Sanusi: How The Nigerian Govt Caused Economic Recession
This speech was given by Former Central Bank of Nigeria Governor Sanusi Lamido Sanusi. It was first published by Premium Times
First of all, I want to break from tradition. Usually I speak in Hausa in Kano. But, I don’t know how I am going to make an economic presentation in Hausa to 36 states’ commissioners and have someone translate it into English. To avoid things being lost in translation, I will speak in the language of economics.
Let me start by saying congratulations to you minister. This is the first time I am meeting you in an official function since your appointment, and to tell you in public what I have always said in private; that you are one of the sisters I remain extremely proud of your work. I wish you all the best in these challenging times.
I have always told people that Dr. Shamsuddeen Usman, my teacher, (I don’t know if he is an ex or former minister, multiple times) taught me microeconomics. So, he takes a lot of the credits, and none of the blames, for what I have become.
Ladies and gentlemen, I was not given a specific topic to talk on. But, because the concern today is the concern about the recession Nigeria is in technically, and also because it is a meeting of Planning and Budget Ministers, I thought I will do a proper economic presentation and put down my thoughts on where I think we are; why I think we are where we are, and what I think we need to do to get out of this.
I am sure there will be many other presentations specifically on what a state can do to raise revenues and so on. But, having an overarching view of economic policy, and where we may or may not have done wrong, or what the key drivers of growth should be for the Nigerian economy are things I thought we should talk about at this session.
So, I call this presentation, Nigeria: The Search For A New Growth Model.
I will start by going back to the past, not just Nigeria, but Africa. Let’s ask ourselves what were the key drivers of growth in Africa, and what has changed since this golden decade Africa had.
Africa Golden Decade was basically the decade of the 2000s. Africa moved from the previous decade, where it was a hopeless continent, to a new decade that we have one type lifting all story of Africa rising.
This rise in Africa across the world was one of stories of sadness, poverty, famine and hunger to a continent that was full of potentials; where there were opportunities for investments; where capital markets were booming.
All of a sudden people heard countries like Nigeria, Kenya, Ethiopia, Ghana, etc. when previously these were supposed to be a basket case in the world.
The first pillar of this growth was clearly shifting terms of trade, which as we all know in developing economics, can be a mirage.
You can’t have improving terms of trade when you are exporting commodities over short periods of a cycle. But, we know as far back as the 1950s, from the Latin American structure economics, that over the long term, any economy that specialises in exporting primary products and importing manufactures would end up having terms of trade shifting against it. You can have a temporary boost, but If you don’t use that boost to have a structural adjustment that would make for prudent management of the economy, you would be courting trouble.
By 2008, one barrel of oil would buy you one Sanyo flip telephone as against 19 barrels of oil to buy the same phone earlier. That gives an idea how well the terms of trade have shifted.
We had an oil price of $10 a barrel in the time of Babangida. At one point under Obasanjo, it rose to $140 a barrel. This was a time of rapidly improving technology, cheaper manufactured products and therefore our oil could technically import us much more.
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