The former Governor of the Nigeria Central Bank, Professor Chukwuma Soludo has said that the Vision 20: 2020 will end up a huge joke because the economy is currently hanging on the life support of a fragile and temporary oil boom without the prerequisite economic investments to support the vision.

 “Unless the economy is growing at the rate of about 15% per annum (more than twice the current rate)” the Vision 20:2020 dream will remain a mirage.

Professor Soludo made the declaration at the the Nigeria@50 Summit that took place at London’s Grosvenor House Hotel, in Park Lane, London from Monday June 28 - 29 2010. 

 “The economy needs to be investing at least $60- $80 billion per annum (about 40% of current GDP and more than the total annual earnings from oil)”, Professor Soludo said. “But so far, there is no prospect of that ever happening. The savings-investment rates and levels are too low to support future prosperity. Currently, the country literally consumes all the oil revenue with little or no investment”, he lamented.
The Business Summit & Cultural Gala Dinner 2010 organised by the umbrella of Business in Africa Events [BIAE] to "harness the celebratory spirit into creating opportunity for business development in Nigeria" and organised by the Chief Executive Officer [CEO] of BIAE, Christian Dozie Udechukwu was meant to coincide with the Golden Jubilee celebration of Nigeria’s Independence.
Elombah.com reporter at the London event attended by the PDP Chairman, Okwesilieze Nwodo, former vice president Alex Ekwueme, The chairman of NEIC, Mr Sam Ohabunwa, DG NAFDAC Mr Paul Orhi among others said the former CBN Governor, Chukwuma Soludo - who gave a thought-provoking and sobering lecture on the state of the Nation, argued that the post-colonial oil boom, and the rentier, distributional politics that developed around it, have emasculated the potentials for Nigeria’s economic greatness.
Soludo began his address by lamenting the absence of vital statistics in National planning. He noted for instance that the speakers at the forum project the Nigeria population at 140 million while some say 150. In fact while Mr Paul Orhi the DG NAFDAC in his presentation quoted 150 million, his video presentation said 150 million.
But Soludo noted that the said 140-150 million was a figure arrived in 2005 (5 years ago!)by the National Population Commission.
“With unprecedented oil boom and debt relief, the economy merely grows at 6 -7% per annum. At this rate, it will not be until about 2052 before Nigeria can attain the current per capita income of South Africa. Given the 140 million population in the 2005 national census and the high annual population growth rate, Nigeria’s population will be about 161 million in 2010, and about 520 million in 2052. Thus, by the time a child born today turns 42, there will be 520 million people in Nigeria”.
With this sobering scenario, Professor Soludo wondered whether Nigerians are “preparing a country that will cater for this number of people? Alternatively, is anyone courageous enough to talk about a population policy for Nigeria?”

According to Elombah.com reporter, the event was misrepresented in the media especially coming on the heels of reports, though denied by the government, that N10 billion has been earmarked for the celebration of the country's Golden Jubilee.
The opposition party, The Labour Unions and Nigerians in the Diaspora wondered why a conference meant to mark the independence anniversary of Nigeria is being held in London, thousands of kilometres away. This led to several Nigerians in UK to phone-picket the event; registering a protest at the waste and profligacy of staging the Golden Jubilee celebration in the UK.
But according to our reporter, the event was low-key. “When I got to the Hotel, there was nothing to indicate significant government presence”, our correspondent said.
Professor Soludo rehashing an earlier lecture he gave at the University of Nigeria Nsukka noted that “Nigeria is at a crossroad. It is currently mired in a vicious circle of underdevelopment occasioned dominantly by the oil curse and the destructive institutions and rentier politics that have emasculated any chances of a prosperous future.
“Errors do become cumulative and often become a way of life. The unitary-federalism, with the drainpipes in terms of arbitrarily ‘created’ 36 unviable states and 774 local governments, together with the wasteful bureaucracies around them have orchestrated a brand of politics that is distribution-consumption oriented.
“Production and growth are an anathema to the current environment and only happen by accidents. The tragedy is that the current ‘system’ has assumed a life of its own, and indeed, not many people realize that it is a blind ally leading to nowhere.
“The economy today is hanging on a life support of a temporary oil price boom. Who will bail the cat? Paradoxically, it is the same operators and even beneficiaries of the current system that will be required to change it. Will they? Only history will tell. But history teaches us that those who make peaceful change impossible make violent change inevitable”.
He continued: “The plan for the future is essentially a Federal Government’s plan. I do not know any state government that has made any investment commitment. The Federal Government controls barely 50% of the revenue. Thus, without a competitive and coordinated, national investment, the Federal effort will remain akin to clapping with one hand. The economy is helplessly hanging on the life support of a fragile and temporary oil boom. If oil prices were to fall below $30 per barrel tomorrow, hardly any government in Nigeria will be able to pay salaries, and per capita income will be below the level before the first oil boom in 1973”.
Professor Soludo said: “In basic economic terms, Nigeria could not cope once oil prices burst: per capita income plunged from $2270 in 1980 to about $400 in the 1990s, with poverty incidence more than doubling from about 30% in 1980 to about 70% in the 1990s. In the entire 1990s, the economy grew at an average of 2.8%, which was just the rate of growth of the population, leaving per capita income growth to zero in the entire decade. Since 1999, God has again given Nigeria a second chance and oil prices have been on the increase since then. Again, we are back to exactly the same consumption pattern of the 1970s and the second republic. In spite of the oil boom for the last 12 years, per capita income is still just $1252. Imagine what would happen when the prices burst again!
President Obama of the United States made the urgent search for alternative energy sources a key campaign issue. With this determination of the United States and other western economies to find alternative energy sources, strategic national thinking should sound the alarm bells and declare a state of emergency to redesign the economic-social-political structure for a world beyond oil and gas dependence. Tragically, the consumption-oriented politics around oil has assumed a life of its own, and there is a certain lethargy and elite complacency that pervades the system on the assumption that it will endure.
“When I campaigned to be governor of Anambra, I set an agenda to ensure that after 6 – 7 years, Anambra will not depend upon oil money or the Federation Account allocation. If there would still be any such a gift from oil after seven years, Anambra would devote 100% of it to deepen its investment in infrastructure and education--- as part of the strategy for Anambra to become the African Dubai- Taiwan. In spite of the agenda, I was still convinced that the incentive structure and politics around the natural resource revenue are wrong, and the unitary-federalism we run has created a consumption framework.
“To move the country forward, we don’t just need to get Anambra and a few states moving. We need to radically overhaul the entire incentives- sanctions regime in order to realign our politics from its current consumption-orientation to a production-driven regime. This is what will propel a new Nigeria, and move us closer to the Vision 20: 2020. Currently, neither the investment nor the growth rates needed for the Vision 20: 2020 will happen. The absorptive capacity will remain low under the current regime, and any attempt to force an investment boom will lead to a predictable waste!
“Today, oil rents in the post colonial Nigeria has shaped the politics of distribution and consumption and the legal-institutional arrangements around the oil rents have assumed a life of their own, and almost creating a vicious circle of a journey without destination.
“The umbilical cord between government and business is that government depends on thriving private businesses to provide employment and tax revenues to government. In return, the government does whatever it can to attract businesses and help them prosper.
“Currently more than 70 percent of such Federation Account revenue comes from oil. Oil rents from an enclave sector can be likened to grants from donors abroad. The difference here is that oil rents are treated as rights and hence unconditional. Every State and local government is entitled to a share, and there is no requirement of accountability as to what you do with it. For most states and local governments, the revenue from the Federation Account is over 90 percent of the total revenue of the state. Most states and local governments merely consume the allocations in recurrent expenditures.
“Nigeria has become what, for want of a better description, I call unitary-federalism. Literally everything flows from the centre. Local governments are ‘created’ from the centre; 90% of revenues come from the centre; public service throughout the country including higher educational institutions operates under unified salary schemes. A new university graduate recruited into the civil service, whether in Jigawa (the poorest state) or in Lagos, or in Abuja or in Anambra is paid about the same salary. University lecturers whether in the State or Federal Universities expect to earn the same salaries for ‘equivalent grades’, whatever that means.
“A culture of entitlement around the oil rents emerged, and much of the politics is woven around the struggle for the ‘sharing’ of such rents. Labour unions endlessly demand for wage increases and resist any attempt to liberalize the pricing of petroleum products. ‘It is our God-given gifts, so why should we be asked to pay international prices’ is the familiar argument. University students insist they must have ‘free’ education even if in the end no one is getting any education. Governors and Local council chairmen withdraw huge sums (in some places amounting to 10% of the budget) as ‘security votes’. These sums, largely the Governors’ pocket money to be spent as they wish, including bribing the parliamentarians, distribution to politicians and stakeholders, have become an open sore in the political arena. Self-interested members of parliament happily approve such sums, and the Governor is not expected to account for them. Evidence abounds of some state governors simply transferring such sums into their personal coffers. , irrespective of the location and quality of the university.
“Rent seeking has become full time occupation for a large segment of the most productive population. With a rentier state, people have seen that the quickest means to instant wealth is not through owning large farm estates or taking risks in manufacturing or other rigorous, risky investments. It pays more to invest in networking and rent-seeking. A large army of highly talented, skilled but unemployed ‘big men’ has emerged. Such ‘big men’ depend on outright handouts from governments/public officials to pay their bills. It is interesting that such big men/politicians are so powerful that they can really make governance unstable unless and until they are ‘settled’ appropriately2
“The foregoing analysis points to the colossal WASTE in the politics that has developed around the oil rents. Besides the corruption elements, which are colossal, we summarize the waste in terms of displacement effects on the economy as follows: one, by substituting for government revenue, the umbilical cord between government and businesses is broken and government has no incentive to promote production and growth. The politicians, unlike the ones under the regions, do not have to build industries or palm plantations for government to generate revenue. Like manner from heaven, it simply flowed. A governor of a state can afford to squeeze the industries owned by his political opponents. He does not need the tax revenue from the company. As for jobs, he could literally create any number he wanted in so far as the rents flowed. In a sense, there is no incentive to be productive, or to actively promote production (bake the cake)
“Public finance is the boldest testimony of the rentier, distributional politics. An example with the Federal budget illustrates the point. In 2003, with benchmark oil prices at $25, and external debt at over $34 billion, and external reserves at barely $7 billion, the recurrent expenditure of the Federal Government was just about the size of the total revenues. I was alarmed as the Chief Economic Adviser to the President. The FGN embarked on the monetization policy and public sector reforms to rationalize spending; also the Due Process office was activated to eliminate waste and increase the efficiency of public procurement.
“Nigeria had since secured external debt relief and external debt down to less than $4 billion. As oil prices increased, we rapidly built up reserves and by 2007; Excess crude account had almost $20 billion. Now in 2010, the Excess Crude account is almost empty; oil prices have, on the average been above $60 in the last three years, and oil output has increased due to the cessation of hostilities in the Niger Delta. With benchmark oil price at $67 in the 2010 budget, the size of the recurrent expenditure, plus debt servicing is almost equal to the estimated revenues, leaving zero for capital expenditure. The size of the budget deficit in 2010 is about the size of the capital budget--- exactly where we were in 2003! The bad news is that while oil prices are rising, and we are not saving, we are also accumulating public debt (internal and external) at highly unsustainable rate. Domestic debt is growing at an alarming rate (by both Federal and State Governments). God forbid, but if oil prices crash dramatically tomorrow, massive defaults cannot be ruled out.
“The summary of the foregoing is that the economy is hanging on a life support of a temporary oil price boom. The savings- investment levels are too low to carry the economy forward. If oil prices were to crash below $30 per barrel tomorrow, most governments in Nigeria, including the Federal Government would not be able to pay salaries, and Nigeria would on a per capita basis, be poorer than it was before the oil boom in 1973.
“Despite these challenges, Nigeria has abundant growth reserves which if mobilized and deployed effectively, can unleash it as Africa’s China: the largest economy in Africa and perhaps one of the top 10 in the world in the shortest possible time. Only 40% of the arable land is under cultivation; a large proportion of the educated youths are either unemployed or underemployed or misemployed; much of the natural resources--- oil, gas, bitumen, limestone, iron ore, columbite, gold, coal, gypsum, etc remain untapped; gross capacity underutilization in most sectors; a youthful population (more than 50% under 18) and potential future workforce; about 17 million largely skilled Diasporas with remittances in billions of dollars per annum with potentials for skill/technology transfer. With these potentials, and oil prices remaining above $60 per barrel on average for the past three years, there is no reason why Nigeria should not be growing at double digit. Its politics holds it down!

The Vision 20: 2020- propounded by the former President, Late Umaru Yar'adua was a vision to make Nigeria one of the 20 largest economies in the world by the year 2020. But Soludo said “For the Vision 20: 2020 not to end up as an empty sloganeering, the economy has to be growing annually at the rate of 15 per cent or more. To achieve this, Nigeria must unleash a productive investment boom and competition/revolution in most sectors. Contrast this requirement with the current politics, which is consumption-oriented, rent-seeking and distributional (cake-sharing) with only scant sloganeering around the politics of production (cake-baking) required to move Nigeria forward. Politics generally is not dominated by Nigeria’s first eleven. Most of the productive elite (as opposed to the parasitic elite) either loathe politics or are shoved aside by the system, and the entry fee for their admission increases by the day. As things are, it is those same people who benefit immensely from the current order who would be expected to change it. This is the paradox! To move forward, the debate must go beyond the confines of political parlours to the market place occupied by the citizenry.
As I argued elsewhere, “for sustainable democracy, fundamental changes are required in the Constitution, the electoral system, the fiscal federalism, as well as a gamut of legal-institutional reforms that are developmental and capable of promoting private enterprise and competition” (Soludo, 2005: 11).
“The emphasis is to orchestrate a new politics that is aimed at cake-baking rather than cake sharing, one which aims to mobilize the creative energies of Nigerians and their endowed resources to unleash one of the economic miracles of the 21st Century.
To deliberately orchestrate a new politics that will unleash the required new economy, urgent changes are required in a few major areas.
(a) Dealing with the oil curse and its destructive politics (Consolidation of states into six fiscally viable regions and reconstruction of fiscal federalism to ensure true, developmental federal structure)
The starting point in reclaiming and re-inventing project Nigeria is to squarely admit that oil and the manner we have designed to utilize it have constituted a stumbling block to Nigeria’s progress. In Section II, we identified the four channels through which oil and its cake-sharing politics has held Nigeria down. We must therefore begin by breaking down the institutional arrangements around oil and reconstructing Nigeria’s political map.
“The key principle is to ensure a true federal structure, with each of the federating units being fiscally viable as to be able to fund its recurrent expenditures, and provide some basic infrastructure on its own without recourse to the centre. The current six zonal structure invented by Dr. Alex Ekwueme is perhaps a good starting point, with perhaps Lagos, Port Harcourt and Abuja as special territories. The point is that we need to consolidate the current unviable entities called states that helplessly depend on Abuja even to pay the salaries of clerks into fiscally and economically viable regions4
“Nigeria cannot develop on a sustainable basis without restoring the umbilical cord between government and business (private sector) thus bringing back competition among the regions to create wealth. When government revenue depends on whether or not private businesses thrive, it will become the primary business of government to ensure that businesses survive and boom. Currently, there is no such an incentive and Nigeria cannot go forward without it. The talk about private sector-led economy will continue to be much of a ‘talk’ until there is an incentive for governments to be interested in growing businesses. Citizens’ participation and demand for accountability increases when government depends on them for revenue.
“To move forward, a new politics weaned of the natural resource curse is imperative. A new incentive framework, driven by a new institutional-legal reconstruction of the political map of Nigeria is the only way forward. We propose the consolidation of the 36 states into six regions (with Abuja, Port Harcourt and Lagos as special territories); a new fiscal federalism with derivation principle accounting for at least 33 percent; distribution of Federation Account as ‘conditional’ rather than unconditional grants; regional police force to complement the federal police; scrapping of current local governments and allowing the regions create the provinces/local governments that they can fund; orchestration of a two party system to ensure serious electoral competition; re-invention of ideologies and manifestoes in the politics, etc. For the new politics to take root, everyone must be involved! In particular, elite indifference is not an option. The change will not come through the normal course of present day politics: it must be engineered! Let the debate continue!”
The Nigeria at 50 summit that took place in London generated ripples at home with the Organised Labour, opposition political parties and politicians querying the rationale behind it.
The corporate sponsores of the event included Access Bank, British Airways, First Bank, Shell, Travelex, UBS, Zenith Bank Laurent – Perrier, AFR-INVEST, GTBank, EKO Atlantic, Capital Oil & Gas, FERMA, Federal Ministry of Transportation, A-Z Petroleum, among others.

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