The “Next Nigeria economy” is possible without oil, but a new political, legal, institutional and governance foundation is required to create wealth for the citizens, a former Central Bank of Nigeria (CBN) governor, Chukwuma Soludo, has said.
Mr Soludo, a member of the recently constituted National Economic Advisory Council (EAC), was one of the key speakers at the Platform, a biennial economic summit organised by the Covenant Christian Centre, Lagos to commemorate Nigeria’s 59th Independence anniversary celebrations.
The former CBN governor who spoke on the topic, “Economic restructuring: Strategies of the future” said the future of the Nigerian economy without oil would be powered by the country’s greatest assets – human capital and technology, to guarantee security, prosperity and happiness.
He said the country’s major problem was not bad economic ideas, as successive governments since 1962 have implemented various National Economic Development plans on economic restructuring or diversification and structural adjustment programmes designed to move the economy away from oil.
Despite these programmes, Mr Soludo said not much has been achieved in terms of the economic structure due to the absence of the enabling institutions to drive the process.
He said a private sector-led economy will not be possible without the requisite financial institution with the capacity to drive the process.
“It will be difficult to have a competitive and prosperous post-oil economy of the future with the same legal institutional foundation for the consumption of oil rents.
“You can’t build a 100 storey-building on the foundation of an old bungalow. The federation needs a new national business model to create wealth for the citizens.
“The link between law, constitution, institution, judiciary and the economic transformation is the weakest in the country’s design of new national economic agenda,” he said.
For the country to create an environment for the change, Mr Soludo said the National Assembly, Ministry of Justice, the state governments and others ”have to get seriously down to work in the future”.
He said with the African Continental Free Trade Agreement, Nigeria needs to be innovative, to be able to compete and win ”to guarantee the security, prosperity and happiness of its citizens in the world without oil”.
The restructuring of the future economy, he said will entail transformational changes to generate and sustain a broad-based growth rate of at least of 7 per cent, from the current one to two per cent rate, required for poverty reduction and employment generation.
“If we want to be a middle-income country by the end of this century in 80 years’ time, what we need is an economy that will be growing at double digits every year from over $400 billion today to about $5.5 trillion.
“Our economy is stuck currently at a very low-speed lane in the context of the debt cliff with little fiscal space, while monetary policy is at near its limits, low savings investments trap, rising unemployment and poverty,” he said.
“The alternative future we see is without oil, where other exhaustible natural resources play very little role. The future will be driven by people, our youths and technology. Nigeria’s people remain its potentially greatest renewable asset and resource for productivity,” Mr Soludo said.
Nigerian Constitution ‘obsolete’
The current Nigerian constitution, he said, has become largely obsolete for the demands of a productive economy, ”since it was designed for the sharing and consumption of the oil rents”.
What is required to bring a new economy, he said was a competitive and flexible legal framework, rather than unitary federalism.
He said Nigeria will require to create a productive, progressive constitution for a world without oil, bring about the devolution of power from the current system of unitary federalism, which concentrates power in the centre.
“The federal government should loosen its hold on policing, electricity supply, railways, ports, aviation, business incorporation, vehicle and drivers’ licences, taxation powers, prisons, etc. and allow the other subnational tiers to take some initiative.
“By creating the unitary system, the federal government has sought to keep everybody in check, but in the process ended up holding everybody down,” he said.
As part of solutions to create a new institutional arrangement for the economy, he proposed new fiscal federalism for the solid minerals sector and the scrapping of the local government system from the constitution to allow federation has two federating units.
Also, he called for the replacement of Section 162 of the 1999 constitution with a new fiscal arrangement that is consistent with devolution of powers.
Besides, he said there was the need to abrogate the Land Use Act 1978 and the various petroleum Acts and amendments and return the right of ownership, control and exploitation of the resources to the federating units who should pay appropriate taxes to the federal government.
New economic foundation
“A prosperous economy is not possible in the 21st century without a sound and efficient legal judicial system. We need a progressive legal system that can deliver justice to Nigerians and businesses in time.
“We need to fix our electoral system to transfer real power to leaders with wealth creation capacities. Next Nigeria is future without oil, but powered by our greatest assets – human capital, plus technology, which guarantees security, prosperity and happiness.
”The transition to that future requires a new foundation, whose elements include the productive progressive constitution that creates a competitive federation, devolution of powers that unbundles the federal government and loosens the stranglehold on the economy,” he said.