Fixing the Economy: Less politics, more substance, by Kayode Fayemi

It gives me immense pleasure to address this audience today, and, I thank Freedom Online, the organizers of this event, for inviting me as a guest speaker.
The topic I have been asked to interrogate, is not one we can completely explore. However, I will share my perspectives on what needs to be done, but more importantly, also share some insight on what the Government, led by President Muhammadu Buhari has done since assuming office in 2015. I will also share additional insight on what States need to do as drivers economic development, using what Ekiti, the State I have the privilege of leading, is doing.
In order to do justice to this topic, there is a need to revisit the history of the Nigerian economy from independence. According to a 1955 report published by the World Bank, then known as the International Bank for Reconstruction and Development, Nigeria had a population of 32 million people, with most of its people engaged in agricultural activity. Even at the time, Nigeria had a thriving export economy led by cocoa, oil palm, palm kernels, groundnut and cotton.
The industrial sector was active, led by the biggest establishment at the time, the sawmill and plywood factory at Sapele, that employed over 3,000 people. In addition to that plant, there were textile mills, rubber factories, bottling companies and other industrial establishments. Even at the time, though most of the people lived in rural communities, Nigeria had 18 towns with a population of over 50,000 inhabitants, led by Ibadan, with 460,000 people. These points are important, because it tells you Nigeria had some of the competitive advantages for industrialization; a large population and a large number of cities.
However, literacy levels were low at 10%, and our per capita income was one-tenth of the income levels in Europe. So, while the economy was healthy, there was a need to spend at least two decades growing human capital and infrastructure; principles espoused and implemented by the Western Region Government, led by Chief Obafemi  Awolowo.
However, with a general lack of investment in long term human capital and infrastructural development, by the 21st century, the Nigerian economy was teetering on the brink, although the seriousness of the situation was masked by rising oil prices. So, it was not surprising that when oil prices crashed, our economy contracted by 1.5% in 2016. However, the difference between previous boom-bust oil-price cycles like the ones in the late 1970’s or the mid-1980’s, is that Nigeria is recovering quickly, and the economy grew by 1.9% in 2018, largely driven by its non-oil sectors, and a recovery plan I will speak about later.
The cost of not investing in infrastructure and human capital is usually painful, and in Nigeria’s case, is manifesting in an unemployment rate hovering above 40%. With two-thirds of our population under the age of 35, it is important to set the country on a path of sustainable economic development, if not for our sake, for generations after ours.
This brings me to reason we are here, how to fix the Nigerian economy. This discussion must start by identifying the necessary conditions for inclusive economic development, which not only ensure macroeconomic growth indices improve, but also lifts people out of poverty and puts our citizens, especially young people in jobs. These conditions are clearly security, human capital development, infrastructure and a clear policy framework that encourages the investment of private capital.
This is why the Federal Government developed the Economic Recovery and Growth Plan (ERGP), designed to drive economic growth by:
Ramping up oil production to 2.5 million barrels per day and reduce petroleum product importation by 60%;
Not reinventing the wheel, but building on existing national and sectoral development plans;
Collaborating with businesses to attract private investment in focus sectors like agriculture, manufacturing, solid minerals and services, a clear sign that the private sector is expected to be the engine of economic growth;
Merging the budget and planning functions into one ministry to ensure the required linkage between planning and funding exists;
And finally, a clear alignment with, and recognition of states, to ensure all parties are working towards a common objective.
The ERGP rightly identified human capital and competitiveness as critical factors that drive economic growth. No economy can develop without a healthy and competent workforce; therefore education and healthcare are critical social investments required to develop our economy. This is why we must continue to expand health insurance coverage and invest in healthcare facilities and professionals, to ensure we improve the quality of life in Nigeria, and as a result of this, develop a more productive workforce. We must also continue to invest in early school education to boost literacy, technical and vocational training to support our industrial needs, but most importantly, we must ensure our children have the right digital skills training, to make them competitive for the future of work. This is why programmes like the Home Grown School Feeding Programme, N-Power and the planned improvement in teaching methods, are necessary actions for developing a workforce that can excel when put in an increasingly competitive global workplace.
To attract the required investment into Nigeria, our economy must be competitive. I have already spoken about how improvements in the labour force will make Nigerian workers more competitive. However, we must support that with the necessary investments in infrastructure. This is why the ongoing investments in rail, power, ports and roads are absolutely necessary to ensure long term economic development. The work being done to develop an intermodal transport system around the Lagos Port, and planned development of both deep sea and inland ports in other parts of the country, are necessary requirements to boost international trade. If this is supported by extensive road and rail networks, then Nigeria would have significantly lowered the cost of moving people and goods, thereby making our economy competitive and more attractive for investments.
Electricity, a long term challenge for Nigeria, remains a necessary requirement for growth. However, with the continued private investment in generation and Government’s investment in improving the transmission grid, it is only a matter of time that Nigeria will provide the electricity required to power its economy. However, to achieve this, we must ask ourselves some honest and difficult questions about our willingness to pay for electricity, and how much it should cost. These are necessary debates for any country that seeks long term development, and Nigeria is not an exception to this.
I will also include an often overlooked requirement, especially as we enter the Fourth Industrial Revolution, which is broadband. Internet connectivity is now a necessity, not just for economic development, but also the delivery of governance. Therefore, we must improve our broadband penetration, from just over 30% to at least 70%, within the shortest possible time, because various studied have shown that a 10% increase in broadband penetration leads to 1.5% increase in GDP . As a Governor, one of the areas I am interested in improving, is how we can lower the cost for providers of the required infrastructure in this area.
As a former Minister, I can testify firsthand that having a clear policy framework is a critical requirement for economic development. During my tenure as Minister of Mines and Steel Development, it was important to ensure a clear and consistent policy framework was developed to guide investors, and provide the required confidence that has led to the influx of investors, and the sustained growth of mines and steel development in Nigeria. While, sometimes, this work is often painstaking without obvious results, policymakers must stay the course, and ensure long term development is not compromised for short term platitudes.
However, all these requirements will not deliver the required outcomes, if we cannot guarantee the security of lives and property. The fact that we are able to gather today, to discuss steps towards sustainable economic development, is only possible because of the greatly improved security situation around the country. While the task of securing our country completely is not done, it is important to ensure we continue to place the required focus on this very necessary issue.
It will be impossible for me to examine this topic without speaking about the role of States in economic development, especially as I am now in my second stint as Governor of Ekiti State. While the Federal Government performs a very necessary role in developing our economy, the real federating units of economic activity are the states. Therefore, it is very important that the subnational synergy and support required to build an inclusive and robust economy exists.
Since assuming office in Ekiti State, our Government has focused on reclaiming our land and restoring our values, by focusing on four critical areas: social investment; our knowledge economy; infrastructural and industrial development; and agriculture and rural development. In doing this, we not only focused on rebuilding the value system on which all lasting societies survive; but we also focused on repairing an economy damaged by a period of waste and irresponsible governance.
To achieve the desired economic development in the State, we have focused on some of the issues I highlighted earlier; education and healthcare. By improving the quality of education and health of our people, we are giving them an opportunity to compete in what has become a global marketplace for skills. We are also exploring practical ways of ensuring our students are also provided with the relevant digital skills to make them ready for the future of work.
Our Government has supported this social investment, with a corresponding focus on the knowledge economy, leveraging on our heritage as the knowledge capital of Nigeria. Very soon, we will unveil a set of incentives designed to make Ekiti the preferred destination for education and innovation investment in Nigeria. To support this plan, we will ensure a conducive environment for broadband and power investments, both critical requirements for the Ekiti Knowledge Zone to develop.
Our work on infrastructure and industrial development complements the focus on agriculture and rural development. We are harnessing the productive capacity of Ekiti farmers, and promoting investments in agri-business along the value chain of our farm produce. So, we are now seeking investors who require crops including cassava, cashew, cocoa and yam, for their production value chain, to invest in Ekiti State. We will not only support these investments by providing quality road infrastructure, but will also ensure the research capability to improve the yield and quality of produce exists within the State.
In concluding my remarks, like statesmen, we must think about the next generation, when making economic choices. The results of these often difficult choices might not be easily obvious to the less discerning, but our responsibility as leaders is to stay the course, and ensure we make the right investment and decisions, to safeguard the future of unborn generations.
On this note, once again, I thank the organizers of this event for inviting to share my thoughts on what is required to deliver sustained economic development in Nigeria. Our role has leaders must remain the propagation and implementation of ideas that lift people out of poverty and create economic opportunities.
I thank you all for listening.
. Being the text of the Keynote Address by the Ekiti State Governor, Dr. Kayode Fayemi, at the Second Annual Lecture of Freedom Online on April 18, 2019 in Lagos, Nigeria.