NIgeria\u2019s 1999 Constitution, by placing ownership of natural resources exclusively in the hands of the central government, creates a dis-incentive for economic diversi\ufb01cation, says Professor Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria (CBN)
This is because it hampers a regional approach to economic diversi\ufb01cation and economic management in what is 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\u2019s paper, which was titled: \u201cEconomic Diversi\ufb01cation and the Wealth of Nations: Lessons and the Path Forward for Nigeria, argued for a constitutional restructuring that would devolve \ufb01scal autonomy to regions or states, which would engender competitive manufacturing and the diversi\ufb01cation 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\u2019s economic policy makers should help the government develop targeted export policies and incentives that would drive diversi\ufb01cation, adding that \u201cachieving economic diversi\ufb01cation in Nigeria would require a comprehensive and joined up approach to economic policy, rather than the silo approach we have seen for many
years.\u201d
According to the former Presidential candidate, Nigeria cannot achieve development unless it makes economic diversification the central thrust of its policy while recommending a policy based on a clearly de\ufb01ned vision that sets 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 \u201cmanaging Nigeria\u2019s economy to transformation would require capable hands that work on it full-time, doing the granular work and analysis that will drive policy.\u201d
It is important, he insisted, that such a council, and the rest of the country\u2019s economic management apparatus, acquire and establish strong competence in industrial policy if our economy is to become truly diversi\ufb01ed.
He supported his argument with the models of such countries as Malaysia, Thailand and Chile
For such an approach to succeed, Moghalu argued, \u201cthe two most important requirements, which are lacking in the Nigerian context, are, \ufb01rst, a clear philosophical foundation for our country\u2019s economic policy that is based on a clearly de\ufb01ned vision and sets out the balance between the role of the government and the role of the market.\u201d
This approach, he noted, has delayed development because speci\ufb01c aspects of economic policy appear to be at con\ufb02ict with stated policy objectives of diversi\ufb01cation.
The former Presidential candidate favours a competent political leadership that understands and prioritizes 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, needs a better understanding of the imperatives of long-term structural economic transformation with an emphasis on periodic development plans and industrialization.
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 diversi\ufb01ed exports.
In this context, he noted, \u201cthe 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.\u201d
\u201cThese 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,\u201d he stressed, \u201chave turned Nigeria into a global market but not a global producer of the hard goods of the globalized economy.\u201d
It is going to require political leadership with a sophisticated understanding of economic transformation and the capacity and will to execute it, if Nigeria is to be able to change course in the years ahead, Moghalu warned.
Nigeria must become an economy driven by innovation such as financial technology which he said, would require a revamp and socialization of the idea of intellectual property, which drove innovation to become the main creator of the wealth of economically advanced countries.
For Nigeria to drive economic diversi\ufb01cation successfully, he said, special attention must be paid to trade policy realizing that for two decades running between 1998 and 2018, Nigeria\u2019s share of global merchandise exports remained virtually stagnant.
There is also the fact that most of NIgeria\u2019s trade is with advanced economies makes our trade disadvantage worse.
He continued: \u201cWith Nigeria\u2019s rati\ufb01cation of the African Continental Free Trade Act in November 2020, we must now shift our strategic trade focus toward African countries. This requires that we manufacture competitively and manage the phenomenon of dumping from foreign countries such as China.\u201d
According to Moghalu, \u201cwe need to seek a special dispensation from the World Trade Organization\u2019s Special & Differentiated tariff regime with a compelling case for why Nigeria should adopt \u201csmart protectionism\u201d for a limited period to ensure the survival of its Infant industry at home.
\u201cIndustrial policy must be the basis of our push toward economic diversi\ufb01cation, since it is the basis on which we can push for a more favorable international trade environment,\u201d he stressed.
Industrial policy, he noted, requires a certain amount of state intervention even in a market economy, provided that such interventionis targeted and productive for broad manufacturing sectors, as opposed to special favors for individual industrialists, a policy that distorts the market playing \ufb01eld for competitors in the same sector.
Moghalu added that foreign exchange policy in Nigeria needs to be revamped away from state control, \u201cwhich encourages scarcities, smuggling and arbitrage, if we are to create incentives for a diversi\ufb01ed economy.\u201d
He also added that achieving economic diversi\ufb01cation depends, at its core, on the existence of knowhow or productive knowledge. \u201cThis requires Nigeria to focus on creating the skills amongst its young population that will drive competitive manufacturing for exports.
\u201cThis calls for a revamp of the education sector in favour of science and technology, at least for the next two to three decades. This is how China was able to achieve spectacular economic transformation and become the world\u2019s second largest economy.\u201d
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NIgeria\u2019s 1999 Constitution, by placing ownership of natural resources exclusively in the hands of the central government, creates a dis-incentive for economic diversi\ufb01cation, says Professor Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria (CBN) This is because it hampers a regional approach to economic diversi\ufb01cation and economic management in what is a […]<\/p>\n","protected":false},"author":7,"featured_media":33772,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[392,3650,2910],"class_list":["post-34472","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-constitution","tag-disincentive","tag-moghalu"],"_links":{"self":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts\/34472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34472"}],"version-history":[{"count":0,"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts\/34472\/revisions"}],"wp:attachment":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}