place.

Using a base growth rate of 11.1%, the economy must grow double-digit for about 15 years; the present economy growth rate is off target.

China recorded double-digit growth rates for more than 20 years to be able to move millions out of poverty.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

Managers of the Nigerian economy must examine thevarious sectors and their contribution to GDP.

The building and construction sub-sectors contribution toGDP was 3.27% in 2012 and 2.39% in Q2 of 2013; real

estate presents similar patterns.

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estate presents similar patterns.

Growth in the building, construction and real estate wouldenhance growth and generate employment. Thus policymust be directed at enhancing the housing sub-sector inorder to generate employment and reduce poverty thusconfronting the paradox.

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3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

Table 1. Nigeria: Sectoral Contribution to Real GDP at 1990 Constant Prices, 2012 2013

(Q1 Q2) in %

2012 2013

Item Q1 Q2 Q3 Q4 Total Q1 Q2Agriculture 34.47 40.69 42.62 38.20 39.21 33.69 40.06

Solid Mineral 0.33 0.38 0.43 0.37 0.38 0.34 0.40

Crude Petroleum &

Natural Gas

15.80 13.86 13.42 12.59 13.76 14.75 12.90

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Natural Gas

Manufacturing 1.12 3.96 3.53 7.12 4.20 1.14 3.98

Telecommunication & Post 7.29 7.28 6.73 7.01 7.05 8.53 8.37

Finance & Insurance 4.07 3.98 2.92 2.83 3.37 3.96 3.95

Wholesale & Retail Trade 23.39 17.12 18.81 20.66 19.92 23.75 17.32

Building & Construction 3.01 2.21 1.68 2.09 2.19 3.27 2.39

Hotel & Restaurants 0.69 0.56 0.53 0.47 0.55 0.74 0.60

Real Estate 2.03 2.03 1.73 1.70 1.85 2.10 2.12

Business & Other Services 1.07 1.12 0.84 0.83 0.95 1.09 0.60

Others 6.74 6.81 6.76 6.13 6.58 6.66 6.74

Source: National Bureau of Statistics, Abuja.

3. PERFORMANCE OF THE NIGERIAN ECONOMY (CONTD)

2012 2013

Item Q1 Q2 Q3 Q4 Total Q1 Q2Agriculture 4.37 4.21 3.89 3.62 3.97 4.14 4.52

Solid Mineral 11.65 11.72 12.61 13.59 12.52 12.00 11.84

Crude Petroleum &

Natural Gas

-2.32 -0.73 0.08 -0.79 -0.91 -0.54 -1.15

Manufacturing 5.17 7.59 7.78 7.70 7.55 8.41 6.81

Telecommunication & 34.06 29.38 31.57 32.44 31.83 24.53 22.12

Table 2. Nigeria: Sectoral Growth of GDP (1990 Constant Prices) 2012 2013 (Q1 Q2) in %

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Telecommunication &

Post

34.06 29.38 31.57 32.44 31.83 24.53 22.12

Finance & Insurance 3.57 5.01 4.08 3.48 4.05 3.61 5.18