By Dele Sobowale
Government is now proposing a benchmark of $73 per barrel to the National Assembly; compared to the benchmark of $78— Dr. Ngozi Okonjo-Iweala, Minister of Finance and Co-ordinating Minister for the Economy, CME, November16, 2014.

NOTHING is more pathetic than great economists in government, at a time of looming national economic disaster; when they are forced to mix partisan politics with economic policy decisions. No Minister of Finance, anywhere on earth, is ever the first to tell the people the bad news, especially with an election round the corner. That would amount to political sabotage against the government of the day.

The usual trick is to release the bad news in tricles; and ensuring that only those facts which can no longer be concealed are disclosed. Nigerians are experiencing that sort of treatment right now. The CME knows a lot more than she is telling; and she only hopes that the situation will not deteriorate faster than she hopes before the elections next year.

The so-called ‘Austerity Measures’ and the accompanying policy packages were forced by circumstance beyond government’s control and they represent the least, not the best, that government can do. It takes a great deal of courage, lacking in this government, to go all the way and take the necessary steps to avert ultimate disaster. So, this is only the first installment of painful measures the Federal and State governments will have to take.

To be candid, it is disappointing because the CME is a better economist than the package indicates. One can only exonerate her by ‘understanding’ her position. At the same time one is reminded of the observation by late Robert Audrey, playwright turned anthropologist, and the author of best selling Territorial Imperative, who said, “The worst sort of disloyalty is thinking that telling the truth will be bad.” She knows that the economy is already worse than she claims for several reasons which will soon be disclosed.

Appointed officials, particularly in developing countries, and especially Nigeria, often fail to realize that while they are entitled to want to stay in their positions, they also have a social responsibility, they owe the people some sort of loyalty; if not for any other reason than that factual, and timely information, even if it contains elements of bad news, at least allow the people to better prepare themselves for the bad times ahead. It is the sudden shock that is the killer of morale and patriotism. There might be no Israelites today if one Joseph had not told the monarch the truth about the seven lean years – right in the midst of the fat years. What is happening to Nigeria now is not new. What will be novel is how we handle it.

Election time-table

When Alfred Marshall, 1842-1924, advised that the economist, like anyone else, must concern himself with the ultimate aims (and fate) of man, (Vanguard Book p 45), he must have had such a situation like this in mind. The ruling party and its candidate would like to withhold the tough measures until after the election which comes up in late February 2015. But, the forces dragging down the price of crude oil and depleting our reserves are not constrained by our election time table. If crude had gone down from $110 to under $80 in three months, who knows by how much it will descend by February?

The truth is, Nigerians cannot wait until the elections to be told the full package of measures designed to rescue their economy. Arthur Burns, Chairman of the US Federal Reserve Board, equivalent of our Governor of the Central Bank, during the Nixon administration, once warned that if government delays selecting options, on the ground that they might be unpopular or interfere with elections, they might discover that suddenly there are no good options left.

The CME also confronts the matter of conflict of interests with respect to the JEMT whose members constitute the rich people government wants to tax more for revenue. Clearly, they will not willingly surrender their money and they will water down any proposal designed to ensure there is more equity and better distribution of the national income. So among the truths she must tell President Jonathan is the need to disband the current JEMT and appoint a more representative body which will include many groups of stakeholders; since we are all in the same leaky boat. Otherwise, the measures proposed, tentative as they are, will not work as they should. Jonathan’s rich friends will sabotage them ab initio.

Just two weeks ago, I made a remark in one of my columns in this paper that crude benchmark was most unrealistic giving as one of my reasons the relentless downward trend of crude prices since it started cascading down since July/August.

Incidentally, the CME who, together with the other members of the JEMT, were expected to provide better forecasts than a private economist and researcher were still clinging to the straw called $78 benchmark. Unfortunately, for the CME, JEMT and, mostly Nigerians, the government is abandoning $78, and moving to $73, at a time when $73 is appearing increasingly unrealistic. Most other analysts, in Nigeria and in the global community, actually foresee a situation in which, by June 2015, crude will be selling at about $60-65 per barrel. In fact, any drop below the $73 benchmark, and the volume projections will spell doom for the 2015 budget which is already undergoing drastic revision.

There are two problems associated with that. One is timing. The new budget will be sent to a National Assembly, NASS, whose two chambers, Senate and House of Representatives, are not exactly positioned to undertake the very rigorous interrogation of the budget documents that will be placed before them by an Executive branch whose credibility had been woefully impaired. The House in particular, which is not scheduled to resume until first week in December will not immediately sit to consider the budget irrespective of how vital it is to the survival of our nation in the next ten years, at least.

It will be fully engaged in the battle for the position of Speaker until the Christmas recess time – which will last until January 2015. With only a few weeks to elections, it is doubtful if anyone will address the budget and its provisions. The CME must be one of less than one thousand knowledgeable people in the whole of Nigeria who actually believe that the JEMT is on top of the situation.

The second is the distinct lack of seriousness with regard to some of the solutions announced. For instance, when she proclaimed that To show how serious government is about job creation, President Jonathan will tomorrow November 17, launch the 4th edition of YouWin to support another 1,500 [that is right one thousand five hundred only] entrepreneurs. one does not know whether to laugh at the joke or the tragedy that statement represents.

In a nation with over 40 million unemployed or under-employed or wrongly employed (science graduates driving taxis or selling recharge cards, engineers working as barbers etc), who can believe government is serious.

That is like trying to irrigate the Sahara Desert by peeing on one spot. And she said this with a straight face!! Quite apart from the farce involved in thinking that 1,500 new entrepreneurs will make a dent on the nations sad job situation, she forgets that four out of five new businesses fail before the end of the first year. So, the 1,500 might not even remain employed for long. That, however, is the mildest objection to the declaration about the 1,500 stalwarts getting their own share of the national cake. The nation only needs to be reminded that most of those who collected new taxis from El-Rufai during Obasanjos tenure are now back on the streets jobless once again.

Absorbing army of unemployed

The major objection to that statement centres around the fact that the CME knows very well that governments, even under the best of circumstances, except Socialist countries, cannot create the quantum of jobs to keep the population in full or near full employment (defined as not more than 4% unemployed). So, it is fraudulent to create the impression that the Federal, State and Local governments can create the jobs to absorb that army of unemployed.

It won’t happen and nobody knows this better than Dr Okonjo-Iweala of the World Bank whose bank is sitting on mountains of studies proving that conclusively. There is absolutely no reason why the Finance Minister, the JEMT or President Jonathan should be offering Nigerians a phony solution which defied all the verdicts of history and experience. Coming from a professional economist, it amounts to intellectual dishonesty. Granted most elections are won by lying to the voters. But, offering people dud cheques on jobs just to win elections is not part of economics in the USA or Nigeria for that matter.

The Minister is on the right road with respect to luxury taxes. But, even the right road is often strewn with dangers. It won’t be the first time that government would tax Mercedes Benzes, or diamond rings 200 per cent, ad valorem.

Invariably, the same government would remove taxes on farm equipment. Since no poor peasant farmer, producing for subsistence, will ever import a tractor or combined-harvester, the wealthy move in and very soon containers, presumed to hold farm tools, are bringing in Jaguars and Rolls Royce duty free.

That world of the more you look the less you see had characterized previous attempts at taxing the top end luxury goods. So, where does that leave us? Candidly, the Minister of Finance should not have called for that press briefing only to unveil ill-digested, ill-timed, poorly conceived, full and half, measures (luxury taxes) and to load the announcement which she knows are nonsensical (1500) and obviously false (government creating jobs).

The best advice to the CME is: withdraw the proposal and try again. The $73 is unattainable anyway. Advice to Nigerians: ignore her; forgive her; for she knows not what she is doing. That last bit is not original. So, forgive me too.