An economist, Henry Boyo, has described the Nigerian economy rebasing as a development that is “good for the ego”, insisting that the standard of living of an average Nigerian is lower than that of a South African.
After rebasing the country’s economy the Statistician General of the Federation, Yemi Kale, said that the “GPD now stands at 510 billion dollars”.
The Minister of Finance, Dr Ngozi Okonjo-Iweala, said that Nigeria moved 10 positions up to number 26 in the list of largest economies in the world, ahead of South Africa, which was the largest in Africa.
However, Mr Boyo explained that nominal indications that Nigeria economy was greater than that of South Africa in terms of output would amount to nothing if Nigerians cannot boast of a better life.
“I do not celebrate any increase in that index. As long as you cannot compare the performance of your economy and as far as critical indices of your economy do not reflect that of successful economies elsewhere, you are a failure.
“Inflation rate is never more than 1.5 or 2.0 per cent in successful economies. When it goes above 2.0 per cent you are in crisis. Unemployment never reaches the height of 23 per cent or more.
“An optical comparison of the social welfare, level of investments, level of infrastructure that is currently in South Africa, will make you question the validity of the claim that we are “better off than south Africa”.
“Yes we may be bigger, like a giant, but we certainly are not very effective in the utilisation and management of the resources that are at our disposal,” Mr Boyo said.
He pointed out that South Africa and Nigeria did not have the same level of unemployment and inflation, emphasising that the quality of life of the average South African was better, a development seen in “the reality that a lot of Nigerians feel comfortable migrating to South Africa”.
The economist, however, said that as a result of the rebasing, people could see Nigeria as a giant in terms of its potential.
“But it does not say more than that because if you want to look at it in terms of performance the Minister of Finance will agree that it cannot be credible performance for us to have the level of unemployment we have and inflation at seven or eight per cent.
“An inflation rate of seven or eight per cent means that a worker should be getting a salary increase of about 7 to eight per cent every year but this is not true in Nigeria and that implies that you lose 28 to 30 per cent of your salary every four years.
“It is attractive for an investor to see these figures.
“Where there are these indications and other very disturbing indices like the high rate of unemployment, high rate of interest and the fact that our government admits to borrowing money it does not need only to warehouse those monies,” Mr Boyo said.
He further stressed the need for the government to look at some of the much more serious indices in the economy like the exchange rate mechanism.
“There is no reason to have four billion dollars in reserve and you have four months imports’ cover. And at a period we had these indices in 1996, we had an exchange rate of 80 Naira to a dollar.
“And about two years ago we had 60 billion dollars reserve and between 16 and 20 months imports’ cover. When you have an extended import cover you are not supposed to have an exchange rate of about 160 Naira to a dollar double of what we had in 1996. It is not commensurate.
“It is a result of a deliberate manipulation of the exchange rate of the Naira.
“It is inappropriate to have an exchange rate of 160 Naira when we have an extended import cover. It means that the more that you earn the poorer you become,” the economist said.
He also blamed the poor standard of living in Nigerians on the structure of the economy, saying that “even if GDP triples with the same structure in place, there will not be real impact”.
“We have done woefully in the proper management of the economy.
“There are obvious levels of degradation of our youths and there are contradictions that Nigerians should address,” he said.
According to him, Nigeria is promoting poverty with the structure in place, one that makes Nigerians poorer even when the country is getting richer.
“One of the main drivers of poverty in Nigeria is the exchange rate. The exchange rate should not be more than 80 Naira to a dollar.
“The government is creating excess liquidity and that is the driver of high interest rate,” Mr Boyo stated.
He insisted that if Nigeria was doing the right thing, it would be in comparison with the top 10 nations in the world and suggested that structures that were making Nigerians poorer should be addressed.