After about three months (budget was first presented to National Assembly by President Muhammadu Buhari on Dec.22, 2015) of being in congress for deliberations , the 2016 appropriation bill proposed at N6.08 trillion has eventually been passed ( on March 22, 2016) with a slight reduction of N200 billion to N6.06 billion by our legislators.
Owing to the controversy of ‘padding’ by civil servants in which it was embroiled,Nigerians received the otherwise cheering news with restrained optimism, largely because, due to lateness in its passage into law,another year would be lost in the implementation of the budget, particularly because, the rains are already here and contractors are not likely to be able to commence construction of roads and buildings which constitute a major part of the capital budget in the couple of months as contract bidding and award processes would still take a minimum of two months to conclude.
Perhaps as a stop gap measure, the N350 billion naira that finance minister , Kemi Adeosun promised to pump into the economy to reflate it-which is estimated to be merely 3% of the N11 trillion believed to be the accumulated local debt stock-would make any significant impact on the economy.
Nevertheless, it is better than nothing, as it would at least slightly increase the pace of activities in the economy which has been static in nearly one year after the assumption of office of the present regime.
Another point of anxiety for most Nigerians is the issue of fuel subsidy-to remain or to be scrapped.
To some extent, the concern has been addressed, as National Assembly has graciously approved a provision of N150 billion in budget 2016 for the expenditure which President Muhammadu Buhari said gulped a whooping N1.24 trillion in 2015.
Despite the recent modest efforts of govt in trying to reflate the economy via the aforementioned new measures being taken, which are more or less designed to be a shot in the arm,a lot still needs to be done to jumpstart the socio-economic activities which have been virtually crippled due to the ongoing crackdown on corruption and delay in approving the 2016 appropriation bill .
The following are five nuggets of Chinese development paradigm pointing to how Buhari can put Nigeria back on track and also prepare her for accelerated growth, befitting Africa’s largest Economy.
Firstly, the Chinese leader, Deng Xiaoping’s dogged determination to solve her electricity power instability challenge as reflected in her construction of the three gorges dam against all odds,is a good candidate for emulation by Nigerian leaders.
Like the Chinese, President Buhari should take ramping up power supply more seriously. Lumping power up in the same ministry as works and housing, does not create the impression that overcoming power shortages and its attendant consequence on industrialisation is a priority by this govt. Separate power from works and housing, appoint another minister to supervise the left over of works and housing and free up the dynamic, high-achieving, former governor of Lagos State, Babatunde Fashola with the power ministry. It may be argued that the extra cost of another ministry would create more strain on our treasury but the benefit of a more nimble power ministry that would deliver more electricity power faster, out weighs the financial burden.
The urgency to overcome electricity challenge can’t be overemphasised but suffice it to say that it is the most critical catalyst for industrial development as evidenced by the Chinese experience. If power supply is stabilised and our economy is running 24 hours, instead of the current 12, Nigerian economy which now has GDP value of $530 could double to over one trillion naira in a record time as productivity would increase when factories run none stop and people are at work both night and day.Think about it, at less than 12 hours working day,our national productivity output yields $530 billion.
Secondly, a combination of Import substitution policy introduced long ago but shabbily implemented and a new policy of Backward integration in agriculture should be pursued as a matter of urgency.
Already, the likes of Obasanjo and transcorp farms, as well as Orleans and Indorama farms are investing in cultivation and processing of some food items like poultry,rice and fruit juice across Nigeria, from Ogun, Delta to Benue states and environ. Likewise, Aliko Dangote, the richest man in Africa has pledged to join the farming revolution by growing rice and sugar in the northern parts of Nigeria and so also has billionaire, Hosa Okunbo who ‘thrown his hat into the ring’ of the new farmers club in Edo State region.
As a further testimony to the capacity of Nigerians to deliver when challenged, Erisco is already producing tomatoe purée in cans locally in Lagos and Dangote is said to have also recently commissioned one factory in Kano.
With more hands being on board to till the soil, food import ticket that is second only to fuel imports-$1.8 trillion, would be reduced very quickly .
Thirdly, petrol or premium motor spirit, PMS which is believed to consume the lion share of about N1.24 trillion of the foreign exchange outflow in 2015 should be tackled head-on.
Fortunately, President Buhari is familiar with building refineries, having been the one that built at least two major refineries in Nigeria during his tenure as minister of petroleum resources and military head-of-state in the late 1970s and 80s.
Along with impressive efforts being made by GMD of NNPC/Minister of state for petroleum, lbe Kachikwu, President Buhari should provide incentives (offer they can’t resist) for oil majors to invest in refineries as precondition for tax breaks and other privileges that they often seek.
Obviously, oil majors have the clout to make it happen faster than any other party because of their foot prints and experience garnered in other climes .
To that end, renewal of leases and award of new ones should be tied to establishment of refineries.That is the wish of Nigerians, over and above the academic scholarships and book quizzes/contests being organized by major oil companies as corporate social responsibility, CSR initiatives.
The National Assembly, should take note of such realities while reviewing the Petroleum Industry Bill, (PIB) which they have promised to bring to the front burner for deliberations next week. After they goofed with their failed attempt to pass the social media gagging bill and the ‘shooting’ down of the bill that would strengthen women’s rights plus their lavish expenditure on luxury jeeps instead of opting for cars assembled in Nigeria to boost employment at home, our lawmakers now have the opportunity to demonstrate that they truly love Nigeria.
Passing the PIB without partisanship being a clog is that opportunity to redeem their sagging image
The new licenses granted for the establishment of modular refineries is good and so also is Aliko Dangote’s petrochemical plant and refinery under construction in Lekki axis of Lagos State.
Having revolutionised cement production in Nigeria to the extent that Nigeria is now a leader in the production of the commodity in Africa and net exporter of the product, Dangote has demonstrated capacity so he can be assumed to have the ability to deliver on local production of oil/gas in Nigeria.
Fourthly, Egypt ($307b GDP) which has a population of about 80 million is the third largest economy in Africa, by GDP value, next to South Africa which is ($350b GDP), and number 2, with Nigeria at ($530b), being number one.
Practically all the consumables in Egypt from tennis shoes, jeans pants to pampers baby napkins are locally produced by transnational corporations who via Egyptian pragmatic trade policies, are compelled to establish factories in Egypt.
That was only possible because Egypt enjoys stable electricity supply and fairly good infrastructure conducive for manufacturing hence my suggestion that a state of emergency should be declared for stable electricity supply in Nigeria. Similar conditions apply in South Africa with a population of under fifty million, 50 million people and better electricity and other relevant infrastructure than Nigeria, hence BMW and other vehicle assembly plants are located in South Africa.
Can you believe that General Electric, GE of USA opened its first factory outside of USA, in South Africa? That says a lot about the robustness of infrastructure over there .
The import of introducing policies that encourage multinational corporations to establish factories for the local production of their goods, is massive local jobs creation which would invariably trigger and energise an otherwise dormant middle class with the needed purchasing power to sustain the businesses.
Fifthly, on the search for home grown healthcare to conserve foreign exchange which Mr President recently acknowledged as consuming about one billion dollars annually, why can’t we set up a Healthcare City in Abuja like they have done in Dubai? The facility in Dubai boasts of having catered to over 1.2 million patients since inception.
Recently, a group of medical practitioners in the diaspora came together to establish a medical facility of international standard in Lagos.They faced enormous challenges trying to set it up, but eventually they did it anyway. This confirms that Nigeria can replicate Dubai Healthcare City here, if the right incentives are provided.It would particularly be a potential health tourism magnet especially from African patients. The National Hospital, Abuja which was a good initiative, has failed because it is owned and operated by govt.
Furthermore, to save forex and discourage exodus of Nigerians into academic institutions abroad, which is yet to receive the attention of the authorities as Mr president’s comment at the recent economic retreat confirms, there are reputable educational institutions in Europe and North America that can be encouraged to establish campuses here in partnership with local investors.
Atiku Abubakar, former Vice President of Nigeria, successfully collaborated with American university in setting up one in Yola, Adamawa State, so he has proven that it is doable.
The initiative of partnership with Western universities would lead to reversal of the trend whereby, Nigerian students are now sojourning not only in advanced societies of Europe and North America, but also in Ghana and Benin Republic higher institutions.
Right now, Ghanaian universities are partnering with UK counterparts to run first and second degree programmes and they are even marketing the initiative to Nigerians by advertising in Nigerian media platforms.
We may have a lesson or two to learn from Ghana where, unlike Nigeria, their academic year is never interrupted by teachers, strike actions, hence the flocking of Nigerians to institutions of higher learning over there.
In my opinion, international trade is only beneficial as long as there is local input like establishing local assembly plants for local content, hence my proposal for the reenactment or replication of Egyptian model, especially for a country like Nigeria and a continent like Africa where we have no comparative advantage in any product or service except agriculture.
For instance, the USA has the capacity to produce her wine in California but WTO believes France has comparative advantage hence you hear of French wine all over the world ,but in agriculture, where Africa has comparative advantage, the West subsidizes farming thereby blunting Africa’s edge by dumping cheap imports like poultry etc on Africa.
Since we don’t have the capacity to compete against the industrialized society, we are left with the short end of the stick.
That’s not the case with Western countries who are on equal pedestal, and squabble all the time by accusing each other of dumping steel in their respective countries and arbitrarily devaluing their currencies to boost export.
These disagreements sometimes lead to trade wars, but Nigeria or indeed Africa don’t have the ‘liver’ (to borrow from local lingo) to bargain or engage in trade wars.
The reality is that when we open up our markets to compete with cheap imports from countries like China and India ,hitherto thriving industries like the textile mills would die.
That’s why Kaduna that used to be a hub for textile manufacturing,feeding on cotton farms that are endemic in neighboring Funtua, Katsina State, is now a shadow of itself as the industry is now effectively dead. Adams Oshiomhole, Edo State governor and a veteran of the textile industry would testify to that.
In international trade, if you are weak in policy and negotiations, you will be bullied and everything will be forced down your throat.
So the West will rattle Nigeria, but it’s left to her to demonstrate strength and leadership by resisting the pressure. However Nigeria must have alternative viable plans and counter strategies to stave off the challenge and disappointingly, our country seems to have none in existence now.
To appreciate what is driving the current devalue the naira or don’t devalue the naira debate, one needs to have a conversation with a Nigerian who has worked and retired from UAC, Shell, Chevron or Mobil for 30-40 years, as a director to realize how fiercely loyal they can be to the ethos of the company or the company’s country of origin like UAC and the Queen of England.This stems from the fact that after working for so long in those companies and benefiting from training by the firm all their working lives, they don’t have any choice than to be beholden to such companies and be extremely loyal.
So also is the situation with a Nigerian that has worked in the civil service or any of the arms of the military for similar length of time and enjoyed scholarships and sundry trainings on the job before retiring as a permanent secretary or a military general.
Such people are also fiercely loyal to Nigeria.
Loyalty to a company in my view is akin to patriotism to a country.
And an individual is loyal or patriotic if or when one feels indebted.
That is the difference between those calling for devaluation of the naira and those against it.
The debate has, from my point of view, been more of emotional argument than an economic one.
This is because, depending on one’s economic point of view or school of thought like the Keynesian/monetarists/public choice theory,there is really no good or bad option -devalue or otherwise – that would not lead to the rescue of the economy, but tenacity of purpose, as reflected in the dogged determination of the leaders/champions of the vision is the most crucial ingredient to success. The Dubai and Chinese cases studies earlier catalogued attest to that fact that accomplishing the mission of turning around an ailing economy is not without grit and grim.
Renown economists like Paul Krugman , Joseph Stiglitz , Milton Friedman, James M.Buchanan etc belong to different schools of thought aforementioned but their ultimate objective is how to create value and progress and more often than not, they succeed in their different methods .
Therefore, it is left to a nation’s economic management team to design or develop a model or pathway to economic revival or growth, and one thing for sure is that no channel to get out of economic challenge is painless, a tea party or a walk-in-the-park.
Those calling for devaluation are satiated with Western doctrines like the retirees from UAC, Mobil etc while those resisting devaluation are dye-in-the-wool patriots like retired civil servants and army generals as illustrated in my earlier analogy.
President Buhari represents the fiercely patriotic and therefore against devaluation while the immediate past governor of the CBN, now emir of Kano, Sanusi Lamido Sanusi, who is calling for devaluation, represents those whose DNA are deeply ingrained with Western ethos.
Nevertheless, what l can affirm is that despite the divergent points of view on whether to devalue or not to devalue,the overarching interest and motivation on both sides, which is to strengthen Nigerian economy,can not be denied.
To achieve a profound and far reaching result of putting Nigerian economy on even keel, the APC led federal govt may wish to seek the expertise of economics experts like Joseph Stiglitz and Paul Krugman who are Nobel laureates in economics. These towering personalities in economics currently advise major countries like Japan, Greece etc.
If APC could engage David Axelrod -the USA President Obama’s campaign strategist to help her create and execute the strategy that enabled her defeat the former ruling party, PDP at the March 28th, 2015 presidential polls, there is no reason President Buhari should not avail Nigeria of the skills of the renown economists, like Stiglitz and Krugman earlier mentioned to help us pull the Nigerian economy out of the present economic doldrums that she is now grappling with.
Mr president has made solving the monumental problem of corruption in Nigeria his priority which is good, but while fighting corruption, searching for the best ways and means of moving Nigeria forward faster , such as the ones suggested above,must go on paripasu.
THISDAY
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