20:2020: From vision to mirage?

Unlike inthe Judeo-Christian religion, when visions are conceived in economies, there is a need for effective econometric modelling and planning to determine the variables and necessary actions which will make the visions come true. The case of Vision 2020 is that of a lofty vision which was not domiciled on the right sacrifice to make it come true.

Our econometric simulations on the Nigerian economy reveal that if the current rate of growth of GDP and population is sustained in the next eight years, Nigeria’s GDP per capita will be a mere $2,384 by 2020. Sadly, this was the average GDP per capita of the top 20 economies (which Nigeria seeks desperately to be like) as at 1997.

Our forecasts which are based on data provided by the World Bank also indicate that by 2020, if the top economies are to maintain the average growth rate which they have exhibited in the last 10 years (that is if the developed economies can shake off the current economic doldrums), they will have average per capita income of about $60,525 by that time.

If the status quo does not change in Nigeria, the country will remain far behind. The problem of Nigeria’s slow GDP growth and high population growth is an old one. Not that population growth is the major problem, but if we continue to grow population without corresponding GDP growth and reduction in corruption, our future is threatened.

Historic data from the World Bank indicates that on average, nations in the first 20 economic group attained GDP per capita in excess of $1,223 (which was our per capita income a few years ago) around 1960. France, Norway, and the UK had per capita income of $1,320, $1,441; $1,382 by 1960, and have consistently grown since then. One fully understands that Vision 20:2020 is a wild goose chase when one reckons with the reality that the goal is to attain an economic standard which we could not attain in 50 years, in just eight years.

As of 1960, Nigeria’s GDP per capita was a mere $91 and has just managed to grow by 25 per cent in the last 50 years. In the same period, Norway grew per capita income by 59 per cent; while France gained 34 percent. On average, the High Income Countries (HIC) recorded 30 per cent increase in GDP per capita in the last 50 years; while Nigeria saw a rise of a little less than 25 per cent.

Our simulations reveal that Nigeria needs to grow at an uninterrupted rate of between 9.5-12 per cent per annum in the next eight years or miss vision 20:2020 altogether. And since this is unlikely to happen, we can as well come up with a better and more realistic vision.

Given the current circumstances, there are two choices for Nigeria. If the country cannot automatically implement policies that will grow the economy at a faster pace, then it has the option of shifting the goal post. Clearly, the idea of merely believing that developing infrastructure will grow the economy is not good enough.

Infrastructure is a necessary but not sufficient condition for development. We need to start asking ourselves the questions: From which sector of the economy will our economic miracle emerge?  What policies are we putting in place to make the identified sectors realistically viable?

Policy makers and governments within Nigeria need to answer these questions. Nigeria’s political elite should in a sense start thinking like the Chinese. What the Chinese did was to set targets for different sectors of the economy and work towards those targets.

Nigeria has the capacity to attain high growth if the country fires on all cylinders. But all economic indicators point to the fact that Vision 20:2020 cannot be attained. If we must attain some level of improvement in the next 8 years, our growth should be all-inclusive, well coordinated and not restricted to one sector. The country needs to explore all its growth frontiers.

Nigeria’s policymakers have to implement fundamental policies which foster inflow of FDI in a coordinated manner. This inflow of FDI should be coordinated to attain predetermined economic targets. When the right policies are well implemented, the result will be growth and consequently development.

The truth is that Nigeria has not done too badly in terms of growth in the past six years. The problem however is that this growth has not trickled down to the masses. There are prospects for Nigeria’s economic ‘resurgence’, but things will not work by mere uncoordinated visions. We have to do more.