By Les Leba
“We are tired of the military repetitive tendency to experiment with our economy: Today, they say “no controls”.   Tomorrow; they say “full controls”.

The day after, they say “fine tuning”.  The next day, they say “Devaluation.”  A few days later, they say “Revalue the same naira upwards again Abi?”

All we can see are the consequences of this permanent game of military “about-turns”, high inflation, a huge budget deficit and an enormous foreign debt repayment burden, dying industries, high unemployment and a demoralized populace.  Our youths, in particular, can see no hope on the horizon”

The above text is report
ed to be part of M.K.O. Abiola’s declaration at Epetedo in Central Lagos, in his truncated attempt to claim the freely expressed mandate of majority of our countrymen and women to rule Nigeria after the results of the freest and fairest elections ever held in this nation were unilaterally annulled by then military President Ibrahim Babangida.  (See Punch 7/7/10 pg 53)

However, the above extract from Abiola’s Epetedo declaration is a familiar echo of our prevailing economic environment.  In other words, the apparent success in forcing the military from governance has now become ashes in our mouths as our economic fortunes as a country continue to dip rather than soar as per popular expectation.  Our self-serving politicians have proved that what the military class can do, they can do much worse with sheepish resistance from the people.

The economic consequences of despotic rule as enumerated by Abiola have since matured into unbridled monsters as annual inflation rate has exceeded 10% since the return to civil rule; thus making nonsense of the economic virtue of savings!  Meanwhile, real investment has understandably taken a battering in the absence of adequate savings.

Patriots and virtuous Nigerians, who were encouraged to save for a rainy day and make adequate preparation for their retirement, have become paupers in the twilight of their lives, as oftentimes, the irregular pension handouts do not even cover the cost of collection!  The rising cost of the average family food basket has also generally outstripped the national inflation index and official sources currently indicate food inflation to be between 14 – 17%, but housewives would insist that average annual inflation rate for the family food basket has remained over 20% in the last decade or so.  Such housewives will cite the prices of pepper, yam, fish, plantains, etc that have soared by over 500% in the last five years or so!

Meanwhile, the minimum     wage level has remained stagnant for over 10 years with dehumanizing implications for millions of our countrymen.  Indeed, UNDP reports indicate that possibly over 70% of Nigerians now live below the poverty line with millions of Nigerians earning less than one dollar a day!  The prevarications, policy somersaults and inconsistencies that Abiola identified as the destructive management style of military despots seem to have been grafted into the modus operandi of the political leadership in our democratic dispensation.

An excellent example of this government by rule of thumb is amplified in the handling of government’s desire to deregulate petroleum marketing in the country.  Today, it is “no going back on deregulation; then it becomes deregulation with a human face or deregulation with palliatives, soon after, it becomes partial deregulation; today, after almost 10 years, NNPC is still responsible for bringing in over 80% of petrol imports; the oil marketers still have to be cajoled and encouraged with payment guarantees in form of sovereign debt notes (SDNs) to engage in petrol importation.  Annual subsidies on the retail price of petrol have climbed to over N500bn annually (over 18% of expected actual federal revenue in the 2010 budget).

Inexplicably, our nation’s prayer is that crude oil prices should not rise in the future because of the implication on the increasing value of subsidy!  On the other hand, subsidy values notwithstanding, increasing crude oil prices would impact positively and continue to fund over 80% of our external dollar reserves and our revenue profile.

In spite of over N1500bn subsidies in the last five years, and the huge promotional expense of encouraging Nigerians to embrace deregulation, indications are that the government does not have the courage to carry through this policy, especially in an election year!  Incidentally, since the government of former President Obasanjo formally declared the failed deregulation policy, the succeeding federal government annual budgets have deliberately and mischievously excluded any provision for subsidies!

This column drew attention to this omission at that time, but this illegality continued even into the current 2010 budget.  The question now is, if the subsidy values were not properly appropriated with each year’s budget, on whose authority and from which source were the subsidies being funded?  It is unlikely that there was any written instruction from the Executive to NNPC to commit such constitutional violation and absorb the subsidies, but the lack of regard for the rule of law has now landed NNPC in the current controversy on its solvency or otherwise.

The Constitution stipulates that all government revenues must be paid into a consolidated federation account and withdrawals cannot be made therefrom without valid appropriation.  Now, the truth is evident that NNPC had not been paying all revenues into the federation account and indeed, no reconciliation has been made for over five years of NNPC’s earnings and the “out rightly illegal and unconstitutional direct payment of subsidies to private sector petrol importers.

The surprising thing is that the Legislature, the Judiciary, the Budget Office, the Accountant General, the Revenue Mobilization Committee and indeed, the Media and other rights activists colluded in their silence or is it ignorance while our most valuable revenue resource became an orphan child, which was abused and raped to father a lineage of illegitimate offspring.

The imperatives of a huge
budget deficit and an enormous foreign debt repayment burden, which MKO Abiola (himself, an astute accountant) decried are regrettably still with us.  The situation is, however, made more anomalous in the sense that our increasing budget deficits over the last decade or more have evolved in spite of spiraling oil revenue, such that a total external reserve of just $4bn during Abacha’s administration had literally ballooned to $60bn in 2008; yet, Nigeria’s budget even in that year accommodated deficit expenditure.

Once again, at the same time that the nation continues to sit on reserves of almost $40bn with little or no yield, inexplicably, the 2010 budget has a projected deficit which may exceed N1.5 trillion, and which will be financed by government borrowings at an average cost of about 7%!   Debt service alone is projected to cost the country almost N600bn in the 2010 budget (the highest sectoral allocation, multiple times the allocation for health, education and power).  Guess from whom government will borrow the sum of N1.5 trillion this year!

Yes, you are right; the domestic commercial banks will be the main benefactor and will ultimately be the major beneficiary of the N600bn debt service charge.  But wait a minute, isn’t this the same financial sector that the CBN just supported with over N640bn bailout package?  It seems odd that government seems happy to borrow back its own funds at such great cost to our treasury!!

Although the huge foreign debt repayments Abiola decried may have been overtaken by the Paris Club rip off (some say forgiveness!) our domestic debt burden has blossomed to take the place of foreign debts, but significantly without any positive welfare benefits, or enhancement in our infrastructural deficit.

If Chief Abiola recognized and lamented the relative sick state of our industrial base over 16 years ago, he would probably suffer massive cardiac arrest if he were alive to witness the comatose state of our industrial landscape today.

The combination of the twin malaise of over 20% commercial lending rates and a horrendously devalued naira continue to circumscribe half hearted government’s attempts at revitalizing industry.

In spite of its expressed good intentions, the CBN and Finance Ministry are in a dilemma, as they cannot successfully explain why their monetary framework has evolved an inexplicable scenario of very low deposit rates of 4 – 5% while commercial lending rates remain over 20%!  In a confused kneejerk reaction to restore sanity, the authorities have embarked on a futile serial bailout for what they believe to be key industrial subsectors!  Needless to say, many such attempts from NERFUND to SMEIS have failed and the grave of the new enterprise has already been dug by the relative scarcity and huge demand for the funds.

If high level of unemployment was an irritation to Chief Abiola, the current level of almost 20% unemployed labour force would have instigated severe depression for the acclaimed winner of the freest and fairest election in 1993!  His lamentation at Epetedo that “Our youths… can see no hope on the horizon” must have been a visionary prophecy.

Today, over 70% of our youths are unemployed, and emigration to more benevolent countries is the dream.  An idle mind, they say, is the devil’s workshop!  Alas, the devil is at large in Nigeria as corruption, insecurity, kidnapping, extortion, etc have all become the order of the day.  We have come full circle, and even eminent Jurists and respected custodians of the rule of law have concluded that only a bloody revolution can save our country!  This may be so and indeed inevitable, if the present monetary policy framework, which has brought our economy to its knees in spite of vastly improved revenue base is maintained.

However, I am confident as severally explained in this column over the years that such a horrendous blood sacrifice may be avoided if the economy improves; Nigerians, to be honest, do not care who rules them so long as he puts food on their table and enhances their social welfare.

It is my unflinching evaluation that the economy can begin to be turned around within six months once the ILLEGAL monopoly of the CBN in the foreign exchange market is dismantled!!  Interest rates across the board will fall to the same level or below the lending cost of 6 – 7% for CBN’s preferred sectoral bailouts; the naira value will dramatically improve, fuel prices will fall, even when crude prices rise.  Deregulation will be embraced even by labour as employment market becomes buoyant, and industries witness unprecedented revival as the naira also strengthens!!

All that is required is for CBN to pay dollar derived revenue directly to Constitutional beneficiaries with the instrument of registered dollar certificates (strictly not cash).  Simple as it may sound, Nigeria will rise again not from the blood of our kith and kin, but simply from the adoption of simple commonsense in our monetary framework and management.

Save the Naira, Save Nigerians!