The managers of Nigeria’s economy should look for ways also to increase national income while reducing expenditure.
Recession presents a period of holistic review of economic and management principles and practices through deep brainstorming. It is a period when the government should properly evaluate what and how it is doing things with the intention of ensuring value for money for every kobo spent. Countries that successfully remodel their economy in periods of recession soar stronger, become more diversified and display greater potential, with stronger economic fundamentals.
In 1965, when Singapore left the Federation of Malaysia, few expected it to survive, let alone prosper. According to Ravi Menon, Managing Director, Monetary Authority of Singapore in 2015, the country was then faced with daunting problems including the lack of natural resources, no industry, no hinterland, and it depended on the outside world for not only food and energy but for water. In 1968, the British government announced the withdrawal of its troops from Singapore, leaving thousands of workers without jobs, hence, compounding an already worsening situation.
How did Singapore metamorphose from such a helpless state to a country that today has its place within the comity of nations as a respected and well diversified economy, with a per capita income of $56,000.00 in 2015, which automatically placed her in the same class with the developed economies of the world?
The government of Singapore took two basic decisions:
1. To shift away from import-substitution in favour of export-led industrialisation;
2. To attract global multinational corporations as vehicles to achieve industrial growth.
These two policies proved the most important in the economic history of the nascent nation.
Today, Nigeria has found herself in a situation described by Tope Fasua in a recent article, as dark and formless, with deteriorating and abysmal economic fundamentals; showing signs of defiance of all policies been taken by the economic management team of the current administration; and prompting policy analysts to ask where the economic team is. It looks like the only option left to the managers of the economy to refinance us out of recession is to sell off our national asset. While well-learned people are strewn across the divided of whether to sell or not, with some postulating that the essence of having national asset is for these to be used to raise funds in time of need, they may be correct in their assertion. Those saying we should not sell our national asset may also be correct. This piece sets to show ways we could finance the economy out of recession, as the only way to to do this in a fast manner is to invest in infrastructure and put more money in the pockets of Nigerians. Hence, there is the need to lubricate the economy for SMEs to reverberate once again.
The government has been proposing the sale of the Nigerian Liquefied Natural Gas (NLNG) company, which as a venture is actually very profitable. In August, NLNG remitted $12.9 billion to NNPC for the period ending in 2013, outside the retained divided planned to be used for the development of other asset. So this venture cannot be called a moribund one. Also, how much does the government spend in funding NLNG’s operations? Your guess may be as good as mine – none!
The NLNG is a very prosperous, high yielding and profitable venture, which is the reason some well discerning “business persons” are calling for its sale. We have other asset that are consuming Federal Government funds with little or nothing to show for them, and the three government refineries are good examples, also the 11 aircrafts in the Presidential Fleet, the railways, etc. We need patriotic investors to help resuscitate these asset to raise money to finance the 2016 budget deficit. If the economic fundamentals precipitating this historic economy encumbrance are not addressed and these national asset are sold off to increase the reserve or to finance the 2016 budget deficit, what would the government sell in 2017 to fund the budget because definitely the recession would likely continue.
Rather, I would suggest the government adopt cost-cutting measures and the asset to be sold should be those whose contributions are currently insignificant when compared to their potentials. Critical periods require critical measures such that each and every one of us will indeed know that “Change Begins with Me.” I therefore suggest the following measures:
1. The legislature should make laws to enable the executive to use the cash recovered from those who “payment where made in error into their account, or those who did not know how Nigerian money got into their account”. On June 5, 2016, ThisDay newspaper reported the Minister of Information and Culture, Lai Mohammed as saying the government has recovered over N3.4 trillion, including asset, as looted funds. With the right legal framework in place, the executive can utilise these funds to offset the budget deficit;
2. The jumbo pay of the National Assembly should be cut down. This is one of the highest paid parliaments in the world! Reducing the N115 billion budgeted to them will free enough funds for infrastructural investment;
3. Security votes should be removed, for the president, governors and principal officers of the legislature. No country that sincerely wishes to progress should be paying such outrageous sums to elected officers as security votes. It is believed that governors receive as much as N500 Million monthly for this purpose. This windfall should be over, alongside the time of oil rents; all payments should be proactively justified and one wonders what justification a governor would give for a N500 million security vote in a month. Otherwise, this should be reduced astronomically. Using these funds to pay local contractors will put more money into the pocket of Nigerians;
4. Foreign medical treatments should be discouraged. In February 2016, it was published that Nigeria spends over $3 billion on medical treatments abroad. This is disheartening. The government should discourage this and thereby free more forex for the productive sectors of the economy. This is aside developing the health sector and attracting foreign investors to build hospitals in Nigeria;
5. Six of the 11 aircrafts in the presidential fleet should be sold off. The Federal Government has one of biggest fleets in the world, which maybe be part of an easy oil rent mentality. The fleet reportedly boasts of aircrafts including the Boeing 738 BBJ, NAF 001 or Eagle One, used by the president for his travels. Also two Gulfstream 550 jets, two Dassault Falcon 7X jets, one Hawker Siddeley 125-800, one Cessna 550 Citation II, one Beechcraft King Air B200, and three Augusta Westland AW139 helicopters. By selling six of these, the government will raise over $300 million and free up half of the 12 billion naira reportedly used annually in maintaining the fleets. This will show us that the government really wants to bring change to an already deteriorated Nigerian economy and society.
6. The three national refineries should be sold off, and these comprise the Port Harcourt Refinery Company (PHRC), Kaduna Refinery and Petrochemical Company Ltd (KRPC) and the Warri Refinery and Petrochemical Company Ltd (WRPC), all are operating abysmally. They should be sold or commercialised to ensure that they contribute towards the conservation of the national forex reserve.
There are basically two ways for effective financial management, whether individual or public, which is either to reduce expenditure or increase income. But, one can implement the two consecutively. This piece is therefore more of a cost reduction technique. The managers of Nigeria’s economy should look for ways also to increase national income while reducing expenditure.
Eziukwu Princewill, a development finance analyst and chartered accountant, works with the Global Fund for Malaria Elemination; Email: firstname.lastname@example.org