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Saving the Nigerian economy

By Patrick Dele Cole

THE Minister of Finance said something about putting policies in place that would deal with the economic problems this administration inherited. I have never seen so much gloom in any economy anywhere. Our economy has lost traction. Where are the ideas meant to combat our problem? When these ideas appear they are killed by political infighting.

Economy
Economy

Every nation goes through crisis. It is then that leadership steps up and tells what has to be done. The people follow the leader. Today, we are filled with general gloom and no idea how to solve the problems. I am sure the minister goes to sleep every night praying that some new scandal about stolen or missing billions is not reported the following morning.

The Nigerian economy is waiting for Armageddon, the judgment of God or Allah – the day all the blessed will move to the right hand of the glory of God and Allah and Christ and Mohammed, the rest of sinful humanity will be condemned to the hottest fire of damnation and hell.

That is alright. But what do we do meanwhile? That is the job of the present administration.  Promising hell to the sinful and corrupt agreed. I have not one iota of doubt that corruption has held Nigeria back and that all those found to be corrupt must suffer the consequences. Even so, the righteous must eat; to eat they must produce; to produce they must work, to work they must be paid, to produce they must gather, sell and export in order to buy other necessities. They must encourage direct foreign investment; they must conserve foreign currency to boost the relative strength of the Naira. They must create an environment that encourages industry.

The administration should stop regarding every rich man as an enemy or as corrupt. This issue of corruption should be handed with some finesse. In the past few months, we have noted that Mr. Cameron and his father may have been corrupt or at least were tax avoiders. Hillary, the Clintons are accused of corruption; etc. Suppose Aliko Dangote is found to be corrupt – what do you do? Close his companies and lose thousands of jobs and cause all  banks in Nigeriato be bankrupt ?

The economy must be made to move: it cannot wait for the salvation of a corrupt free Nigeria. There are millions of corrupt free Nigerians who are starving. It is not that the administration is naïve in its pursuit of the corrupt. It must continue to do so. How about those who are not corrupt, are they not entitled to live? Why don’t we have other activities that create wealth and productivity?

You cannot do that by handouts of N5000 to the unemployed etc. You cannot do that by refusing to deal with businesses which are collapsing around all of us. Rather you engage vigorously with businessmen. The fear of business contagion and corruption has stifled our economic growth without any decrease in our population growth. The lack of a clear policy to put our people to work ironically can only encourage corruption, injustice, theft – it definitely would not produce economic puritans, clean mullahs etc. Engage the people to work. If they are caught being corrupt, punish them.

But even if the EFCC is twenty times its size to-day, the economy, the GDP will not rise. Perhaps, it is in allowing rapid GDP growth that effective corruption stoppage or corruption reduction mechanism and institutions can be developed.

If our GDP is to rise to 9% in a world GDP that is below 3%, it will not and cannot be that the rise is simply the result of abolishing corruption. The economy of Nigeria is like a giant tanker. You have stopped it. You now have to turn it around. But since it is empty, you first have to fill it up. That takes time. You have to turn it around; that takes more time.

Then you have to start the engine gently, run the engine (also that even takes more time) before you can gradually move to full steam. Even then you have to avoid rocks. The origins of corruption are deep and versatile. It can be substantially reduced by education, which should fill the people with moral pride that they can slay the monster of corruption. The people know that corruption is endemic: know your leaders; know your people – like banks – know your customers.

We need to have National Government where all political parties are represented in the Cabinet which should include independent experts to advice on how to end the recession, build the foundation for productive, sustainable economy. Nigerians must be aware of their economic predicaments and should be carried along with the intended solutions.

The National Assembly and State Assemblies must reduce their expenditure by at least 60% – 70%; their members should be part time and all its allowances reduced substantially. Governments,  Federal, State and Local, recurrent expenditure should be reduced by 70%, while creating a better foreign investment environment. The political parties have to return to a positive internal democracy without which they would be deregistered. Privatisation policy should be reviewed drastically.

Nigeria should play to its strength – we are in a market of 180 million people and the centre of ECOWAS, thus, the centre for a market of over 350 million people. Nigerians must all be put to work in all ways – roads, agriculture, fishing, herding etc. with related industries encouraged. The Naira stability and comparability in value with other currencies should be our top priority. The policy of cash calls with the International Oil Companies, IOCs, has been tried for over 50 years and we cannot meet these cash calls.

A new fiscal regime with the IOCs has to be implemented. Subsidies must stop. The Judiciary should be whipped into shape; if our laws demand that all election petitions should end within a certain period, it should so end. No excuses. If a member of the Assembly is to lose his seat if he moves to another party, then this should be so, no excuses and no contention as to whether the party has a division or not. The chairman of INEC must be dissuaded from embarking on another registration exercise. Sectional appointments disregarding the Federal Character requirements of the Constitution must stop and, where this has been made, revoked.

All money paid by all institutions to Government must first be lodged with the local banks: CBN must discard its penchant to be partly a normal clearing bank. It should model itself as the Reserve Bank of the US or the Bank of England. The Local Government, 774 of them, is the origin of corruption in Nigeria. It also inhabits the atmosphere and the area where people have the clearest knowledge of how corrupt the Chairmen and Councillors have become. The EFCC should have a corresponding office at the Local Government level.

The State Government play fast and loose with the finances of the Local Governments. This must stop. Local Government finances and money is a no go area of state Governors, who also must be accountable to State Assemblies that are aware of their duties. All the pensions and other perquisites voted by the Governors for themselves to be reviewed drastically downwards, as should those of Presidents and the Executive. The same austerity must be applied to all parastals; their pay and expenditure reduced drastically.

Banks should reflect the economy; when the economy is not doing well, the banks ought not to be doing well. But in Nigeria the worse the economy is, the richer the banks become. There is a disconnect somewhere which ought to be resolved. Similarly banks should be the instrument of progress, not the death knell of business. There is some wooly thinking which permits Nigerian banks to live outside of world economic realities. The interest regime in the rest of world (except Zimbabwe and Venezuela) is low interest rate and low inflation.

I do not see anything in Nigeria which suggests that we are part of the modern monetary system or in tune with it. Our thinking is stuck in a time warp, operating a discredited system of high inflation and high usurious interest rate. This system cannot refloat our economy.

The Nigerian economy does not live in isolation. Other African countries do not have the severe problems our economy is experiencing. The flight of companies and other closure of many companies are not replicated in nearly all African countries (the exceptions are Angola and Zimbabwe)

Finally, “Restructure” means different things to its various proponents. One thing, though, is common to all – restructure is a cry that people are unhappy with the administration. The palliative of a national government is temporary. In the end we all must ask ourselves how we want to progress as a nation but more fundamentally whether we want to do so in a single entity or a combination of semi autonomous units. The first question will be answered by a referendum. The second question will follow only after we have answered the first. But will this be necessary if the economy is fully refloated and it is a roaring success?

 


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.