Moghalu: Why Nigeria Needs Defined Philosophical Foundation

Dike Onwuamaeze

A former Deputy Governor of the Central Bank f Nigeria (CBN), Prof. Kingsley Moghalu, has stated that Nigeria needs a comprehensive approach and clearly defined philosophical foundation for it to achieve economic diversification.

Moghalu said this recently, when he delivered a keynote address titled: “Economic Diversification and the Wealth of Nations: Lessons and the Path Forward for Nigeria,” at the 2021 Annual Conference of the Nigerian Economics Students Association (NESA) of the University of Port Harcourt.
He said: “Achieving economic diversification in Nigeria will require a comprehensive and joined up approach to economic policy, rather than the silo approach we have seen for many years in which specific aspects of economic policy appear to be in conflict with stated policy objectives of diversification.

“For such an approach to succeed, the two most important requirements, which are lacking in the Nigerian context, are, first, a clear philosophical foundation for our country’s economic policy that is based on a clearly defined vision and sets out the balance between the role of the government and the role of the market.”

Moghalu, who was a candidate in the 2019 presidential election and has also expressed interest to contest in 2023, stated unequivocally that it would also require political leadership with a sophisticated understanding of economic transformation and the capacity and will to execute it, for Nigeria to be able to change course economically in the years ahead.

He said: “A competent political leadership that understands and prioritises economic development over the crony capitalism of vested interests, backed up by competent economic management and a capable state bureaucracy, is essential in realising the country’s quest for economic diversification.”

He defined economic diversification as the process of shifting economies away from a reliance on one or a few products such as natural resources or agricultural products toward the production and export of a wider range of value-added products that were manufactured and traded competitively.
He said this could be achieved by expanding the production value chain in already existing sectors as well as expanding into new sectors based on market opportunities or state-driven industrial policy.

He stated that economic diversification is a fundamental requirement for real development, in the form of human development, economic growth and structural transformation that is achieved when the productive structure of an economy has become more sophisticated, diversified and resilient so that agriculture would play a vastly reduced role in the overall economy.

He said: “We must understand that true economic diversification is a very difficult goal to achieve for resource dependent countries such as Nigeria. And yet, it remains an imperative for our country to become a part of these elite clubs.

“Lessons show that successful diversification requires strong government policy engagement with the economy because there must be deliberate intent. This in turn calls for both political will and competent economic management, which is not the same thing as statism or populism.”

Moghalu said Nigeria’s leaders in the First Republic, and even in the military regimes of Yakubu Gowon and Murtala Muhammad/Olusegun Obasanjo, demonstrated a better understanding of the imperatives of long-term structural economic transformation with an emphasis on periodic development plans and industrialisation.

He, however, lamented that, “in more recent years, Nigeria suffered from a decline in structural economic thinking led in the past by economists such as Dr. Pius Okigbo, Dr. Adebajo Adedeji and Professor Sam Aluko, and a somewhat premature shift, under pressure from the Bretton Woods institutions the IMF and the World Bank, to extreme liberalisation of trade without an appropriate foundation of industrialisation that would have made us more competitive in the global economy with diversified exports.”

According to him, “the failure of the Ajaokuta steel industry represents a tragic failure of political leadership for economic transformation in Nigeria, as iron and steel are an important basis for an industrialised economy.”

He added that though capitalism has been undoubtedly the basis of wealth creation, it still required certain foundations to do it effectively and efficiently.

These foundations, according to him, included full property rights for citizens, innovation, and access to capital through efficient private sector financial markets as opposed to a reliance on state funding through a central bank.

Moghalu noted that policy errors such as premature embrace of globalisation without the structural foundation to become part of its production value chain “turned Nigeria into a global market but not a global producer of the hard goods of the globalised economy.”

He recommended that Nigeria must become an economy that is driven by innovation as a policy and as a way of economic life in other aspects of science and technology that could be turned into the local mass manufacturing of value-added products of innovation in our country.