By Henry Ojelu

The Director-General of the World Trade Organization, WTO, Dr Ngozi Okonji-Iweala has advocated for a new social contract in Nigeria where certain policies in the economy and society are sacrosanct and must not be touched or changed when administrations change.

She stated this on Sunday at the opening ceremony of the Nigerian Bar Association, NBA, Annual General Congress , in Lagos State.

Lamenting that Nigeria is not presently where it ought to be as a nation, Okonji-Iweala stated part of the problem includes lack of policy inconsistency where every government abandons the policies of the previous administration.

She said: “A very important part of the explanation for why we’ve not been able to succeed is lack of policy consistency. Successive administrations failing to continue good economic and social policies put in place by predecessors. Allowing politics to frame policy, what we can call the not-made-in-my- administration syndrome.

“We all understand that where policies are bad and not working, of course politics should intervene. But where things are working to the good, we ask, why fix what is not broken? To minimize the volatility of economic and social policy and to set our country on a steady growth and development path, rather than an episodic growth path, I have become increasingly convinced that Nigeria needs a social contract.

“By this I mean a fundamental cross-party, cross-society agreement that certain things in the economy, in the country, in policy and in society are sacrosanct and shall not be touched or changed when administrations change.

Every one of us here in this room, knows that Nigeria today is not where it should be, that our country has not progressed as it should have.

That is why, more than 60 years after independence, the NBA and all general conferences are still looking at things like rebuilding Nigeria, charting a course for nation building. I said it’s not in recrimination or even in futile regret, but rather as part of moving our country and advancing its interests. We are living in very difficult times, locally here in Nigeria, but also globally.

“We have seen protests in this country a few weeks ago, but we have also seen protests elsewhere on this continent and beyond. These difficulties should make us think deeply and reflect on what is needed to move this country forward, so we can have the right type of conversation, not about blame games or recrimination, but about what we actually need to do to tackle present and emerging problems, to assure a bright future for our young people in this country. That is why my speech today is entitled, A Social Contract for Nigeria’s Future.

“If we look back to the early years of independence, it’s clear Nigeria had what it takes to succeed, and yet we’ve fallen behind countries that were on par with us back then. I want to remind people that in the first half of the 1960s, our per capita income in 1960 dollars was roughly equal to that of South Korea, in the neighborhood of 100 to 120 dollars per capita, according to World Bank data. But then South Korea’s growth took off, as it went from exporting primary products like tungsten oil and dried seaweed to manufactured goods.

“Back then it was textiles and footwear, compared to today’s integrated circuits, electronics, ships and autos, not to mention services exports, such as gaming, entertainment, etc., where South Korea is also strong. Meanwhile, Nigeria’s export basket went in the opposite direction and became less diversified. In the early 1960s, mining exports made up half of our exports, and food and animal or vegetable oils together about a third, with manufacturers accounting for five to seven percent.

“But since 1974, oil has dominated, often accounting for 97 to 100 percent of Nigerian exports, with its share rarely dipping below 90 percent. The good news is that our economy itself is quite diversified, and with the capacity to do much more in terms of agricultural exports, critical minerals, services such as entertainment, etc., and I want to commend ongoing efforts by this government to diversify the exports of our country. Last year, Nigeria’s per capita GDP was 1,620 US dollars, while South Korea’s was 33,000.

“Korea’s growth miracle was exceptional and world-beating, but even more modest performers have outpaced us. Thailand’s per capita GDP was comparable to Nigeria’s in the early 1970s and is now $7,200. Peru, a country I will come back to, was about even with Nigeria in the early 1980s, but now has a per capita GDP of nearly $7,800.

Even India, which into the 1990s and 2000s had a per capita GDP well below Nigeria’s, recently surpassed us on that mark and is now $2,484. India is now the third largest economy in the world, one of the fastest-growing and modernizing economies. I cite all these numbers not because GDP is a perfect measure, but because, as Daniel Susskind, a scholar on economic growth at King’s College London, recently put it, and I quote, GDP is correlated with almost every measure of human flourishing.

“So whether we like it or not, it does tell us an important story and it affords us a measure of comparison. Many of the big questions the NBA is grappling with at this conference have at their root Nigeria’s failure to sustain rates of economic growth and development that consistently outpace the growth of our population. We have had episodes of reform and faster economic growth that were not merely a function of the price of oil, but we were unable to consolidate and build on them.

And millions, indeed scores of millions, of our compatriots have paid the price in terms of diminished job prospects and human well-being. For example, in the decade between 2000 and 2014, we had an average GDP growth rate of 3.84 percent, well above a population growth rate of 2.6 percent per annum, meaning that people were on average truly improving their standards of living. During the following decade, average annual GDP per capita growth has been negative, around minus 0.9 percent, meaning people were worse off because we were not able to sustain prior positive growth momentum.

A very important part of the explanation for why we’ve not been able to succeed is lack of policy consistency. Successive administrations failing to continue good and emphasize good economic and social policies put in place by predecessors. Allowing politics to frame policy, what we can call the not-made-in-my- administration syndrome.

We all understand that where policies are bad and not working, of course politics should intervene. But where things are working to the good, we ask, why fix what is not broken? To minimize the volatility of economic and social policy and to set our country on a steady growth and development path, rather than an episodic growth path, I have become increasingly convinced that Nigeria needs a social contract.

“By this I mean a fundamental cross-party, cross-society agreement that certain things in the economy, in the country, in policy and in society are sacrosanct and shall not be touched or changed when administrations change.

And the private sector and Nigeria civil society, including influential actors like the NBA, have important roles to play in policing a social contract and holding the political class accountable.

I’m saying that all major actors in the governance of our country should agree on some basic parameters for security, macroeconomic and social stability, and the enabling environment for future dynamism and growth of our country. Once agreed, these parameters and policies should be institutionalized or enshrined in law or even be made part of our Constitution, not to be tampered with, except perhaps through a national referendum involving the entire country and society. My convictions on Nigeria’s need for a social contract were reinforced recently when I was in Peru on an official visit.

For us as Nigerians, the real surprise must be that Peru’s different political parties, for all their vicious opposition to each other, broadly supported the hard-won structural reforms and honoured the fiscal and monetary policy frameworks when in power. They accepted that certain things should be respected for the good of the country and should not be played with, no matter how rough the politics. That cross-party commitment to strong macroeconomic foundations is something we need in Nigeria.

During President Obasanjo’s second term, we carried out strong structural reforms very similar to Peru’s. A $30 billion external debt was cleared, that was mentioned earlier. The central bank was made independent.

The multiple exchange rate regime became a thing of the past, as a flexible, rational, managed float regime was put in place. An oil price-based fiscal rule was also put in place, along with a medium-term expenditure framework, leading to a strong accumulation of savings and foreign exchange reserves. We discussed and observed notional guidelines to enable sustainable debt levels, with a target for debt-to-GDP ratio not to exceed 33 to 40 percent, suitable for a country at Nigeria’s stage of development, and debt-service-to-revenue ratio not to exceed 33 percent.

Actual debt-to-GDP and debt-service-to-revenue numbers were far below these notional guidelines. These policies were maintained under subsequent administrations of Yarajo and Jonathan, and even more reforms were carried out to strengthen and modernize the economy. Strong social safety nets were built, well-targeted social programs such as shopping, UN, and saving 1 million lives, the latter targeting pregnant women and children.

Am I saying that these administrations were perfect? Of course not. They had their problems, imperfections, and challenges, and as a finance minister, I was part of struggling with those challenges. But there was a consistency of policy that led to the economic numbers I quoted earlier in this speech.

What I’m saying is this. Maintaining good economic and social policies, that is, maintaining policy consistency, and adding more reforms on top of that will lead us along the path of good progress that we all desire. As we know, our political leaders have thus far never been able to agree to stick to a common set of principles and policies that deliver on a consistent basis for citizens, irrespective of ethnic group or political persuasion.

And our big civil society groups like the NBA have not been able to hold politicians accountable, and I’m not going to flatter you, because segments of our legal system have also become beholden to those same politicians. But it is never too late to do the right thing. Instead of fighting over who gets what shelf and ever smaller cake, it’s about time this country had a meeting of all parties to agree a social contract that can help us focus on baking a larger cake.

Giving insights on the elements of the kind of social contract needed by Nigeria, the former Nigerian Finance Minister said: “Let me say here that trust will be a prerequisite for any social contract for rebuilding Nigeria, meeting our economic development challenges and building a brighter future for the rising generations of young people. All political parties, all ethnic groups will have to honour this contract, no matter who is in government. The importance of trust in our country, given its size and diversity, has been clear since day one.

“It is the duty of all of us to work for unity and encourage members of all our communities to live together in peace and harmony. The way to do this is to create understanding, mutual respect and trust. Trust comes not from words, but from deeds. That is from accomplishing things together, building together.

“A social contract could become a basis for the virtuous circles of reform, growth, peace, security and trust that have too long eluded us. Turning now to potential ingredients of that social contract, the first element should be a shared understanding that we must prioritise the security of life’s property and national assets. We cannot have economic or social development without security, and we certainly cannot have security without development.

“We all know that security has been weaponised in our country for political purposes, by political actors, leading partly to the difficult situation we have now. We have politicians who believe that the best way to make their opponents look bad is to instigate insecurity, making it look like they can’t govern.

“Regardless of whether this leads to loss of life and property of innocent Nigerians, this has to stop. A second aspect of security relates to security of national assets. Nigerians have seen for years how organised crude oil thefts on a massive scale seriously undermines the economic and financial health of the country.

“All Nigerians must agree that stealing of our national assets of any type is intolerable and must be stopped. How can we be struggling to see how to strengthen our foreign exchange reserves with the Government of the Central Bank working so hard on this, when so much is being lost through oil thefts? There is so much technology available now to track such thefts, and there must be no more excuses for inaction. Theft of electricity cables is another rampant and very dangerous form of national assets.

“The taking and stealing of national assets is unbelievably dangerous for those doing it, and it must be a mark of desperation and failure to see the bigger picture that leads people to do this. I’m pleading with all Nigerians that this has to stop. It’s even endangering your own life to engage in this type of act.

“The second element of the social contract involves the basic organs of the economy. They should be left to work so as to produce the best economic and social results for the country, as I described in the case of Peru. First, we must continue to support the Central Bank and its work and support its independence.

“No one should try to tamper with the Central Bank, asking for manipulation of interest rates or the exchange rate. Do not use the Central Bank as a fiscal agent, asking for printing of Naira beyond agreed ways and means limits. Fundamental fiscal and financial rules should be respected once they are on the books.

“Respect the use of the oil price-based fiscal rule that allows the accumulation of reserves and savings in good times to be used to push in bad times. Respect the agreed budget deficit. Keep it as close to 3% of GDP as possible.

“Limit non-transparent extra budgetary spending spent through the budget. Stick to transparency of FACA locations and state and federal budgets so that citizens have a clear view of how their money is being spent. Do not exceed sensible limits for public debt as a percent of GDP.

‘For an economy at Nigeria’s stage of development and given its vulnerability, debt-to-GDP ratios should remain well below 40%. Debt service to revenue we should strive not to exceed 33% so as not to crowd out operational and capital expenditures. Budget on the basis of a medium-term expenditure framework so as to provide a sound forward-looking platform for economic and budget management.

“Create an investment-friendly business environment cutting down on bureaucracy, licensing and policy uncertainty to encourage the domestic and foreign private sector to invest and remain in Nigeria. Respect of the above will ensure a sound macroeconomic framework with core economic management working on an objective basis to become a foundation for investment, growth and employment. The third element of the social contract is provision of basic infrastructure services.”