Dr. John J. Chizea is a lecturer in the Department of Economics, Baze University, Abuja. Time Nigeria engaged the young and vibrant Economics teacher on the state of the economy and he offers reasons why Nigerians must be patient with the president. According to Chizea, it takes a while for the gains of a vibrant economy to trickle down to the common man, especially with the advent of a new government. Excerpts
As an expert, do you think the present administration has an economic plan?
Whether we like it or not the present administration has an economic plan. But what an ordinary man understands by good economy is when things are going well, good life and good food and so on and so forth. Even the gains in the best economy of the world takes time to trickle down. However, there are two distinct things when an economy is growing. The last government was criticized that the economy was growing but people did not really see it. When economy is growing there is also the issue of income distribution. We can say that the last government to some reasonable extent was successful in terms of economic growth but they did not do the same in income distribution because the masses did not see it.
A lot of wealth was made but it concentrated in the hands of the few while the bulk of population did not feel the growth in the economy. As to the economic plan, time will tell whether this government has economic plan or not. My point is that they have to work on that economic plan, because if the masses could not have a taste of their economic plan they cannot win the next election.
When a nation is set to diversify its economy, what are those things to look at?
In the first place what is diversification; it simply means to have multiple streams of incomes or more than one source to sustain an economy. Now, in the case of Nigeria, we are more or less a mono-economy, where oil remains the only source of foreign earning, though other things contributed but at a very minute percentage. For a nation to be set for diversification that country wants stability in her foreign exchange and economy as a whole because, if a country has more than one sources of income the better for that country. With regards to Nigeria as a country, we need to have several other sources beside oil and gas such as agriculture, mining and any other sources that can earn us foreign exchange, so that even when oil price shrinks, yes, we can feel the pains, it will only be a pinch but not what we are seeing now.
For example if oil ceases to sell in the world market today, Nigeria will be in big trouble because we don’t have other sources of income, That is why the Central Bank is having so much problem defending the position of Naira because the Naira is becoming more weaker by the day because if you cannot get foreign exchange and people are demanding for it, then they would be willing to pay more of your currency for little foreign exchange. So it is in your interest to diversify.
Then, process of diversification varies from one country to another, comparative advantages will come to play, you ask yourself what I can do better than this person in relation to countries. If you have something that you can do better than others, then we focus on those things that we are very good at. We equally have problem exporting at the basic level. If you ask me, I will say we should focus more on agriculture and take a step further, when you produce it you refine it a little before export.
For example, we export cocoa pod like that, why not refine it to a massive chocolate paste so that we can charge more for it. Even if we take these things from primary product and push it one or two steps further, even if we cannot take it to the final stage, let’s just push it further, so that we can earn more. It will do two things for us, it will create more employment because it is our labour. Secondly, it will attract a higher price for what we are pushing out. Our refineries need to be worked on and improve upon them.
Frankly we shouldn’t be importing refined petroleum, even when our refineries were working we were still importing engine oil. They take crude oil away and they bring us part of it and we still pay higher price for the part they brought in. If we can resolve the issue of refineries it will free us of a large amount of foreign exchange, look at the possibilities of exporting refined petroleum products that alone can do us a lot of good. So, the diversification is not specific to one way it might even be taking in all sectors, pushing and adding more value to what our export is right now .We export primary product let us bring it out and refine it before we export, we earn a bit more money and we create more employment. I don’t want to subscribe to the notion that the last administration did everything wrong, no, they did so many things right too.
This is a new government now, they need to get their words on ground and put things in good shape, any good thing you do, you need to have a solid foundation. I want to believe that there is economic plan and the result will come out very soon.
The president is requesting for emergency power to turn around the economy, do you think Nigeria’s economy has become that bad?
There is a little information at my disposal to answer that question fully; I do not have the information. Mr. President has obviously more information on the Nigerian economy than I and the basis of making accurate information should be information. I feel the economy is not doing well, infact it is in a bad state now, Mr. President might feel that more drastic measures should be taken and this I will support because anything that can make the economy better will be good.
At the same time, if you are asking for an emergency power in relation to economy, I would ask a question, are we moving into a command system? And I want to believe that the power resident in the executive allows him to carry out so many things already and I don’t think there is a case anywhere in the world where emergency power had been requested particularly in relation to the economy. From normal presidential system we have, the Executive President has enough power by virtue of conducting his fiscal policy, this is what I think he needs to do.
To an average Nigerian, the economy is not doing well, as a scholar, what is the way out?
Let me tell you, it is not just an average Nigerian that the economy situation is affecting, it is affecting everybody, the economy is not doing well and it needs to do better. My advice to Nigerians is to be patient. In reality, there is nothing they can do, in hardship situation therein are also opportunities. Right now, government is looking for ways to kick start the economy, so any skills, business idea you have within the system that at this point in time Nigeria’s economy needs to rise, deploy them.
So if you do your plan and analysis well there is going to be a lot of opportunities, I don’t think Nigerian economy can get worse than where it is now. About turning point, anything you are doing that is viable and realistic there is hope for it.
Nigerians should look beyond buying and selling, particularly young Nigerians, most people believe business is going there and buying this, bring it here and sell without adding any value. Nigerians should look at ways to add value because it is all about value added. There are a lot of ways people in Nigeria can make money from as simple as tomatoes. During tomato season it spoils everywhere with the exemption of this year when we had a serious shortage in tomatoes.
There should be a good technology regarding this that can fabricate and get it processed for six to 12 months, the same thing goes for cassava, a lot of people move cassava outside Nigeria for animal feeds. How many young graduate are exploiting how they can take cassava either to produce or buy it and process it further? I know it is not easy, I will be the first person to tell you that, but the fact is that how many people are looking in this direction. The mindset of an average Nigerian is to graduate and get a job.
But, if people are willing to add value to existing process then this is the best time for that because government has no other choice than to add value to what we are already doing. As a result of value adding, we can earn a lot of money and that is where our future lies.
