Nigeria Matters

Nigeria’s Vision From A Blueprint!

Except for oil, Nigeria’s economic sectors, including agricultural produce and solid minerals, are in poor shape. Farm production fell from 1.5 million output in 2001 to 961,000 output in 2009 Government corruption is rampant. It is all but certain that at least a large chunk of $320 million in proceeds generated from last fiscal sale of a 10 percent government share in an oil field has disappeared into the authority pockets. Mr. President said the money was used to keep the economy going, yet his own spin-doctor said that he did not know what happened to the proceeds or why the sale was made.

Though Nigeria’s colonial rule was grossly inequitable, the British did build an impressive infrastructure, now in decay, that supported a vibrant manufacturing and industrial sector. Economic growth rates of 7 percent per year, some of Africa’s highest, were registered throughout the 1960s and early 1970s Briton exodus, the civil war, and the socialist economic policies of the ruling regime. There are many threats to Nigeria democracy: tribalism, a totalitarian tradition, a bitter civil war legacy, a violent Niger Delta crisis, and a lack of experience with democratic institutions.

As economic activity is becoming increasingly globalized and as industries need more specialized services, some believe a new world or “system of economy” has emerged .In the process, sophisticated networks of high-level financiers, lawyers, accountants, and advertising professionals are clustered in so-called global cities. In other words, not only are clusters occurring in cities, some sectors are clustering only in certain cities or regions. Decisions made in these cities, such London, New York and Tokyo, affect countries and cities around the world. The influence of these cities is growing, while that of secondary cities is declining. Paris is growing in economic wealth and power; Marseilles is declining. To survive and prosper in this new world environment, some argue that it is crucial to see our major city regions as competitors on a global scale, in line with German city-states such as Bremen, Berlin, and Hamburg. This may not be as important for US cities such as Los Angeles, Chicago, or New York, but it is crucial for Toronto, with roughly 20 percent of Canada’s GDP.

The obvious conclusion is that, because Nigeria’s biggest cities are relatively more important to the country’s economy than are the biggest cities in Africa; the future of Nigeria’s economic prosperity depends on whether these cities can compete with other region-states around the world. We once thought nations and companies competed. Now we’re told city regions do. Regarding matters of globalization and competition, it is useful to remember that it is companies that compete, not regions, cities, or nations. Over the years, we’ve been seduced into thinking that competition among countries will determine our overall economic well-being. But, as economist Paul Krugman (1994) reminds us, our obsession with national competitiveness can lead us down the wrong path when it comes to public policy such as the temptation to start subsidizing export-oriented industries. Even though the GTA has become a ‘global city-region’ with strong north-south ties in Africa, where Lagos exports 50 percent of its GDP, it is important to remember that all this came about without any direct or conscious effort to make Nigeria’s largest city-state more competitive.

In 1932, President Roosevelt of the United States and his “brain trust” of academics, most of whom had never met a payroll in their lives, really put that nation’s economy on the skids with their National Industrial Recovery Act in 1933. “It allowed American industrialists to collaborate to set the prices of their products, and even the wages and hours that went into making them.” The competition in the marketplace ceased and one could actually be sent to jail for offering a product or service for less than the fixed amount. There is no doubt that skilled, creative people are good for urban economies, but if you wanted to predict growth in the 1990s, you would have looked to places with warm climates, high skills, and friendly to urban sprawl and cars (Glaeser 2002). Aside from the obvious conclusion that cities are special places in need of specific public policy attention, there are other implications. One is that growth and productivity are no longer the exclusive domain of macro levers such as trade and fiscal and monetary policy. New urban thinking relies more on policies that attract industries and talent to designated regions. Another implication is that cities, not corporations, are at the centre of competition. If we are to succeed in a more global world, it’s not how efficient or competitive our firms are, but whether Toronto can compete with Barcelona, Milan, or Tokyo (Federation of Canadian Municipalities 2002).

Nigeria can make of all the attention given to cities as drivers of economic wealth and prosperity? What makes cities rich — or countries, for that matter — isn’t easy to define. If it were, most of our problems would be solved. And it isn’t simply a matter of giving cities greater economic and political powers. I believe the necessary powers are already in place. Let me put –up the following observations as to what I think cities can do to enhance growth: Skilled workers are key to a successful city, but encouraging and attracting entrepreneurs and businesses should be at the centre of any policy to create wealth. In order to attract both, cities have to be good at getting the basics right. That means good schools, good roads, safe streets, and reasonable municipal taxes. Once these things are in order, the art galleries and high-tech jobs will follow.

Getting the smart people requires no micromanagement: that means letting them figure what sectors or industries to work in. Encouraging certain clusters or sectors over others won’t work. When the Berlin Wall fell, urban planners hoped to attract big company headquarters to that city. The strategy failed. Inexplicably, Berlin became a haven for artists, web designers, and software writers, with few government incentives. Cities are complex creatures with their own cycles of growth, decay, and sometimes re-growth. Macro policy isn’t dead: boosting productivity is the key to increasing economic wealth. Getting fiscal and monetary policy right swamps anything we can do to micromanage wealth creation at the municipal or city level.

Nigeria should Price public services correctly: anyone caught in rush hour traffic in Toronto knows the situation is intolerable. But gridlock isn’t simply a question of more or even better public transit, but of pricing externalities properly. London was able to cut its traffic problem almost overnight by charging drivers closer to the real cost of using roads. On the same theme, we need fewer subsidies and more user fees. Here, I agree with Glenn Murray, who, when mayor of Winnipeg, wanted to rely less on property taxes and more on user fees, but not with his suggestion to revive Winnipeg’s economy by spending money on the arts to attract hip workers to that city.

Finally, this government should eliminate unnecessary regulations: unnecessary and irrational zoning laws do more harm than most suppose policies; lesser fairer is encouraging. One study, by Harvard economist Edward Glaeser (1998), has shown that almost half the cost of housing in New York is directly related to regulation. It would be interesting to see what the comparable cost-economy in Nigeria’s major cities is.

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