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Sobowale On Business

Economic Summit: Elephant goes into labour, delivers a mouse (1)

President Muhammadu Buhari and Vice President Yemi Osinbajo at the opening of a 2-day National Economic Council Retreat at the Statehouse Conference Centre on 21st March 2016.

In the three tears left to this administration, we have given ourselves the target of 10,000MW distributable power. In 2016 alone, we intend to add 2,000MW to the national grid.”

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File: Buhari during the 2016 budget presentation to the National Assembly.

Economic Conference: An afterthought too late to rescue budget 2016 (1)

NOTE: This article was written on March 8, 2016, two weeks after it was announced that President Buhari had agreed to organize an Economic Summit. Even then, it was clear to some economists that this government was not really interested in the summit. The summit failed to take off on Thursday, March 10, 2016 as scheduled and no new take-off date had been established. Obviously, there is no commitment; only an attempt to silence critics of government.

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Prepaid Meters

“No” to protest against tariff increase

Most of our Fellow Countrymen (“How many fools make up Fellow Countrymen”, asked Thomas Carlyle, 1795-1881, in despair) are emotional and unrealistic. Less than one tenth of one per cent understands the basic principles of economics. Most of the leaders, drawn from the same pool of people, are not different. Even those among the leaders who understand the principles of economics lack the moral courage to tell the truth when issues pertaining to economics become contentious. They choose to play to gallery by telling the “masses” what they prefer to be told instead of telling the truth which might be unpopular.

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Geregu power

Killing discos; commiting national suicide

Like most Nigerians, I consume electricity and receive all those bills, about which everybody complains, and the services are not satisfactory. But, unlike most Nigerians, five DISCOs, two in the North and three in the south, provide me services. With one pre-paid metre, four estimated bills, popularly called crazy bills, are received and paid monthly. I don’t have shares in any DISCO and I tried my best to discourage friends wanting to invest in DISCOs when the last administration slated them for privatization.

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File: Buhari during the 2016 budget presentation to the National Assembly.

Can these figures and budget illiterates run a government?

It ain’t the things you don’t know that cause the problem. It’s things you think you know that ain’t so. Ralph Waldo Emerson, 1803-1882. VANGUARD BOOK p 117. President Buhari must have entered into the GUINNESS BOOK OF RECORDS for taking five months to assemble a cabinet of less than fifty people and about thirty Special Advisers, noise makers as he called them.

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Mr Godwin Emefiele answering questions  during his screening by the Senate for  Central Bank Governorship in Abuja on Wednesday

Soludo vs Emefiele: Pot calling kettle black

Professor Chukwumah Soludo, former Governor of the Central Bank, CBN, was in his elements a few weeks ago, when he declared that the current CBN Governor, Godwin Emefiele, turned the bank into an ATM machine for the Jonathan administration. The imports of that statement are numerous; but, two would have struck most readers who are no knowledgeable about the role of the central bank in any nation.

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Emefiele CBN Governor

Finally, FG addresses fiscal policy

Godwin Emefiele, the Governor of Central Bank of Nigeria, CBN, is one official who has my total sympathy. He is the victim of economic circumstances absolutely beyond his control, yet, he is looked upon to provide solutions to problems well outside the mandate of the CBN. Unjustifiably, he had become the target of attack from all sides – manufacturers, importers, exporters, BDCs, domiciliary account holders, banks, oil companies,

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deltaplane

Taraba enters age of aviation, tourism with Overland Airways

It is like a marriage made in Heaven which invariably produces great results. When Governor of Taraba State told me in November last year that his state capital, Jalingo, will in about three weeks, enjoy direct flight from Lagos, through Abuja, it sounded like one of those political promises “made to be broken” (apologies to Jonathan Swift, 1667-1745). Given the short period he had been in office, in one of the poorest states in the nation, and being distracted by his political adversaries, it would appear that sealing a deal with an airline to start operating a flight to Jalingo would be almost impossible.

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supermarket

Expected lower aggregate consumption in 2016

When Morita wrote the article from which that statement was lifted in 1992, I was a Senior Lecturer/Consultant at the Nigerian Institute of Management, NIM, and an avid reader of the Harvard Business Review. That explains why the VBQ is filled with insights from the HBR. But, in 1992, Japan was the second largest economy in the world and the second biggest manufacturer; the USA was first in both. China was nowhere in sight and the VBQ was still fifteen years away from being published. But, I had started on it.

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Buhari presents N6.08trn 2016 budget to NASS

Consequences of states reducing budgets for 2016

The most obstinate illusions are ultimately broken by facts.” Trevor Roper, in THE LAST DAYS OF HITLER. (VAGUARD BOOK OF QUOTATIONS, VBQ, p100). Roper, in one of the best books on the last days of the German leader wrote about how Hitler, deceived by his field commanders set about deploying imaginary troops in order to halt the advance of the Allied Forces into his country. It was comical and historical. It demonstrates how political leaders can turn to clowns when faced with realities which are too harsh to admit.

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Emefiele CBN Governor

Banking blues in 2016

When oil companies fail to pay, bankers are in a fix. But, not just bankers; we are all in a fix. Shareholders of Nigerian banks, already waving off a bad 2015, will again have to endure two economic woes – low or no dividends and plummeting share prices. Currently, only two banks shares are above N15 per share: ECOBANK and GTB. None of the others is above N6 per share.

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BAIL-OUT

Why most states are on the verge of bankruptcy

In July 2014, the Federal Government allocated N630.32bn to all the three tiers of government – Federal, States and Local Governments. In August 2014, N601.65bn was allocated to the states. For September 2015 the figures just released indicate that a total of N389.936 was shared by all the tiers of government; representing drops of 35% and 38% from the August and July 2014 allocations. Yet, N601bn in August represented a sharp decline from the previous months in 2014. At the moment governments are sharing less than half of what was available in January 2014.

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Minimum wage

Minimum wage and the inevitable bankruptcy of state governments

Another economic war is about to start in Nigeria. The war will be about Minimum Wage, MW. The states want to renegotiate it, meaning reduce it. Labor also wants to renegotiate it, meaning increase it. Renegotiation seems to be the only point of agreement; it is also the battle ground. On the face of it, one would assume that this is only “a matter of cash”. But, it is more than that. The very existence of states and local governments is threatened by this conflict.

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BAIL-OUT

Can Nigeria states go bankrupt? (2)

Governor Aregbesola, went on to disclose to the people of the state, and Nigeria, that “Osun State received only N55m from the Federation Account for the month of September 2015.” For a state which had declared a monthly wage bill totaling N2.4 billion, this is not only frightening, it naturally leads to the question: from where will the state raise the funds to fulfill its obligations to its workers and others?

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Cartoon

Can Nigerian states go bankrupt? (1)

It is unthinkable that wisdom should ever be popular”, Johann Goethe, 1749- 1832, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 275.) “The Chairman Fiscal Responsibility Commission, Chief Victor Murako, has warned of a possible shutdown by some states of the federation in the next six months unless they find creative ways of handling their dwindling allocations from the federation account.” PUNCH, November 24, 2015. You bet they can; and at least two are technically bankrupt now.

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