Role of information communication technology in Nigeria economic growth?

Answer 1

Nigeria's economic growth rests on quality of expenditure

In order to achieve its planned economic growth target, the Federal Government will need to be mindful of the quality of its expenditure, renowned professor of economics, Paul Collier, has advised.

Collier, a former director of research group at the World Bank, observed that the country had in the past suffered because of the poor quality of its expenditure.

"Improvement in the quality of expenditure made by government is important to support future economic growth.

"In Nigeria though, government expenditure is on the increase; waste, mismanagement, and misplaced priorities mean the economy is not getting the required improvements because of the poor quality of expenditure," he said.

Nigeria currently has an ambitious 13 percent growth rate target over the next 12 years. This year alone, the country hopes to achieve 9.2 percent growth rate from the current 6.65 percent recorded in the second quarter.

Collier, who currently heads the Centre for Study of African Economics at Oxford University, England, spoke at Business Day's breakfast meeting held in Lagos yesterday, noting that Nigerians should celebrate the intelligent decision on public expenditure in the past four years which ushered in the buoyant financial conditions currently being enjoyed in the country, especially in the face of the current global financial crisis.

He was also of the view that there is the need to strike a balance between consumption and expenditure because as a growing economy, Nigeria needs to save for the future not just for consumption.

"The need to strike a balance between consumption and spending is because the foundation of future growth is laid today," he said.

Collier remarked that even with the ongoing global financial crisis, there is no cause for panic.

"Crisis happens very often. There is no cause for panic. For Nigeria, though the demand for oil is still down, but even at $87 per barrel, it is not still bad, looking at the budget benchmark and when oil was sold at as low as $27 per barrel."

With the ravaging global financial crisis, it is envisaged that the Nigerian economy will slow down a bit because as an oil producing economy, it is still selling to Europe and America that are worst hit by the global panic.

"The crisis would have hit harder on the country if there is not a good macroeconomic management in terms of macro economic stability and government savings."

Collier was also of the view that a lot of public spending should not go into investments. This, in his estimation is because in the last four years, the unit costs of construction have soared.

"In investment spending, Nigeria must bring down the cost of construction. That is micro-spending decision which will enable the country save for the future."

For a robust economy, a sound financial system is required and this is why Nigeria's financial system has to be strong. This is a challenge to the Central Bank of Nigeria's (CBN) post-consolidation, he noted.

Collier observed further that in the last 20 years, Nigeria's manufacturing industry has been dormant.

"This is one of the consequences of an oil dependent economy. The way forward is good macro-management in public spending which brings down the cost of manufacturing. Lagos as a mega city can be turned into a low cost manufacturing city integrating into a global economy.

In relation to fuel subsidy, Collier noted: "Your [Nigeria] legacy is that Nigerian citizens lack confidence in the quality of government spending. Government should not deny these suspicions by citizens. There should be a very high degree of confidence from the grassroots. For instance, in Malaysia, the government was able to convince the citizens of government's ability to spend public money in a meaningful manner," Collier stated.

He also spoke of the need to engage with the private sector.

"For Nigeria, the reason you need the private sector is for management. The secret of good management is competition. There should be private sector management in public service delivery. The financial sector, network industry (power, rail) and public assets are the three key sectors that need government regulation to keep the economy running," he added.

Remi Babalola, minister of state for Finance, who was special guest at the breakfast meeting, disclosed that Nigeria is in a precarious position in terms of what is happening today (global financial crisis).

"We are having challenges in terms of the volume of production. Since the current administration came in, most Nigerians have not really seen the impact. What we are trying to do is to diversify the economy by focusing on power, agriculture and other areas important to drive our growth target. That (rewuired)a quantum of money."

Indeed, he noted that, the greatest challenge Nigeria has is how to transform poverty to prosperity in the country.

"Over 80 percent of Nigerians are living below acceptable standard. Government is trying as much as possible to get to the second level of reforms. That is why we are begging people from the private sector to come, so that we grow the economy together. We are trying to analyse and put things together to get a proper development plan."

Speaking further, Babalola noted that before the global financial crisis, there had always been collaboration among the ministry of finance, Central Bank of Nigeria (CBN) and other important agencies to make sure there is a stable financial sector.

"We are trying to make sure that we have stable financial landscape which people will appreciate," he said.

He also indicated government's commitment to the structural and institutional reforms of the public sector. "This is because we cannot have a vibrant private sector without a vibrant public sector. We are getting to a stage where public sector activities are getting worse of because we are concentrating on the private sector to drive the economy. We believe that our economy will still grow. Let's be realistic, the interesting thing about Nigeria is that people are actually looking at the possibilities of achieving the double digit growth target."

The minister indicated that double-digit growth for Nigeria is not immediate but attainable with successive achievements.

"Success brings success. If we grow the economy each year over the next five years, there is every possibility of achieving double-digit growth. For instance this year, in the agricultural sector, we are going to achieve substantial growth. We will not compromise some basic macro economic indicators as a way of achieving macro economic stability. We have one of the lowest Gross Domestic Product (GDP) ratios in the whole world," noted.

By Saberedowo Abayomi O. (Dept. of Economics - Joseph Ayo Babalola University)