NONSO OBIKILI
African. Economist. Plus other things
Subscribe to my blog at nonso2.substack.com

Education

Ph.D. Economics
State University of New York at Binghamton

Binghamton NY, USA

M.A. Economics
State University of New York at Binghamton

Binghamton NY, USA

B. Sc. Economics
University of Port Harcourt

Port Harcourt, NG


Employment

ECONOMIST
United Nations
Development Coordination Officer - Economist

Abuja - Nigeria

Center for Global Development
Non-Resident Fellow

Washington DC - USA

Department of Economics - Stellenbosch University
Research Associate

Stellenbosch - South Africa

Turgot Centre for Economics and Policy Research
Director

Abuja - Nigeria

Economic Research Southern Africa
Policy Associate

Cape Town - South Africa

American University
WARA Residency Fellow

Washington DC - USA

African Heritage Institution
Director of Applied Economics

Enugu - Nigeria

State University of New York at Binghamton
Adjunct Professor

Binghamton University NY - USA

Central Bank of Nigeria
Research Assistant

Abuja - Nigeria

COLUMNIST
Business Day Nigeria
Chief Economist

Lagos - Nigeria

Guardian Nigeria
Contributor

Lagos - NIgeria

CONSULTING
Control Risks

London - United Kingdom

Enhancing Financial Innovation & Access (EFInA)

Abuja - Nigeria

First Bank of Nigeria

Lagos - Nigeria

Good Governance Africa (GGA)

Abuja - Nigeria

National Competitiveness Council of Nigeria (NCCN)

Lagos - Nigeria

National Treasury

Pretoria - South Africa

Nextier Advisory

Abuja - Nigeria

Oxford Analytica

London - United Kingdom

Partnership to Engage Reform and Learn (PERL)

Abuja - Nigeria

Public and Private Development Centre (PPDC)

Abuja - Nigeria

Sofala Partners

London - United Kingdom

United Nations University - World Institute for Development Economics Research

Helsinki - Finland

WNT Capitas

Lagos - Nigeria


Research

PUBLICATIONS
On Exchange Rate Policy Independence: Experiences from West Africa

Journal of Development Perspectives

2020

READ
Decolonizing with data: Cliometrics in Africa

with Johan Fourie

Handbook of Cliometrics

2019

READ
The impact of political competition on economic growth: evidence from municipalities in South Africa

South African Journal of Economics

2019

READ
State Formation in Precolonial Nigeria

The Oxford Handbook of Nigerian Politics

2018

READ
Fiscal Policy During Boom and Bust

with Kingsley Moghalu

The Oxford Handbook of Nigerian Politics

2018

READ
Markups and concentration in South African manufacturing sectors

with Johannes Fedderke and Nicola Viegi

South African Journal of Economics

2017

READ
The trans-Atlantic slave trades and local political fragmentation in Africa

Economic History Review

2016

READ
The impact of the slave trade on literacy in Africa: evidence from the colonial era

Journal of African Economies

2016

READ
A dream deffered: the microfoundations of direct political action in pre- and post-democratization South Africa"

with Biniam Bedasso

Journal of Development Studies

2016

READ
An examination of subnational growth in Nigeria: 1999 - 2012

South African Journal of Economics

2015

READ
Social capital and human capital in the colonies: a study of cocoa farmers in Western Nigeria

Economic History of Developing Regions

2015

READ
The introduction of higher banknotes and the price level in Nigeria

with E. N. Egbuna

International Journal of Economics and Finance

2013

READ
WORKING PAPERS
Emigration and education: the schooling of the left behind in Nigeria

with Biniam Bedasso and Ermias Gebru

Economic Research Southern Africa no. 759

2017

READ
Unfilfilled Expectations and Populist Politics: Examining the Emergence of the EFF in South Africa

Economic Research Southern Africa no. 722

2017

READ
Human capital inequality and electoral outcomes in South Africa

with Biniam Bedasso

UNU-WIDER Working Paper No. 2016/100

2017

READ
Convict Labor and the Costs of Colonial Infrastructure:Evidence from Prisons in British Nigeria 1920-1938

with Belinda Archibong

Columbia University Working Paper Series

2019

READ
WORKS IN PROGRESS
Before Formalization: Attitudes toward Government Taxation and Governance Alternatives in Lagos's Informal Sector

with Adrienne LeBas

Climate yams and precolonial centralization

Transaction costs collective benefits and selective incentives: A six-country randomized trial design to encourage formalization

with Adrienne LeBas + 24 others

Gender and the Transmission of European Social Norms in Africa

with Grieve Chelwa

Trust and Punishment: Long-Term Impacts of Colonial Prisons and Labor Coercion on Trust in Nigeria

with Belinda Archibong

When Women March: The 1929 Aba Women’s Tax Revolt Prisons and Political Participation in Nigeria

with Belinda Archibong


Blog

On Inequality and Growth Strategies


When you think of a country with inequality Nigeria typically does not come to mind. At least not in the same light in which we see inequality in South Africa or Brazil. According to the latest living standards survey by the NBS the country as a whole has a GINI coefficient of 35.1 which all things being equal is not bad. At least it is lower than the 40 to 50 range it was estimated at in the 90s. I know you can argue about hidden wealth and proper estimation, and all that. Certainly if you look at the gap between the bourgousie (that word always sounds so fancy) in Ikoyi and those eeking out a subsitence lifestyle on the farm then it certainly seems very unequal. That “real-life” observation that is seemingly at odds with the data is what I want to focus on today.

If you look at the dissagregated data on inequality by state and compare that to national inequality then it becomes easier to marry the idea that Nigeria has both high inequality and not so high inequality at the same time.

Essentially the data suggests that inequality in Nigeria is driven primarily by inequality accross places, not within them. The GINI for Nigeria as a whole is higher than that of 34 of the 36 states. In some cases much higehr. When it comes to inequality it appears the first question is where you are, not who you are.

This spatial inequality has all sort of implications. An obvious one is the idea that states have equal opportunity to increase internally generated revenue, which is definitely not true. It is obviously easier to increase IGR if you are at the richer end of the inequality distribution compared to if you are the poorer end. The underlying factor of course being an also unequal distribution of economic activity which is ultimately where IGR comes from.


On of the more interesting articles on the Nigerian economy I have read this year is this one. There is a lot of good analysis in the there but in the context of this piece the interesting bit is that argument for a new set of growth drivers: privatization and liberalization of transportation and logistics, privately financed infrastructure, and a food-centric industrial and trade policy. This to me reads as an argument for the liberalization of more of the still government-controlled sections of the economy and the deployment of capital to drive growth in those sectors, with obvious spill over effects on the rest of the economy.

To be perfectly clear I am for less government participation in many of these sectors, especially in logistics which is fundamental for any properly functioning economy, and I also think that as much as is possible infrastructure should be financed by the private sector especially given the current fiscal situation the government finds itself in.

Yet is is difficult to square that growth strategy with the reality of current inequality in Nigeria. By definition, a capital driven growth strategy benfits those with …. you guessed it…capital. And as the data suggests, most of the country does not have capital. Capital, like income, is concentrated in certain spaces. The implication is that a private capital driven growth strategy will exacerbate those inequalities and will probably replicate the type of growth we saw in the between 2000 and 2015. Good on paper but poor in quality and jobs.

The map above is the distribution of average growth between 1999 and 2012 from one of my papers. If you overlay that with estimated population distribution then you get an even clearer picture about why, despite the two high growth decades, we still somehow managed to find ourselves with little to show for it. Yes, the North East had negative growth on average over that period and prior to the emergency of Boko Haram. A second capital driven growth boom alone is likely to have similar outcomes and maybe worse.

Even infrastructure driven growth is no longer as people and jobs centric as it used to be. Excerpts from a recent paper on infrastrucure and economics:

"Today, infrastructure is far more capital intensive and far more likely to use skilled laborers who would be employed in any case. If infrastructure requires machines, more than less skilled people, then the scope for infrastructure policy to exert short-run effects on employment will be limited."


If a capital and infrastructure driven growth strategy is unlikely to deliver broad people centric growth then what is? Two things to say here.

I should also point out that I am not a believer in “equal” growth everywhere. I like to use the example of trying to engineer growth in the middle of the Sahara desert. It is unlikely and even if it were possible it would probably not be worth it. I do however think that equal opportunity is achievable and is a better strategy. The idea that, even if you happen to be born in the middle of the Sahara desert, you can aim to have just as good a quality of life elsewhere as anyone else. And in my opinion that is all about education. Not just going to school, but learning in general.

In the Nigerian context the spatial inequality problem rears its ugly head again. Education, especially basic education, is legally (not naturally or God-sent) a state and local government issue. And the hands are not equal. I took a look at the IGR per capita of some states, and there are a couple of states that collect as little as $5 per person per year. Fair to say those states, even with FAAC money, are unlikely to have the capacity to finance public education anytime soon.

Private individuals of course recognize the importance of education and per the living standards survey, it is one of the items high on the household expenditure list. In many states just below transport and health in non-food expenditure. But remember that 40 percent of Nigerians are in poverty and many others not far from it. If you dissagregate by state then the numbers look even worse with quite a few states topping 80% poverty rates. So, if the governments in many states do not have the means to finance education, and the individuals also do not have the means then Houston you have a problem. If education is one of the most important drivers of sustainable growth and large chunks of the country are not investing in education then there is only so far a capital/infrastructure driven growth strategy can go.

Secondly, given the current make up of Nigeria’s economy, any growth strategy has to be deliberate about engineering growth in unskilled-labour intensive growth. Education is all well and good but that takes time. For the here and now you need labour intensive growth. And given Nigeria’s structural challenges and scale, I believe that growth has to be driven by exports. This is also where I kind of disagree with a food-centric industrial policy. It is a lot more difficult to export food products compared to others. Even besides tariffs, the non-tariff barriers to food exports are much more challenging. To put it simply, people care a lot more about what they put in their bodies than what they put on them and the rules on food products trade is alot more challenging.

Also, food products and derivatives tend to be a lot more sensitive to infrastucture challenges. Your agbada will be perfectly fine even if delayed at the port for 30 days but your cocoa beans or yams and their derivatives might not do so well.

Nothing wrong in promoting food industry but I think if the target is exports, which I think it should be, then a better bet would be something more resilient to infrastructure challenges. If I was holding the darts I would aim squarely at the garments (not textiles) dartboard. We have the people and creativity to match. Although this is likely to be different depending on where in the country you are standing.


To cut all this long story short, I do not think a capital and infrasturcture driven strategy is likely to deliver the kind of growth we want. I see it as a necessary but not sufficient strategy as we economists like to say. A more credible and sustainable growth strategy would be deliberate about targetting some non-oil non-food export growth and importantly, capturing some of that growth and channelling it into broad nationwide investment in education (and health) for everybody regardless of which corner of the country you happen to be born in. For all that you need some notion of an effective government. Capturing and re-directing value is all about the public good and government. You, or we, need to somehow make our government work better to deliver that investment. We can’t privatize or entrepreneur our way around that one.

Read more

Other Items

Reading between the lines

Sat, 19 Dec 2020 08:16:58 GMT

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Waiting for another oil boom?

Mon, 07 Dec 2020 08:32:41 GMT

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New paper: On Exchange Rate Policy Independence: Experiences from West Africa

Wed, 11 Nov 2020 10:27:30 GMT

  Read more

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