NIGERIA:
The monthly Federation Accounts
Allocation Committee, FAAC, meeting was held the other day in Abuja,
with the representatives of state governments again cap in hand, asking
for their share of federal revenue – read: oil revenue, or better still,
national cake, or our money. A paragraph in the report by the online
newspaper, Premium Times, caught my attention and here it is: “But
at the Federation Accounts Allocation Committee, FAAC, meeting,
representatives of the 36 state governments went home SAD (emphasis
mine), as they were handed parlous shares from a total N299.75 billion
statutory allocation for the month, the lowest allocations in more than
five years.” For the month of March 2016, the states shared N55.34
billion, compared to N64.52 billion in February 2016. I have
deliberately emphasized the word sad, because the day may well
come when after the sharing of national revenue, we may be told that
some Commissioners of Finance left the meeting crying, or wailing.
To prevent that happening this time,
the Federal Government chose to suspend deductions of salary repayment
loans owed by the states. When such deductions were made in February
2016, at least one state, Osun, went back home with a paltry N6 million
only. The truth is that most of the 36 states are in dire straits, worst
hit by the economic crisis that the country faces. About 27 out of the
36 states of the Federation are effectively insolvent, if not bankrupt.
In July 2015, the Federal Government not only bailed out the states
financially, the Central Bank of Nigeria further extended the repayment
period for bank loans taken by the states from a period of seven years
to 20 years. So far the affected states have collected salary
assistance loans from the CBN to the tune of N689.5 billion, with an
additional N310 billion as loans backed by the Excess Crude Account.
Across the country, these states are
owing staff salaries, in some cases up to seven months. Pensioners have
not been paid their arrears. Civil servants are angry because their
allowances are being withheld. Most of the states (24) have not been
able to improve on their internally generated revenue. The people are
angry, wondering what this change has brought to their doorsteps. In
January 2015, former CBN Governor, Charles Soludo, had sounded a
cautionary note of warning in a piece titled “Buhari vs. Jonathan:
Beyond the Election” wherein he argued that under President Jonathan,
economic prosperity (oil boom) rather than generate wealth and
opportunities resulted in greater pressures and the handing over of the
economy to “self-conflicted traders and businessmen.”
He warned that the future of the
Nigerian economy appeared bleak in the event of a slide in the spot
price of crude oil. In November 2015, Soludo wrote a post-election piece
titled “Can a New Buharinomics save Nigeria?” in which he slightly
revised his trenchant attack on the Jonathan administration and argued
that President Muhammadu Buhari had in fact inherited strong economic
indicators and that in spite of the dwindling oil prices, he had an
opportunity to further strengthen the Nigerian economy, given the right
choices. The economist called for a debate on the subject, made his own
recommendations and asked for the immediate setting up of a WAR ROOM on
the economy.
Between January 2015 and March 2016,
Soludo has been proven right in many respects; if you discount the
politics of his January 2015 piece, that is, and focus on the analytical
prescience of his contributions, you would easily agree that whatever
may be happening in the economy today is foreseeable, foretold, and
perhaps preventable. There is no challenge more urgent in Nigeria today
than the economy. The health of the economy is linked to the well-being
of the people. A recursive economy brings hardship and perhaps the last
time Nigeria found itself in similar circumstances was truly between
1981 and 1985; the mismanagement of that challenge then, rather than
improve our situation resulted in an uncontrollable decline, the effect
of which has had Octopal implications for the well-being of the entire
society. The concern of the concerned intelligentsia is that things
should not get worse than they are now.
Because things are not really
looking good, right now, President Goodluck Jonathan, for example, has
had the great opportunity of engaging in an inevitable
chest-beating-if-nobody-praises-me-I-will-praise-myself presentation in
Newark, United States a few days ago. What he didn’t spell out is in the
sub-text of his commentary. The current indication is that Nigeria’s
GDP growth has dropped to below 3% in 2016 from about 7% in 2014.
Income levels have similarly dropped. Inflation has jumped from single
digit to a frightening double-digit range (12.11%). The manufacturing
sector, which was on the rebound as at 2014, is now below 3% of GDP,
which is as bad as saying there is no manufacturing going on at all and
that the real sector is prostrate. The country’s reserves have been
drained. Government deficit is rising. Unemployment has risen, even if
one West African country is nonetheless asking Nigeria to come and help
it solve its unemployment problem – I hope we will not again go and give
what we do not have at home! Fuel queues are back as a feature of
national life. Many Nigerians have not had an hour of electricity supply
in the last four months. The people are angry and hungry.
In his November 2015 article, Soludo
asked for a War Room. In March 2016, the Federal Government organized a
Talk Shop in the form of a 2-day retreat of the National Economic
Council (NEC) which came up with 71 proposals to revive the economy. 71
proposals! Sadly, there is nothing new in those proposals. Soludo
called for a debate and pro-active measures. The administration is
obviously not interested in what he has to say. Instead, there has been a
lot of blame-this-blame-that going on. My take is that we cannot leave
economics to the economists. Economists are fundamentalists; between
the market fundamentalists and the state capitalists they only manage to
produce problems, and that is perhaps why the idea of a War Room may be
the wrong idiom. I also don’t consider the blame game helpful.
Whatever is wrong with the Nigerian economy is an open secret that does
not require any prolonged movement of the mandibular.
We are, to say the truth, paying the
price for the failure of the Nigerian leadership elite to diversify the
Nigerian economy and expand the country’s revenue base. We found oil
in 1958, and since then we have been as a country, a victim of the curse
of oil. The curse of oil in our context has meant indolence, the
emergence of a rentier class, a squandering of riches and the alienation
of the poor by the rich. Every country afflicted by the curse of oil
has found it difficult to escape from the curse. In our case, it is
worse. Crude oil accounts for 90% of Nigeria’s exports, 70% of Federal
revenue and about 15% of GDP. The point has been made for years that
without oil, or with great falls in the spot price of the Brent crude,
Nigeria will be in trouble. Every scholar has spoken about the need for
diversification, but oil money is so cheap, it does not allow our ruling
elite to think. I wrote the foreword two months ago to a book tilted Memories of Yesteryears written by Akpandem James, formerly of the Independent Newspaper
and in one of the chapters he reminisces about a long list of
plantations across the South Southern part of the country, but those
plantations are no longer there, either in the South South or the North
or the East or West, because over the years, Nigerians got used to the
easy money that comes with oil.
Oil, everyone said, is a wasting
asset. But our leaders never listened. Instead, they argue that we have
more gas than oil and that if nobody buys our oil, shale oil or no shale
oil, Nigeria will sell gas. A country built on a philosophy of wealth
without work or sense, commits a grievous sin. We have confronted the
curse of oil on so many occasions. It caused the civil war of 1967-70.
It resulted in the desperation of the North to seize Federal power and
get a bigger share of the national cake by all means. It led to the
agitations in the Niger Delta, the death of Ken Saro-Wiwa and the Ogoni
Eight, pipeline vandalism, Niger Delta insurgency, environmental
degradation and the potent threat of a resurgent militancy in the Niger
Delta, which is bound to cripple the Nigerian economy finally and
tragically. The curse of oil is the source of a national cake mentality
that has turned public service into an arena for primate accumulation.
It is the root of corruption in Nigeria.
It is not a Buhari vs. Jonathan
apotheosis therefore. To reduce it to that level is to ignobly avoid the
messages of history. If anyone must be blamed, it must be all Nigerian
leaders from independence at all levels. They have focused more on the
fundamentals of ethnic, religious, regional and personal benefits, more
than the fundamentals of national benefit. The leaders at the state
levels are no better than gluttonous beggars. Elsewhere, states are
centres of productive, economic activities. In Nigeria, every Governor
is interested in what comes from the easy monthly allocation from Abuja.
For IGR, they tax the people, multiple, punitive taxes. They create
the impression that government exists to punish the people. Not every
problem is Abuja-sourced. We need Governors who can think creatively
economically and turn their states into economic units, not cowboys who
spend more time in Abuja doing eye service. Truth is: some Governors are
so cheap when they go to the Villa, they even expect to be given
transport fare!
There are other issues: enhanced
financial transparency will help, fraud has to be checked; there should
be greater oversight scrutiny by civil society and the legislature; too
many lawmakers are too busy trying to get their own bite of the national
cake – can they please keep their rumbling and insatiable stomachs in
check? And finally, the cost of governance must be reduced: Lawmakers
who proudly ride vehicles worth N36.5 million are bandits not servants
of the people. Governors who live ostentatiously and claim that there is
not enough money to pay salaries are wrong. President Buhari is
fighting corruption: he should allow states being run corruptly to sink
if they must.
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