Sunday, 27 January 2013

The Wealth And Poverty Of A Nation: Who Will Restore The Dignity Of Nigeria?–By Oby Ezekwesili

Being text of the lecture delivered by Nigeria’s former Minister of Education and former Vice President (Africa) at the World Bank, Dr Obiageli Ezekwesili; as the 42nd Convocation Lecturer at her alma mater, the University Of Nsukka, recently.
I am hugely delighted to return to my alma mater the great and only University of Nigeria to speak at your 42nd convocation. Twentyeight years ago I sat just like you– those of you who are part of the graduating Class of 2013; excited by my graduation. It was 1985 and I was very privileged to be one of the then only 3% of our own youthful population that had the opportunity of a university education.
Today, you are still fortunate to be one of the yet paltry 4.3% of your own youthful generation with an opportunity for university education. For Nigeria that percentage does not compare favorably with 37.5% for Chile, 33.7% for Singapore, 28.2% for Malaysia, 16.5% for Brazil and 14.6%. Our lag in tertiary education enrollment is quite revealing and could be interpreted as the basis of the competitiveness gap between the same set of countries and Nigeria. The reason is that “…. tertiary enrollment rate which is the percentage of total enrollment, regardless of age, in post-secondary institutions to the population of people within five years of the age at which students normally graduate high school…….plays an essential role in society, creating new knowledge, transferring knowledge to students and fostering innovation”. The countries with the most highly educated citizens are also some of the wealthiest in the world in a study by the OECD published by the Wall Street Journal last year.
The United States, Japan, Canada, South Korea, Finland, Norway, Israel, United Kingdom, New Zealand and Australia also have among the largest Gross Domestic Products. All these countries aggressively invest in education.
The same cannot be said of Nigeria. The crawling progress in tertiary education enrollment since my graduation more than two and a half decades ago is therefore one key reason former peer nations left us behind at the lower rungs of global economic rankings. Economic growth rate and ultimate development of nations are determined by a number of factors that range from sound policies, effective andefficient public and private investments and strong institutions. Economic evidence throughout numerous researches proves that one key variable that determines how fast nations outgrow others is the speed of accumulation of human capital especially through science and technology education. No wonder for these same countries by 2011- South Korea of fifty million people has a GDP of$1.12trillion, Brazil of one hundred and ninety six million has $2.48 trillion; Malaysia of twenty eight million people has $278.6Billion; Chile of seventeen million people has $248.59Billion; Singapore of five million people has $318.7 Billion.
Meanwhile with our population of 165 million people, we makeboasts with a GDP of$235.92 Billion- completely way off the mark that we could have produced if we made a better set of development choices.
More dramatic is that this wide gap between these nations and Nigeria was not always the case as some relevant data at the time of our independence reveal. In 1960 the GDP per capita of all these countries were not starkly different from that of Nigeria- two were below $200, two were a little above $300 and one was slightly above $500 while that of Nigeria was just about $100. For citizens, these differentials are not mere economic data. Meanwhile by 2011, the range for all five grew exponentially with Singapore at nearly $50,000, South Korea at $22,000, Malaysia at $10,000, Brazil at $13,000 and Chile at $14,000. Our own paltry $1500 income per capita helps drive home the point that we have been left behind many times over by every one of these other countries. How did these nations steer and stir their people to achieve such outstanding economic performance over the last five decades? There is hardly a basis for comparing the larger population of our citizens clustered within the poverty bracket with the majority citizens of Singapore fortunate to have upper middle income standard of living.
Again, how did this happen? What happened to Nigeria? Why did we get left behind? How did these nations become productively wealthy over the last fifty years while Nigeria stagnated? How did majority ofthe citizens of these nations join the upper middle class while more Nigerians retrogressed into poverty? There are usually as many different answers to these sets of questions as there are respondents on the reasons we fell terribly behind. Some say, it is our tropical geography, yet economic research shows it has not prevented other countries with similar conditions from breaking through. Others say it is size, but China and India are bigger, yet in the last thirty and twenty years have grown double digit and continue to out- grow the rest of the world at this time of global economic crisis. Furthermore, being small has not necessarily conferred any special advantages to so many other countries with small population yet similarly battling with the development process like we are.
Some others say it is our culture but like a political economist posited “European countries with different sorts of cultures, Protestant and Catholic alike that have grown rich. Secondly, different countries within the same broad cultures have performed very differently in economic terms, such as the two Koreas in the post-war era. Moreover, individual countries have changed their economic trajectories even though “their cultures didn’t miraculously change.” How about those who plead our multi ethnic nationalities as the constraint but fail to see that the United States of America happens to be one nation with even more disparate ethnic nationalities than Nigeria and yet it leads the global economy! As for those who say it is the adverse impact of colonialism, were Singapore, Malaysia and even China not similarly conquered and dominated by colonialists?
That Nigeria is a paradox of the kind of wealth that breeds penury is as widely known as the fact that the world considers us a poster nation for poor governance wealth from natural resources. The trend of Nigeria’s population in poverty since 1980 to 2010 for example suggests that the more we earned from oil, the larger the population of poor citizens : 17.1 million 1980, 34.5million in 1985, 39.2million in 1992, 67.1million in 1996, 68.7million in 2004 and 112.47 million in 2010! This sadly means that you are children of a nation blessed with abundance of ironies.
Resource wealth has tragically reduced your nation- my nation- to a mere parable of prodigality. Nothing undignifies nations and their citizens like self-inflicted failure.Our abundance of oil, people and geography should have worked favorably and placed us on the top echelons of the global economic ladder by now. After all, basic economic evidence shows that abundance of natural resources can by itself increase the income levels of citizens even if it does not increase their productivity. For example, as Professor Collier a renowned economist who has focused on the sector stated in a recent academic work, countries that have enormously valuable natural resources are likely to have high living standards on a sustainable basis by simply replacing some of the extracted resources with financial assets held abroad.
Disappointedly, even that choice eluded our governing class who through the decades has spent more time quarreling over their share of the oil “national cake” than they have spent thinking of how to make it benefit the entire populace.
There are perhaps three broad classes of resource rich countries. The first are those which like Norway have built up all other types of domestic investment from which revenue is generated and can therefore save their huge revenue from gas in foreign assets. The second are those mostly of the Middle East countries like Kuwait which also have saved huge revenue in foreign asset and generate sufficient revenue from the asset to be better off than other countries without resources. However, for Kuwait this may be only because they live well from resource rents rather than becoming productive. The third category of which our country is a classic example are countries which though resource rich have neither been able to build up foreign asset for citizens to live well off of nor evolved new and alternative sectors of productivity.
The appropriate response to the revenue extracted from our oil over the period 1959 to date would have been to use it in accumulating productive investment in the form of globally competitive human capital and physical asset of all types of infrastructure and institutions. Such translation from one form of nonrenewable asset to renewable capital would have been the right replacement strategy for a wasting asset like oil. Unfortunately unbridled profligacy has made us spend and continue to spend the free money from oil like a tragic Rentier state that we are called in development circles. We spend most of what we generate on mere consumption with no tangible productive asset to show for our so called “wealth”.
Due to profligacy we have dismal human development indicators which are inconsistent with the scale of our earnings. For example using life expectancy as a proxy measuring how we score on human development, 51.4years for Nigerians falls far short of the 80years for citizens of Singapore and South Korea, 78years for citizens of Chile, 73 years for citizens of Malaysia and 72years for citizens of Brazil. We may in fact be the world record holder in the rank of natural resources rich countries that tend to have worse human development scores when compared to countries without endowments.
As our human development scores have lagged, we continued with our binge on oil revenue and became trapped in cyclical decline of national competitiveness. It explains why every other economic sector in Nigeria has suffered the effect of the oil enclave economy. Oil has unleashed shocks and volatility of revenues on our economy due to exposure to global commodity market swing, proliferated “weak, ineffectual, unstable and systemically corrupt institutions and bureaucracies” that have helped misappropriate or plunder public resources. Nations with abundance of natural resources especially in Africa, Latin America and part of South Asia have experienced the fueling of official corruption and “violent competition for the resource by the citizens of the nation” .
While there may not be concurrence on the causes of Nigeria’s colossal under-performance, most of our citizens however agree that poor governance and the more visible symptom of corruption have had virulent impact in arresting the development of Nigeria. The poor in our land have paid the highest possible price for being born into the world’s best example of a paradox. The common wonderment of these poor citizens – whether east, west, north and south- is “why would more than half the population of a country that earned nearly one trillion dollars in oil revenue since the Oloibori discovery of crude oil; continue to wallow in poverty?” Well, economic evidence shows that the answer which we must all ponder deeply is that oil wealth entrenched corruption and mismanagement of resources in government and warped the incentive for value added work, creativity and innovation in our public, private sectors and wider society. This being the case, the larger population of our people is deprived of the opportunity to overcome poverty and this is what economists call the “resource curse”. The oil revenue induced choices made by our ruling elite over the five decades of political independence cursed several of our citizens to inter-generational poverty!
To be continued

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