UNITED CAPITAL RESEARCH – In 1776, Adams Smith argued that the wealth of a nation (aka GDP) is driven by the level of liberalism, level of specialization, division of labour, investment in productive capacity (infrastructure), competition, open borders and the limited role of the State.
Lately, momentum in the Nigerian economy has been broadly tepid. GDP growth is locked in the recovery phase, at 2.0% for several quarters while the productive capacity stays below potential (negative output gap). FDI is weak, inflation is double-digit, and most of the 36 States are not viable in the absence of a strategic economic specialization. In our view, revisiting some of the Smithian prescription (over 2 centuries ago) may be helpful.
As we step into Q4-19, Nigeria clearly needs to take another look at the potency of a more liberal policy framework to hasten economic momentum. By Smithian submission, the increased role of the private sector is a necessity while the State machinery focuses on creating an enabling environment for businesses to flourish. Also, a reorganization of the 36 States into economic zones will enhance specialization, boost productivity and youth employment. Finally, Nigeria should consider a more liberal view in managing events in the energy, currency and international trade market to boost its hesitant economy.
Happy Independence Day Nigeria!
