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OUTLOOK 2010: Setting out without a plan


By Dele Sobowale

“Plans are nothing; planning is everything”.
Dwight Eisenhower, 1890-1969, the 34th President of the United States.

One of the reasons our nation is not getting anywhere fast is associated with our disregard for planning and our lack of good planners.

To be sure we have for decades had a National Planning Minister. The current one is Dr Shamsudeen Usman, who according to information at our disposal has a doctorate degree in Economics.  One of the greatest attributes of a competent planners is an unshakeable respect for facts –whenever found and how ever inconvenient.

All planning starts with certain facts that are demonstrable. In that regard, Dr Usman, does not even begin to approximate a good planner –as I will demonstrate presently. And the lack of a credible plan as a basis for budgeting and budget implementation, which had been one of the major causes of our failure in the past, is the reason why the 2010 budget, whenever it is finally passed, will go the way of its predecessors.

“He who speaks without modesty will find it difficult to make his words good”.
Confucius, Chinese Philosopher, c.551-479 B.C.

And let me add that he will also find it hard to eat his words. One Minister of the Federal Republic of Nigeria has words to eat on account of 6000 MW of power the government has failed to deliver.

Earlier this year, when the Federal Minister for Power, Dr (another one) Lanre Babalola announced to a skeptical nation that the government will generate for Nigerians 6000 MW of power by December 31 of this year, many people were quick to remind him about the failed promises that have been made in the past. This writer traced the history of promises made from IBB to Obasanjo’s administration and the disastrous outcome each and every time.

But, the Minister of Power will not listen; and the Minister for National Planning, who should be more wedded to the truth joined the chorus singers promising 600 MW by year end. From the day Babalola made his false promise till December 15, 2009, every member of Yar’Adua’s cabinet stuck to their words that the nation will generate 6,000MW.That was the tragedy.

Then on December 15, 2009, while addressing the 15th summit of the Nigerian Economic Summit Group, NESG, in Abuja, the president’s Chief Economic Adviser, CEA, announced as follows: “We may not achieve 100 per cent of the target. We have been able to achieve 5,200MW so far”.

No sooner did the ECA get off the podium than the Minister of Planning got up to tell those in attendance that if the government attained the 5,200MW, it would have recorded 86 per cent or 90 per cent of the target. He went further to state that 86 or 90 per cent would be regarded as an excellent result if assessed in an examination”. That was the second tragedy.

Both the ECA and the Minister of Planning, who should be hard-headed quantitative analysts have fallen deliberately into self-made traps by confusing installed capacity with deliverable power output. Not only that, they were both being economical with the truth.

First and foremost, no plant or collections of plants ever deliver 100 per cent of their installed capacity. Thus even if 5200MW installed capacity is achieved, the power delivered will be short of 5200MW for reasons too numerous to list. Secondly, Nigeria achieved more than 5200MW installed capacity before Obasanjo departed from office.

The problem had been our inability to generate and distribute the 5200MW on account of frequent gas shortage, vandalisation of pipelines, breakdown of plants, strikes by workers, insufficient transformers etc. Let me illustrate the point by taking the last constraint as an example.

There is virtually no building in Lagos Island that is not connected to the national grid. Yet for over two months many buildings in Lagos Island have not had power supply. In many instances lack of transformers has been discovered to be the problem.

Thus even if 10,000MW or 100,000MW are generated, those neighbourhoods without functioning transformers will derive no benefit whatsoever. The example of Lagos Island can be multiplied by reference to hundreds of thousands of communities in Nigeria who will miss out even if 5200MW is generated and distributed.

And that situation will not change any time soon because PHCN lacks the financial capacity to procure and install all the transformers needed at this time. It is doubtful if the corporation will still be able to provide all the transformers required even by the end of 2010.

Furthermore, the last Minister of Power under Obasanjo, Engineer Lyel Imoke, had already promised the nation 10,000MW by the end of 2007, at the time the promise was needed to pry loose $13 billion from the Excess Crude Account. So the 5200MW installed capacity, about which the Minister of National Planning was grading the administration excellent, was and in reality, a step backward from what had been promised and partly installed before Yar’Adua took over.

All these are important because they point very clearly to incompetent planning at the very top levels of government. The CEA and the Minister who should be leading the fight to base our projections on facts have joined all those who prefer fiction to facts.

“He uses statistics as a drunken man uses lamp-posts – for support rather than illumination”.

Andrew Lang, 1844-1912.

Lang died before Lord Lugard cobbled together several nationalities and asked his girl-friend to give it a name – Nigeria. But, what Lang wrote is just as true of Nigeria today as  the subject of his statement at the time.

According to a report, the Bureau of Statistics, which is under the Ministry of National Planning, and, which, like other such outfits worldwide, should be fact-minded, had deviated from the time-honoured path of impartiality when gathering and distributing data.

The Bureau was reported to have claimed that the Nigerian economy has grown by 300% since 1999. How an economy which grew at less than 6% annually could have achieved that level of growth is a mystery which only the Bureau can unravel.

Yet again this is the sort of data that will be used for planning. Already we can notice some absurdities. While the nation officially cling to the fiction that only 54% of Nigerians live below the poverty line, the United Nations, the World Bank and NISER reckon that 70% of our citizens are impoverished.

Among the data missing or unreliable with respect to the country is one connected with the level of employment. Whereas other nations have fairly accurate figures regarding the number of people employed or out of work, the numbers are either unavailable or lacking in Nigeria.

However, some sectors have already provided indications of what to expect in 2010. The most important is the banking sector which has already started to retrench thousands of staff in response to the losses announced so far this year. It is quite possible that when the 2009 final results are published, no single bank in Nigeria will post profit for the year.

Close to 30% of bank jobs are at risk. Considering that every worker in Nigeria supports approximately three dependents, the incomes of millions of people will be drastically reduced. Aggregate consumption of goods and services will be adversely affected.

Unless the Federal government again intervenes and provides more bail-out money, credit will been significantly reduced. With over a trillion naira in bail-out money with the banks, it is not clear if the government can provide even more stimulus in 2010.

The losses declared by banks have also had a negative impact on those who depend heavily on dividend income and those who traditionally sell some of their shares in December to generate liquid cash. Share prices have continued on a free fall since last year and the downward trend had been accelerated by the losses declared.

Right now there is a glut of shares in the market at bargain basement prices everywhere.

Despite the threat of strikes by organized labor and civil society groups, the federal government has concluded plans to deregulate the downstream sector of the oil business.

For once, no provision has been made in the 2010 budget for subsidy and with all the state governors and the National Assembly in support, the stage is set for a confrontation that will nevertheless result in deregulation.

Higher prices are inevitable in the short term and galloping inflation will follow; perhaps reaching as high as 20% per annum. But, by the third quarter, fuel prices will start a steady decline as more importers move in to take advantage of the free market.

The initial gains of amnesty which had brought temporary peace to the Niger Delta are in jeopardy as implementation is not going as planned. Some have attributed the slow down to the president’s health.

But, if that is the case, then the sooner he gets well the better because a return to the creeks by the militants can only exacerbate the difficulties the country will face in the coming year. Disruption of crude oil supplies and vandalisation of fuel and gas pipe-lines will deal the economy a mortal blow which might result either in deficit spending or more foreign debt.

Already debt servicing charges constitute one of the largest expenditure items in 2010, insecurity will increase it.

By the fourth quarter, the country will be in the grips of election fever as politicians prepare for the 2011 elections. Governance will effectively have come to an end by then. The economy will be on auto-pilot. Anything can happen.

Justas the year was coming to an end two new major policies, Living Wages and Direct Procurement of airline tickets, announced by the Federal government, portend grave consequences for workers and employers alike. And a third one announced by the FCT Ministry would also have local impact on employment in the nation’s Federal Capital Territory.

Under the Living Wage policy the government, after adopting the Justice Belgore Committee Report on wages and salaries intends to pass into law a “Living Wage Act” which will replace the 2000 Minimum Wage Act which dictated a minimum wage of N7,500 for every worker in the public and private sectors.

Under the new Living Wage Act, if passed, workers will receive at least N30,000 as opposed to the N52,000 recommended by the Nigerian Labor Congress.

That 300% jump in wages will inevitably drive inflation up and by increasing the wage bill for employers result in more retrenchments of workers –assuming many employers will be able to afford to pay at all. Even today, a lot of employers of labor, especially the mini and micro enterprises which constitute the major employers of labor still fail to pay the N7,500 stipulated by the 2000 Minimum Wage Act.

The Recurrent expenditure of all tiers of government will also jump –almost exceeding their total budgets for the coming year. Since salaries and wages are regarded as “entitlements” capital expenditure could dwindle to zero by year end.

The policy of the Federal Government which will lead to direct booking of air travel by Ministries and government agencies threatens at least 600,000 jobs according to Nigerian Association of Travel Agents, NANTA.

Again, bearing in mind the number of dependents every worker supports at least four dependents, at least 3 million people at risk on account of this. The figures could get higher if the state and local governments also adopt direct booking as policy.

This is one year during which decisive, vigorous and effective leadership will be badly needed. Unfortunately, this is one year when that particular variable will be absent. The President, whenever he is discharged from hospital, will be weakened by protracted illness.

From all the budgets announced by the Federal and State governments, it is clear that the Jeremy Bentham’s, 1748-1832 principle, “the greatest happiness of the greatest number is the foundation of morals and legislation” had been jettisoned by governments.

Capital expenditure, which benefits the people had ab initio received less allocation than recurrent expenditure which benefits elected officials and civil servants.

The Living Wage Act, if and when enacted will reduce capital expenditure to nil and even then governments will be forced to retrench staff as well.

No stimulus package, assuming government is considering it, will mitigate the disastrous impact of all the known variables.

And all these will occur against the background bereft of credible plans by government.

Threats of renewed hostility in the Niger Delta on account of government’s failure to consolidate the gains of amnesty only add another element to the growing list of factors pointing to a bleak year.

Anything can happen.


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