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Another Economic Management Team!

There is an increasing universal recognition that the prime essence of government is the actualization of a thriving and beneficent economy; last week, President Goodluck Jonathan formally inaugurated the engine room that would serve as the arrowhead for the determination of his place in history as Nigeria’s number one citizen.

The major features of economic success are well captured in his message to the 24-man National Economic Management Team, NEMT that “our people want to see improvement, not only in terms of reduced inflation, higher economic growth and economic diversification, but also in job creation, better school enrolment, improved access to health care and a more sustainable environment.

They want regular and sustainable electricity supply, higher purchasing power, social infrastructure .…”(Punch 19/8/2011, pg 19).

Nigeria’s paradox of commendable statistical growth rate above 6% amidst deepening poverty reinforces urgent recognition that somethings are fundamentally amiss in the management of Nigeria’s economy, especially when relatively modest national growth rates below 2% elsewhere impact more beneficently on those economies.

Same observation is aptly reflected in April 2011 World Bank report, which states inter alia that “…despite Nigeria’s strong economic track record, poverty is significant”! Our CBN Governor reflected the same theme recently when he put the figure of unemployed youths at 41.6%, while Manufacturers’ Association noted that “in 2009, 834 member companies shut down, a development that resulted in the loss of 83,000 jobs.

Indeed, with an estimated unemployment rate of about 20%, well over 30 millions may be jobless, while purchasing power of incomes of the dwindling population of employed Nigerians continue to be ravaged by an inflationary spiral that has been difficult to keep below 10% as a result of government’s inappropriate policies and measures.

Inflation rate has been fuelled and sustained by the blatant monopoly of CBN in the forex market and the attendant distortion that weakens naira with increasing dollar revenue; a veritable and economically destructive paradox that makes seamless deregulation of downstream oil sector an uphill task as domestic fuel prices rise correspondingly with a weaker naira!

In his address, President Jonathan reminded the new economic team that the task ahead was to ensure that “Nigerians see clear improvement in their lives”, and noted that “economic growth should necessarily translate into measurable benefits to our people”.

I believe that Mr. President spoke the minds of millions of his longsuffering countrymen, who have watched in bewilderment at the failure of billions of naira/dollars voted over the last 12 years or so, to bring expected succor to their social welfare.

The relevant question, however, is, why should Nigerians trust this team of economic gurus to deliver? After all, we have had one failed economic team after the other in the past decade or so. Incidentally, each economic team was heralded as “economic messiahs” because of the perceived heavily laden credentials of its members.

Mr. President must have been conscious of this reality and consequently decided to further embellish the team composition with Jonathan, himself, as Chairman of NEMT, with Vice President Sambo as Vice Chairman!

In the event that neither Chairman nor his Vice Chairman has a strong background in economics, the political pair Nigerians actually elected to serve may just become bamboozled and intimidated by the sophistry of those with better international economic credentials! After all, this was the case during the Obasanjo years, such that in spite of the array of international and local stars including World Bank Vice Presidents and Professors of Economics, Nigeria frittered away the stupendous wealth brought about by the fortuitous high prices of crude oil.

Indeed, during Obasanjo and Late Yar’Adua years, inflation rate and unemployment continued unabated at unexpectedly high levels; businesses continued to collapse as a result of decaying infrastructure and high cost of funds, with lending rates constantly in the realm of higher double digit, and often in excess of 20%!

Incidentally, the current heralded coordinator of the new NEMT had the equally impressive role of Team Captain at that time! This writer recalls with amazement the connivance of that team to sell Nigerians a dummy that a growth rate of 10% was achievable in spite of the evidence on ground of an ‘unimpressive’ growth rate of less than 6% by midyear!

Heads of MDAs converged at a well-attended workshop in Abuja and publicly promised Obasanjo incredible transformation prospects that would guarantee the presidentially prescribed growth rate of 10% within the last two quarters of the same year.

I recall that none of the experts, including the current coordinator had the ‘balls’ to tell Mr. President that growth rates do not come about from dictatorial fiats!! It was no surprise that the growth targets for that year fell well below expectation and other economy indicators did not fare any better!

Well, President Jonathan certainly expects better results this time around, and hopes that in addition to expanding group membership size from 12-man or so to 24 he may induce a better synergy for success!

Well, hopefully, Mr. President will not belatedly find that larger does not mean better; for example, our national history suggests that the dozen or so Ministers in immediate post independence cabinet may have fared better than the post military cabinet membership of 40 or so Ministers with a plethora of Special Advisers and Advisers to Special Advisers!

Besides, in spite of Mr. President’s professed helplessness at a more compact and cost-effective cabinet size due to constitutional limitations, Nigerians may wonder why Jonathan willfully chose a larger cumbersome and expensive 24-man team, when the work at hand probably requires no more than a 6-man membership team.

Some people may argue that with over 10 Ministers and several DGs of MDAs, a Monitoring/Evaluation Adviser and two Governors in this new team, there may not be much work left to be done at the weekly meetings of the Federal executive Council.

In spite of the reality that the NEMT Coordinator failed to impact positively in critical areas of employment, infrastructure and socially beneficent budget structure during her first coming as Finance Minister for over four years, President Jonathan obviously expects a new improved Okonjo-Iweala.

Mr. President is profusely enamoured by his conquest in extricating the vivacious lady from the clutches of the IMF to serve in his cabinet; in the words of Mr. President, “other Heads of State and governments are appreciative of me, especially the African leaders that I did well to pull you back home to help to solve the African problem because they know your worth in the World Bank”.

With such international perception of the ‘worth’ of the new NEMT helmswoman, President Jonathan must have felt that her lackluster performance in employment generation, improvement of social welfare and infrastructure during her first term in government may have been possibly due to limited powers of the Finance Minister; this time a round, Ngozi has an array of ministries to supervise under a more embracing title as Coordinator “of all the economic activities of the federal government” according to Mr. President.

Once again, Nigerians will hope that President Jonathan does not discover too late in the day that a hood does not make a monk, as these powers do not differ significantly from her earlier position as Finance Minister; hopefully, however, for those people who feel that “Ngozi has the magic wand”, maybe the new job title might just make the difference from her first term in office.

Dr. Iweala, on her side, has modestly dismissed any claims to any Cinderella-like magic wand in addressing the country’s economic problems and may have distressed the staff in the Finance Ministry with the declaration that “the execution of government policies would be based on hard work”.

Nonetheless, Nigerians would be appreciative if this time around, she succeeds, according to her, in spreading the spirit of “effectiveness, efficiency and delivery” and also succeeds in her efforts “to implement the president’s priority agenda to create jobs for the teeming youths”while remaining steadfast in ensuring that all the policies and programmes that would be implemented during her tenure would be geared towards this goal.”

Here then, we have the benchmark with which Ngozi wants to be judged. The question is, will she succeed? Well, to the extent that she could deliver budgets that skew budget structure in favour of capital and infrastructural enhancement, additional jobs will come on stream, but such restructuring may pitch the Minister against entrenched interests and constitutional limitations; for example, any attempt to reduce recurrent expenditure will run against the brick wall of upkeep and operational expenses of over 40 Ministers, and a free spending National Assembly.

Interestingly, Ngozi did not succeed in increasing capital expenses to anything near 50% of total budget during her first term; there is nothing therefore, to suggest for example, that she will be capable of emulating the 70% capital expenditure profile of Lagos State budgets or indeed, on insistence of allocation of a minimum of over 20% of budget for education as per United Nations recommendation for countries in our development bracket.

In same vein, Ngozi will have an uphill task to withdraw the N600bn annual fuel subsidies and the establishment of a deregulated market for fuel. She would most likely be unable to resolve the paradox of increasing dollar revenue against a depreciating naira, and its attendant adverse economic distortions, so long as CBN continues to capture our dollar revenue and substitute naira as allocations.

Meanwhile, the employment generating capacity of the private sector will continue to be crushed by high cost of funds and inadequate/unavailable infrastructure and a weakening naira, if CBN’s monopoly persists in the forex market and the prime objective of Dr. Iweala with regard to job creation will become just a pipe dream!!

This writer has consistently predicted over the last 10 years that lower single digit inflation and interest rates, increasing employment, expanding industrial base, improved social welfare and security will remain unattainable so long as CBN’s suicidal practice continues; even if the 24-member economic team were all genetic clones of Ngozi, Jonathan’s expectation of “seeing clear improvement in the quality of lives” would be wishful thinking as we will inevitably continue to plunge deeper into poverty even with unparalleled growth in export revenue.

As it has been since we began to substitute naira allocations for dollar revenue after SAP in 1985, so will our economy continue to remain comatose and domestic debts snowball until wisdom prevails and we adopt dollar certificates for the payment of allocations of dollar-derived revenue.

PS: A couple of days after inauguration and first publication of this article, Aliko Dangote and four others have since been added to the NEMT; an indication, some would say, of inconclusiveness and shoddy preparation for such an important assignment!

SAVE THE NAIRA, SAVE NIGERIANS!


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