Government is financing Corruption and Waste: Buhari’s Policy Somersault

Government is financing Corruption and Waste: Buhari’s Policy Somersault

Being A Paper Presented At A Media Parley, Organized By OneVOICE At the Centre for Constitutional Governance (CCG) Conference Hall, 10 Afolabi Lesi St, Ilupeju, Lagos Nigeria. May 26, 2016

Let me place a caveat here: As civil society practitioners, we always assess the impact of government policy on the vulnerable, disadvantaged groups – women & children, disables, the extreme poor who live under $1 per day. This is our responsibility as we believe in human rights and social justice. It is within this perspective that we examined the effects of government’s recent fuel price hike on ordinary Nigerian citizens.

Whenever every successive government (including this present government) in Nigeria is looking for easy money to run its administration, it comes up with a phantom called ‘fuel subsidy’ to rip off the Nigerian masses. For more than 30 years now, every government policy aimed at providing the solution to the problems in the petroleum sector has turned out to be a big swindle.

It began with the military president General Ibrahim Badamasi Babangida promising heaven and earth to Nigerians upon the removal of the so called fuel subsidy. Olu Falae, secretary to the government of the federation and Kalu Idika Kalu, finance minister went to town lecturing Nigerians that a litre of petrol was far less than a bottle of Coca Cola. Knowing full well that petrol was indeed the underbelly of Nigerian economy, they asserted that it was grossly underpriced and in fact highly subsidized. And this has been the same sing-song ever since.

Different arguments for Fuel Subsidy removal since 1986-2016

a.      Petrol was so cheap that it was being wasted by Nigerians. Were they drinking it like water or beverage? Or were they using it to cook food or using it to wash hands?

b.      Petrol was very cheap in Nigeria; hence it was being smuggled to neighbouring countries to make huge profits. Since 1986 to date, has smuggling stopped despite incessant price hikes? Certainly no. And who are the smugglers? The rich powerful highly connected or influential Nigerians who can haul as many as 50-100 trucks of petrol across the borders. Not the small hawkers who use jerry-cans to smuggle fuel. Unfortunately, smuggling is going on as profitable business with the connivance of the customs officials. Government cannot claim ignorance.

c.       Petrol is far cheaper than a tin of milk or a bottle of Coca Cola. Does milk or Soda drinks affect Nigerians and Nigerian economy the same way petrol does? Added to this, they said petrol is cheaper in Nigeria than United States of America. Where then is the relevance of the economic law of comparative advantage?

d.     Petrol was so cheap it was being adulterated. What brought about this?  Was it because it was cheap or scarce? Mixing water with it to increase its quantity was done by roadside hawkers, which led to many car engine knocks.. Indeed, the so called adulterated petrol was a very low quality grade brought into the country. What can be adulterated was converting aviation fuel to kerosene for domestic uses, not petrol.

e.      The refineries are obsolete and not working. Are Nigerian refineries as old as those in UK, France, Germany and other parts of Europe? The difference is that the European refineries are well maintained unlike the Nigerian refineries that are constantly mutilated by unpatriotic elements at the refineries in exchange for monetary rewards so that fuel importation can continue unhindered. Secondly, during Obasanjo regime, Arthur Eze was given contract for the ‘Turn Around maintenance’ (TAM) of one of the refineries. What technical competence does Arthuir Eze have, to enable him win such a contract? The whole contract was bungled and no arrest or refund was ever made. Also, Total of France was given the TAM on Kaduna refinery but later dropped it mid-way because of threats from oil cabals who wanted oil importation as against local refining. No arrest was ever made. Government just played along. Worst still, when local refineries are patched up to produce little quantities of petroleum products, they are shipped several kilometers away from the loading platform and returned back to Nigeria as imported fuel to earn windfall gains, subsidy inclusive. Yet, government cannot claim ignorance of this, but chose to look the other way.

f.        Monies realized from subsidy removal would be used to build new refineries (a farce for years unending) for domestic consumption and export to generate more foreign exchange. Kachikwu is still singing the same tune today that new refineries will be built to enable Nigeria to begin fuel exportation by 2019. 

g.        Government is broke. This is the same with what Okonjo-Iweala (finance minister) and Sanusi Lamido Sanusi (Central Bank governor) said in early 2012 that Nigeria will collapse if fuel subsidy was not removed. They went to town preaching to every Nigerian they could find that there was no money to run the government, and as such the country was on the verge of collapse. It was all a ruse, a scam, Nigeria is still standing till date. If government is truly broke why did it not levy its political office holders and elected officials? Why did the National Assembly legislators go ahead to purchase #36.6million exotic car each (amounting to #1.314 billion) on tax payers’ money, despite ceaseless public opposition. If truly government is broke, why are federal ministers insisting on #20 million housing allowance each, much against President Buhari’s approved #3.4 million? Why did the lifestyles of these politically exposed persons not change? Why can’t they cut down their various allowances running into millions of naira, and lead by example? Yet, government is so insensitive as to want the Nigeria’s vulnerable groups – women & children, those with physical disabilities and the extreme poor living below one dollar per day – to bear the excruciating burden of fuel subsidy removal.

h.      Exchange rate parity with the price of petrol.

Government arrived at the new price by a simple conversion of using foreign exchange at N285. That N285 is from nowhere; it is basically the secondary source that people buy foreign exchange from, versus the N320, which is the black market rate. If you convert it and throw it in, you will get about N141, N142 or N143. So there are not much of palliative elements left there for you to use.

All these have been the litany of lies over the years whenever government needed to rake in easy money (fuel price hike has always been the first resort), using all kinds of nomenclature: deregulation, liberalization, correct pricing, subsidy etc to justify more hardship, more misery, and higher cost of living for the Nigerian masses.

What became of Babangida’s mass transit buses that were supposed to be running on ‘subsidized fares’? What happened to Obasanjo’s ‘Poverty Alleviation Program’? Where is Jonathan’s SURE-P? All the monies promised by these past administrations for the Nigerian people have vanished into thin air and landed in private pockets of public officials. 

By early 2016 government notified oil marketers that there will be no more subsidy payment.  Consequently, the oil marketers refused to import fuel, insisting that the subsidy regime must continue. Therefore, fuel queues took over major Nigerian cities and towns with prices rising between #150 and #250 per litre. Kachikwu instructed NNPC to begin oil importation 100 percent. The oil marketers ganged up to cause so much delay at loading depots and even at retail outlets called filling stations. The queues worsened with attendant price hike to #300 per litre coupled with citizens’ frustration, hardship, man-hour losses, theft and even arson in some places.  Government became frustrated and desperate. It invited the oil marketers to the negotiation table to offer them 50% importation while NNPC takes 50% too.

This was the point where we were on May 11, when without warning, without consultation, without vexation or incitement, and absolutely heedless of the likely consequences, government announced a 68% increase in the price of petrol. Different arguments came from government quarters, namely that the price has nothing to do with subsidy but a mere re-alignment of domestic prices with international oil market prices; deregulation of the downstream sector; liberalization that allows for the interplay of market forces of demand and supply etc.

Who benefits from this price hike?

Government; oil marketers, depot managers and officials of DPR, PPPRA Federal Ministry of Petroleum Resources etc will benefit from this price hike.. Nigerians must now pay the landing cost and other ancillary charges of petroleum products. The PPPRA’s pricing template cost elements include: cost/freight, (N109.01); lightering expenses, (N4.56); Nigerian Ports Authority (NPA) charges, (N0.84); NIMASA charges, (N0.22); financing, (N2.51); jetty through port charges, (N0.60) and storage charge, (N2.00), bringing total landing cost to N119.74. The landing cost, added to distribution margins, which are retailers, (N6.00); transporters allowance, (N3.36); dealers, (N2.36); bridging fund, (N6.20); marine transport average, (N0.15); and admin charges, (N18.37), brings the total distribution charges to N18.37. According to the PPPRA, the landing cost (N119.74) plus total distribution margins (N18.37) gives a total cost of N138.11 per liter, putting the price at between N135 and N145.

All these smack of a solid framework for corruption and scam, which is what the government should have dismantled. Indeed, in abdicating its duty of providing welfare for the people, government chooses to finance corruption and waste in the petroleum sector. The oil cabals are arm-twisting the government, dictating what they wanted. Hear them: in response to Kachikwu’s statement that “any private entity can now import fuel at the prescribed price benchmark of between #135-#145 per litre…. but must source its forex at the secondary market”, the oil marketers (led by Dapo Abiodun of DAPPMAN oil) met Kemi Adeosun finance minister on Friday May 20 insisting that they will not import fuel unless the CBN provides forex cover for them. This is another grandstanding with government, the third time this year alone.

Who loses? The Nigerian masses, the disadvantaged groups – the very poor, women & children, disables etc. To these groups over the years, there has been deficit trust for successive governments, over inability to deliver programmes meant to alleviate their parlous social and economic conditions. Therefore, this fuel price increase is another betrayal of trust that Buhari’s government did not live up to its avowed change mantra. Deregulation or liberalization or price re-alignment, whatever it is called can only lead to higher prices and inflation (currently13.72%) of virtually every commodity. Subsidy removal will stifle the economy, further and without adequate mitigating initiatives to cushion the shock, social dislocation and public unrest is unavoidable. Immediately following the announcement, the forex rate jumped from #320 to #385 to the Dollar; the costs of foodstuff and soup ingredients soared. The cost of transportation doubled as well.

The basket of hardship the Nigerian masses have come to bear are: Increases in electricity tariff, fuel price, higher costs of goods & services, transportation cost, review of VAT & other taxes, (proposed) return of Toll gate etc all come from the same pockets of the masses, who comprise three-quarter (131.25 million) of the 175 million population of Nigeria. They live below $1 a day. Many of them are women, children, disables and the extremely poor who need government assistance and subsidy in education, health and social welfare. But government in Nigeria does not subsidize anything, unlike in many European countries where there are free or subsidized education, health care, housing, public transportation and foods.

Petrol, the single commodity that has a reverberating effect mechanism across the whole economy, is what every government (now including Buhari’s administration) likes to tinker with, to inflict excruciating pains on the masses.

Breaking News: The CBN announced yesterday that forex will be liberalized, meaning that it will compete with the parallel market, by being auctioned openly. The implication is that we have not seen the end of fuel price increases. Whatever, the open market exchange rate of the dollar to the naira will continue to determine the eventual price of fuel. But, we siddon look as things begin to unfold.

The Way Forward

Government needs to go back to the drawing board and come up with a better strategy that offers relief and succor to the suffering and suffocating Nigerian masses.

In deference to the Court judgment (under Obasanjo’s tenure) that the issue of fuel price hike does not constitute labour issue and therefore outside trade dispute ought to have informed the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) not to get involved with the issue of policy. Instead, labour ought to have declared strike on the effects of the fuel price hike on workers’ wages, and the effects on the ordinary citizens. Labour needs to query government double standard – why the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) should continue to fix salaries and allowances of political office holders and elected officials while the Federal Civil Service Wages Commission fixes salaries for low cadre workers. There is need to harmonize the two commissions to fix all workers’ salaries and allowances from bottom up. Secondly, labour ought to have advised its members to sit at home, that under the fuel price hike with its attendant effects on transportation cost, foodstuff and other things, workers are unable to come to work. Here, government unilaterally fixed fuel price without considering its effect on wages. Therefore, labour should have insisted that government should also review wages upward by the same 68% margin upon which the fuel price hike rested.

Also, government should explain withholding forex at the CBN from fuel importers but provides the same forex cover ($30 million) for Dangote to establish cement factory in Congo or what are the economic benefits in providing forex to Audu Ogbeh minister of Agriculture for the importation of Brazilian grass for Fulani herdsmen to graze their cattle. Withholding forex at the CBN vault will also seriously discourage foreign direct investment.

Although we are not unmindful that the naira has unofficially been devalued, government must not abdicate its responsibility to Nigeria and therefore should not devalue the naira officially as being speculated. Any further official devaluation of the naira will have a devastating effect on the economy which will lead to unquantifiable hardship for the greater majority of Nigerians.

We hope that this vicious cycle of policy somersault will not push Nigerians into mass revolt in the not too distant future.

The Buhari administration owes it a duty to Nigeria and Nigerians that it will not surrender control of the economy to mindless cabals operating as importers of petroleum products. Even while sourcing forex at the secondary market, government must monitor and control their activities to ensure that Nigerians are not further pauperized.

In conclusion, there are questions left unanswered.

1. What happened to the crude oil allocation to NNPC for local refining, that NNPC claims it uses in the form of oil swap?

2. Two refineries (Port Harcourt and Kaduna) are operating at 20% capacity. What is the official price for the refined petroleum products coming out of these refineries?

3. Government should explain to Nigerians the various palliatives and the implementation process.

Having forced this petrol price hike down the throat of Nigerians, it carries the cost of waning public goodwill and trust, the crest upon which Buhari rode to power. It remains to be seen therefore how Buhari hopes to move forward with this baggage of trust deficits.

Many thanks for your kind attention

Pastor Adedeji Adeleye                                                                                   

(dejiadeleye.blogspot.com)

Executive Director, IAP and Chair, OneVoice Media Committee

The Lingering Economic Crisis in Nigeria

      The Lingering Economic Crisis in Nigeria

Being A Paper Presented At A Media Parley, Organized By OneVOICE At the Centre for Constitutional Governance (CCG) Conference Hall, 10 Afolabi Lesi St, Ilupeju, Lagos Nigeria. April 21, 2016

Nigeria is experiencing the weakest recovery in modern history, even-though there is an economic recovery expansion, and we are almost back where we started. Most importantly soaring inflation (12.4%, the worse in four or five years), insipid youth unemployment, long chaotic queues at petrol filling stations, paralyzing power outages, pipeline vandalism by saboteurs, increasing depreciation of the Naira, excruciating economic hardship by almost 90% of Nigerians etc ALL staring us at the face, with perhaps no immediate solution in sight or at best government is losing grip of effective management of the economy. And indeed, we have failed to get back where we started.

Admittedly, Buhari’s administration inherited a sick economy where all economic indices were on the downward trends. Equally it appears Buhari and the APC-led government did not anticipate that they could win the elections and as such did not quite prepare an economic blueprint that can lead us out of the woods. Therefore, it appears that they were (and are still) merely groping in the dark.

Given this scenario, could economic ideas (the Keynesian economics) from almost a century ago help us now? Is our economic situation, the so called economic hardship where there are no jobs, no businesses and money is very hard to come by, comparable to the Great Depression of the 1930’s?

Being the most influential economist of the 20th century, British John Maynard Keynes (1883–1946) postulations were adopted by Franklin D. Roosevelt to battle the Great Depression and helped US to climb out of the economic disaster.

Keynes theorized that during recessions, the public gets frightened and holds back on spending, resulting in more layoffs, which in turn produces less spending in a vicious circle of economic decline. The way to break the cycle, said Keynes, is to pump government spending into the economy by building roads and bridges and other public works including housing, electricity and rural infrastructure. America under Franklin D Roosevelt even hired unemployed writers for a Federal Writers’ Project, traveling the country to produce guidebooks on states and cities.

 Sadly, in Nigeria, Buhari’s government has always complained of lack of money even in the face of stark realities: (a) various monies recovered from looters of public treasuries amounts to over #1 trillion; Fowler the head of Federal Inland Revenue Service (FIRS) stated that tax defaulters rushed to pay in, billions in 2015 and our tax has since markedly improved; Colonel Alli (rtd) the head of Customs & Excise also posted more than #1 trillion  by December 2015; and the introduction of Treasury Single Account (TSA) has brought more billions of naira into government coffers from all the 81 Revenue Collection Agencies (RCAs). Yet this government is holding money back from the economy. Worse still, government has plans to squeeze the already over-squeezed Nigerian masses further: (a) electricity tariff was increased from #13.2 per unit to #21.2 per unit consumption; (b) Tollgates collections on Nigeria road highways are coming back; (c) Fuel price increase is also being contemplated (d) Vice President Yemi Osinbajo is canvassing for higher VAT and other taxes.

However, John Keynes overturned classical economic theory which said that free markets produce full employment. Keynes argued that aggregate demand determines the level of economic activity. If demand falls short, it leads to recession and high unemployment, which is what is affecting Nigerian economy here: The purchasing power is decreasing coupled with scarcity of money. Apart from President Reagan, most American presidents since 1980’s particularly from George Bush senior to date brought back Keynesian economics, ramping up spending in order to pump up aggregate demand.

Government Efforts since March 17, 2016

Government was able to convene a National Economic summit made up all the State governors, federal ministers, Vice President and the President. But it appears it was a jamboree of sort, as the outcome did not provide any clear-cut economic blueprint for the country.

Fuel importation & refineries, 

The current nationwide fuel scarcity reached a crisis point with a litre of petrol selling for between N150 and N300 against the official price of N86.50 in many parts of the country. Despite repeated assurances by the Nigerian National Petroleum Corporation (NNPC) that the scarcity was artificial, most petrol stations were shut down with no fuel to sell. The few that opened witnessed long queues of desperate motorists and citizens who needed fuel for their vehicles, motorcycles and generators

The government’s reaction typified by indecision, bureaucratic vacillation and avalanche of promises made to mollify the public only worsened the situation as crowds piled up at fuel stations. Expectedly, fuel hawkers had a field day as black market thrived with many of them selling petrol in residential areas and along major roads in the country. These hawkers as racketeers ripped off desperate motorists willing to pay any price.

Effects of fuel crisis are seen in hike in transport fares. Also, stranded commuters suffered untold hardship. The prices of commodities have also gone up as a result of the astronomical hike of fuel prices, which invariably has increased the cost of living generally such as foodstuffs, detergents and other household items, even a sachet of pure-water is now N10.

Meanwhile, the power sector is facing its lowest moments which has plunged the nation into suffocating darkness, as fuel scarcity denies domestic and commercial consumers from operating private power generators.

The official promise was that the fuel scarcity would end by the first week of April but it may take about four more weeks to get fuel into the country due to the long process of ordering petrol from refineries. This crisis was inevitable, when the NNPC, in a fit of bad judgment reduced the import allocation ratio of private companies from 60% to 22%. In that event, the NNPC was expected to import the entire balance in supply of petrol requirements for allocation to oil marketers for eventual distribution. Indeed, the NNPC even argued that this option would not only be profitable but also checkmate the antics of oil marketers over the volume of fuel imported. 

 That standpoint provoked widespread speculation in certain quarters that the NNPC was short-changing the oil marketers. And going by the recent fuel crisis, the decision was a bad miscalculation as NNPC failed to meet its obligation of fuel importation. This opened the window for private marketers to frustrate supplies at depots and filling stations in order to get a higher import allocation and ensure government cancels its price modulation mechanism and resumes subsidy payments. 

 However, the market fundamentals neither support a return to subsidy nor an upward review of prices at the pump. The NNPC is grappling with fresh challenges as its operational deficit rose to N24.23 billion in February, from N3.55 billion in January. Ultimately, the NNPC reversed course with a new allocation formula that reverts the bulk of importation to the private marketers in exchange for a commitment not to engage in sabotage and hoarding. The decision to give a greater allocation ratio back to private companies will allow NNPC to focus on the key task of building domestic fuel reserves.  

 It is so unfortunate that fuel, rather than be a major part of the solution, has become part of the problems of Nigeria to be solved. There is administrative inefficiency at the highest level of the oil industry management. This must be corrected before any policy thrust can work.

Besides, the high degree of policy inconsistency also remains a major problem affecting the industry. The contradictions and confusion inherent in the downstream sector have remained intractable. The four existing refineries are still grossly under-performing below capacity. What then is happening to the huge allocation of crude to the NNPC? If this allocation is effectively refined and the products released, it should go a long way to meet local demand and reduce dependence on importation. Therefore, the oil allocation to the NNPC should be discontinued since it ends up being managed in ways that are far from satisfactory or transparent. The fact of the matter is that NNPC’s opaque management system can hardly be said to have changed under Ibe Kachikwu.

 The NNPC symbolizes the endemic and systemic corruption that has become second nature to Nigeria. Because of the huge and varied opportunities the oil industry offers political leaders to lubricate the wheels of their extended patronage networks and fill their pockets, it would seem there is a deliberate ploy to keep the sector down. Over the years, successive administrations seemed to cash-in on the corruption in the sector to further their political and economic interests.

 With all the machinery at the disposal of government and its agencies, all that is needed to make fuel available is good planning and transparency. Whether it is granting of licenses or the actual importation, proactive planning would ensure the availability of petrol and avoidance of embarrassment as well as the untold hardship visited on hapless Nigerians. The usual excuse by the NNPC that the scarcity is caused by panic buying is no longer acceptable. The country has had enough of the buck-passing.

Power sector,

The power sector is another problematic area. Power generation  has been dropping in the last two months particularly to an all-time low of less than 1,080.6 megawatts, MW,  and most Nigerian households now live without electricity as they have also run out of fuel to power their generators.

Captains of industry and small scale business owners scrambled to hold talks with government after a debilitating power and fuel crisis escalated, threatening hundreds of companies. Business leaders have described the situation as grave, warning that crippling power cuts, caused by decreasing electricity generation, were already undermining the competitiveness of local products, and also worsening the low productivity levels in the manufacturing sector.

Nigeria’s continued power and fuel supply crisis is posing the biggest obstacle to growth, the Business chieftains asserted. Analysts warned that the projection that the economy would grow at a slower pace of 1.5 percent in 2016 now appeared too optimistic.

Industrialists, economists and consumer watchdogs hit out at government, accusing the authorities of pretending that all was well when the fuel, electricity crisis was blowing out of control. Indeed, the lack of availability of power is likely to further raise the product prices as manufacturers recover overheads over a few number of units.

 Within various homes, meat, milk and other perishable foods have gone bad due to constant blackouts

Unfortunately, there is no end in sight; rather, the government’s response has been to blame past administrations for their present failures. This raises fundamental questions over the managerial capabilities of those in charge, and vindicates criticisms that the APC was not prepared for governance. Nigeria’s continuous dependence on a corruption-ridden fuel importation regime is baffling, Indeed, for an oil producing country to refuse apparently to build and operate functional refineries preferring importation is most pathetic and disgraceful

ON THE NIGERIAN ECONOMY

The Finance Minister Kemi Adeosun espoused an economic vision for the government. With reference to the impact of the falling global oil prices on the Nigerian economy, Adeosun was of the view, “in the past we have the means but not the will. Now we have the will but we no longer have the money to invest. The safety blanket of oil has been ripped away, laying the poverty of Nigerian institutions bare.”  For decades, government has only been tinkering at the edges of its institutions, infrastructure and economy committing grave mistakes of about 40 years of economic maladjustment and fiscal imbalances.

Adeosun argued that collective government’s economic blueprint must therefore equip the future generations to be creative and dynamic, a blueprint that allows us to articulate a vision of a Nigeria with a strong educational foundation; rich in depth of knowledge with a breadth of skills; an expansive infrastructure capable of servicing the needs of Nigerians. Describing the 2016 as an expansionary budget for investment and growth, Adeosun espoused, “we must find the money and create a system that enables targeted expenditures, based on the nation’s priorities. Expectedly, the expenditure must be efficient and impactful, focused on creating wealth for the majority.”   

Indeed, the finance minister’s economic vision is hinged on three tripods:

(i)                            Structured borrowing:                                                                                              

About N1.84 trillion is being outlined for borrowing in 2016 budget to invest in priorities of Transport, roads, Housing, Power and Health. But I believe education ought to be included as a priority as well given its enormous potential and real contributions to national development. It must be emphasized that this type of borrowing will not fiscal indiscipline, but rather there will be “aggressive programme of fiscal housekeeping,” to plug leakages in the system and avoid wastages. While being careful in borrowing we must equally be prudent in spending. 

(ii)                          Targeted Investment.

Government intends to increase its expenditure through heavy investment in infrastructure, and fund budget deficit and negative trade balance cost effectively. There will be substantial increase in gross capital formation; acceleration of GDP growth and infrastructure development to unlock economic growth.

(iii)                       Diversified Growth

While there will be heavy diversification into non-oil sector, particularly solid minerals and agriculture, Economic growth will be stimulated to achieve a real Gross Domestic Productivity (GDP) growth rate of 4.2 percent in 2017 which is more than the average population growth rate of 3.2 percent annually. Secondly, government intends to reduce the cost of governance and strengthen institutions to frontally combat corruption; and extract efficiency in public service. 

All the three structural segments are, in fact, predicated on what the minister called ‘Counter-cyclical budget expenditure model’, which enables government to offset the risks of economic recession and create an economy that is not based on either fragile consumer spending (mostly import-dependent) or over-reliance on oil.

The Missing Links

In all the places or events or fora where President Buhari, Vice President Osinbajo and Finance Minister Kemi Adeosun have visited and spoken about Nigerian economy, they have all espoused mere ideas, mere economic visions, mere imponderables lacking the actualizers, the targets and the deliverables. Government needs to set targets achievable within a time-frame of three months, six months or one year and so forth. But government is not keeping the public well informed about how it wants to implement and actualize the economic vision so set out. The information management here is highly defective and requires total effective overhauling. Lai Mohammed (along with Kemi Adeosun) needs to embark on weekly or monthly briefing on the state of the economy, and should welcome suggestions or constructive criticisms from Nigerians. Secondly, there is an urgent need to set up economic implementation team to give vent to the vision.

However, from our end here, we want to provide the missing links. Fiscal (or Financial) house-keeping is a 21^st century economic model of finding ways to plug spending leaks, and adopt tight fiscal measures. Ultimately, it is based on sound proactive financial planning and tax advisory regime. Embedded in this are policy measures like:

The Treasury Single Account,

The advantages of TSA are: It enables efficient cash management; allows complete and timely information on government cash resources; improves appropriation control; and also improves operational control during budget implementation.

Discovery of ghost workers

The finance minister was able to discover 34,000 ghost workers thereby saving about N2 billion for the government. Indeed, newspapers’ report this week however point out that the figure has increased to 37,395 ghost workers on account of further discovery by the EFCC. It will ultimately continue to save more money for the government.

Cost Effectiveness

The finance minister announced the ban on ‘first class trips’ by top government officials. They are to fly only ‘Business class’ while their aides accompany them would fly ‘economy class’. This is to cut down considerably the cost of air-tickets by public servants, about N62 billion in 2015. Besides, government is also negotiating partnering with some airlines to bring down the cost of air-tickets, which hopefully when consummated, will save about N13 billion for government.

However, our suggestion to government is that it can save more billions by cutting down estacodes approved for public servants on foreign trips.

To further reduce the cost of governance, government must consider complete reduction of the 18 different allowances being paid to members of the National Assembly. Most of these allowances (hardship, ward-robe, furniture, car, travel, constituency, sitting etc) are unnecessary and a complete drain on the tax payers’ money.

Applying Financial housekeeping to the capital market provides a sound investment policy that helps to reduce risk and maintain investor confidence.

So how can we help Nigerian economy NOW following Keynes economics?  Let us speculate:

1. Clearly, we would advise the federal government to invest in infrastructure, building roads and bridges, improving the electricity generation and distribution,, and developing alternative energy. Following Adeosun, government is already planning to do just these and even more. OneVoice is equally suggesting to government to include greater investment in education and social welfare, in addition to what is being planned for health and housing.

2. In the face of worsening unemployment workers will not accept pay-cuts, neither will they allow government owing them months of salaries. Therefore, we would rather support drastic cutbacks in emoluments and other pecks to political office holders, as well as drastic reduction in the use of government resources by these officials.

3. We would favor lowering taxes for Small-medium enterprises and would certainly support tax breaks and other incentives for corporations to build new factories, hire new employees and ramp up research and development.

4. Keynes felt that countries should not run large trade surpluses or deficits. We are in agreement with him. Therefore, we are in support of measures that will boost Nigerian exports, give Nigerian companies a competitive edge, and adopt measures that will help reduce any trade deficit or imbalance with other countries doing business with Nigeria.

5. There are super rich Nigerians (especially high profile politicians and captains of industry) who are hoarding "too much" cash—we (following Keynes) are in favour of increasing taxes on these super-rich, and maybe even the near-rich, to help pay for venture capitals, finance infrastructure investment, and narrow the budget deficit.

6. On March 17, 2016 we made some suggestions to government. They are still very relevant today:

(a)  On transportation: government must take advantage of the waterways and railway to cargo the hinterland distribution of petroleum products, instead of relying on trucks to haul the fuel products across Nigerian roads. The inland waterway from Port Harcourt to Lokoja is begging for attention, to be used by NNPC. The Nigerian Railway corporation can be made to provide rail-coaches for fuel haulage from south-northward. However, this is a temporary measure to ward off constant vandalism of the oil pipelines, and also allow more time for the modular refineries to take off.

(b) On Road rehabilitation, reconstruction and repair: We have canvassed oil-for-cost swap deals, reminiscent of the Abacha days. Under Abacha regime, Construction companies like Julius Berger, Dumez, Arab Contractors were all settled with crude oil in exchange for repairing and maintaining major Nigerian roads. This again can be replicated by Buhari’s administration instead of paying these companies from the scarce or limited money available to this government.

(c) On Agriculture: There is need for the creation of more agriculture extension service centers for cereals, cocoa, rubber, plantain, cotton, groundnut, yams and cassava etc to aid the various farmers with quality information, support and best crop yields. Secondly, we suggested that government should set up regional commodity exchanges to facilitate inter state or inter regional commodity trading based on state or regional competitiveness. Interestingly, some states - Kebbi and Lagos States have signed agreement on commodities. Osun and Ogun states are also shopping north for the supply of different commodities. This is a good development which must now be complimented by the creation of Marketing Boards for the different commodities, especially for export purposes. Also, government needs to establish Agriculture Bank to take care of loans to farmers, financial facilities and intermediation to Regional commodity Exchanges, Marketing Boards and Agriculture extension service centers etc. 

(d) Electricity: This is a critical concern of every Nigerian. Because the commanding height of the Nigerian economy and other sectors, including small and medium scale enterprises, and the various Nigerian homes depend on electricity. Indeed, it must be stated that no country, apart from Nigeria, has ever subjected its power generation and supply to the private sector, much less to an unpatriotic, selfish, and destructive Nigerian private sector. The new owners of GENCOs and DISCOs had thought (when they bought PHCN) electricity sector will be just like GSM phone sector where MTN, Airtel Globacom, Etisalat etc (including the ancillary industry operators) are all smiling to the banks daily. They had expected windfall profit from electricity. Little did they know that the sector requires huge billions of dollar investment which they do not have. Hence, they are now arm-twisting the government to give in to more tariff increases, non-compliance on metering of every household, and complaints on irregular supply of gas from NNPC to power the turbines to generate electricity. It is becoming constant now to experience power outages throughout the country than to have electricity.

OneVoice believe government should reconsider a buy-back of these GENCOs and DISCOs before considering new investment intervention in the sector. Secondly, government must commit all multinational companies selling generators in the country to a Treaty Agreement on Power Stabilization, otherwise any of them caught in shady deals with officials of GENCOs and DISCOs to plunge this country into darkness in order to sell their products will be prosecuted. 

 7. Constant Communication: There is a disconnect between Buhari’s Administration and the Nigerian public because government (especially relevant officials and agencies) has refused to brief the public of its intentions and how it wants to carry them through, even setting targets and time-frames to achieve those targets. Government assumes it has the moral authority to carry on with governance without the people’s inclusiveness. Lai Mohammed, Ibe Kachikwu, Emefiele of CBN, Adeosun etc all need to buckle up and begin on constant public briefing to carry Nigerians along on government programmes and activities.

Otherwise, tempers are flying over the hardship caused by fuel and power crisis that has refused to abate. This could snow-ball into discontent that government may find difficult to handle.      

Many thanks for your attention.

Pastor Adedeji Adeleye

(dejiadeleye.blogspot.com)

Executive Director, IAP and Chair, OneVoice Media Committee