Nigeria’s big election questions

It has been said that “Brazil has a future and always will”.

The same can also be said about Nigeria. It has a future and it is working towards it, but without the mind-boggling mistakes that have been made in recent years in Brazil.

Nigeria’s economy, the largest in Africa, has grown 11 fold since 2000, according to Goldman Sachs.

Since democracy was restored in 2010, the national income has almost trebled.

According to a Citigroup report published in 2010, Nigeria will have the highest GDP growth in the world between 2010 and 2050. Already its GDP per capita is $3,900 per person.

Nigeria goes to the polls on Saturday to vote in what is going to be a closely fought election. 

It is probably fair to say that right now, poorer voters do not feel they are on the lift going up. Growth has not trickled down to them as much as it should, at least in terms of incomes, although their access to clean water, medical help and education may have improved.

Economists say they will not get a real leg up until Nigeria approaches double digit growth.

The rapidly expanding middle class has its own worries.

Since the price of oil fell a few months ago, government revenues have fallen sharply. To make up, the government increased taxes on better-off people and delayed capital expenditures.

Projected annual economic growth is coming down from over 7 per cent to under 5 per cent. Nevertheless, it is very far from hitting rock bottom as it has in Brazil.

Although oil and gas provide 70 per cent of government revenues, they account for only about 8 per cent of the national income.

As the World Bank reports, “though the petroleum sector is important, it remains in fact a small part of the country’s overall vibrant and diversified economy”.

Thus, there is little chance that momentum, although slowed, will be seriously affected in the long run.

The manufacturing sector has been improving steadily. It makes up 15 per cent of the national income.

Services, including the booming telecom sector and the film industry (Nollywood), make up 30 per cent.

Agriculture makes up 40 per cent. It is in this sector that most of the poor people live. But growth has been slow.

Thirty-three per cent of the population lives below the poverty line. In the rural areas, it is around 45 per cent and in the urban areas 12.5 per cent.

Lagos, the powerhouse of Nigeria, continues to steadily lift its population out of poverty. Its economy, according to Renaissance Capital, the investment bank, is worth one-and-a-half times Kenya’s total output.

When democracy returned in 1999, President Olusegun Obasanjo made a great range of economic reforms.

Aided by Ngozi Okonjo-Iweala and Nedani Usman, his successive women finance ministers, Nigeria repaid Nigeria’s enormous debt, reorganised the banks, introduced an IMF-backed exchange rate regime, built up a large sovereign reserve fund and initiated a string of liberalising reforms. 

Infrastructure reforms initiated by Obasanjo came to fruition during the tenure of his successor, Goodluck Jonathan.

The moribund railway system has been given a new life with renovated lines, including the 1,126-kilometre-long link between Lagos, in the south, and Kano in the north. The electricity system has been privatised.

Jonathan has his own achievements to boast. One is revamping the agriculture sector with young people now trying to get into it.

The housing sector is being unleashed and unfettered. The aim is to see housing as a source of growth, as it is in developed countries.

The pension system, once a nest for corruption, has been totally revamped. The system is being digitised and people are given biometric cards.

The oil subsidy system, another nest of corruption, has been cleaned up and this has reduced the amount of money disappearing.

Foreign investors are coming into the power sector.

The government has used the money it raised last year from a $1 billion eurobond issue to ramp up investment in power supply.

Many big companies are investing in the country. There has been a good start in building a cash-transfer system whereby poor families are given a subsidy — Brazil and Mexico style — if they put their girls in school.

One can talk at length about economics, but the fight against the Islamist extremist Boko Haram movement will be a big consideration for voters.

According to Obasanjo, “many things with the army went wrong, training went wrong, morale went down, motivation was not there, corruption was deeply ingrained, welfare was bad”. 

Jonathan’s rival for election, Muhammadu Buhari, a Muslim from the north, seems, as a former major-general, to have better credentials for dealing with the crisis. He is also known for his personal austerity. Voters appear to be contrasting this with the corruption that has flourished largely unpunished under Jonathan’s government. 

The election seems up for grabs. But whoever wins will have solid economic foundations on which to build.