Trade, Development, and Immigration

Turbo-charging the Nigerian economy (Part 2)

Continued from Part 1 here. 

One potential growth sector is hotels and leisure. With a growing middle class, and a surge in the demand for air travel, Africa is likely to see a boom in hotels. The Hilton Group has just opened its first hotel in Nigeria for 30 years – the Legend Hotel, part of the Group’s Curio Collection at Lagos airport. Hilton’s global boss, Chris Nassetta recently welcomed the fact that African governments are tackling the greatest threat to future growth, namely security.

These widespread concerns from potential international investors underlines the fact that high rates of unemployment can trigger alienation and leave young people vulnerable to agitators advocating violence and anti-social unrest – a trend all too obvious in some Northern states of Nigeria. Concerted action must be taken to deter such damaging developments. In a nutshell, that means job creation.

Fourthly, promoting open, entrepreneurial economy. Encouragingly, Nigeria climbed 24 points in the World Bank’s Ease of Doing Business index, though it still ranks 145 out of 190 countries. Yet the single greatest obstacle preventing Nigeria from achieving its enormous potential is corruption. It drains billions of dollars a year from the country’s economy, stymies development, and corrodes international perceptions of this remarkable country.

During our session I recommended tackling corruption by streamlining processes for registering and running a business along with limiting the urge to licence. Culling government bureaucracy limits the opportunity for officials to demand and accept bribes and inducements. Property rights are crucial: these need to be clear, transparent and upheld by the courts.

The Nobel Laureate Elinor Ostrom had much to say on this issue. In her analysis of market failure and government regulation she examines how to manage difficult environmental problems without unwieldy top-down government, fostering high levels of trust and reciprocity in systems of ownership and governance. In a piece of IEA research, she demonstrated how property rights can be successfully and judiciously applied through a land title reform approach adopting a ‘bottom-up’ strategy.

Conclusions and Recommendations

But the crucial tasks on the agenda for Nigerian policy makers are fourfold.

First, Nigeria must tackle its perennial electrical power deficit. Second, it needs to invest in redressing the skills gap so that it can diversify away from oil – a goal ever more pressing in the light of the global shift to the digital economy. Thirdly, in a related move, it needs to concentrate on exporting a range of value-added goods and services across the continent of Africa and further afield. Here, there is real scope for optimism since the nation can draw on the entrepreneurial zeal of its citizens, particularly the young. Nigeria’s cities are buzzing with creativity – illustrated by the emerging ‘tech hub’ focused on the Yaba district of Lagos.

Fourthly, Nigeria needs to encourage entrepreneurial spirt – unshackled from the bureaucratic grip of the state – and bear down on the menace of corruption. The rule of law must be vigorously upheld through the courts and by Nigerian judges.

Inspired political leadership is key. Whether Nigeria manages to welcome back dynamic younger men and women who have been expensively educated at universities and business schools in Europe and the USA will be a litmus test of achievement.

One final plea: Nigeria would fulfil its potential much quicker if its citizens learnt to be more punctual. As Woody Allen sagely observes, ninety per cent of life is about showing up. When Nigerians earn a reputation for punctuality, rather like the Germans and Japanese, we will really appreciate that times have changed.

IEA Regulation Fellow

Keith is an IEA Fellow and economist, the author of over one hundred publications on public policy and planning issues, economic development and regulatory policy. Keith has contributed to publications including The Financial Times, The Wall Street Journal, The Times, The Daily Telegraph, City AM, and is the Africa Editor of The Journal of World Economics. An alumnus of the London School of Economic (LSE), Keith is the founder of Keith Boyfield Associates Limited, a consulting firm bringing together specialist Associates based across the globe.

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