FEATURE ARTICLE

Shola Babs-Aro-LamboWednesday, August 10, 2016
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THE NIGERIAN ECONOMY:
ROADMAP TO ECONOMIC RECOVERY AND GROWTH (CONCLUSION)

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Continued from Part 2

“There are no short cuts to any place worth going” – Beverly Sills

“When there is a crisis, one must stick to reforms “– Anonymous.

“….The Nigerian economy is undoubtedly in a recession, and the earlier the present administration accepts this harsh reality and rolls out its austerity measures, the better for us to jump-start our economic recovery and growth” – Shola Babs-Aro-Lambo, The Nigerian Economy (2).

he above-mentioned critical factors form the solid foundation upon which a sustainable economic recovery, growth and development could be achieved.

In any successful turnaround situation, the strategy to explore consists of a number of phases which may occur concurrently and in any order:

New and improved leadership: This phase has been adequately taken care of, via electoral power by the Nigerian electorate when they voted out the Peoples’ Democratic Party (PDP) government at the centre. This was purely a change of leadership as a result of the inadequacies of the 16 years of PDP’s administrations

The Socio-political and economic restructuring of Nigeria:

Restructuring Nigeria simply means that we as a Nation must organize ourselves differently, geo-politically and socio-economically. The more i brainstorm on this, the more it looks like a mirage due to the fact that it has been highly politicized. While the present arrangement favours a particular section of the country, it remains fantastically unfavourable to other sections because of the inherent issues of insecurity, nepotism, marginalization, militancy, insurgency, resource control and derivations; and infrastructural deficits.

Chief Obafemi Awolowo warned against the inherent dangers in the present structure of the Nigerian federation and said: "If a country is uni-lingual and uni-national, the constitution must be unitary. If a country is uni-lingual or bi-lingual or multi-lingual and also consist of communities, which over a period of years, have developed divergent nationalities, the constitution must be federal and the constituent states must be organized on the dual basis of language and nationality. If a country is bi-lingual or multi-lingual, the constitution must be federal and the constituent states must be organized on a linguistic basis. Any experiment with a unitary Constitution in a bi-lingual or multi-national country must fail in the long run," (Obafemi Awolowo, Path to Nigerian Freedom, 1949, pp. 48-49). This was written before the discovery of oil in Nigeria and the advent of present day anti-social issues within the polity. And, according to Professor Itse Sagay, "Political domination and economic centralization has characterized the current arrangement in Nigeria since 1966."

The truth is that, for Nigeria to attempt total restructuring now, we would be playing into the hands of those agitating for resource control through violence. What is desirable right now is partial restructuring which can commence by tackling the social and political aspects of it before the economic. For instance, there is a great need for a constitution in which the principles of true social justice, equity and fairness are duly enshrined. Again, we seriously need to review our stance on policies such as federal character and quota system that tend to stifle our efficiency and development. Meritocracy should henceforth be encouraged and take priority more than ever before.

On the political side, we must do everything humanly possible to reduce the cost of governance. We should start by considering the substitution of our present bicameral parliament with a unicameral parliament as it was recently done in Senegal due to the high cost of running their presidential system of Government. Again, the idea of allocating a large chunk of our annual budget to lawmakers as constituency allowances should be totally discouraged. We also need to make law-making less attractive so that patriotic Nigerian professionals who truly want to serve their nation can occupy such positions. Rome, they say was not built in a day, and the journey of a thousand miles begins with a step, so let us start partial restructuring now and total restructuring later.

Crisis Stabilization Phase: This involves the immediate stoppage of the haemorrhage the economy had suffered and the injection of fresh funds into it. In part one of this piece, entitled, The Nigerian Economy: Towards Financial Recovery, I listed all the various steps the Federal Government could undertake to achieve economic recovery. Some of which are:

  • Drastic Reduction in cost of governance without compromising on efficient service delivery.

  • Lending from internal and external lenders at very affordable rates to fund high priority capital projects required to bridge the infrastructural gap within the economy.

  • Divestment of redundant assets or use as securities for short term funding.

  • Implement an easing, effective and efficient fiscal and monetary policy

  • Continuous recovery of looted funds, and blocking of other leakages within the economic system.

It is imperative at this stage to buttress some of these financial recovery solutions:

The formulation and implementation of economic policies towards achieving a robust and efficient fiscal and monetary control system are necessary in rejuvenating our dwindling economy. So much has been said about devaluing the Naira, officially. Devaluation of any currency is usually one of the stringent conditions for seeking financial assistance from most of the international money lending institutions like the World Bank, International Monetary Fund (IMF), The Paris Club and so on, therefore, those that are pressurizing the Federal Government or the Central Bank of Nigeria (CBN) to officially devalue the Naira at this level of our economic downturn or recession are either disciples of those institutions or they are just unnecessarily being incautious.

Though, it is a truism that the value of a nation’s currency should be determined by the forces of demand and supply, but when the causes of our FOREX imbroglio are so glaringly known, then, in the short to medium term periods, we can correct it through an easing, effective and efficient fiscal and monetary policies implementation; stringent regulation and monitoring of Banks, BDCs and unregistered foreign exchange speculators; aggressive economic diversification; aggressive marketing of oil and other exportable products to new and existing trading countries in Africa, Asia and beyond.

When economies go haywire, there is a natural tendency to close ranks by tightening trade policy and refrain from foreign goods.

Now that the CBN has introduced a flexible foreign exchange market where the exchange rate is determined by the forces of Demand and Supply, it should equally ensure that its implementation is fully transparent and consistent in order to win the confidence of investors, both local and foreign. The CBN must also ensure that our domestic interest rate is fixed in the medium range so as not to strangulate indigenous businesses and discourage direct foreign investments.

In addition, the full implementation of the Treasury Single Account (TSA) by the Buhari Administration is a welcome development and a step in the right direction. This has ensured that the Federal Government had taken full control of cash/revenue management, however, the Federal Government is obligated to ensure that all stakeholders get their allocations on time and appropriately.

Again, this singular act has obviously impacted negatively on the liquidity ratings of all Nigerian Banks, hence, the cogent reason for the continuous retrenchment of Bank workers left, right and centre. My closest ally and former school mate at Lagos Baptist Academy, Obanikoro, Lagos State, who works with a 2nd generation Bank puts it succinctly “Why is the Federal Government complaining about retrenchment of Bank workers? Is it possible for a parent to smack a child and tell him or her not to cry?

The Federal Government must urgently cushion this liquidity effect via capital interventions into the money market, with very stringent regulation and monitoring by the Central Bank of Nigeria. This was exactly one of the strategies deployed by the United States of America and other European countries during their most recent recessions.

On the fiscal side, the Federal Government must continuously block revenue leakages and explore other avenues of revenue generation, for instance, the government can look inwards and tap revenues from the underground or shadow economy. These could be in form of taxes from investments of religious bodies, routine jobs, and from members of the oldest profession in the world, if it is properly regulated. More so, Value Added Tax (VAT) on certain luxurious items, and property tax (on Houses within a specific threshold) should be increased; properties that were confiscated from treasury looters should be rented out for residential and commercial purposes to generate more revenue, as opposed to what was obtainable before, when such properties were sold at unbelievably cheap prices to Government cronies and apologists. The Federal Government can also convert its fleet of aircrafts to kick-start our new national carrier; and continue to invest in revenue-generating capital projects that will be beneficial and affordable to the Nigerian citizenry.

The following are the revenue-generation options for the thirty six states in Nigeria:

  1. Diversifying their economies in line with the Federal Government Economic Diversification Policy: States can lead the Federal Government Agricultural Revolution by empowering and supporting new and existing farmers within their domains; and by setting up standardized plantations specializing in arable crops and vegetables in which they have competitive advantages. The Lagos State Government has newly bought more hectares of land outside the state for mechanized farming.

  2. States should attract local and foreign investors to their domains through favourable business policies, regulations and provision of affordable business spaces.

  3. Investing in capital projects that will improve revenue generation: The construction of industrial parks, business parks, and housing projects will readily come to mind.

  4. Generating revenue from the informal economy within the state (see above).

  5. Since the Lagos State Government is on top of its game on tax collection, other States should borrow a leaf from its tax collection template.

  6. The recession has had a devastating impact on the revenues of State Governments, therefore, the Governors should as a matter of urgency adjust accordingly by reducing the costs of governance. They can start by cutting their salaries, remunerations and security votes; and also cut down on non-essential services, but, they must consult with representatives of stakeholders who may be affected by their austerity measures proposals.

Implement an Economic Stimulus Package: This is the fourth phase of this turnaround management process. This package must ensure that our recovery and prosperity is based on economic integration and policy coherence; and consists of radical economic policies that will effectively diversify the Nigerian economy. A package that will give rational consideration to the following sensitive and relevant issues:

  • Attracting genuine local and foreign investors who are willing to invest in other sectors of the Nigerian economy.

  • Reduction of general unemployment and poverty

  • Promotion and encouragement of entrepreneurial skills for undergraduates. My resource manuscript can assist the Federal Government on this. (PinkyPiggy Solutions, Dublin, Tel:+353-899598226)

  • Provision of seed capital as grants to interested graduate entrepreneurs through the Bank of Industry.

  • Construction of industrial and business parks in partnership with States and the private sector.

  • Supporting small and medium sized businesses (the engine of our economy) to access capital or loans, at affordable rates for expansionary purposes.

  • Provision of intervention funds for the capital market to regain its glory and boost investors’ confidence.

  • Development of workplace skills and work placement schemes for fresh graduates in partnership with States, Local Governments and the Private Sector.

  • Setting-up an Economic Advisory Council, comprising of leaders of industries, academics, and technocrats representing relevant professional bodies. Whoever heads this council can report directly to the Vice-President.

There has never been a better time than now for Nigeria to truly and genuinely embrace a movement of her monolithic economy to a multi-product economy due to the continuous dwindling of oil revenue and output. Economic diversification will enhance increased productivity, increased revenue and creation of uncountable job opportunities for the teeming population of unemployed Nigerians. It will also promote competiveness, innovation and imagination.

Our economic diversification should be phased and highly prioritised, for instance, sectors such as Agriculture, Solid Minerals, Power, Construction, Housing, Tourism, Transportation, Science and Technology need to be phased and prioritized in order to enhance job/wealth creation and poverty reduction.

The Federal Government must lead an Agricultural Revolution that will encourage and empower existing farmers and majority of members of the active population, and also create greater awareness so that interested Nigerian youths will understand that farming is not just tilling the soil. They need to understand that farming is the activity or business of growing crops and raising livestock. It encompasses others areas such as: horticulture, poultry, piggery, fishery, and so on. The Federal Government should also be ready to train and retrain interested participants and if necessary provide them with land or space and other factors of production, apart from labour. Again, the Federal Government should ensure that all the thirty six States of the federation key into its Agricultural Revolution Project.

While the economic diversification of the economy is ongoing, the Federal Government should simultaneously expedite action on the passage of the Petroleum Investment Bill (PIB) that is pending before the National Assembly; and aggressively market our oil and other exportable products to new and existing trading countries in Africa, Asia and beyond.

If China can bombard the whole world with “Made in China” goods, what then is stopping the giant of Africa from doing same, considering our numerous human capital and natural resources. Now is the time for the Nigerian Government to start encouraging hard work, innovation, competition and commitment to work.

Thankfully, if the present administration can win the wars on insecurity and corruption; and moves the Nigerian economy from a sinking state towards the path of survival, growth and development within its four-year term, it would have achieved so much to deserve to deserve an automatic second term from the Nigeria populace, but not without an attempt to restructure the Nigerian federation before the next general elections.

Genuine actionable steps, political will and determination are the pre-requisites to achieving our economic goals in the medium and long-term periods.

The actions needed are doable, while the goals intended are achievable, so Let Us Do It!

Now Is The time To Talk Less And Act More, After All, Fine Words Butter No Bread!

God Bless Nigeria, And Long Live The Federal Republic Of Nigeria!!!

Concluded.

Continued from Part 2

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