FEATURE ARTICLE

Shola Babs-Aro-LamboTuesday, October 4, 2016
[email protected]
USA

ANNOUNCE THIS ARTICLE
TO YOUR FRIENDS

STILL ON THE NIGERIAN ECONOMY:
SHORT TERM ECONOMIC PALLIATIVES, SOLUTIONS AND MATTERS ARISING

advertisement

“The greatest discovery of my generation is that human beings can alter their lives by altering their attitudes of mind” - William James, American Philosopher, (1842 – 1910)

After rain comes sunshine;
After darkness comes the glorious dawn.
There is no sorrow without its alloy of joy,
There is no joy without its admixture of sorrow.
Behind the ugly terrible mask of misfortune lies the beautiful soothing countenance of prosperity.
So tear the mask! - Chief Obafemi Awolowo, Great Thinker & Politician, (1909 – 1987). Prison Journals

he bitter truth is that the Nigerian economy slipped into recession unofficially a few months prior to the 2015 general elections. As at the 31st of March 2015, our foreign reserves had depleted by 50% (From $62bn in 2008 to $31bn in 2015). During this period, the global price of oil was fluctuating within $100 and $140, yet the immediate past Federal Government still borrowed to service recurrent expenditure at the expense of sustainable capital projects.

The former Minister of Finance and Coordinating Minister of the economy, Dr. Ngozi Okonjo Iweala tactically admitted this much, and was already making plans to address the situation. For instance, during an interview on Channels Television, before the elections, she said “The Government is making plans to introduce belt tightening measures”, when asked about the state of the Nigerian economy. She also hinted that “the Federal Government added $5b to the $4b in the Excess Crude Account (ECA) in 2014, and that the Governors arm-twisted the Federal Government to share the $9b among the three tiers of Government”. Furthermore, “the Governors argued that they could not be saving while their people were suffering, and that some of them even threatened to go to court”.

Subsequently, to the chagrin of eagle-eyed political observers, the privileged members of the political class (The immediate past President and all the Governors) opened their treasuries to fund the costliest political campaigns in the history of Nigeria. While President Jonathan was running from pillar to post, dolling out dollars to Imams, Pastors, Obas, Emirs, Ezes and others, soliciting their support and assistance to canvass for votes, the Governors were spending heavily in support of their candidates at both federal and state levels. All these worsened an already bad situation.

For how long must we live in denial of the truth even in the face of overwhelming facts? As a veteran politician, I have keenly observed that there are certain terminologies that politicians tend to avoid, some of which are: economic recession, economic depression, austerity measures, broken economy and so on; and that our leaders can be categorized into three distinct groups, namely: The Politicians, The Technocrats , and The “Technotricians” .

While the politicians conceal their real intentions, the technocrats declare their real intentions and they are very straight forward and blunt. The technotricians are usually technocrats undergoing a conversion process to become politicians. They conceal and declare their real intentions for different purposes. So many classical examples abound.

I have deliberately raised this issue of excessive campaign funding so that our political elite can learn from what it had caused Nigeria, and therefore, resolve amongst themselves never to toe such path again. We urgently need to enact and enforce the required legislation, and re-orientate the electorate in order to guide against such political profligacy in the future.

In my trilogy piece, entitled, The Nigerian Economy: Roadmap To Economic Recovery and Growth,https://nigeriaworld.com/articles/2016/aug/101.html, published by the top-notch Nigerian News web portal, nigeriaworld.com, i made some valuable recommendations to the Federal Government on how to turn our dwindling economy around. After much rumination on the causes, symptoms and solutions, the hunch to pen a sequel on how the Federal Government could ameliorate the harsh effects of austerity measures on the Nigerian citizenry and Businesses was so compelling, hence the title of this piece: Short-term economic palliatives, Solutions & Matters Arising. Palliatives will not necessarily solve our economic crisis, but they can make a bad situation better.

It is however important and logical to highlight the factors that collapsed the Nigerian economy before recommending short-term palliatives and solutions. These are as follows:

  1. Corruption

  2. Large Bureaucracy and Political Profligacy

  3. Crash in global oil prices

  4. Low oil output due to militancy and vandalism in the Niger Delta Region

  5. Shortage of Foreign Exchange

  6. Infrastructural Deficits (Power, Good Roads, Fast Railway, etc)

  7. Liquidity Problems and distortions in the Money Market (Banking Sector)

  8. High rates of Inflation and unemployment

  9. Depleted Foreign Reserves; and

  10. Low productivity in non-oil sectors

Short Term Economic Palliatives:

The current harsh economic realities that Nigerians grapple with daily have caused so much vexations and anger in the land. Therefore, the Federal Government needs to urgently implement a combination of short, medium and long-term solutions to reflate the economy. Meanwhile, the timing and quality of implementing these short term palliatives and solutions are of the essence. The Government should also garner as much funding from recovered looted funds and short-term borrowing to fund the following palliatives:

  • Fast track the implementation of the Social Welfare Policy.

  • Launch a youth entrepreneurship project that will motivate and encourage youths to come up with creative and innovative ideas that can generate lasting employment for themselves and others.

  • Reduce the cost of transporting people and goods by introducing a two-tier pricing system for domestic petrol sale, for example, reducing the pump price of petrol and diesel for transporters; and enact regulation to checkmate abusers). This will reduce inflation.

  • Reduce the pump price of kerosene and gas to reduce hunger and poverty in the land.

  • Initiate job placement schemes for interested graduates, in partnership with the private sector and government institutions; and subsidize whatever is paid to them by the employers.

  • Initiate a final loan to Bail out States that still owe workers’ salaries and ensure that the Federal Government sets up an ad-hoc monitoring committee that will ensure that such funds are no longer diverted by the executive state governors.

Short Term Economic Solutions

  1. The Federal Government should continue to dialogue with genuine representatives of the Niger Delta Avengers; continue the sanitization of polluted areas in the Niger Delta Region; and implement the resolution of the meeting of federal lawmakers from the South-East and South-South zones, that militants from the zones should be constituted into an officially recognized brigade for the protection of oil installations.

  2. Review the implementation of the Transaction Single Account (TSA) and initiate policies to cushion the liquidity problem in the Banking Sector.

  3. Political stability without a peaceful environment will not attract the needed Direct Foreign Investments (DFI) to reflate the economy. Are we enforcing the required legislations? The news media is constantly awash with sensational arrests of kidnappers, cultists, militants, money ritualists and insurgents, but how many of them have been convicted to serve as a deterrent to others?

  4. The government can attract genuine foreign investors with steady power supply, better infrastructure, low corporation tax, tax incentives, increased import quotas on machinery, and government’s commitment to transparency, accountability and due process in policy formulation and implementation; and the award of government contracts.

  5. The three tiers of government must continuously reduce the costs of governance, especially at the federal and state levels through radical civil service reforms and abolishment of unnecessary allowances and duplicated departments and agencies.

  6. Prioritize infrastructural development – start with those that will generate mass employment and job opportunities. Examples are power, construction of roads and railways, and housing.

  7. The Federal Government must continuously monitor and review the effects and results of economic policies, more importantly those from the injection of funds to boost the economy. Pertinent questions that require cogent answers are: Are the capital projects engaging a substantial number of Nigerians or not? Secondly, are those engaged paid as at when due? And so on.

  8. The Federal Government should sell off only redundant assets that are costing us dearly to maintain, and augment it with limited borrowing from internal and external sources. Some Federal Government abandoned properties have become criminal hideouts, for example, the former federal secretariat in Ikoyi, Lagos State, is one among others.

  9. The Central Bank of Nigeria should revisit its stance on leaving the MPR at 14%, which means that after Ghana’s MPR at 26%, Nigeria’s MPR is the second highest in Africa. Other African countries still manage to keep their MPRs lower, Examples are Kenya (11.5%), Tunisia (6% ), Angola (9,25), Egypt (8.25) and South Africa (7%). Although, the rate at 14% will attract Direct Foreign Investments, but at the detriment of domestic investors who are the main drivers of the economy. What we truly need now is a stimulative monetary policy that will attract both domestic and foreign investors . A policy that will also ensure that genuine manufacturers can easily access foreign exchange; and encourages others to source raw materials locally.

  10. Lastly, the Federal Government should do everything possible to always reduce the incidence (time lag) of bureaucracy.

The Five Government Tendencies

The Federal Government should ensure that it guides against the five tendencies or challenges of Governments all over the world which according to Michael Boskin, former chairman of George H. W. Bush’s Council of Economic Advisors, include:

  1. Waiting until forced to act, often too late and with great harm.

  2. Systematically ignoring long-run costs to provide short-term benefits.

  3. Trying unsuccessfully to circumvent the laws of economics.

  4. Ignoring the laws of arithmetic, selectively counting some effects while excluding others; and

  5. Enacting programs or spending money in a crisis or boom where especially large unintended consequences become apparent only when the economy returns to normal.

“Every Little Helps”

This is the scintillating marketing motto of TESCO’s, one of the biggest megastores in Europe. Now is the time for every Nigerian to stand up and be counted. The various tiers of Government and their institutions alone cannot resolve our current economic meltdown, therefore, we, the citizens must assist and contribute in our own little ways, such as:

The great need for us to change our attitudes, styles and tastes towards “made in Nigeria” products. We must refrain from foreign products that are readily available in Nigeria. This will drastically reduce the pressure on the demand for hard currencies and help to reduce the rate of inflation.

Nigerians at home and abroad should also take advantage of the current situation to key into the various Government‘s economic initiatives to revamp the economy. For instance, the various initiatives and roadmaps have created a lot of job opportunities, some of which are: Rental of agricultural equipment and sales of seeds, fertilizers and pesticides, to new and existing farmers; setting up of training institutes to improve the skills and employability of unemployed Nigerians; Mining opportunities; provision of services and bidding for government’s contracts; and so on.

Furthermore, all Nigerians in Diaspora can also help the Nigerian economy by patronizing “made in Nigeria“ products, wherever they reside; and continually transfer more money to their loved ones at home.

The operators in the money market and the private sector should desist from circumventing Government regulations and policies; and strive to operate in the overall interest of the Nigerian people. Again, those in the private sector must ensure that their goods and services meet internationally approved standards so as to compete favourably in the global market.

Finally, while we pray, fast and hope that the Almighty God turns our economic crisis to economic recovery and growth, we, the citizens must make our little sacrifices; and remain patient with the Federal Government while it works assiduously in achieving this onerous economic goal. I am highly optimistic that the economy will rebound before the end of 2017. This is borne out of my very strong conviction that the present administration has the determination and political will to implement all necessary reforms and policies needed to fix our broken economy. After all, it is inadvisable to start a mission and abandon it half way. The consequences are always more disastrous than when it was not started or implemented.

The sacrifices we need to make today are nothing compared to the current and future benefits derivable. At least for now, we have learned our lessons the hard way:

  1. That diversifying the Nigerian economy is no longer negotiable

  2. That we must embrace prudency against profligacy

  3. That we must urgently reform our Civil Service and rid it of corruption, internal politics, nepotism, big-headedness and incompetence.

  4. That corruption will continue to stifle sustainable socio-economic and infrastructural development; and

  5. That, once the economy rebounds, we must start saving for a rainy day and spend less on political campaigns.

This economic recession is a wake-up call for Nigeria as a nation to reform, refocus and restrategize. According to one of the laws of economics, named after the late economist and author, Herbert Stein, “If something cannot go forever, it will stop”. And to all Nigerians, let us have faith in the popular saying that states “This, too, shall pass”.

On a final note, “You cannot go through a difficult time without getting something out of it” – Anonymous.

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

advertisement
IMAGES IN THE NEWS