Statistically, if you are supporting 5 children on a salary of $1,000 per month, you will struggle to provide them better support than someone who supports three children on a monthly salary of $10,000. In other words, despite how prudent you could be on that $1,000 salary, there is a ceiling on that financial management efficiency.
That takes me to Nigeria where despite having 3x the population of South Africa, South Africa spends close to $100 billion more than Nigeria. To be honest, even if Nigeria judiciously manages the $33 billion, it will struggle to catch up to deliver decent services to what South Africa does. Of course, with SUVs, yachts, etc as priorities, the “little” $33 billion does not even get into the right things. And that is the national tragedy.
Of course, this is not to say that $33b is not a lot. My point remains that Nigeria needs “effective growth” so that it can have resources to advance its citizens. Why that word “effective” before “growth”? I am not talking of just GDP growth which tracks the aggregate of production activities for finished goods, I am talking about formalizing the economy.
Nigeria does not have effective growth and that is why even though our GDP could be higher than South Africa’s, they have resources to spend more than we. Their market capitalization as a share of GDP is about 280% while Nigeria is below 30%. With that, the market cap of one South African bank can buy all the major banks in the Nigerian stock exchange, and one South African company can use less than 50% of its value to buy every company listed in Nigeria’s stock exchange!
How do we get Nigeria back? I have shared some ideas here.
Merit-based system – no nation has advanced better than its ability to inspire, motivate and reward via merit. Without a nationally transparent merit-based system, Nigeria cannot progress.
Pragmatic Innovation – focus on what works, over the purity of scoring political goals. The implication is that we have to seek and execute the best ideas irrespective of where they may be coming. I gave an example of how the same team of Central Bank leaders who kept our exchange rate stable for years, within 2012 to 2015, blew it up later. Yes, we must allow data to work and follow the best ideas.
Honest Leadership – the citizens are smarter and can only take cues from their leaders. People willingly pay taxes when taxes work in their lives, they say. If we preach one thing and do another thing, you lose the citizens.
Integrate Rural and Urban Nigeria – we need to have a functioning postal service, to bridge the huge gap between rural and urban Nigeria. I explained how years ago, secondary school kids used to have American and European pen pals, relying 100% on NIPOST. A reliable postal service will unlock massive latent opportunities across Nigeria, from agro to arts to entertainment, in this globalizing world.
Put Rural Wealth in Nigeria’s Balance Sheet /Property Rights – those lands (subject to the land use act), houses, etc should be digitized and recorded so that even those in rural Nigeria can enter the formal economy. It is unfortunate that a man with 100 hectares is considered poor because he has no papers to share with banks, to access credits to train his kids and support his family. Simply, Nigeria must advance its property rights governance, not just in land and physical properties but also intellectual properties.
Comment 1: While what you posit is evidently true. How does a nation achieve effective growth, economic-wise? If the nation refuses to allocate the scarce resources it has in the direction of the desired growth, can she grow?
Growth believe is a two-way factor. In agriculture, water and sunlight is needed for plants to grow, but in the desert where you have abundant sunlight, lavishly allocated, plants find it difficult to grow. To grow plants in the desert, it would require a higher level of thinking to develop a controlled environment where the abundance of the sun doesn’t hinder the growth of the crop.
Nigeria’s problem is not lack of resource to engineer growth. I think we have too much. Probably more than we the citizens are aware of. That can be the only reason why our leaders will prefer to buy yachts and SUVs rather than invest in the critical sectors of the economy for tomorrow’s growth.
Comment 2: To put the gap in better context, Nigeria’s 2024 budget per capital is $165, while that of South Africa is $2,225 using Prof’s posted figures. Now you see how huge the gap is. Not adding the fact that Nigeria’s budget is hardly 70% implemented.
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