1. SUSTAINABLE ECONOMIC DEVELOPMENT
SPEAKER: KEITH BOYFIELD

2. Our Panel have been invited to address these issues.
Why the quality of economic growth and sustainability is fundamental.
Why does Nigeria, Africa’s wealthiest nation, rank relatively low in economic performance?
Why has Nigeria not been able to maintain the growth rate necessary to reduce poverty?
What are the key factors in ensuring the attainment of sustainable economic development?
What are the crucial frameworks necessary to foster sustainable economic growth?

3. Economic growth and sustainability
Nigeria has much to be proud in terms of its recent achievements:-
After a deep economic recession the country’s GDP is now picking up making it the continent’s wealthiest nation.
Lagos is ‘home to a pan-African banking industry as well as a thriving music, fashion and film scene’ (FT. 26 March 2018).
Lagos is emerging as a ‘tech hub’ focused on the Yaba district where the state government has installed a fast broadband network.
Lagos’s road network is much improved. Toll roads have helped. The city’s rail mass transit system will eventually open.
Infrastructure investment underpins sustainable economic growth.

4. Why has Nigeria not been able to maintain the growth rate necessary to reduce poverty?
Nigeria needs to diversity its economy and develop value added business.
Four key areas:-
Ensure a stable and adequate power supply.
Address the skills gap, particularly with respect to technical, engineering and scientific disciplines.
Develop trade links. The continent of Africa contributes a mere 2% to global trade.
Encourage an entrepreneurial environment. The ‘THATCHER factor.’

5. The importance of reliable power
Put simply: no power, no business.
In 2012 only eleven countries in Sub Saharan Africa offered reliable power to over 50% of the population.
Electricity underpins the economy. Nigeria has a mere 7,000 MW of generating capacity.
Lack of power imposes significant damage in terms of foregone economic activity and the need for back-up generators.
Massive new infrastructure is not a cure all: countries need a robust well crafted regulatory regime which rewards investment , encourages efficiency and encourages the transfer of cost savings to the consumer.
Boards and management must be accountable; the same applies to regulators and politicians.

6. It can be done. Takoradi 2 power plant, Ghana: an example of a successful public – private partnership?
Utilising dual fuel capacity (oil & gas), this plant boosted electricity generation from 220 to 330 megawatts, providing reliable supply to mines in the Western Region, thereby spurring economic growth. This project alone created 453 new jobs.
Ranks as the first independent power project to be financed commercially in Ghana, demonstrating the role the private sector can play in increasing supply and reducing the cost of power generation in West Africa.
It expands power generation capacity as well as efficiency without increasing greenhouse gas emissions. Annual CO2 savings estimated at 430,600 tons over other generation options.
Won support from development banks such as World Bank/IFC and AfDB.
System loss and outages have been significantly reduced.

7. II Africa’s skills gap: a human capital issue.
The continent’s skills gap is a legacy issue.
Results from many years of under investment in technical, engineering and scientific knowledge.
Only one in six African students are likely to graduate as an engineer or scientist. In China the proportion is 40%.
Africa’s R&D investment is the lowest level among all developing regions of the world.
Research in science and technical fields is 29% of all research in Sub Saharan Africa; in Malaysia and Vietnam it’s 68%.

8. III. Developing Trade Links (1)
Backdrop: Nigeria’s President has rejected signing an Economic Partnership Agreement (EPA) between the EU and West Africa.
The President worries that this EPA will shut out Nigerian exports and damage the country’s industrialisation strategy.
The President is right to be worried in certain respects: EU nations have tended to shut out competition in finished and refined products.
In 2016, for example, the EU banned 26 Nigerian food products on health and safety grounds.
EU trade policy tends to favour its member countries – Italian coffee refiners benefit at the expense of Kenyan coffee growers.

9. Developing Trade Links (2)
BUT David Ricardo explained the attractions of comparative advantage 200 years ago.
Trade should make everyone better off.
The key is to negotiate access – China is flooding Africa with cheap exports but denies access to its own market.
To industrialise successfully Nigeria needs export markets.
BREXIT offers an opportunity for Nigeria to establish guaranteed access to the world’s fifth largest economy (measured in terms of GDP in $ market exchange rates 2016).

10. Classical economists’ ideas remain relevant. David Ricardo
Argued that free trade improves everyone’s prosperity by encouraging each nation to concentrate its resources on the products it is relatively more efficient at producing and offering.
MIT’s Paul Samuelson, a Nobel Laureate, judged this the single most important theory in social science.
Barriers to trade such as tariffs and regulations, generally speaking, limit the gains to be made from trade.

11. Ricardo was influenced by Adam Smith who pointed out in The Wealth of Nations
‘No nation is ever rich by the exploitation of the crude produce of the soil but the exportation of manufactures and services”.
Africa faces three challenges:
Inadequate competitive capacity;
Conformity with international standards;
Connectivity to markets.
UNIDO’s 3Cs.

12. Are there lessons to be learnt from other countries?
Let’s look at Malaysia.
Gained independence just before Nigeria.
Deliberately sought to diversify its economy including agriculture.
Together with Indonesia the country now dominates the global market in palm oil.
Given smallholders a stake in the business through FELDA.
This has done a lot to alleviate rural poverty.
Malaysia not perfect: ruling party voted out of office this year. The former Prime Minister is to be put on trial for corruption.

13. Some suggested reading:- Institute of Economic Affairs
Some suggested reading:- Institute of Economic Affairs Commonwealth Exchange (IEA) study
Available for exchange.org/blog/sarawak- report-launch-lessons-from-the- commonwealth
The Malaysian experience of commercial
agricultural development compared with
Nigeria’s record since independence.
Available for
_Commercial%20Agriculture_web_updated.pdf

14. More suggested reading
Nigeria: a cautionary tale of two oils.
In a chapter I contributed to this book I contrast the way in which Nigeria has developed its black hydrocarbon oil since independence in while shunning the cultivation and processing of red oil – palm oil.
In recent years this neglect appears to have been recognised and fresh initiatives are being actively pursued.

15. Caution: Agricultural Development out of sync
Komenda sugar mill in Ghana a good example of a project out of sync.
First sugar mill built in 1960s fell into disuse.
$36.5 m invested with Indian partner to reopen the facility.
Closed within a few weeks of reopening in May 2016.
Telling example of silo mentality. Growers unable to supply sugar on time for the mill.

16. IV. Encouraging an entrepreneurial environment
First the good news: Nigeria has climbed 24 points in the Ease of Doing Business index issued by by The World Bank.
Yet it is still ranked a lowly 145th position out of 190 countries.
More needs to be done to make it easier to start a business, deal with construction permits, obtain licences from government bodies and obtain credit from financial institutions. Far too often SMEs are priced out of the market by tight credit constraints and excessive regulations which acts as a barrier to entry.
Property rights are key: these need to be clear, transparent and upheld by the courts.
Corruption is probably the greatest hurdle, certainly in terms of international perceptions.
Foreign investment will accelerate in line with Nigeria’s ability to tackle deep seated corruption - recently assessed by Matthew Page of Chatham House.
The ‘THATCHER factor.’ Britain was transformed in the eighties and an entrepreneurial culture was fostered.
But this brought with it casualties.

17. Perceptions of corruption in Nigeria
Matthew T. Page is a consultant and co-author of Nigeria: What Everyone Needs to Know (Oxford University Press, 2018). He is a nonresident scholar with the Carnegie Endowment for International Peace, an associate fellow with the Africa Programme at Chatham House, and nonresident fellow with the Centre for Democracy and Development in Abuja.
DfID funded his research.
“Corruption is the single greatest obstacle preventing Nigeria from achieving its enormous potential. It drains billions of dollars a year from the country’s economy, stymies development, and weakens the social contract between the government and its people”. 
‘A New Taxonomy for Corruption in Nigeria’, Carnegie Endowment for International Peace July 2018.

18. Some suggestions for fostering sustainable economic growth in Nigeria (1)
Diversity away from oil – Professor Sir Paul Collier has pointed out that this is beginning to happen. Encourage such a shift in the light of the global shift to the digital economy.
Tackle corruption through streamlining processes for registering and running a business.
Limit the urge to licence - that helps to reduce corruption via bribes.
Establish robust regulation that is above all else transparent.
Encourage free and open markets.
The guiding strategy should be to accelerate attractive trade deals and harmonise regulations. Once agreed, trade deals should be implemented.
In turn, this will reduce Nigeria’s reliance on oil and spur fast growing sectors – not least Nollywood and the creative industries.

19. More suggestions for for fostering sustainable economic growth in Nigeria (2)
Implement a step change in public service delivery: other countries spend as much as Nigeria but deliver better services, notably in healthcare (e.g. immunisation) and education (tertiary colleges).
Develop planning and housing policies tailored to Nigeria’s swelling population. Lessons to be learnt from the Garden City tradition.
Apply property rights through land title reform adopting a bottom up approach – learn from Nobel Laureate Elinor Ostrom’s recommended approach.
Encourage trade deals that work for Nigeria. Britain is anxious to negotiate one post Brexit.
Sort out Nigeria’s electricity supply system.
Be punctual!

20. Reasons to be cheerful
The McKinsey Global Institute believe Nigeria has the potential to become a major global economy within 15 years.
Public Private Partnerships such as Eko Atlantic City (pictured) illustrate a vision of the future.
The Dangote oil refinery and fertiliser plant promise to transform the country’s economy by addressing key structural problems.
Major boost to Nigeria’s balance of payments.
Alongside a growing middle class we are beginning to see the emergence of strong new Nigerian brands.

21. Further reading suggestions: Garden Cities in Africa
A response to the continent’s urgent housing crisis.
Authors: Keith Boyfield & Oni Oviri
Available for
m/news/garden-cities-in- africa

22. And one more good read: Elinor Ostrom
The Future of the Commons
Beyond Market Failure & Government Regulation.
A primer on how to manage difficult environmental problems without top-down government.
Key goal: foster high levels of trust and reciprocity in systems of ownership & governance.

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