Monday, 25 July 2016

#MustRead: Mr. President and an Economy in Recession

by: Eze Onyekpere

The Nigerian economy is in recession, or “technically in recession”, as the Minister of Finance, Kemi Adeosun, put it last week, and seems to be at the lowest point it can be in recent history. We have rocketing inflation at 16.9 per cent, high unemployment rate, high interest rates exceeding 20 per cent per annum, weak demand for goods and services and not just a stagnant economy, but an economy that is shrinking. 

The foreign currency reserves over the years fell from over $40bn to just about $26bn whilst international rating agencies had a free reign downgrading Nigeria’s economic rating and that of its associated private sector institutions. All the economic indicators are pointing south and the horizon looks extremely bleak. What do all these figures portend and how can they be reversed? It feels like going down a steep slope without any hope of a wedge to slow down the movement.

It is imperative to recall that sometime in July 2015, the Central Bank of Nigeria through the communique of its Monetary Policy Committee warned about an impending recession if things continued the way it was going. The CBN called for urgent and drastic measures to stem the tide but it is obvious no one seemed to have listened. At that time and even up till now, most economic watchers stay glued to the media to know the outcome of the Monetary Policy Committee meetings. The impression has been created that the fiscal policy component of macroeconomic policy does not matter or is either in abeyance or does not exist.

Where do we begin to stem the tide? The first step is to ask and provide answers to the fundamental posers. What does the political leadership of the country headed by President Muhammadu Buhari think about this situation? Is the President and his team sufficiently worried about this ugly scenario? If the political leadership have thought through the economic challenges, have they communicated to Nigerians? If the answer to the second poser is in the affirmative, what new ideas or old tested ideas are they bringing to the table? The government is elected to govern with the consent of the people and is expected to show leadership and policy direction in matters that impact on the lives, livelihood and properties of citizens. From the present scenario, the leadership seem to be in denial and no one is seriously talking about the challenges in terms of planning an exit strategy.

The starting point will be to devise an agenda for action, an overarching framework for governance, not just in the anti-corruption sector alone, but across all sectors. It is a fundamental aphorism that if you fail to plan, you plan to fail. Nigeria is too big to be run without a coherent policy framework. Running Nigeria as the “spirit leads” the leaders cannot be an option in the 21st century. Investors, rational citizens, the international community, etc, need to see the policy framework which will be the basis of engagement. No reasonable person takes a leap of faith in making investments worth billions of naira.

Just like the anti-corruption agenda has taken the time of the administration, Nigerians need to be alive to continue the struggle. We need to see our President lead discussions, appoint strong committees, and hold expert sessions on different themes of reviving the economy. The President needs a strong team anchoring our economic revival. We need the best hands available in this country irrespective of their political, ethnic, religious or geographic leanings and origins.

In reviving our economy, we need to get our priorities right; declare a state of emergency on the economic sector. The contours of this state of emergency will have nothing to do with accumulation of powers in one person or committee to enable the abuse of human rights and liberties. Rather, it will include leadership by example, reduction of salaries and perks of office of political leaders. It is immoral and I dare say illegal, for elected and appointed political office holders to insist on collecting the huge perks of office at a time ordinary workers have not been paid for months. We need to see a Nigerian-centric policy of buying made-in-Nigeria products with the President, governors and legislators leading the way – not just at the formal launch but in real terms.

If the Federal Government can produce over a trillion naira to bail out states, why are we not implementing the federal capital budget to the letter? Public spending and works in roads, electricity, schools and other infrastructure are needed to reflate the economy. So, why the delay? What is happening to the hundreds of billions of naira that have been recovered through the anti-corruption drive or the money saved through centralisation and the curb of leakages by the TSA arrangement?

The emergency will create opportunities for enhanced government-citizens dialogue and engagement so that everyone (if possible) becomes part of the solution. Communication will be important. The President needs good speech writers so that Nigerians can hear motivating presidential speeches which challenge our sense of productivity, patriotism and “Nigerianity”. But the work of economic emancipation cannot be possible without responding to the Nigerian question of how to run a federation with diverse peoples, cultures, religions and expectations out of the system. There have been several conferences funded at the public expense and all the President needs to do is to dust them up and start the conversation. The legislature will finish the remaining part based on the expressed wishes of the Nigerian people. Such discussion and restructuring will liberate the energies of Nigerians and galvanise them into enhanced productivity. There is no part of Nigeria without the requisite resources to survive, blossom and create surplus.

The emergency will activate actions in the energy sector and seek to resolve the posers around access to electricity. Without electricity, enhanced production of goods and services cannot proceed. It will also seek to reform the petroleum sector; many Nigerians are surprised that more than one year after taking office, the Buhari administration has presented no clue through a bill to reform the petroleum sector. These two components cannot go on without seeking a final resolution to the Niger Delta debacle. Nigeria will continue its ostrich movement to think it can resolve its energy crisis without resolving the Nigeria Delta crisis. As we seek to diversify the economy, we must insist on harvesting low hanging fruits, which includes exploiting the whole value chain of the oil and gas industry. Beyond Dangote’s sole intervention, we need refineries and petrochemical complexes, gas collection and transportation facilities. These can immediately improve energy access, lower prices and make the economy more competitive. With gas availability, we will restart the export of gas through the West African Gas Pipeline and even expand its reach beyond the present configuration. We will make same available in industrial hubs, commercial areas and households across many cities in Nigeria.

The value chain approach adopted in agriculture needs to be intensified. Utilizing the vast tracks of arable land in the north and south of Nigeria will reduce un-necessary confrontations and clashes between settled communities and herdsmen will be a thing of the past. Can anyone imagine the economic benefits of using the 95,363 thousand square kilometres of Niger State (and land in other states) for all season farming to the Nigerian economy?

These are just but a few examples and in no way exhausts the possibilities open to us as a nation. The future lies in our hands.

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