2019: Beyond sloganeering and wishful thinking

By Joba Akinpelu

Governance is a continuous business, and that is a common knowledge.  Even when a leader’s term expires and another member of his party took over, we are still in same continuum.  The conundrum may change radically when power changes hands between two different political parties.  Nevertheless, business of governance is a going concern.

It is on that note that I like to begin this essay; first by listing the major assets handed over to Buhari on May 29, 2015 and then contrast it sharply with the liabilities he also inherited.  Even though it is not possible for me to list everything off-hand, the sample size I have chosen is sufficient for the kind of analysis I want to make.

On the assets of the Balance Sheet, he had:

1. $2.0 billion in excess crude account.
2. $30 billion in external reserves.
3. 2,550 megawatts of electricity.

And on the liabilities side, he inherited:

1. More than 3 million adults and children holed up in IDP camps across Nigeria.
2. Insurgency palaver in the NE. Boko Haram terrorists had annexed 24 local governments out of the territorial space of Nigeria.  Indeed they were hosting flags to tell the whole wide world that they have fully captured those territories.
3. 27 state governments were owing huge salary arrears.
4. FGN owed various state governments N550 billion on road maintenance and rehabilitation done on her behalf by those states making the verifiable claims.
5. FGN owed N600 billions subsidy arrears to independent oil marketers. As at today N40 billions is still being owed because the independent marketers cannot substantiate how they came about that aspect of their claims.
6. Insurgency of Boko Haram terrorists had paralyzed economic activities in North East totally.
7. Acute shortage of petrol: two months before the elections and two months after
8. Huge pension arrears to retired Railways and Airways workers.
9. Inability of NNPC to remit crude oil sales to federation account. How could they do that when they had more than 300 different accounts?
10. Federally collected revenue fell below N4 billions monthly from N9 billions monthly on the average in 2013, before crude prices fell.
11. Fuel subsidy bazaar had shrunk—a telltale that government was broke totally. Before Buhari took over, the oil cabals would have none of that.  And to prove that they really meant business the mother of Okonjo Iweala was kidnapped.  The ransom was to force her to resign her appointment and go back to New York.  She made that revelation in a book to tell us how dangerous it was to fight corruption.
12. Agitators and group kingpins like Faseun and Tompopowere in charge of pipeline monitoring—having been awarded mouth gaping contracts. Yet pipeline vandals had a field day.
13. Duty and tax waivers were recklessly granted to cronies of government, even though government revenue was shrinking and federal government was borrowing to pay salaries.
14. FGN contractors had abandoned every construction sites throughout Nigeria, because there was no money to pay them.
15. N6 trillion was trapped in AMCOM and those who borrowed it refused to pay back their loans.

That was the balance-score-card Jonathan regime handed to Buhari on May 29, 2015, at least the key ones I can recollect off-hand.

What about the economic fundamentals also inherited?

1. Crude oil price was falling steadily, indeed it fell to as low as $28 per barrel at a point.
2. Daily production fell below 800,000 barrels per day, from 2.2 million barrels per day.
3. Militancy and busting of crude pipelines escalated in the oil producing areas, this is traceable to cancellation of pipeline monitoring contracts.
4. Nigeria was importing every liter of refined petroleum products consumed locally. This was gulping about 25% of our FX earnings.  This explains why there was acute shortage of fuel before 2015 general elections and after
5. We had more than 7 million automobiles in our roads and yet we don’t have a single tyre manufacturing factory. Ditto for battery and other things we import.  In actual fact we are importing toothpicks and table water!

What are the end results of these economic fundamentals?

1. Nigeria’s balance of trade fell to negative zone in the third quarter of 2015, immediately Buhari took over. That was the first time it would happen in more than twenty years!
2. By the fourth quarter Nigeria went into recession! That is not unexpected.
3. The treasury was completely empty, so there was no money to finance 2015 budget which Buhari took over from Jonathan.

How did Buhari react to it?  He chose the following policy options.  Fundamentally and technically speaking, many of them are hard decisions.

1. He blocked major areas where the economy was hemorrhaging.His first shot was TSA (Treasury Single Account). With introduction of TSA, NNPC began to remit cash to federation account.
2. Kemi Adeosun, then finance minister weeded off 45,000 ghost workers out of federal payroll. For those not too mathematically inclined, the maximum seating capacity of Abuja National stadium is 42,000.  That means that Jonathan administration ran a system that accommodated a huge number of ghost workers that can fill Abuja national stadium to full capacity and still spill over!  Is that not scandalous?
3. Buhari also took following far-reaching and fundamentally hard monetary policy options.
4. He devalued the Naira by more than 100%, after his initial resistance failed.
5. He placed 42 items on import prohibition list. Rice was included.  This means that if you want to eat rice grown in Thailand,then go and source your own FOREX.

• You can no longer pay cash deposit into your domiciliary account.

1. All invisible transfers through Telegraphic Transfers over the counter were abolished. This hurts a lot of people, including parents who must pay school fess of their wards schooling abroad, among other things.
2. FX allocation to all bureau de change was cancelled outright.
3. To cushion the effects of TSA, monetary policy rates were reduced to shore up liquidity in the banking system.
4. The fiscal side of the economy was neither spared:
5. His government gave bailout package of about N3 trillion to states that owed state civil servants salary arrears.
6. He followed bailout package with refund of Paris club debt recovery.

• He cancelled every existing duty and tax waivers granted under Jonathan administration.
• He increased Petrol pump price to N145.
• He removed subsidy on petrol.
• CBN introduced anchor borrowers window through which local farmers were able to borrow money and increased local production of food like rice.

• He reduced the number of jets on presidential fleet. And for the first time since the Babandia era, the first lady, Aisha Buhari traveled about in commercial flight.
• Buhari government introduced school feeding program. As at last count more 9 million children are now being fed once a day across 26 states of the federation.

1. He empowered 500,000 young graduates with N30,000 monthly through his N-power program.
2. He was paying N5,000 to extremely poor people under his conditional cash transfer

Surely all these policy choices are beyond political sloganeering, cacophonies and wishful thinking.

Surely every Nigerian felt the heat of those hard decisions, particularly the most vulnerable, the poor working class, the unemployed and the half employed, the aged and the retirees.  Some of the end result of those policies:

1. Inflation rate soared above 18%. Prices of everything doubled except salary and wages.
2. The gap between parallel and official market on FX market widened by almost 100%, dollar sold above N500 in the parallel market.
3. Unemployment rate soared above 30%
4. Merrymaking and social activities ebbed
5. Fast food joints lost patronage, many closed shop.
6. Property market collapsed. Even ordinary rent paying tenants could no longer pay house rents.
7. Emergency contractors lost patronage.
8. Number of contract sites that employ artisans reduced.
9. Job losses rose as more factories close shop.
10. Number of out of school children increased, private schools lost children.

These are the major ones I can recollect off-hand.  These are the prognosis which more or less represents the balance-score-card of Buhari government as at today.  Surely these policies have wrought so much suffering in the land.  They have caused so much disaffection among Nigerians.

Most Nigerians are pointing accusing fingers at Buhari that he was responsible for everything.  That he has not delivered the much promised change that he campaigned for in 2015.  Even those who are supposed to know better, like the professionals and the highly educated are behaving like ostriches.  That is the worst part of everything and that is one of the major reasons why it is extremely difficult to lead Nigerian people.

The worst enemies of Nigerian people are concentrated among the elite class.  And the worst among Nigerian elites are to be found in political and religious class!  After those vicious groups come elites in the academia, the business, the professionals, the civil servants and those in the military and Para-military groups.

All the sufferings Nigerian people are going through today are mere symptoms of a fundamental problem.  They are unavoidable consequences of hard decisions of either facing a lion or jumping into the blue sea.   However, the root cause of why Buhari took those decisions did not just develop overnight.  They were consequences of bad decisions taken in the past, some of which dated more than thirty years back.

The truth, however is that most of the decisions Buhari has taken so far are not far reaching enough.  Therefore, every delay today is a postponement of the evil day ahead, because at the rate our population is growing, everything will soon get out of control before we know it.

It is highly hypocritical to continue to blame Behari when we know that our economic survival depends more than 90% on a mono product.  When we know that we have no control over the international price of that product and the quantity the market will accept from us.

As at the time Jonathan took over, after the death of Yaradua, he inherited $66 billion in external reserves and $18.5 billion in excess crude account.  In addition to that, crude was selling well above $100 and daily production was stable at 2.2 million barrels per day.  Yet he never added $1 to the external reserves he inherited for a period of 5 years, instead he depleted it to $30 billion.

The main issue was, if Jonathan won in 2015, how would he have survived the pressure of managing our economy when crude price fell to $28, judged by his antecedents of squander-mania of his cohorts and oil cabals?  That is why I always insists that they would have ran our economy into bankruptcy, just the way the economy of Venezuela, an oil dependent economy like Nigeria ran into bankruptcy in year 2015.  Our recession would have been a child play.

Now, let us look at few gains Buharinomics has brought to us:

1. External reserves rose from $30 billion to $45 billion in three years. This happened when crude prices was below $50 per barrel.  This is extremely significant when compared with previous regime that never saved a dime for the rainy days, despite selling crude price above $100!.  It also means that if Jonathan was prudent as Buhari was, then there is no reason why our foreign reserves should not be standing above $180 billion by the time he handed to Buhari.  Then we would have been spared most of our present woes.
2. Abuja metropolis rail services and Abuja Kaduna rail services is now fully operational. Ditto for Itakpe-Warri-Ajaouta rail services.  Lagos Ibadan rail services will became operational soon.  All these infrastructural deficits ought to have been addressed more than thirty years before now!
3. 2015 budgets for works was N19 billions, power was N5 billion and housing was N1.2 billion, making a total of N25.2 billion. In 2017, budget for works was N394 billion, that of power was N69.96 billion and housing was N64.9 billion, all totaling N529 billion.

Are there feasible solutions?

Our socio economic problems are too fundamental, and its solution has gone beyond applying mere palliatives, religious and ethnic sentiments.   That would not take us far.  Again we have been accumulating it and sitting on pile of the rut for too long, indeed over a period of more than forty years.  Therefore anybody who claims he has a kind of magic wand to solve it in a jiffy is a joker!

Yes indeed, there are feasible solutions.  The major feasible solution however will impose class suicide on the political class!  Let we expand it a little bit further.

As at today, political office holders are less than 3% of our entire population of over 180 million.  Yet this small group is gulping more than 50% of our foreign exchange earnings.  Starting from local government level, every local government chairman and his vice are riding Prado Jeep (SUV), not to mention state governors, our parliamentarians from state to federal levels, our ministers, other political appointees and their hanger on.  They are the only ones who can buy brand new cars!  And yet we cannot produce the spoke of a bicycle from head to toe.  We don’t even manufacture tyres and batteries.  Worst part is that Toyota and Nissan has refused to set up assembly plants in Nigeria, despite that we have more SUVs of their products in our roads than in their home country, Japan.  To curb these excesses needed extremely drastic solutions:

1. We must suspend buying new SUVs for political office holders for the next five years. They must be content with automobiles assembled in Nigeria.
2. We must scrap the 774 local governments before 2027.
3. We must scrap the entire Senate and go back to unicameral in our national assembly.
4. We must go back to 24 states structure from current 36 states structure.
5. We must reduce the number of minister to maximum of 12 (two from each geopolitical zone). After all US with 52 states structure has only 17 cabinet members.
6. We must cut down the number of federal government agencies by 60%. Yes indeed with can manage with even less than 40%.
7. We must stop importation of refined petroleum products within the next two years. As at today, refined petroleum in gulping 25% of our FX earnings.
8. We must stop importation of grains like rice, maize etc. and start exporting them
9. We must stop importation of every food items we can produce locally.
10. Every state must be transformed into economic development unit that can contribute immensely to the growth of our GDP. Today, federal budget is just about 12% of the entire size of our economy on annual basis.  And yet that 12% size is the mainstay of the entire economy driving more than 50% GDP of the entire economy, particularly in terms of infrastructural developments.  Our economy can never grow strong if we remain on that trajectory, even for the next one hundred years.  Today, most state governments are complaining that they cannot pay even N25,000 minimum wage.That is not acceptable after the Naira was devalued by more than 100%.  All the state in the federation needed urgent restructuring of their civil service, which are now over-bloated and structurally top heavy.  Their problems actually is not the N30,000 minimum wage being demanded by labor but top heave workforce.  For most of these states, they are now saddled with a workforce that has majority between levels 12 and 15 and extremely low percentage in middle and lower levels.  Unfortunately, for most of those officers, their productivity in terms of value addition is very low.  Therefore, any state governor that wants to bring economic development cannot depend on his civil servants to drive it.  He must borrow leave from Lagos state that has developed a perfect template on how to blend civil service bureaucracy  with that of professionals hired from outside.

Half measures will count for nothing.  We must go the whole hug if we want permanent solutions to our development.

 Conclusion

Between 1999 and 2015 we imported every liter of fuel we consumed locally.  And despite that Obasanjo presumably spent whopping $16 billion on NIPP, only 2,550 megawatts of electricity was handed to present government in 2015.

Jonathan ran a system that accommodated more than 45,000 ghost workers on federal payroll.  And he never increased our reserves and excess crude account by as little as $1.  Instead he depleted it by more than $50 billion, even though crude price was favorable enough.

If we cannot hold them accountable for those dismal failures, it will be foolhardy, even delusional on the part of the electorates to expect that they have changed overnight, especially when major players that ran the system between 1999 and 2015 are same set now being recycled.

Surely, they can still cajole the myopic, coax the ignorant, wheedle those who cannot think rationally,deceive the sentimental, and entice the overbought.  Judged by their antecedents, they are certainly not the best choice for now; out of more than seventy five other available options that we can make in 2019.

We have certainly entered another cycle of political sloganeering.  This is time for cajoling the electorates.  This is time to whip up sentiments and buy their conscience with ill-gotten nectar.  If you buy their dummies, you are a sleep walker and wishful thinker.

Predictably, the prognosis of all political debates will be centered on the effects of our problems rather than the causes and how to find appropriate solutions for it.  Therefore, it is natural and expected if politicians promise what they can never deliver.

Never argue with any of them.  And if you want to put them to real task, just ask any of them how he will manage the value of the Naira if crude price fall below $30 per barrel again.  You can be rest assured that most of them will give evasive answer to that simple question.  From that you can begin to shift the shaft from the grains.

Nigerian economy is still very fragile.  The balance of risks is still very high.  The gap between official and parallel FX market (N60) is still too wide—an indication that everybody still depends on one source of supply.

Our foreign reserves are still very low even at $45 billion.  They cannot sustain our consumption for a long time if price of crude oil fall as it did in recent years.  Our population is rising at an alarming rate.

So no “uhuru” yet until we save more and move up to $180 billion and above.  At that level, we may then begin to increase the exchange rate of the Naira gradually, even below N120.  Nobody can achieve this overnight.  Therefore, we should be weary of fake promises!

We have overstretched the political space at the expense of economic development.  And that is our Achilles heel, our major albatross.  In year 1980, the local government I come from was one.  Today it has been increased to three.  But the numbers of public primary and secondary schools remained the same,to cater for ever increasing population!  How can we develop like that?  Why can’t we scrap all of them and convert their secretariats to general hospitals and clinics?

• Joba Akinpelu— essayist, author, is a Fellow of Institute of Chartered Accontants of Nigeria.