NIgeria’s 1999 Constitution, by placing ownership of natural resources exclusively in the hands of the central government, creates a dis-incentive for economic diversification, Professor Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria, CBN, has declared.
That, according to him, was because it hampered a regional approach to economic diversification and economic management in what was a supposedly federal state, Moghalu argued.
Moghalu a former flag bearer of the Young Progressives Party, YPP, expressed these views in a keynote speech delivered during the annual conference of the Nigerian Economic Students Association, NESA, in Port Harcourt on Thursday.
Moghalu’s paper, which was titled: “Economic Diversification and the Wealth of Nations: Lessons and the Path Forward for Nigeria,” argued for a constitutional restructuring that would devolve fiscal autonomy to regions or states, which would engender competitive manufacturing and the diversification that will drive it.
According to Moghalu who was the Young Progressives Party, YPP, flag bearer during the 2019 presidential election, Nigeria witnessed its best broad-based economic growth in the First Republic when resources were under regional control rather than its subsequent boom and bust cycles that were driven by reliance on oil rents.
He proposed that Nigeria’s economic policy makers should help the government develop targeted export policies and incentives that would drive diversification, adding that “achieving economic diversification in Nigeria would require a comprehensive and joined up approach to economic policy, rather than the silo approach we have seen for many years.”
According to him, Nigeria could not achieve
development unless it made economic diversification the central thrust of its policy while recommending a policy based on a clearly defined vision that set out the balance between the role of the government and the role of the market.
Moghalu therefore advised that the Economic Advisory Council to the President would need to become a full-time body because “managing Nigeria’s economy to transformation would require capable hands that work on it full-time, doing the granular work and analysis that will drive policy.”
It is important, he insisted, that such a council, and the rest of the country’s economic management apparatus, acquired and established strong competence in industrial policy if the economy was to become truly diversified.
He supported his argument with the models of such countries as Malaysia, Thailand and Chile.
For such an approach to succeed, Moghalu argued, “the two most important requirements, which are lacking in the Nigerian context, were, first, a clear philosophical foundation for our country’s economic policy that is based on a clearly defined vision and sets out the balance between the role of the government and the role of the market.”
This approach, he noted, had delayed development because specific aspects of economic policy appeared to be at conflict with stated policy objectives of diversification.
The former Presidential candidate said he favoured a competent political leadership that understood and prioritized economic development backed by competent economic management and a capable state bureaucracy and not crony capitalism of vested interests.
The political class, the former CBN Deputy Governor insisted, needed a better understanding of the imperatives of long-term structural economic transformation with an emphasis on periodic development plans and industrialisation.
He warned against undue pressure from the Bretton Woods institutions, which in the past led to a decline in structural economic thinking.
This decline, he pointed out, also led to a premature shift to extreme liberalisation of trade without an appropriate foundation of industrialization that would have made us more competitive in the global economy with diversified exports.
In this context, he noted, “the failure of the Ajaokuta Steel industry represents a tragic failure of political leadership for economic transformation in Nigeria, as iron and steel are an important basis for an industrialized economy.”
“These policy errors, including a premature embrace of globalization without the structural foundation to become part of the production value chain of globalization – and thus competitive in it,” he stressed, “have turned Nigeria into a global market but not a global producer of the hard goods of the globalized economy.”
Moghalu warned that it was going to require political leadership with a sophisticated understanding of economic transformation and the capacity and will to execute it, if Nigeria was to be able to change course in the years ahead.
