The significance of an inclusive economy is in the value of indigenous participation and sectoral linkages. It is a major channel through which the benefits of growth could be transmitted to improve the well being of the citizens.
The challenge of making the global economy more inclusive demands that we identify the structural causes of inequality and put forward the conditions under which global inclusiveness can be achieved. Ideas on how to shape inclusive societies should also be proposed in terms of concrete policy measures.
One of the key shortcomings of the Nigerian economy is the disconnection between economic growth and the welfare of citizens.
The goal of an inclusive economy is to prevent social exclusion. It means creating more sustainable and inclusive societies that aim at carrying along all the members of a society in the growth process, instead of distributing wealth among them after periods of steep growth. It is targeted at preventing global economic crises by regulating capital flows and reforming the financial system. It also pays attention to the environment, aiming at a sustainable and green global economy.
Making Nigeria an All Inclusive Economy
- There is the need for policies that will engender growth in financial services and overall economic growth and development.
- Continuous crafting of macroeconomic stability (enabling environment) for the legitimate pursuit of means of livelihood.
- Provision of robust financial infrastructure (local, state and national) to support the business and vocational activities of the citizens.
- Creating and offering loan facilities and other services.
Access to finance is critical to the achievement of an all inclusive economy. The financial system generates wealth in the economy. It promotes trade. There is strong link between economic development and the state of an economy’s financial system. In regards, banks play intermediation role; deposit taking/lending; resource allocation –from surplus units to deficit units. The financial system facilitates risk sharing –spreads/reduces risk faced by economic agents.
With a young population of nearly 170 million people and GDP growth, averaging more than 7% over the last 10 years, Nigeria is on the front lines of the new Africa. Nigeria has huge investment potentials. The interest of the international community in what the country has to offer is growing. Within its immediate sub-region, Nigeria is one of 15 countries in West Africa that make up the Economic Community of West African States (ECOWAS) and accounts for half of its population and three-quarters of its total GDP. We are talking about a country with a vast and growing middle class of about 23% of the population, with its average age being between 18 and 26 years.
Nigeria as an Investment Destination
Among African countries, Nigeria is one of the two major countries with strong potential to harness the opportunities and meet the challenges that the global economy could provide. Nigeria’s economy has been growing rapidly, due in part to gains from economic reforms and rising prices of oil. The country yields one of the highest return-on-investments (ROI) in the world. However, Nigeria's integration into the global economy has been below potential. While it has improved its global rankings on indicators of competitiveness, business climate, and productivity in the past five years, it still ranks below most of its peer group on these indicators. It is among the poorest countries in the world, in terms of social indicators, despite oil wealth. Further integration into the global economy would require sustained policy reforms, improved governance, and public-private investments in social, human and physical infrastructure.
Although Nigeria is struggling with decaying infrastructure and a poor regulatory environment, the country possesses many positive attributes for carefully targeted investment and will expand as both a regional and international market player. Profitable niche markets outside the energy sector, like the specialised telecommunication providers, have developed under the government's reform programme. There is a growing Nigerian consensus that foreign investment is essential to realising Nigeria's vast but squandered potential.
Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, while establishing a local presence and choose their partners carefully. The Nigerian Government is keenly aware that sustaining democratic principles, enhancing security for life and property, and rebuilding and maintaining infrastructure are necessary for the country to attract foreign investment.
Most Countries’ Top Priority
Countries world over are looking at improving the standard of living of their citizens. Building an inclusive society is also top of their priorities. For instance, in Ireland, the national income per head is now above the average for the European Union and they have reduced unemployment rate from 12% in 1996, to about 4% today. These developments have brought significant improvements to the living standards of all groups in the society. Over the period 1994-2000, the proportion of the population in consistent poverty fell from 15.1% to 6.2%. In practical terms, this means that 400,000 people have been lifted out of poverty, as defined in the first National Anti-Poverty Strategy.
A new economic framework requires rethinking the meaning of economic welfare and well-being. We need to redefine growth beyond the narrow definition in terms of GDP. An inclusive economy also requires that we rethink the concept of scarcity: how are assets distributed across the world, and who prospers from that? Inclusiveness at the global level calls for tax transfer systems that focus on pre-distribution rather than redistribution.
Inclusiveness stresses the participation of people in economic, political and social institutions. Organisations of farmers, industrial labourers, etc. can democratise economies, since they aim at putting production processes under the control of the stakeholders. This implies the focusing on a larger role for local market economies rather than the one-sidedly global markets. Moreover, inclusion requires strong civil societies, where political decision-making processes are democratised, and where global public goods are protected against the detrimental effects of the global economy and are accessible to those who most need them.
A Large Market with Right Demography
One major advantage is the geographical location of Nigeria. It has a very vast coastal region. In addition, it has a whole lot of internal (coast-supporting) interlinked water bodies, including the famous Rivers Niger and Benue. This cumulates in a huge trade advantage: an advantage that is far from being fully tapped.
The country is blessed with a long list of natural resources, great tropical weather, good soil, and a wide range of food and cash crops of high quality species. With better policies and laws, as well as improved controls and security, the country should be eyeing the number two spot for the most lucrative investment region in the world, while it project itself to reaping huge rewards for its citizens.