Oil and gas, naturally since it represents more than 90% of the country’s export revenue. The opening of new offshore platforms has revived activity. In spite of the uprising among communities in the oil region affected by ecological depreciation, production is still going on and the future still remains bright.

The food industry profits largely from the 130 million inhabitants of this country. Demand is keen and the final distribution is often done through informal market networks, which is the only means of reaching the entire population. Thus, in June 2001, Nestle recorded sales 38% higher than that of the same period in 2000 and 100% higher than in 1998. The breweries also experienced the same boom, the factories functioning at 100% of their capacity and yet not meeting the national demand. Investments in this sector in terms of renovation and construction of factories is increasing. Nigerian Breweries has already opened up in Enugu, the biggest and most ultramodern bottling factory in sub-Saharan Africa.

Water is also a topical issue. In fact, this sector is in the process of privatization in Lagos. In 1998, the World Bank carried out preparatory studies thereon.

The pharmaceutical industry will definitely profit from the privatization of drug sales in Lagos hospitals. This sector will certainly be stimulated by the goals of the new health Minister, in terms of primary health programmes and construction of new hospitals in each of the 6 geopolitical zones of the country.

Telecommunication is the current subject of interest in Nigeria. The awarding of mobile telephony licences and the ongoing privatization of NITEL, has created anticipation for an exponential increase in subscribers, as well as the opening of a new market of facilities similar to mobile and fixed telephony.

REFLECTIONS ON THE FEDERAL GOVERNMENT'S ECONOMIC POLICIES

Targets recently announced by the Federal government indicate that the present administration intends to achieve annual economic growth of 10 percent by 2003. Given the underutilized capacity in all areas of the economy (arable land, water resources, diverse mineral wealth, and the huge but largely unemployed workforce), the desired level of growth has always been within the capacity of the Nigerian economy. The main puzzle from the country's economic history over the last decade is the stagnation and precipitous decline in the economy in the face of these enormous potentials. The economy had grown in real terms by less than 3 percent per annum five times in the last seven years. Since the nation's population is estimated to be growing at about three percent per year, per capita income had declined in five of the last seven years.

Realism will suggest that the task of pushing growth from below zero to nearly seven in the space of three years is not an easy one. There must be a rigorous diagnosis of the problems followed by a clear articulation of policies that would address them. Areas yearning for attention include:

Nigeria and the rest of Africa need to tackle both soft and hard issues of Agrarian reforms. They used to export much more agriculture output than their Asian counterparts, such as Malaysia and Indonesia, but that is now reversed. Asian and Latin American developing countries now export much more agricultural and mineral output than African countries, including Nigeria. Which has made some economists to argue that it is not true that African countries depend too much on the primary sector: the truth is that even the primary sector is crumbling in Africa. This probably explains why external debt remains a lingering problem. Reforms are needed to counteract the effects of unsteady rainfall; develop fertilizers more suited to the Tropic soil, and give stronger incentives for people to farm.

It is safe to assume that oil production in Niger would have stopped by now. LNG export is a reality because of J- V contract. J- V contracts that allow the private partners to manage the entity they co-own with the government insulate corporate entities from political interference and patronage. The refineries would have been working well today if they had been J- V s. Perhaps it is time to make them J-Vs, like oil producing J-Vs and the NLNG project.

NEPA, NITEL, Nigerian Railway, Nigeria Airways, urban transportation, the Ports, water supply and waste management, would also work well as Joint-Ventures. Roads are better built by private companies who should levy tolls until they recover the capital invested and funds required for maintenance. This is the build-operate-and-transfer (BOT) method that has been used widely in many other developing countries. Government can then use most of the funds it is currently committing to road construction to increase real incomes, as commercialization of roads will not be feasible without an aggressive income reform. The remaining funds can be used to build roads that have no economic value in the sense that no one would be prepared to pay tolls on them.

Government should ensure a sufficiently high level of income is paid workers to enable them afford privately provided education and health facilities. If providers know that the public will be able to pay, many of them will be able to secure market financing to provide top quality education and health facilities. Government can then target additional support directly to users in the form of cash payment for fees and health bills. Impact of such is easier to assess. The target groups are more clearly defined.

Nigeria, like other African countries, has failed to industrialize, in spite of strong lessons from over a dozen Asian countries that industrialization can happen if government gives a resolute push to private businesses. There is a need for pro-active industrial policy in Nigeria. This does not appear to be forthcoming yet as government appears to be leaving the task of industrialization entirely to private sector. Government incentives appear to have played the biggest role in all cases of successful industrial transitions in East Asia.
The task of economic reform before the Obasanjo regime is therefore Herculean. Such however was the task of political reform before the Abdusalam administration this time last year. The Babangida-Abachajuntas had left a pitifully twisted economic and political terrain. To General Abdusalam's credit, his administration achieved the much-desired quantum leap on the political front that the duo of Babangida and Abacha had forcefully denied the nation. He did this by freeing all political prisoners, signaling the end of political repression so clearly that voluntary political exiles returned home. He then consulted widely with every segment of the polity on the democratic transition program, thereby inspiring their confidence in the credibility of his political transition. The major gain from Abdusalam's regime is the successful transition to the Obasanjo-led 4th Republic. Never mind several pockets of lingering political unease, the successful democratic transition has laid the basis for their lasting resolution.

Since we must credit the Abdusalam administration with the resolution of the big political problem of successful democratic transition, and there is no need to reinvent the wheel, the political challenge before General Obasanjo is limited to just keeping and consolidating what that administration bequeathed his own. Doing only that will be too little for a four year term, Abdusalam made the big leap in less than one year, the most important contribution that the Obasanjo regime can make is to achieve the needed quantum leap on the economic front.

One of the main failings of the Abdusalam Government was the economic mess he left unresolved. Another one is the high spate of corrupt practices that permeated the Abdusalam administration. The Obasanjo regime is already dealing with the issue of corruption.

However, the fact that the Babangida-Abacha juntas granted unfair accesses to public funds to a few people is just one side of the economic coin. The far more important but less noticeable other side of the coin is that the same regimes unfairly blocked the access of most Nigerians to legitimate reward for their productive efforts. Redressing this by ensuring that every Nigerian receives a fair reward for productive efforts is probably the most important piece of economic reform that the current regime should pursue.

A drastic income reform is needed to signal the intention of the new government to encourage productive pursuits as strongly as it wishes to discourage corrupt practices. With the amount of money being thrown around in government circles such as the funds that the defunct PTF used to sit upon and the loot still being recovered from past government officials and their cronies, the government certainly has more than the resources required to fully reward productive efforts.

This is what the Obasanjo Administration must do to bring back the Groundnut pyramids that one used to be one of the numerous symbols of our nation's agricultural might? It will make young and old, literate and illiterate, people alike take delight and find fulfillment in flocking back to rural farms as they used to do in the past, and like millions of Americans, Europeans, Asians and Latin Americans still do today?

Do we really need to encourage anyone to go back to the farm, or does anyone really need to be encouraged to go back to the farm? Yes we do. Yes, they will not go without encouragement. But how might we encourage them? Appeal to their senses of patriotism? Tell them to do it because it is good for our nation? After all, that was what operation feed the nation (OFN) jingles sought to do. To stop us from leaving the farms for the cities, stop us from bringing our parents who used to be farmers over to the limitless fulfillment of city life. Not many took the jingles seriously. A few started, but soon learnt that it was futile and got back to life as usual.
How come those more industrialized and faster growing industrial nations still manage to keep more people, many of them highly educated, on the farms than we do? How come millions still see farming as a good occupation in these other countries while it has lost its allure here. How come that they manage to keep farm output growing at paces comparable to service and industrial output. How come that they are able to achieve food self-sufficiency for their nations, reduce food import, and often increase food export, while we continue to fail?

About 50% of the annual budget of the European Union goes to agriculture, most of it in the form of income subsidies paid directly to individual farmers. Many farmers actually rely on such subsidies for as much as 90% of their annual incomes. The same applies in the other economies mentioned above Were the subsidies not there, they too like the Nigerian farmers would have left the farms for contracts in the cities, even if their governments spent hefty sums on agricultural projects. The message is that only income guarantee schemes have succeeded in keeping people on the farms around the world. Nigerians are no different. Many agricultural policies of the government since the 1970s have diverted incomes away from the farms into the cities, and people who used to farm have also left the farms for the cities, perhaps to become contractors to the agricultural ministries. To get them to go back, the government should make it profitable for the individual farmers by effective income guarantee schemes rather than input guarantee schemes that tend not to reach the farmers.

The problem is not just getting people to take new delight in going back to the farms. Income reform is also, what the Obasanjo administration needs to reduce or even reverse the current high rate of emigration of Nigerian doctors from the country. It is common knowledge that a large and growing number of graduates from Nigerian medical schools now treat patients in the United States of America, Europe, Canada, Middle East, South Africa, and so on. Recent statistics claim there are more than 5000 Nigerian doctors officially licensed to practice in the US alone. The number of doctors in Nigerian hospitals has been on a steady decline. The 1998 Annual Report of the Central Bank of Nigeria puts the number of patients per medical doctor in Nigeria in 1998 at 4,977. The same report showed that this was only 3,701 in 1994. Thus, local need for medical doctors rises steeply as our doctors emigrate to greener pastures. It is an open secret that poor pay at home is what they are fleeing from. We had funds to do the more difficult aspect of building medical schools that train such high quality medical staff that could easily migrate wherever they want around the world at will. We pretend we are not able to do the easier bit of paying them enough to make them stay here. In this case, we have sown, and economies that are much better off reap. Thus, the Nigerian government has more to lose by refusing to pay. Paying them more is needed for the country to capture the benefits of its own investment.

This problem is a lot more general than it seems. Most social and economic services in Nigeria involve excessive capital investment but too little human input to make them work. So many new roads, but no one to fill the potholes because the government is not paying civil servants enough to attract anyone to do that. It is probably much better that the few roads around are motoraole than to build more and more each month and then have potholes in all of them
The average Nigerian youth knows that the Nigerian government will not reward productive effort and would not care less whether private sector companies do or do not. An aggressive income reform is n~4ed to reassure the hoards of Nigerian youths who, seeing no meaningful economic future for themselves in Nigeria, will give anything to leave the country and seek economic asylum elsewhere, just anywhere else.

Government needs to recognize the drain on real purchasing power that the public sector wage freeze of mid 1980s to early 1990s, the high rate of inflation and exchange rate depreciation, and not least the withdrawals through AFEM intervention surpluses and appropriate pricing of petroleum products had inflicted on the populace. Real wages must be made to rise substantially if the economy is to recover, as the biggest problem with the economy today is the collapse of private demand.

With manufacturing capacity utilization rate of about 30% and high inventory of finished goods even at this low rate of capacity utilization, only a substantial wage rise can have an economy-wide impact on supply side capacity utilisation. If buyers deplete the' current piles of inventory, companies would earn more revenue, soon find it necessary to employ more to increase capacity utilisation rate, and eventually find renewed basis for expanding installed capacity. Higher real incomes will not be inflationary under present economic conditions. Rather it will boost real economic growth, at least until average manufacturing capacity utilisation rate rises above 80%, which would probably take three to five years to happen.

Government is certainly able to pay. But the issue is not just that government is able to pay appropriate incomes, it is actually imperative that government should pay. It is the only real hope that producers and investors have of keeping their markets and opening up investment opportunities in the domestic economy.

For the suggested economic reform, the Obasanjo regime does not need any more time than the Abdusalam regime had to address the political issue, if the necessary vision and will is there.

The policy reform would have been enough when economic exiles start coming back home as General Abdusalam's reforms made political exiles to.

To conclude, present deterioration will continue to worsen if the government continues to block access to legitimate reward for the productive pursuits of Nigerians by retaining the repressive income and wage policies of the previous administrations. A renewed emphasis on adequate reward for productive efforts by every Nigerian will boost private demand and trigger a round of economic growth that would end the lingering recession and turn the economy around.

As so much funds are being recovered from looters, government should make a determined effort to redirect both the proceeds of the loot and the original sources of the loot back into sustained reward package for legitimate productive pursuits by every Nigerian.