Still, it is not all doom and gloom. We all…could however take solace in the fact that while the Great Leap Forward resulted in famines that killed off tens of millions of Chinese peasants between 1959 and 1961, China’s eventual embrace of market reforms in 1979 saw it help more than 600 million rise out of poverty in the thirty years after.
It was a measure of how desperately supporters of the incumbent administration needed confirmation of the rectitude of government’s recent policy pirouette, that they celebrated the numbers for third quarter output growth with gusto. According to data released last week by the National Bureau of Statistics (NBS), the country’s gross domestic product rose by an annualised 2.28 per cent in the July to September period. In the same period last year, the economy had managed a Scrooge-like 1.18 per cent growth. Against the economy’s 2.12 per cent performance in the April to June period, the third quarter numbers were clearly headed in the right direction.
In the light of these numbers, how much credit is then due to the scaremongering about how the central government may be choking off the real sector of the economy, which those opposed to the incumbent government’s policy portmanteaux regularly engage in? Phrased differently, by how much are “arbitrarily high” tax assessments of small and medium-sized enterprises, the closure by the customs of car sales outlets, and the effect on investment and consumption of the border closure (to take but three recent examples) hurting the economy?
The answer, pardon the cliché, is in the details. On the back of better production numbers, the national goose dutifully laid a few golden eggs in the third quarter. The oil sector grew by 6.49 per cent on an annual basis in this period. Better, though, than the rate at which it grew over the same period last year, the sector’s performance in the quarter to end-September 2019 was still down on the 7.17 per cent at which it grew in the second quarter of this year. On the other hand, the non-oil sector, the bearer of the brunt of government’s recent policies, according to the gripers, grew by a staid 1.85 per cent in the third quarter. Manufacturing was up by a measly 1.10 per cent. While trade, a stand-in for household spending, contracted by 1.45 per cent.
…the Buhari administration’s current closure of the country’s land borders (as it struggles to support its attainment of domestic self-sufficiency in food production narrative) is looking in need of a good leg to stand on. In this regard, it is beginning to look everything like the model that it is advertised as a copy of – China’s “Great Leap Forward”.
In a sense, therefore, those commentators are right, who worry about the deleterious impact of a bigger and clumsier government on the economy. Besides, the main tale told by the GDP numbers is that stripped of the sound and fury, not much has altered in the structure of our crude oil-dependent economy. Beyond these broader concerns, though, is the much simpler observation that with our population, growing at close to 3.00 per cent annually, per capita GDP contracts each time growth comes in below 3.00 per cent. In other words, despite the best wishes of its fans, the incumbent administration has not found the combination of policies that will unlock the country’s growth potential and halt the immiseration of our people.
More than any recent policy initiative, or combinations thereof, the Buhari administration’s current closure of the country’s land borders (as it struggles to support its attainment of domestic self-sufficiency in food production narrative) is looking in need of a good leg to stand on. In this regard, it is beginning to look everything like the model that it is advertised as a copy of – China’s “Great Leap Forward”. Even though we are in the harvest season, domestic food prices have made their own Great Leap Forward – on a year-on-year basis, headline inflation is reported by the NBS to have risen by 11.6 per cent in October, from 11.3 per cent in the same month last year.
Food prices were the main driver of this increase. Worse still, just about every commentator I’ve listened to blames the border closure for the shortage in the supply of major food items, and the resulting northward trajectory of domestic prices. Most now expect headline inflation to reach at least 14 per cent year-on-year if the border remains closed into next year. After the planned two-year closure? I couldn’t find one person knowledgeable enough on these matters willing to stick their neck out on the outcome.
…it is scant consolation to the poor and vulnerable that their spending on food accounts for a disproportionately large portion of their earnings. Nor that rising prices will leave them poorer than before the borders were closed. Poor or rich, rising domestic prices will hurt spending, and the trade component of GDP will tank even further.
Ultimately, it is scant consolation to the poor and vulnerable that their spending on food accounts for a disproportionately large portion of their earnings. Nor that rising prices will leave them poorer than before the borders were closed. Poor or rich, rising domestic prices will hurt spending, and the trade component of GDP will tank even further. Manufacturing, on the other hand, will succumb to depressed demand and a turning off of the investment taps.
Still, it is not all doom and gloom. We all (government, it’s critics, the poor and vulnerable) could however take solace in the fact that while the Great Leap Forward resulted in famines that killed off tens of millions of Chinese peasants between 1959 and 1961, China’s eventual embrace of market reforms in 1979 saw it help more than 600 million rise out of poverty in the thirty years after. Time, it seems, does in fact heal all things – even poorly conceived (albeit well implemented) policies.
Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
