By Adisa Adeleye
Many Nigerians and foreign friends of Nigeria have cherished common belief and conviction that with such enormous human, physical and mineral resources, Nigeria should by now be a prosperous nation. The present predicament of abject poverty for a great number of Nigerians is a national disgrace and total embarrassment to the developed world.

Some patriotic Nigerians constantly associate the poverty of their country to a calculated mismanagement of both economic and human resources of those who pretended to be leaders in the past but later discovered to be nothing short of plunderers and criminals. It must be admitted that some feeble attempts had been made in the past to find solution to the case of deepening poverty. The problems have always rested on comical misunderstanding of causes and effects of poverty in the country. The political leaders in the past twelve years have failed to recognize the glaring facts of underdevelopment in the face of plenty. The remedy being used over the years could not work because it did not address the root cause of the problems.

It is gratifying to note that President Jonathan has set up a new economic management team under the former World Bank Managing Director, Dr. Ngozi Okonjo Iweala as Minister of Finance and Coordinator. The new gadget looks fine with the amiable and capable Minister given an important role to play. Dr. Okonjo _Iweala is not new to the Nigerian economic scene and she has proved not to be a magician. Even, the best brain in the world could fail under a hostile environment.

Unless the economic environment is changed and political attitude altered, the new team with its array of talents (including the President and his Vice) might easily hit the rocks with devastating effects on the political and economic life of the country. Some serious analysts believe that President Jonathan should have started with the clearing of weeds before planting seeds to ensure proper germination of the seeds.

There is that huge problem of high cost of running the governments at all levels – Federal, State and Local Government. The Federal Government feeds about 40 Ministers and about 20 other aids; each of the 36 States keeps about 18 Commissioners and about 20 others in form of advisers and assistants; each local government Council has its own Chairman and other public officers. No serious nation would tolerate such colossal waste in its pursuit of economic growth, even if it is approved by the Constitution.

The next problem is the question of allocation of oil revenue which is based more on political consideration and less on economic factors. The folly of allocation of oil revenue to all levels of government without corresponding share in funding oil production is glaring. Only the federal government funds the Joint Oil Venture. Also, the methodology of payments of oil revenue to the states and local governments has been faulted, I think, rightly by LesLeba of the Vanguard, who argued sensibly that oil revenue due to the States and Local Government should be paid in ‘Dollar Certificate‘ instead of Naira at the Central Banks‘ determined Exchange rate. This method would prevent the usual monthly surplus liquidity ready to be mopped by the Central Bank at its own determined rate. The beauty of the Dollar Certificate scheme is that it would allow a state with strong internally revenue generation scheme to accumulate dollar certificates to finance its structural development at a later day. On the other hand, in the Nigerian fashion, the silly holders of the dollar certificates could rush back to the Central Bank for naira exchange. However, the Dollar Certificate Scheme looks like a reasonable proposal than the present method being used by the Central Bank of ‘cornering‘ the dollar receipts and distributing naira instead.

A more serious point is the role of the Central Bank in the pursuit of economic growth. The crucial role of the Central Bank in conjunction with the Ministry of Finance is to advise the federal government on suitable monetary policies to ensure macro_economic stability. Its role is not to take over governments‘ responsibility on the whole economy. Full employment, growth and improved standard of living are the major policies of any good government.

Since the last two years, the Central Bank has engaged itself in justified bitter battle against the dreaded enemy of the economy – Inflation with wrong method. Commonsense tells us in simple terms that inflation arises when too much money chases too little goods. That means that the price of goods would tend to rise if the supply of goods remains unchanged under the pressure of increasing demand. Thus, inflation is a factor of demand and supply factor. When quantity of money increases, the demand and supply come into play.

If in layman‘s language, ‘too much money is chasing too few goods‘, the answer lies in increasing the quantity of goods to meet the increase in demand. If there is increase in price, it would only be for a short time for the quantity of supply to be adjusted. In a situation of unemployment and low capacity utilization, increase in liquidity needs not cause increase in prices, but increase in supply through release of unsold stock or production of new ones by idle machines or new hands.

The Central Bank leadership in its mortal fear of probable inflation caused by excessive demand might have forgotten the remedy of widening domestic sources of production by making borrowing from the banks less costly. The Central Bank should scrap its counter_productive monetary tightening policy and embrace a friendly policy of aiding local manufacturing industry to grow bigger and faster.

It may not be too late for the government to start to sort out our priorities from the confusions of the past. First, action should be taken to strengthen the import substitution industry so as to ensure its survival against foreign competition and also to be able to produce enough for home demand and for export. The fiscal measures required are prevention of smuggling substantial reduction or complete eradication of import duties on plants, machinery, spare parts and raw materials which cannot be produced at home.

A complimentary policy is that which will stimulate demand for the locally produced goods. Since the lower income groups are more likely to prefer these goods, it would be better to put more money in their pockets by a moderate increase in salaries and wages or substantial reductions in personal income tax and purchase tax (vat). The other group, with higher propensity to consume home goods is the old-age pensioners who need substantial increase and regularity of payment of their pensions. The third group embraces those unemployed graduates (after the National Youth Service) who need a form of income to sustain their current level of demand. They should be supported by stipends until they are employed.

What is needed is commonsense economic policy on sensible politics to engender support from all stake_holders even if this will lead to amendment of certain sections of the Constitution.