Development Challenges of the Economy: The Way Out Episode I

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The development challenges of the Nigerian economy may be categorized as follows:

  1. Persistent abject poverty resulting in low life expectancy, a high prevalence of notifiable diseases, and high infant mortality rate that is higher than those of Ghana, Kenya, Tanzania, Pakistan, India, and Indonesia,
  2. High unemployment and joblessness affecting scores of millions of youth.
  3. Rapid Inflation or continually rising prices of commodities
  4. Extreme income and wealth inequality – the poor getting poorer, the rich get richer
  5. Severely inadequate and inefficient energy and transport infrastructure
  6. Industrial under-development and low productivity
  7. Neglect of rural areas in development policies and persistent poverty and under-development aggravating regional inequality in socioeconomic development
  8. Excessive migration and rapid population growth in urban centers
  9. Weak domestic currency and depreciation fueled by persistent excess demand for foreign exchange
  10. Economic and political instability
  11. Persistent insecurity to life and property and insecurity of livelihood

Way Out – Development Theory and Divine Guidelines

Basically, for effective and veritable policy formulation and monitoring, Government needs to consult periodically with the people on important affairs concerning their welfare, livelihood or occupation, challenges, and potentials for improvement, productivity growth, and development. Without carrying the people along with critical policies, they will not cooperate with the Government in the policy implementation. They may in fact protest and hinder the implementation of the policies. Sometimes, the people may enlighten the authorities and volunteer information about what can be done that will be effective and carry their support.

Q.42 : 39

Secondly, it is essential to design a policy that will ensure minimum living standards for every citizen that will guarantee their survival or livelihood. This will not cost the nation much if appropriate development strategies are adopted. The sense in ensuring that everyone has minimum standards of living in terms of basic needs of food, water, clothing and shelter is that it will contribute substantially to socioeconomic development in three ways: One, it will ensure greater security of life and property; second, it will free the creative potentials of the generality of the unemployed people and promote productivity and rapid economic growth; third, it will boost effective demand and have a multiplier effect on demand for goods and services of various sectors of the economy and thus lead to higher employment and income growth. This has been recognized in the Holy Qur’an Chapter 20 verses 119-120 as follows:

Holy Quran Chapter 20 verses 119-120

This policy will need to be achieved by the establishment of local-government based ECONOMIC EMPOWERMENT AND GAINFUL ENGAGEMENT SCHEMES for the eradication of joblessness and idleness for the purpose of security of livelihood. All jobless people, except those under the guardianship of those having good jobs or occupation and are able to cater for them, will be required to stay in their local government origin where they will be given jobs and subsistence allowance to cover basic needs of food and clothing and not necessarily shelter. In the local government of origin, citizens are expected to have family houses (or those of close relations) where simple shelter can easily be provided for them. The job creation will largely be in the areas of agriculture or agro-allied activities, which will constitute viable enterprises. But government and her agencies will have to provide initial credit to start the collective enterprises, such as with farm settlement. Individual contributions or allocated targets will be recorded to ensure equitable returns. Initially, they will all be given some fixed allowances. But after harvests or at the end of the business term or year, profits will be calculated after deducting the allowances and other costs. The participants will then share in the profits. There will be two streams of income, namely, monthly allowance and yearly share of profits, which will depend on individual contributions or targets met. The funding will be the joint responsibility of Federal, State, Local government, microfinance banks with a government guarantee, private-sector joint venture participation, and possible support by charity organizations and philanthropists.

The policy will, of course, have to be complemented by infrastructural development targeted to productivity and optimal systems with respect to energy, water resources schemes for irrigation and potable water supply, functional transportation systems especially rail, waterways, bicycle and pedestrian paths. The programmes must not lose sight of the need for environmental protection, preservation, and sustainability.

It is to be emphasized that such a novel programme of job creation and youth empowerment programme for the security of livelihood will be outside conventional labour employment so that it is not subject to civil service wage structure and minimum wage. That is why we may refer to it as a subsistence allowance for the eradication of joblessness or idleness. Whoever secures wage employment elsewhere is free to opt out of the programme.

Successful administration of these job-creation programmes will definitely require people of extra-ordinary probity, discipline, commitment, and hard work. It will also be necessary to adopt severe penalties for those guilty of fraud or sabotage of the policies. This policy will gradually and effectively address the following development challenges:

  1. Persistent abject poverty resulting in high child mortality, low life expectancy, and high prevalence of notifiable diseases among others.
  2. Unemployment
  3. Extreme income and wealth inequality – the poor getting poorer, the rich get richer
  4. Neglect of rural areas in development policies and persistent poverty and under-development aggravating regional inequality in socioeconomic development
  5. Excessive migration and rapid population growth in urban centres
  6. Economic and political instability
  7. Persistent insecurity to life and property and insecurity of livelihood

Job creation and youth empowerment in all local governments will address the neglect of rural areas, arrest excessive migration to urban centres, reduce extreme income inequality, check political instability and significantly reduce insecurity to life and property. If everyone has a job, it will be much easier to challenge anyone, not at his or her work and roaming about. Holy Qur’an 89:11-15 has declared that a major step to national development is the eradication of bondage and poverty.

The remaining development challenges of rapid Inflation, severely inadequate and inefficient energy and transport infrastructure, industrial under-development and low productivity, and weak domestic currency and depreciation can be addressed by some straightforward macroeconomic and development policies.

First of all, the government has to step up the development of energy and transportation infrastructure by curtailing the excessive corruption in the award and implementation of development projects. Corruption is the bane of our failure to put in place adequate and efficient energy infrastructure and good networks of railway transportation linking Abuja, Lagos and state capitals. Allah has warned us in this regard in Q.20:189 and Q.4:30 as follows:

Q.20:189
Q.4:30

The neglect of transport infrastructure and efficient energy systems has led to immense casualties on our roads and electric installations. The corruption leads to killing the people as hinted in Q.4:30. With efficient energy and transportation infrastructure, the problem of industrial under-development and low productivity will be addressed.

The problems of rapid inflation and weak domestic currency are interrelated and are caused by excessive corruption and inefficient and corrupt foreign exchange management policy. Corruption makes available too much money in the economy that is not backed by the production of goods and services and so leads to rapid increases in the general price level. Corrupt and inefficient foreign exchange management policy makes it possible to engage in excessive money laundering and purchase a lot of the nation’s foreign exchange earnings in the free market and transfer abroad by those individuals and corporate entities who have looted government treasury and obtained phony contracts.

The solution to these development challenges is a foreign exchange policy of parallel foreign exchange markets: one regulated and the other a free market. The regulated foreign exchange market operates a fixed exchange rate for official foreign exchange earnings from crude oil and gas exports under CBN administration. The foreign exchange will be made available for the purpose of essential imports of capital and intermediate goods not locally available for industrial and agricultural development. The foreign exchange will also be made available for essential locally unavailable consumer goods for life sustenance as interim measures until local production becomes adequate.

We should note that foreign exchange is demanded for several purposes, namely:

  • Demand for the purpose of capital flight or income transfers to abroad for safekeeping, the stability of value, or to hide ill-gotten gains; demand for the purpose of luxury goods and extravagant spending and non-essential consumer goods;
  • Demand for equipment, plant and machinery and intermediate inputs for the purpose of agricultural and industrial development for which capital goods there exist no substitutes locally; and
  • Import of essential consumer goods, including foodstuffs that are in short supply in the country, the non-importation of which will jeopardize people’s health.

Auctioning official foreign exchange earnings will make them available to those who have stolen the nation’s wealth and all such demands that have nothing to do with national development. The fixed exchange rate will curb excess demand for foreign exchange that weakens the Naira and cause rapid inflation. However, the policy of the parallel foreign exchange market requires men of extraordinary integrity and competence. Severe penalties will have to be awarded against fraudulent practices by foreign exchange officers. Fraudulent practices have to be punished severely as a deterrent. That is why it is necessary to appoint men of integrity in the management of such policies as declared in Q.4:59.

Q.4:59