Goodluck Ebele Jonathan of the Peoples Democratic Party will be sworn in as the President of Nigeria on 29 May following elections that have been generally acclaimed to be fair, free and credible by most observers. Once in, he will have to hit the ground running to tackle the several challenges confronting the country, such as power shortages, development of alternate energy sources, physical infrastructure and socio-economic services, peace in the Niger Delta region, further development of agriculture and promotion of foreign investment.
Are these issues the only ones? Can they be addressed without supporting governance mechanisms? Plans, strategies and laws are all there on paper but implementation is woefully bad and predatory. Institution-building is critical and civil society groups have to catalyse the process.
Domestic politics requires development of not merely physical capital but also, and perhaps more critically, human capital for increasing productivity and promoting an environment for inventiveness. For physical capital to grow efficiently, what is critical is the availability of energy. With solar and wind energies still not developed on a commercially viable scale, and with hydro and thermal sources having already been stretched to a good extent, diesel oil — which is largely imported — is used to currently drive generators in most households, offices and a large number of manufacturing units.
Nigeria will have to invest, as the Presidential task force on power has mentioned, $10 billion annually over the next 10 years to meet all its demands. The current use of diesel has added approximately 40 per cent to the cost of production, with consequential demands for additional wages and allowances. High costs and inflation also disincentivise foreign and domestic investments. The current approach — based on the erroneous impression that oil revenue makes all imports affordable — has to be overturned by economic strategies, reforms and institutions in order to generate employment opportunities.
Such a strategy has to consist of (a) revival of the four largely underutilised petroleum refineries; (b) development of alternate sources of energy; (c) greater use of natural gas at home and as an important export earner; (d) development of physical infrastructure on a massive scale through revival of the now defunct railways, development of a network of buses across the country and increasing the number of modernised airports and seaports; (e) increased impetus to the development of agriculture; and (f) improvement of human capital with focus on education and healthcare in order to meet, at least partially, the Millennium Development Goals.
The investments needed for such a variety of tasks are larger than the resources available with the public sector. Private sector development, local and foreign, through comprehensive reforms would be necessary. This calls for an interface with foreign investors and multilateral institutions which would be a part of active economic diplomacy. If this is not done, the demographic dividend will not be reaped nor will employment opportunities increase. This could possibly reignite the Niger Delta militancy and aggravate regional imbalances.
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One of the foremost priorities is development of agriculture and small industry, because they absorb a considerable number of the unemployed. Agriculture should be broad-based to include the setting up of food-processing units. Some areas that need to be particularly focused are cocoa and groundnut production, cotton, rubber, palm oil, corn oil and tuber, to name a few. Research and development in agriculture, storage and processing of agricultural produce, marketing with appropriate standards, dairy farming and animal husbandry are areas that require to be given special attention with sound governance mechanisms at the State and local levels. SMEDAN (Small and Medium Enterprises Development Agency of Nigeria) has to be given the necessary finance and technical expertise, even if this means seeking external assistance.
The new administration has to be more candid about foreign investment policies, especially in areas such as automobile manufacturing, petro-chemicals, pharmaceuticals, information technology, alternate energy sources, mining and steel, agriculture and advanced institutions of learning. There is a need to recognise that, being a populous country with a large diaspora, Nigeria has to accept that all investments — domestic and foreign — are profit-driven and should be encouraged, so long as they operate within the regulatory framework and with social responsibility. In agriculture, prospects of joint ventures in horticulture, long-grain rice, wheat, pulses and some categories of fruit and vegetables may need to be exploited.
The new administration has to address these tasks with domestic support and economic diplomacy to promote local entrepreneurship overtime. For this purpose, it is important to give sanctity to the contract law and to make all ministries highly transparent and accountable in their activities.
Economic diplomacy has to encompass cooperation and coordination in several sectors that have a bearing on both real and financial transactions in the economy. It has to reach out more openly to other emerging economies for a place in the current G-20 group. The President must pay personal attention to making Nigeria a part of the BRICS countries — Brazil, Russia, India, China and South Africa — and convert the group into a ‘BRINCS’.
Economic governance is the key to reaching higher planes of development. The President has to deliver the message that those who do not comply with the law will have to pay a price. He could also consider calling the UN to sponsor an International Round Table on the Way Forward and give feasible recommendations. Indian policymakers and business now have a critical role to play. Hopefully, they will respond.