The Nigerian economy is faced with several challenges after 57 years of political independence. One of the challenges for the leadership, policy-makers and other stakeholders is on how best to fast-track development to reduce poverty and enhance the standard of living of most of the citizens. Recent data show that the poverty incidence has been rising, unemployment and underemployment are about 30 per cent and 45 per cent for the youths and these indices are rising. Inflation is about 16 per cent while the GDP growth has contracted (-1.70 per cent). Lending rates remain very high averaging about 25 per cent. The economy was in a recession in 2016 and up to the first quarter of 2017 and is yet to fully exit the recession. On a macro sense, the performance of the economy remains unsatisfactory.
Furthermore, the provision of social amenities is nothing to write home about. The quality of health service delivery is poor and the public- school system at all levels has virtually collapsed. About 80 per cent of the population lacks running water and modern sanitary conditions. The development of hard infrastructure such as roads, railways, etc, is not taken seriously. Electricity supply, which is crucial for growth, is epileptic despite various efforts by successive governments to revamp the power sub-sector.
Akpan Ekpo
Despite the enormous resources (human and material) of the country, only about 20 per cent of the people benefit from these resources while a staggering 80 per cent merely try to survive. From 1960 to 2017, Nigerian governments have conceptualised, formulated and implemented various policies, programmes and strategies to develop the country, yet underdevelopment quite much persists. For the most part, there is confusion between modernisation and economic development.
Experts on this subject posit that the problem is the lack of effective implementation of economic policy even when the latter, as it were, is often well formulated. Others argue otherwise. Several reasons have been advanced for the void between economic policy formulation and implementation. The graph below shows the urgency of policy when it comes to unemployment – unemployment outpaces the growth of GDP from 2010 to 2016.
One of the main challenges facing the Nigerian economy in the last 50 years in the implementation of economic policy, particularly fiscal policy, is the timing problem. It is often difficult to achieve correct timing due to many lags between the making and implementing of economic policy. These lags include:
(i) The Recognition lag which is the time difference between the occurrence of the problem and its manifestation in the statistical trends. To address this problem, the quality of data management ought to improve.
(ii) The Administrative lag – this is the waiting period between the recognition of the problem and taking definite action on the matter. This challenge is due to the slow process of decision-making by the National Assembly; evidently , politics dominates the decision-making process.
(iii) The Operation lag which connotes the time required for the implementation of economic policy to have the desired effects. This is often caused by bureaucratic bottlenecks, lack of inter-ministerial coordination, dependence on foreign sources of supplies and consultants as well as poor infrastructure. This is unhealthy for stabilisation purposes.
In discussing the challenges of formulating and implementing economic policies in Nigeria, the constitutional and structural imperatives of the economy must be considered. For example, an economic policy of a state government may run counter to that of the federal government. State governments may run fiscal deficits which may distort the fiscal policy of the government at the centre.
To overcome the gap between the formulation and implementation of economic policies as well as strengthen its coordination, government must address:
Capacity and Training: Continuous capacity building and training would update the skills of existing policy makers at all levels. The formulation and execution of economic policy require that practitioners be up to date in their various areas of expertise.
Incentive structure in the civil service: The reward system in the civil service must be altered to retain competent and qualified staff. Even within the civil service, emoluments should match productivity and nature of assignment. In certain Ministries, Departments and Agencies (MDAs), incentives to staff should be close to those offered by their counterparts in the private sector.
Commitment and dedication of staff: This is tied to the incentive matter; middle-level and senior policy-makers may not be that committed and/or dedicated-hence unnecessary delays are created to slow down the implementation of economic policy.
Quality of leadership at all levels: This needs no emphasis. This could help shape the attitude of subordinates.
Avoiding and/minimizing policy reversals: More often, policies are partially implemented because of policy reversals. This results in a waste of resources and sends wrong signals to potential investors. It creates uncertainty and loss of confidence and trust in government economic policies.
Inter-and-intra-ministerial coordination: This is important for optimising the output of relevant MDAs and these agencies’ impact on the overall economy.
Political will: There must be the political will to drive and fast-track development as well as make concrete changes to improve governance.
Quality of government intervention: Economic policy implementation also depends on the content of the policy and whether it is feasible. There is nothing wrong with government intervention in the economy but the quality of such intervention is crucial for positive outcomes.
Management of the economy: The economy should be managed based on the results of evidence-based research. Thus, qualified and competent persons in relevant fields of economic management should work in, say, Council of Economic Advisers of the President or its equivalent as well as relevant agencies like the Ministry of Finance, Ministry of Budget and Planning, Central Bank of Nigeria, etc.
To ensure the effective implementation of economic policy, monitoring and evaluation of outcomes is not only important but would also indicate whether the citizens are benefiting from this permanent “work-in-progress” called Nigeria.
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To ensure the effective implementation of economic policy, monitoring and evaluation of outcomes is not only important but would also indicate whether the citizens are benefiting from this permanent “work-in-progress” called Nigeria.
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