Economic Growth Nigeria

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Igbinedion University Okada Eighth Convocation Lecture

By

Sanusi Lamido Sanusi, CON Governor Central Bank of Nigeria

GROWTH PROSPECTS FOR THE NIGERIAN ECONOMY

Convocation Lecture delivered at the Igbinedion University Eighth Convocation Ceremony, Okada, Edo State, November 26, 2010

GROWTH PROSPECTS FOR THE NIGERIAN ECONOMY
Sanusi Lamido Sanusi, CON Governor Central Bank of Nigeria

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INTRODUCTION

Nigeria’s economic aspirations have remained that of altering the structure of production and consumption patterns, diversifying the economic base and reducing dependence on oil, with the aim of putting the economy on a part of sustainable, all-inclusive and non-inflationary growth. The implication of this is that while rapid growth in output, as measured by the real gross domestic product (GDP), is important, the transformation of the various sectors of the economy is even more critical. This is consistent with the growth aspirations of most developing countries, as the structure of the economy is expected to change as growth progresses. Successive governments in Nigeria have since independence in 1960, pursued the goal of structural changes without much success. The growth dynamics have been propelled by the existence and exploitation of natural resources and primary products. Initially, the agricultural sector, driven by the demand for food and cash crops production was at the centre of the growth process, contributing 54.7 per cent to the GDP during the 1960s. The second decade of independence saw the emergence of the oil industry as the main driver of growth. Since then, the economy has mainly gyrated with the boom-burst cycles of the oil industry. Government expenditure outlays that are dependent on oil revenues have more or less dictated the pace of growth of the economy. Looking back, it is clear that the economy has not actually performed to its full potential particularly in the face of its rising population.

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In general, economic growth and population growth rates are very close that the margin cannot induce the required structural transformation and economic diversification. The Nigerian economy has grossly underperformed relative to her enormous resource endowment and her peer nations. It has the 6th largest gas reserves and the 8th largest crude oil reserves in the world. It is endowed in commercial quantities with about 37 solid mineral types and has a population of over 150 million persons. Yet economic performance has been rather weak and does not reflect these endowments. Compared with the emerging Asian these countries have countries, notably, Thailand, Malaysia , China, India and Indonesia that were far behind Nigeria in terms of GDP per capita in 1970, transformed their economies and are not only miles ahead of Nigeria, but are also major players on the global economic arena. Indeed, Nigeria’s poor economic performance, particularly in the last forty years, is better illustrated when compared with China which now occupies an enviable position as the second largest economy in the world. In 1970, while Nigeria had a GDP per capita of US$233.35 and was ranked 88th in the world, China was ranked 114th with a GDP per capita of US$111.82. The major factors accounting for the relative decline of the country’s economic fortunes are easily identifiable as political instability, lack of focused and visionary leadership, economic mismanagement and corruption. Prolonged period of military rule stifled economic and social progress, particularly in the three decades of 1970s to 1990s. During these years, resources were plundered, social values were debased, and unemployment rose astronomically with concomitant increase in crime rate. Living standards fell so low, to the extent that some of the best brains with the requisite skills to drive the developmental process left in droves to other nations, and are now making substantial contributions to the economic success of their host countries....
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