Declining productivity, public holidays and change deficit
Nigeria is technically in a recession. Gross Domestic product plunged from 6.3% growth in 2014 to 2.7% in 2015. Specifically it went from 2.84% in Q3 2015 to 2.11% in Q4 2015 and then dropped off the Clive to -0.36% in Q1 2016. So without waiting for the official Q2 2016 report which is not expected to do much better, we have had two consecutive quarters of GDP decline.
National productivity which rose between 2010 and 2014, began a decline in Q1 2015 and has maintained this course up to date. In the component of Labour productivity, Nigerians are known to be hardworking but productivity of its labour force is often questioned. The labour productivity in emerging Countries like Russia ($24) Brazil ( $10.7) and turkey($28.9)is much higher than Nigeria’s. In Q4 2015, Nigeria’s labour productivity declined to $3.55 from $3.86 in Q3 2015 and the decline has continued since then approaching the 2011 level of $2.98 or less
The fall in GDP is blamed on the precipitate fall in the price of crude oil in the international market which started since June 2014 and has not recovered appreciably. Nigeria’s economy remains so vulnerable to the volatility of commodity prices in the global market. Efforts to diversify the economy have been moderately successful in terms of GDP contribution. As at Q1 this year, Agriculture contributed 19.17% to GDP, Trade 21.55%, oil 10.29%, Manufacturing 9.93%, Real Estate 6.46%, and construction 3.99%. In fact, the non-oil sector contributed 89.71% of National GDP according to the National Bureau of Statistics. But the challenge is that the oil that contributes only 10. 29% of GDP is responsible for nearly 80% of our foreign exchange earnings, which is one reason the country has had acute shortage of foreign exchange in the last one year or so.
Other causes of the fall in GDP include Nigeria’s loss of global competitiveness. In the 2015-2016 Global Competitiveness Index ( GCI), released by the World Economic Forum ( WEF), Nigeria scored 3.46 over 7 to rank 124 out of 140 countries measured. On the Ease of doing business ranking, Nigeria in the 2016 report came last at 169 out of 169 countries assessed, scoring 44.69%. Little wonder foreign direct investment has literally dried up in the country. The Adjustment policies previously adopted until a few weeks ago by the government to manage the decline in National income and foreign exchange, seemed to have compounded the loss of competitiveness,constricting the economy and bringing Nigeria’s trade balance to a deficit in Q1 2016, as total foreign trade declined by 22.6% over Quarter 4 2015 and by 38.0% over same quarter in 2015. It is also true that the worsening security situation especially in the Niger Delta region has been a significant contributor to Nigeria’s current economic realities.
On the side of Labour productivity, several factors are blamed. These include lack of quality educational institutions, poor training, lack of skills, unfavorable investment climate, lack of electric power, high unemployment and underemployment.
But there are two extraneous factors worsening both national economic growth and National Productivity. The first is the penchant for Nigerian workers to go on strike, and all such activities that stop them from effectively utilising man-hours for productive activities. The painful losses in the first five months of this year are too fresh for us to forget as most Nigerians spent useful time queuing and sleeping in fuel stations due to fuel scarcity. The other extraneous factor is governments love for public holidays. State governments compete with the federal governments in finding excuses to declare public holidays for every conceivable reason. This is in addition to the religious holidays which are increasing by the day.
I was alarmed that Nigeria effectively lost last week on holidays. Question is, do our leaders understand how the GDP of a country is calculated? Do they understand that business men who have borrowed money from the banks pay interest on the borrowed funds on public holidays? I was hoping that under our circumstances, we should begin to consider returning Saturday as working day. I was also hoping that under our change mantra, all such excesses as extending public holidays for whatever reasons would not happen. The habit of moving the holidays to the next working day(s) ought to change. If the idea of public holiday is to give people time to celebrate, commemorate events or to rest, Weekends (Saturday & Sunday) are ideal days. If we must improve National productivity ,improve global competitiveness and minimise poverty and concomitant social disequilibrium, we must keep Nigerians, working all the time and doing more productive work.
