(Bloomberg Opinion) — One of humanity\u2019s most hopeful developments in
\nrecent decades has been the dramatic drop in extreme poverty. In 2000,
\nsome 1.4 billion people lived at or below the global poverty line of $1.90
\na day. Today, the number is about 600 million.<\/p>\n
This remarkable change is mainly due to growth in China and India: Much of
\nsub-Saharan Africa, particularly Nigeria, has failed to share in the
\nsuccess. A decade ago, Nigeria had far fewer people in extreme poverty
\nthan either China or India; today, according to data compiled by the World
\nData Lab, it has more than both combined. The count stands at more than 90
\nmillion, and has risen both in absolute terms and as a share of the total.
\nNigeria\u2019s young and fast-growing population is projected by the United
\nNations to double in size by 2050, making it the world\u2019s third-biggest.
\nEven assuming that the proportion of Nigerians living in extreme poverty
\nstops rising as quickly as it has in recent years, it\u2019s on course to
\nremain extraordinarily high for the foreseeable future.<\/p>\n
Nigeria\u2019s success or failure in confronting extreme poverty will be
\npivotal for the rest of Africa, too \u2014 partly because of its huge
\npopulation but also because of its outsize influence over its neighbors.
\nThe government led by President Muhammadu Buhari, recently re-elected to a
\nsecond and final four-year term, bears a grave responsibility. One wonders
\nwhether a politician known as \u201cBaba Go Slow\u201d is up to the task.<\/p>\n
His record over the last four years is discouraging. Economic growth has
\nbarely recovered following the 2014 crash in the price of oil, which
\nremains Nigeria\u2019s biggest export and source of government revenue. Per
\ncapita gross domestic product is less than it was when he took office.
\nJoblessness has more than tripled. Efforts to spur agriculture and other
\nnon-oil parts of the economy have failed. Foreign direct investment has
\nfallen by more than half since 2010.<\/p>\n
Islamic extremists such as Boko Haram and Islamic State remain a serious
\nthreat, violence persists in the oil-rich Niger Delta, and environmental
\npressures due to climate change have stoked clashes between herders and
\nfarmers. All told, more than 2 million Nigerians have been displaced by
\nconflict. The country also has the world\u2019s second largest number of people
\nsuffering from HIV\/AIDS, and faces huge burdens from tuberculosis, malaria
\nand other diseases. Governance remains weak, corruption and crime rampant.<\/p>\n
Despite everything, Buhari retains a reputation for personal integrity and
\nthe commitment to fight graft. But he needs to give equal weight to
\neconomic revival, without which there will be little progress in quelling
\nconflict and radicalism. This in turn means moving away from the statist
\nmindset that he\u2019s displayed since the 1980s, when he became head of state
\nfollowing a military coup.<\/p>\n
In particular, he has steadfastly resisted devaluing Nigeria\u2019s currency,
\nlikening a depreciation of the naira to \u201cmurder\u201d because of its impact on
\nthe prices of imported fuel and food. Nigeria maintains multiple official
\nexchange rates for different transactions. This stops the price system
\nfrom allocating resources to their best uses, and draws the government
\never more deeply into managing the anomalies and inefficiencies that
\nensue. To promote domestic manufacturing and farming, for instance, Buhari
\nhas restricted access to hard currency for importers of more than 40
\ncategories of goods, including cement, fertilizer and textiles. The result
\nis predictable: more smuggling, more shortages, and a thriving black
\nmarket in currency.<\/p>\n
In the longer term, Nigeria should aim to float its currency, as proposed
\nby the International Monetary Fund and Atiku Abubakar, Buhari\u2019s challenger
\nin February\u2019s election. In the short term, unifying the exchange rates and
\nliberalizing access to hard currency would be a big step forward.<\/p>\n
Economic reform could also lure more foreign direct investment \u2014 which is
\nsorely needed, especially in infrastructure. Nigeria\u2019s decrepit refineries
\nforce Africa\u2019s biggest oil producer to import 90 percent of its petroleum
\nproducts. Its electricity-generating capacity is less than one-sixth of
\nSouth Africa\u2019s, though its population is three times bigger. Access to
\npower and good roads would be a big help to agriculture, which employs
\ntwo-thirds of Nigeria\u2019s workforce. Lacking cold-storage facilities and
\nefficient transport, Nigeria\u2019s tomato farmers, for example, must sell to
\ntraders at harvest when prices are low, and can suffer losses of up to
\nhalf their production. Most recently, gridlocked ports are holding up
\nexports of cashews.<\/p>\n
To fund public investments, Buhari\u2019s government will need to boost non-oil
\nrevenue through better tax compliance and enforcement. Until the tax
\nsystem is fixed, further reliance on debt would be unwise, even though the
\ncountry\u2019s debt ratio looks modest at roughly 25 percent of GDP. The
\nproblem is that Nigeria collects relatively little revenue, so debt
\nservice eats up most of the budget. It already accounts for 60 percent of
\nfederal revenue, and the figure is expected to rise to more than 80
\npercent by 2022 \u2014 a level the International Monetary Fund calls
\n\u201cunsustainable.\u201d<\/p>\n
Buhari\u2019s priorities are understandable: Fighting Boko Haram, restoring
\nsafety and security, and curbing corruption are essential if Nigeria\u2019s
\nprospects are to improve. But reviving the economy is no less urgent.
\nConsider that nearly 2 million Nigerians enter the workforce every year,
\nwhile unemployment stands at more than 20 percent. The country that could
\nbe Africa\u2019s dynamo is instead its biggest demographic time bomb. Before
\nit\u2019s too late, Baba Go Slow needs to hurry up.<\/p>\n
\u2014Editors: James Gibney, Clive Crook.<\/p>\n