As generally ascribed to Benjamin Franklin, “He that goes a borrowing, goes a sorrowing”. This is the typical situation of our dearly beloved nation Nigeria! With the increase in almost everything from electricity to fuel and from tomatoes to plantain especially in this period of COVID-19, Nigerians are moaning and wondering what has befallen them and what kind of government we have. To the ordinary Nigerian, it is PMB and his government that is inflicting all the pains and to a large extent, they are correct. Are our current challenges accidental, no they are not? Are they caused by COVID-19, the answer is no. Did we as a country and particularly the PMB’s government contribute and responsible to the crisis, it is a resounding yes!
All the problems we are facing now started manifesting before PMB took over with an overwhelming goodwill in 2015. He campaigned and won the election on the promise of bringing change that will address most of our socio-economic problems. Over five years down the road, how are we faring? If we classify all the problems into weak revenue generation and high cost of governance, the question is what the PMB’s government has done to address these two major problems. In 2015, our excess crude account had about $2.5 billion with an exchange rate of about N200 to $1 and external debt of about $9.7 billion. Five years after, this year 2020, excess crude account has about $72 million with exchange rate at about N430 and external debt of about $27 billion. It is the same worsening situation in other measurement variables – unemployment, inflation, insecurity, FDI etc.
As many people cautioned, the solution to our economic crisis is not through excessive and continuous borrowing which has been PMB’s government approach. Now that we have borrowed and borrowed and still want to borrow with little to show for it except increasing consumption and some infrastructure, our lenders are getting worried and demanding for tougher terms and conditions before we can get our next meal ticket. Who do you blame, IMF, World Bank or Nigeria?
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Before 2015, it was clear that certain key reforms were pertinent to move the country forward. These include removal of many subsidies particularly fuel and electricity, reducing the cost of governance, rethinking the structure of governance and devolution of powers from federal to states and local governments. Also emphasised was the imperativeness of selling or privatising many government assets such as the four moribund refineries and many other reforms such as appointment of government functionaries and pursuit of policies and interventions from a deeply committed inclusive approach.
As usual, most of the reforms and suggestions were ignored and we are where we are today, a worse situation. Interestingly as we want to borrow more, the needed reforms are now externally imposed on us and we have little or no room to say no.
As usual, most of the reforms and suggestions were ignored and we are where we are today, a worse situation. Interestingly as we want to borrow more, the needed reforms are now externally imposed on us and we have little or no room to say no. Moreover, while we are contending with the emerging IMF/World Bank demands, the Chinese and other creditors are waiting by the corner to enforce their own demands. Will it get better? Not immediately! It will likely get worse before it starts improving but dependent on how serious and committed PMB and his government are to do what is needed.
First for immediate liquidity, the removal of the subsidies should be quickly complemented with selling or privatising many government assets that are idle and wasting with the four refineries that cost about N140 billion every year to maintain without production a good place to start.
Second, CBN needs to pursue a unified exchange rate that will likely result in about N400-N420 to $1. This can be achieved through the average of the multiple exchange rates we have and deliberate mopping up of the excess liquidity in the market. With such move and proper forward guidance policies from key regulatory agencies such as CBN on key issues such as interest rate and inflation, a better stability will be achieved.
Third is the need to use every rainy season to plant economic trees until we plant 20 million trees in every state of Nigeria. With the potential of every tree to generate about N20 thousand revenue every year after three years when they start fruiting, every state will be able to generate additional annual revenue of N500 billion and about N18 trillion for Nigeria.
Fourth is the urgent need for deliberate efforts to reduce the cost of governance. Its urgency is like yesterday. We cannot in the face of an overwhelming crisis such as COVID-19 continue to run a very extensive and expensive system of governance as we currently do. The need to fully implement the Orasonye Report cannot be over emphasised. In line with the saying that leading by example is an excellent way to teach, President Buhari needs to exhibit courage and urgently reduce the number of ministers and aides to serve as a reference point for others such as the governors and National Assembly leadership to follow. With courage, the President needs to clearly agree and pursue the necessary constitutional amendments and persuasions required to make our National Assembly work on a part time basis with significant reduction in the number of National Assembly members. A suggestion will be to have only one chamber (upper or lower) with each state having only two to three members.
Fifth and most important is the need to pursue devolution of powers particularly transferring some items from the exclusive legislative list controlled by the federal government to the concurrent and residual lists controlled by the state and local governments. This will help liberate our economy enhancing more private sector participation through the reduced regulation that can be achieved.
Sixth is the urgent need to address the emerging political risk particularly the 2023 presidency. Irrespective of the economic policies we formulate and adopt, their effectiveness will largely depend on the creation of a stable and peaceful political environment. With threats and counter threats already emanating from different political groups, it is important for PMB and APC to nib the emerging crisis now by making a guiding statement on which zone the presidency will go to. It can start with an unambiguous statement that it will be zoned to the South. It can also go further to state that from an objective and critical assessment of the socio-political and economic factors, the zone that will create the best socio-economic impact and stability for Nigeria at this critical situation is the South East! Just a clear statement like this will engender unprecedented stability and prosperity for Nigeria. As we cautioned since 2015, we are again suggesting what will help in rescuing our dear nation for total collapse and we implore PMB to heed to the counsel. His legacy will be everlasting, and Nigeria will forever be indebted to him!
Dr. Ngwu, is an Economist/Associate Professor of Strategy, Corporate Governance & Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- [email protected],
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