PETERSIDE ECONOMIC REVIEW

Chamberlain S. Peterside, Ph.DMonday, April 21, 2008
[email protected]
New York, NY, USA
FROM PILLAR TO POST
…WHERE IS THE GROUND-BREAKING 7-POINT ECONOMIC AGENDA?

…Defying the Jinx

ot many will disagree that the violent-free transition to a new civilian administration under the leadership of President Umaru Yar'Adua last year in Nigeria was a good omen for the country, despite how questionable the election was seen to have been by observers. As we await Supreme Court’s ultimate verdict on the appeal, lets take solace in the fact that the election tribunal did uphold the presidential poll result, because anything less might have rocked the boat (big time) for Nigeria. Now that is behind us where is the 7-point agenda and when will it start delivering results?


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As closer scrutiny can reveal, Nigeria registered some palpable successes in its financial reform drive over the last several years, which will eventually define its future and has already put her on the radar screen of international investors - yes the progress you might say is yet to trickle down to the poor masses in the desired fashion to ease their pain, but then a good head-start is better than nothing. Which brings us to the new debate on real essence of macro-economic reform and how that should be measured in the lives of the people. Historically, we have been accustomed to indices like Gross Domestic Product (GDP) and per capita GDP as a reflection of level of activity and mass of production going on in a country without necessarily understanding how that impacts life.

Based on GDP growth, Nigeria has done fairly well in the last half decade, logging in growth rates of 5-6% year after year and even close to double digit (8,5%) for non-oil sectors in 2006 – World Bank estimate for 2008 is 9% or more, whereas policy-makers in Nigeria are gunning for 10-13% growth rate over the long-run - quite impressive for a perennial underachiever. But then, if we may ask, how has life-quality changed for the ordinary folk in the last 5-8 year? We recently read about the superlative performance of the stock market and huge bank profits; again how has that improved job situation? Most of all, we are proud to witness the steady acceleration of foreign reserves which currently stands at $60 billion; has that in any shape energized the power, infrastructure or production sectors in the country?

…New Focus of Attention
These are questions that beg urgent answers, which interestingly have become the focus of analysis in the international arena, what with the use of Human Development Index (HDI) as a barometer of how well citizens are faring. It is against that background, one might expect that with the advent of this administration their job could have been well cut-out - that is continuing on the reform path and ensuring that previous gains are consolidated and built upon, toward locking in irreversible tangible benefits that can be felt by the populace – that is yet to happen. True, Yar'Adua’s government started off in 2007 on a sound footing by crafting the seven-point agenda, and empanelling several eminent committees and groups to amongst other issues address:

  1. Perennial electric power shortage - a report to that effect was submitted last month, but the National Assembly has captured the thunder by their aggressive pursuit of colossal funds spent on electricity with nothing to show for it.

  2. Understudy and recommend how the oil/gas industry, (especially NNPC) can be drastically transformed and set on a new track of economic viability similar to state oil companies like Petronas of Malaysia or Petrobras of Brazil – that report also is ready, but we hear it was unacceptable to the powers that be.

  3. Bring lasting peace to the volatile Niger Delta region, through stepped-up law enforcement and continued dialogue – kidnappings have slowed considerably but assumed a new dimension (terrorizing kids and old people for ransom money is the name of the game now), as the long-awaited Niger Delta Summit is yet to be convened.

  4. Alleviate poverty, generate more employment and catalyze higher crop yield/output in the agricultural and allied sectors, whilst stimulating activities amongst micro and small and medium enterprises.

There have been threats and calls to declare state of emergency especially in the decrepit power sector, to no avail. Health and housing problems remain looming large, as mass unemployment and poverty have become a constant variable in Nigeria’s existence equation with no clear sign of way-out. Certainly, recent improvements in the financial sector is delivering benefits to some population segments, sadly though that is not all-encompassing, and the pace is just not good enough whist the 7-point agenda seem to be advancing at a snail speed, if at all. In midst of that we have seen a rising spate of probe panels and reckless truncation of privatization mandates and policy reversals. Could have the sweeping banking consolidation of 2004-2005 become a reality under these circumstances? I doubt it.

…How Much Longer?
Again, this brings us back to the question at stake– where is the earth-shattering measures that can ride on the coattail of huge foreign reserves, low external debt, successful bank consolidation, increased international capital-flow, and favorable sovereign credit rating to drive Nigeria out of this comatose state? Some pundits might offer the same lame excuse that progress takes time to reach deeper into society and that policies are better well thought-out than rushed – in effect that seem to be the case with this administration, underscored by the recent public submission from the finance minister Shamsudeen Usman that President Yar'Adua is indeed slow, but that he prefers to take his time to do things.

Just to offer some perspectives; first, the idea has long been floated on the need to sensibly deploy some portion of the huge foreign reserves as guarantees to issue sovereign debt instruments (bonds) in the international capital market, which Nigeria can then tap to finance power, infrastructure, and counterpart funding in oil/gas sector at home, – still no action in sight, due to policy inertia and administrative complacency. The current finance minister himself has commented on moves toward such sovereign bond offering, but you wonder what is holding that process - by the way, a similar $600 million debt offering by Ghana (that doesn’t hold such huge reserves and has lower credit rating than Nigeria) last year was oversubscribed. Secondly, the long-promised land reform and 100 billion Naira bond offering by Federal Mortgage Bank of Nigeria (probably the two most critical elements that could transform Nigeria’s landscape for good), are still to my utter dismay “in the pipeline”.

How long do people have to wait before the basic dividends of democracy (affordable housing, jobs, accessible healthcare, clean water, electricity etc) reach their doorsteps? Moreso is the administration tactfully analyzing how the world economy is changing as it plays the waiting game? The world market never sleeps and is not waiting for any nation to catch-up. Since the inception of 2008, we have seen oil price climb above $100 per barrel mark and even breached $115 in New York mercantile exchange. As the US sub-prime mortgage mess continues to rattle the global financial market, high commodity prices is adding salt to injury, resulting in escalation of food prices, with some major grain-exporters slapping ban on export of wheat and rice products.

As a highly populated country with substantial impoverished citizenry, is Nigeria ready and capable of withering that storm? Is the current administration factoring in such unforeseen scenarios in the planning process? So rather than focus on pressing issues, we see unnecessary witch-hunting, ill-conceived and self-serving attempts to claw-back some of the gains of the last 5 years, spearheaded by the rank and file of this administration all in the name of due process – to what effect?

…Drumbeat of Due Process
There is no iota of doubt in my mind that President Yar'Adua means well for Nigeria and in fact is someone Americans will typically call “a good man”. Anyone who heard him speak in September 2007 here in New York City during the last “Nigeria Meets the World” Conference hosted by ThisDay newspaper will be sold on his genuine heartfelt desire for change. It goes without saying that economic progress must be built on rule of law, equity and fairness, therefore Yar'Adua’s current drumbeat of due process can’t necessarily be waved aside or considered hollow, but we must be mindful that it is not hijacked to serve personal aspirations of political appointees and government bureaucrats.

It should be very clear to the ordinary eye that certain macro-economic pillars for long-term development are forming in Nigeria, added to that there is currently a tail-wind of positive international sentiment towards reform and investments in Africa, but an atmosphere of policy summersaults that is bereft of ideas, lacking in political will and innate desire to move things forward quickly and aggressively will be counter-intuitive to the vision of this President and detrimental to the yearnings of the people.

Chamberlain is a New York based financial professional and member of Rivers State Economic Advisory Council.


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