Obiora: With 3.2% Growth, Poverty Eradication Not Feasible

•Laments country’s non-oil exports to GDP ratio at 1.2% in 10 years

James Emejo in Abuja

The Deputy Governor, Economic Policy Directorate, Central Bank of Nigeria (CBN), Dr. Kingsley Obiora, has insisted that the country cannot grow at the current International Monetary Fund (IMF), projected 3.2 percent and expect to make a significant dent on poverty which is presently at 31 per cent.

Obiora also expressed worry over the country’s snail’s pace of non-oil exports to GDP ratio which stood at 0.8 per cent between 2001 and 2011, and 1.2 per cent between 2012 and 2022.

Speaking at the Zenith Bank Non-oil Export Seminar, held in Lagos, recently, he said, “We cannot grow at 3.2 per cent and expect to pull 31 per cent of force living below the poverty line.

“That is why I’m very excited that Zenith Bank has continued this tradition to call attention to non-oil exports.”

The CBN deputy governor said the country needed to grow much faster, adding that, “countries that are way smaller than us are doing much better.”

He also said though the inflationary pressures in the country had affected growth in recent times, Nigeria’s situation was much better compared with other economies.

Obiora said, “The Netherlands has a land size of 34,000 square kilometres – and so if you add water, you go to 42,000 square kilometres.

“It might interest you to know that non-oil exports from the Netherlands is 29 per cent of their GDP. Most times, they do $108 billion in non-oil exports. Now, keep in mind that the Netherlands is smaller than Niger State, actually half the size of Niger State.

“I give you another example; Ireland is a country that sits on just about 70,000 square kilometres and they routinely do non-oil exports of $170 billion.”

He said, “We have all it takes; we are lucky too that we have a government whose economic philosophy can be encapsulated in market-driven initiatives while also protecting and engendering the egalitarian society.

“So, there cannot be a better time for us to grab this our future, work on non-oil exports and make sure that we grow beyond the 1.2 per cent that we are currently producing at.”

Obiora who also assessed the global economic outlook, stated that the last three years had been characterised by crisis – citing the 2022 Annual IMF Report also titled “Crisis Upon Crisis” to buttress the turbulence in the world economy.

He said, “And when you look at it, we’ve had a ravaging pandemic, and we are having war in the heart of Europe. We’ve had unprecedented hunger in the largest swath of the world; we’ve seen inflation reach historic levels and we’re seeing debt rise to levels that we have not seen before.

“If you look at COVID-19 with 769 million infections and 6.9 million deaths across the world, something that started as a public health crisis quickly metamorphosed into an economic one.”

He said, “In Nigeria, we’ve had over 260,000 infections and 3,155 deaths. So, we’ve also borne the brunt of that COVID-19. But what policymakers have done in a bit to save lives and livelihoods has been to go into an expansionary fiscal policy, dig into their pockets and make sure that the worst effects of the disruptions, the desolations, and the death was kept from happening.

“The G-20 alone- which is the top 20 economies in the world spent $14 trillion just to make sure that COVID was not as ravaging as it should have been.”

According to him, while the expenditure obviously was not a bad thing, it has taken public debt to historic levels.

He said, “As we speak, public debt is now at $92 trillion, which is over 40 per cent of total public debt in the world.

“And just to put it in a historical perspective, that is the highest level of public debt we now have in the last 60 years.

“In Nigeria, we have also seen our public debt growing gradually from 37.3 per cent last year, and it is projected to end this year at 38.2 per cent.

“We’re seeing inflation at historic levels. We know that the war between Russia and Ukraine, as we know Russia and Ukraine, are very important commodity exporters. Both of them account for 50 per cent of oil seeds exports in the world and 30 per cent of sunflower exports.

“So, when such a region is at war, then you know what will happen to food prices around the world. We know too that there’s been a shift in demand from goods to services, and as you know, services are usually more expensive.”

Continuing, he said, “There’s also the disruption going on in China today with their zero COVID policy power cuts as we know and then their switch from coal to more renewable energy – that has also meant that power is not as available as it used to be.

“We see too in China today, some correction in the property market – a lot of Chinese don’t have quite the kind of investment vehicles that say the average American has and a lot of them have put their savings into property, but that has meant oversupply of property in China. Today, there are 65 million empty apartments in China. That’s enough to take the entire population of France.

“So, that correction is also leading to supply chain disruptions, all of these exacerbating the high food prices.

“Around the world, in Lebanon, you have inflation today at 269 per cent – it’s shocking but this is true.

In Argentina, inflation right now is 115 per cent. In Turkey it’s 38 per cent.

“Now, when you come down to Africa – neighbouring Ghana, at the last count, inflation there is about 42.5 per cent. We have it at 31 per cent in Ethiopia two years, and 36 per cent in Egypt.

 “So, in your dear country, Nigeria, we are 22.8 per cent as of June.  When you hear these figures, it tells you that we are not doing as badly. But all of these have also affected economic growth itself.”

He added: “Today the IMF has revised growth downwards, from 3.5 per cent to three per cent this year and three per cent next year.

“For Sub-Saharan Africa, the IMF expects growth to moderate from 4.1 per cent last year to 3.5 per cent this year, but to take back again to just slightly over four per cent next year.

“In Nigeria they expect us to 3.2per cent this year. If you look at the fact that poverty in Nigeria today is at 31 per cent, 3.2 per cent growth would not cut it for us.”