Okonjo-Iweala: Economic Slip-ups of 1980s Induced Current Pains, Deprivations

Ngozi Okonjo IwealaChineme Okafor  The Coordinating Minister for the Economy and Ministerof Finance, Dr. Ngozi Okonjo-Iweala, has disclosed that the current cycle of economic pain and deprivation being experienced in the country are caused by the reckless economic mistakes that were made by the ruling class in the 1980s and 1990s.

Okonjo-Iweala stated that the federal government’s economic decisions within the periods ensured that both decades were wasted without any form of progress in the economy.

The minister said this on Sunday in Ilishan, Ogun State, when she delivered a speech at the 12th convocation ceremony of Babcock University.

While describing 1999 when Nigeria returned to democratic rule as the turning point for the country, withthe government’s initiation of various macroeconomic and structural reforms to manage the economy, she however noted that the current government of President Goodluck Jonathan has thus continued from where former President Olusegun Obasanjo left off, adding thatthe results from such economic reforms are gradually beginning to manifest.

According to her, tangible reform of Nigeria’s health, education, power, agriculture and housing sectors amongst others have been initiated with great expectations for growth, while further measures to curtail unemployment, income inequality and poverty are being followed up.“Let us not forget that our economic situation has not always been like this. In the early 1980s, when I was also graduating from my doctoral programme, the economic situation in Africa and for Nigeria was very different.

For Nigeria, the 1980s was a difficult decade. Oil prices had just collapsed, and our economy slipped into a recession. Our average Gross Domestic Product (GDP) growth in the 1980s was -1.42 per cent, while our population continued to grow at about 2.6 per cent,” shesaid.The minister further explained: “Although, we had enjoyed high oil prices in the 1970s, we had forgotten tosave, and so we entered the 1980s without any fiscal buffers. It was at this time that Nigeria became heavily indebted and had to re-schedule debt payments.“As the 1980s went on, our standard of living fell as GDP per capita dropped from $871 in 1980 to $260 in 1989. For the first time in our modern history, our nationwas classified as a low income country.”Okonjo-Iweala said: “The 1990s also came along and did not help us much. Military rule continued. The economic instability remained, with periods of hyperinflation. In 1995, inflation went as high at 73 per cent. We did not diversify our economy and so became even more dependent on oil revenues which now accounted for over 90 per cent of exports.

Our debt burden worsened, and occasionally we had to suspend our debt servicing. Economic growth was veryslow, with GDP growth of about 2.5 per cent. Population growth was also at 2.5 percent so we were basically at astandstill.“The quality of our infrastructure deteriorated and our institutions were poorly managed. And by the end of the1990s, our human development indicators were comparable to that of other least developed countries inthe world.“Overall, the 1980s and 1990s were lost decades for oureconomy. These two lost decades explain much of the pain and deprivation we feel today. If your economy is contracting, and you do not invest in infrastructure for 20 years, it will take some time for you to catch up,” she added.Referring to 1999 as a turning point for the country, the minister stated: “We began to put in place various macroeconomic reforms and structural reforms to manage our economy better. We obtained debt relief which lifted a $30 billion debt burden, and provided us with fiscal space to invest in capital projects in our country,” she said.“We also implemented important reforms such as telecoms liberalisation, banking sector consolidation and privatisation of government enterprises. Today, the ongoing transformation agenda of President Jonathan continues to build on these economic reforms. And it continues to deliver results for Nigerians.”She explained that while there are various accomplishments from such economic reforms, the country still has to overcome the challenges of income inequality, poverty and unemployment.“We fully agree that despite this growth, challenges remain in creating jobs, in addressing poverty, and also in tackling rising income inequality in our country.“The fact is, although our economy has been growing, it needs to grow even faster and in sectors that create jobs, if we are to tackle these three challenges of jobs, poverty and inequality,” the minister stated.