Dare Babalola
Former Kaduna State Governor, Nasir El-Rufai, has attributed Nigeria’s persistent economic underperformance to what he described as a “talent-allocation crisis,” arguing that the country’s most capable minds are being drawn into unproductive activities due to distorted incentives within the system.
In a detailed policy statement issued on Wednesday, El-Rufai said Nigeria’s economic challenges are not rooted in a lack of human capital, capital resources, or ideas, but rather in how incentives shape where talent is deployed.
“Nigeria’s growth problem is not primarily a shortage of talent, capital, or ideas. It is a problem of where our best talent goes—and why,” he stated.
He explained that across societies, highly skilled individuals tend to gravitate toward sectors that offer the highest returns, noting that economies grow when such returns are tied to productive activities like entrepreneurship and innovation, but stagnate when they are concentrated in rent-seeking.
“People do not wake up intending to harm their country. They respond rationally to incentives. So the right question is not ‘Why are people corrupt?’ but ‘What activities does our system reward most handsomely?’”
El-Rufai highlighted key economic indicators to underscore his argument, noting that while Nigeria recorded about 4.1 percent GDP growth in 2024, the figure remains inadequate for a country with its population size and development needs. He added that GDP per capita remains low at approximately $1,084, while about 93 percent of the labour force operates in the informal sector.
According to him, Nigeria’s tax-to-GDP ratio—estimated at 8.2 percent—reflects weak fiscal capacity and an overreliance on discretionary revenue collection mechanisms.
“These numbers describe an economy where scale is risky, visibility attracts predation, and long-term investment struggles to compete with short-term access,” he said.
The former governor argued that Nigeria’s current structure rewards proximity to power and regulatory influence more than productive enterprise, pushing talented individuals into political brokerage, legal disputes, and administrative maneuvering rather than innovation and business growth.
“In such an environment, the most capable Nigerians often find that the fastest and safest returns come not from building large, productive enterprises—but from proximity to state power.”
He warned that rent-seeking activities weaken economic growth by diverting resources away from productive use, increasing the cost of doing business, and discouraging investment.
“When the brightest minds are pulled away from production, the quality of entrepreneurship falls, technological progress slows, and the economy’s long-run growth rate declines.”
El-Rufai also pointed to critical infrastructure and systemic constraints hindering economic expansion. He cited Nigeria’s limited electricity supply—just over 5,300 megawatts for a population exceeding 200 million—as a major bottleneck to industrial growth.
He further highlighted inefficiencies in port operations, where vessel turnaround times average around five days, creating delays, increasing costs, and opening avenues for rent extraction.
On employment, he noted that only about 16 percent of Nigerians are in wage employment, leaving the majority in low-productivity, survival-driven economic activities.
“This is not because Nigerians lack ambition, but because the system penalizes formal growth,” he said.
El-Rufai called for a comprehensive restructuring of Nigeria’s economic incentives, summarising the reform goal as making “value creation more rewarding than value capture.”
He advocated for reducing discretionary powers in governance, improving regulatory transparency through digitisation, strengthening property rights, and making it easier for businesses to scale.
“When these conditions exist, the most talented Nigerians will move—naturally and voluntarily—into productive enterprise.”
The former governor outlined specific benchmarks that should be achieved within 24 months if reforms are effectively implemented. These include increasing power supply to between 8,000 and 10,000 megawatts, reducing port delays to under four days, raising wage employment to about 18–20 percent, and improving the tax-to-GDP ratio to 10 percent.
He also called for expansion in manufacturing and non-oil exports, both in value and the number of participating firms.
“These are not technocratic targets. They are signals to talent—telling Nigeria’s brightest minds that building, producing, and exporting now pay better than extracting,” he noted.
El-Rufai concluded by stressing that Nigeria’s future depends on whether its system rewards productive enterprise or rent-seeking behavior.
“If the system rewards brokers over builders, we will continue to underperform. If it rewards producers over extractors, growth will follow—rapidly and durably.”
Reiterating his central thesis, he said:
“Nigeria does not lack talent. Nigeria must reallocate it.”
He ended the statement with a call for decisive action to reposition the country’s economy for sustainable growth.
