Citizens and experts who gathered Tuesday in Abuja to discuss how Nigeria can build a post-oil economic future placed good governance, true federalism, and removal of the overburdening fuel subsidy top on their list of immediate expectations of the incoming government.
The event – organised by The Carnegie Africa Program and Agora Policy was to launch and present the book titled “Economic Diversification in Nigeria”, written by Zainab Usman, the pioneer director of the Carnegie Africa Programme.
Kaduna State Governor, Nasir El-Rufai who spoke at the event said Nigeria’s enormous fiscal challenges require necessary and urgent reforms, good leadership, and a firm commitment by the incoming government to take bold and decisive steps in devolving powers from the central government, removing fuel subsidies, as well as ensuring that competent people are engaged into office.
According to him, with Nigeria’s revenues just among the lowest in terms of GDP globally, worsened by ballooning debt, the size of the federal government, and a number of states struggling, the country is already “boxed against the wall” and may face dire consequences if urgent actions are not taken.
“We don’t have any choice, Nigeria must address fuel subsidies. They must be addressed tomorrow, otherwise, we’ll end up in the hands of the IMF,” said El-Rufai whose party- the ruling All Progressive Congress (APC) has been in power for eight years.
“So I think that that kind of understanding by the political elite will bring everyone to an understanding so that we are realistic about tackling our problems and our situation. We have to be very serious and pragmatic about solving our problems.”
He said at this critical juncture in Nigeria’s economic and political history, the country does not have a choice but to sit down and agree that the only way out of an imminent collapse is absolutely to alleviate some of these distortions and then try to put policies in place that will unleash the kind of political competitiveness which will then make development smooth and attractive and devoting more power, responsibilities, budgets to the States.
Raising concerns about Nigeria’s huge fiscal constraint, he regretted that despite the urgency, the country cannot increase its revenues in the short term, and is unable to raise its 6% revenue to GDP tax to 20% in one year and therefore requires a long-term plan.
He warned that despite the Buhari administration’s stance as contained in the latest Finance Act, the solution is not to increase taxes or even introduce more taxes, which will mean more hardship to businesses despite Buhari administration’s stance as contained in the latest finance Act, the solution is not to increase taxes or even introduce more taxes which will mean more hardship to businesses which are still struggling after COVID.
“If you want businesses that are 95% of Nigeria’s economy to thrive, you have to try to step back from thinking that by imposing more tax, you should be looking at expanding the tax base. Most Nigerians don’t pay correct taxes,” he pointed out.
The governor also thinks that in the short term, “Nigeria’s political elite must realize the danger ahead and come together, reduce the present mutual suspicion and get the best people – our first eleven in government if we are going to even begin to address this.”
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He also strongly pushed for encouraging competent private sector operators into government, noting the need to create political divisions at national and sub-national levels which will address this problem. “Do the right thing, but engage with the public to tackle the challenges.”
Earlier in his welcome remarks, Waziri Adio, Founder of Agora Policy first noted how Nigeria’s economic performance has been uneven and below par with undesirable outcomes.
According to him, Nigeria’s uneven and subpar economic performance is not just about theoretical constructs, or a mere academic exercise or a set of raw or stylized data, but about lives lived and not lived, with political, social, and security dimensions that reverberate within and beyond our borders.
For him, development is not a naturally-occurring phenomenon or plans dutifully and periodically drawn up, but deliberate.
“The third point is that a different development path is not just desirable for Nigeria, it is necessary. It is urgent. It is existential. And there can’t be a better time than now to start that deliberate journey of not only thinking differently but acting differently, and most importantly—optimally and consistently.”
Key messages in the book launched at the event include: An alternative framework for conceptualizing the challenges of oil-rich countries; The nature of a country’s political settlement shapes policymaking and economic outcomes; Policy reforms in Nigeria have been focused on crisis management rather than economic diversification, have expanded non-oil sources of growth, but have not diversified exports or fiscal revenues among other insights.
At the panel, Usman particularly wondered why Nigeria continues to witness a frequent collapse in leadership and policy implementation contrary to citizens’ high hopes, citing Botswana’s successes as a lesson for leaders.
For Shubham Chaudhuri, Country Director of the World Bank for Nigeria, political elites must agree on proper macro-fiscal management while the government must have the basic understanding, commitment, and recognition of the role of private investment in a nation’s life while striving to earn trust from the citizens.
“No country has eliminated poverty, without private firms growing and creating jobs,” Chaudhuri stressed.
“You can be reelected based on transactional politics but I think there has to be a political settlement or consensus that everyone will be better off if the National pie gets bigger.
“And that requires trust amongst the people. People talk in Nigeria about the trust deficit between the state and the citizens or between private firms and the government. I think the most fundamental trust deficit is within the elites because everyone seems to recognize the right thing to do that will benefit everyone, but if any one person tries to do it, others think they’re going to be worse off.”
He said in a sense, that’s Nigeria’s major problem. “You can call it a lack of political consensus. But until there is elective trust amongst the elites, it’s in everyone’s collective interest to do the right thing, to clamour for transformational politics as opposed to transactional politics,” he stressed.
Anambra State Governor, Chukwuma Soludo spoke about paradoxes and tragedies of the Nigerian economy, citing Nnewi, a potential economic hub in his state which illustrates how the private sector has tried to thrive despite government negligence and constraints.
“That’s a national tragedy,” Soludo noted.
“We don’t have the strategy to focus on things like needed infrastructure, how to access long-term financing, challenges in the power sector. We need a deliberate strategy for export-led industrialization.
“If we begin to have an institutional framework, that is the minimum required to begin to unbundle and make transactional politics less attractive and concentrated at the center, and then you can unleash the potentials at the base.”
He decried so many policies and ideas which the federal government policies have stalled at the state level, including macro frameworks which make it difficult for people to have access to long-term financing even globally.
He however raised the hope that the new incoming government has an opportunity for a fresh start in the country’s quest for transformational leadership, and transformational agenda, which according to him starts with the new government deliberately assembling a formidable team that is committed to ensuring that powers and concentrations at the center move to the lower levels which will unleash competitiveness for development.
Soludo argued for a balance between the centre and other federations units in terms of power and financing, as he frowned at the bureaucracy of government, particularly at the federal level.
“Unless we dismantle the present structures and continue to Abuja, democracy will not deliver the goods.
“You can’t run Nigeria effectively from Abuja. It’s impossible,” he noted.
“For me, that’s the way of getting Nnewi and other economic clusters on a path for sustainable development and long-term sustainable transformation.
Aigboje Imoukhuede, Chairman of Coronation Capital and former CEO of Access Bank noted leadership as key for Nigeria to tackle its challenges. He suggested three solutions in this regard to include, fiscal consolidation, a painful debt restructuring, and massive private sector investments, which according to him, will not materialize by the government signaling its intention to raise taxes.
In his views, the former Emir of Kano and governor of the Central Bank of Nigeria said there is a need to learn from the past and make corrections if the country must make progress.
“Putting round pegs in round holes is extremely important and I hope that is what we will see- a government that recognizes our mess.”
He also advised the incoming government to separate economic policies from populism and remove fuel subsidies, which he said the country is only using to hedge to bankruptcy.
“We have lost a lot of ground than we have earned, so we need to be serious. We need to return the Institutions of government.”
Immediate past governor of Ekiti State who is a also staunch member of the ruling APC equally re-echoed the need to prioritize competence, which say is lacking in the Buhari administration.
He further urged the incoming government to take courageous, unpopular decisions and prune the size of public service inorder to eliminate wastes and free up funds for development.
“We have enough not to end up in the hands of the IMF if we are serious,” he noted.
