According to some Newspaper reports in the United States of America (USA), two subjects dominated the scene last week.  Americans celebrated solemnly the 9/11 sad event when two planes piloted by terrorists successfully hit the World Trade Centre in New York killing thousands of people – Americans and foreigners.  The other event was the Job Plan announced by President Obama.

For weeks, the American President has been ridiculed by his Republican opponents of being planless and weak in the face of growing unemployment and incipient recession of American economy.  The current rate of unemployment is about 11 to 12 percent.

No developed country would tolerate an unemployment rate of more than 3 percent.  Both the Democrats and the Republicans alike have continued to doubt the ability of their President and his administration to stimulate a dormant economy until President Obama unfolded his Job Plan which jolted his opponents and sent the Republican presidential opponents to the starting block.

The Job Plan of President Obama of USA envisaged an injection of about $400 billion into the economy to create jobs.  The plan covers tax incentives (cuts) to small scale businesses; extensive payroll tax cuts for Americans; increase in benefit to unemployed Americans and $100 billion for infrastructural developments – roads, bridges, transportation, etc.

The President Obama‘s Job Plan is based on more money in the pockets of the class of Americans whose propensity to consume American goods is high, tax reduction for big companies to encourage them to engage more American workers and of course, economic infrastructural developments like roads, bridges, schools, to create more jobs etc.

Happily, I have, through this column, advocated similar strategy for the development of our economy without any success.  As I have stated in my previous article “COMMON SENSE AND SENSIBLE POLITICS”, it may be relevant here to repeat it for more emphasis and action. It reads, `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 would 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‘.

In order to develop and survive as a nation, we must produce enough goods at home and sell more abroad to earn foreign exchange.  While serious efforts are needed to provide favorable conditions for growth, stringent measures should ensure that domestic industry responds to the policy of employment generation and the demands of tax payments (as and when due).

Some countries have successfully re-organised their industry into, Home and Export, and have created export free zones under this structure, different incentives are given as the conditions demand to ensure a flourishing home market and a promising foreign one.

The giant super stores of old were a sad reminder of lost opportunities through uncoordinated fiscal policy and foreign exchange management.  The old giant stores disappeared because of difficulties in procurement and the cost of foreign exchange and also rising cost of production of retail goods.

The practice of economic diversification is not new to Nigeria except that it has remained a mere executive theory or parliamentary jargon during annual budget sessions.  A concrete policy is needed to be faithfully executed.  What is needed is strong determination by a strong leader who would reverse the trend of selling not only crude oil abroad, but also other oil-based locally manufactured products.  Nigeria should be an exporter of refined products and not an importer.

The difference between us and America is that any injection into the funds of the economy is not treated as excess liquidity to be ‘mopped‘ by the Central Bank but to be used directly to ease problems of lending unlike in Nigeria where more money in the system is regarded by our Central Bank as a source of inflation.

In the economics of expansion to create more jobs, the tightening monetary policy of our own Central Bank is completely out of place and should be discarded immediately.

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