For Nigeria to effectively diversify its economy, the country must accelerate the rise of adult literacy, aiming for at least 80 per cent as soon as possible.
The Global Chief Economist at Renaissance Capital (RenCap), Charlie Robertson, stated this in the report made available to newsmen yesterday.
Robertson, also suggested that in order to ensure that the north is not left behind, Nigeria would need to enact an adult education campaign, similar in scale and impact to that pursued by South Korea in the 1950s.
According to him, diversification requires industrialisation, which he defined as a manufacturing sector of 20 per cent of Gross Domestic Product (GDP).
Robertson, noted that a big expansion in high productivity services would achieve the same end, of escaping poverty.
He explained that the reason Nigeria displaced India as the country with the most people in poverty was because India met the three pre-conditions – electricity, adult literacy and investment – to escape from subsistence farming, while Nigeria has not.
“On basic adult literacy (in any language), Nigeria has made huge improvements since winning independence from the UK in 1960.
“But it still took Nigeria over a generation before it could more than double the adult literacy rate to the 40%+ levels at which growth can be sustainable.
“The good news is that in 2019, there are already 65 million literate adults. So there are many states, mostly in the south such as Lagos or Abia, where industrialisation can happen.
“The bad news is that this will leave the north behind and widen the economic inequality within Nigeria. In some states of Northern Nigeria, a malaria survey that conducted an adult literacy test (in local languages or English) showed adult female literacy was below 10 per cent.”
However, he pointed that electricity is also key for industrialisation, saying even 100 per cent adult literacy would not allow an escape from poverty if there is no reliable supply of electricity to power a factory or office computer.
“Nigeria’s privatisation process has failed to deliver enough power to diversify the economy, and the distribution companies say this is because the electricity tariffs have not been raised as promised at the time of privatisation.
“As a result, the electricity price is too low, and the more electricity the distribution companies supply, the more money they lose.
“Critics of the distribution companies point out they have not invested enough money putting electricity meters in households, so customers dispute estimated bills, and revenue collection is poor.
“Dollar debts to fund the purchase of DisCos became extremely onerous when the naira depreciated with oil price from 2014, which the discos say made such investment unaffordable,” he said.
The economist also noted that high investment above 25 per cent of GDP was a characteristic of countries that escape poverty, escape the middle-income trap and become wealthy countries.
According to him, stringent capital controls mean the state can take individual savings in the state-owned banking sector and lend them out at interest rates below the rate of inflation.
He estimated that an average Nigerian (children included) gets just over $0.30 per day from the country’s oil revenues, which account for over 90 per cent of exports.
“Relative to other African peers, Nigeria’s government revenues as a percentage of GDP are very low, and were among the lowest even in 2007 when oil prices were much higher.
“This is partly because Nigeria exports much less oil per person (and therefore to GDP) than other African oil exporters, and it does not collect many revenues from elsewhere either,” Robertson added.