By Tunde Obadina
I suspect that having won the 2015 presidential election following three consecutive failed attempts, former military leader Muhammadu Buhari is at least a little anxious about returning to power. The millions of Nigerians who voted for him are expecting that the change of leadership after 16 years of rule by the People’s Democratic Party will herald a new dawn in a country that has hitherto failed to live up to its potential. People expect that Mr Buhari, with his reputation for honesty, will lead an administration that will thrust Nigeria forward to attain its potential, rightful, place in the world.
Unfortunately, those hoping that the incoming government will eliminate the major problems ailing the country, such as corruption, underemployment and mass poverty, are liable to be disappointed. Even if the new government behaves exemplarily and the economy shifts gear from fast to super-fast growth the likelihood is that in four or eight years time most Nigerians will still be living on less than US$2 a day. There is no realistic scenario in which the country can emerge from underdevelopment in the near- to medium term. Indeed, industrialising is liable to be more difficult in the next decade than it was in previous decades when East Asian nations rose from poverty to wealth. Opportunities for building the type of export-orientated, low-skilled, employment generating manufacturing that enabled these nations to swiftly escape poverty are now scarce. Furthermore, China, already a global manufacturing hub, still has substantial scope for industrial expansion because of its vast untapped hinterland provinces.
This is not to suggest that Nigeria under a new administration cannot achieve faster growth and more rapid reduction in poverty and underemployment. It certainly can. But government will have to be more serious in implementing policies that remove existing obstacles to private wealth creation. It must discount the notion that government can successfully micro-manage the economy to create wealth and jobs. The experiences of economies that have emerged from poverty show that it is the endeavour of individuals acting in markets that produces economic prosperity.
We do not need to look far for evidence of the importance of market reforms in unleashing human creativity and economic growth. We can see how the limited reforms that have taken place in Nigeria over the past decade have spurred growth in the affected sectors. The liberalisation of the telecommunications and financial sectors are obvious examples. Reform of tertiary education produced a mushrooming of private universities in the country. The Buhari administration does not need to formulate a new development strategy but needs to deepen and extend market reforms begun at the start of the new millennium but stalled by politicians lacking the imagination and resolve to tackle politically difficult deregulation reforms.
It would be great if the new administration shows greater courage and determination in pursuing already tabled reforms of the oil sector, including the restructuring of the national oil company to make the management of oil resources more transparent and subject to market forces. It would be great if the new government shows toughness by facing down forces that have blocked the liberalisation of the downstream oil sector, including scrapping the highly corrosive petrol subsidy, to enable private investment in the building of oil refineries and other oil-related industries. Mr Buhari could also boost the economy by implementing land reforms that make it easier for investors to acquire land for commercial agricultural production and construction projects. Far more progress can be achieved in the energy sector if the government liberalises electricity pricing and deregulates domestic gas pricing, thereby giving oil companies appropriate incentives to invest in gas production for domestic usage. The economy would benefit if existing trade barriers were dismantled, including scrapping import prohibitions and punitive tariffs.
The incoming administration does not need to come up with a brand new strategy for economic growth and development. Indeed, it would be a tragedy if it tries to reverse Nigeria’s general movement towards becoming a market economy. What is required from government is much greater steadfastness in implementing stalled reforms to loosen the stranglehold the state maintains on the economy.