By Henry Boyo
The Managers of our economy, have inexplicably, merely succeeded in shunting more and more Nigerians into poverty, despite our abundant human and material resources, with bountiful export revenue from oil, over the years.
Sadly, credible international agencies now also allege that about 70% i.e. over 100million of Nigerians now live on less than $2 a day, while fewer employment opportunities exist in a job market that is increasingly, annually bloated, by millions of new entrants.
Thus, social scientists may rightly suggest that the very disturbing current level of crime and insecurity, would recede if more job opportunities were available to absorb our teeming, restless youth population.
There is probably no greater antidote to poverty than sustainable work opportunities that would provide income to fund expenditure on basic necessities, such as food, clothing, and shelter for more families.
The threat of poverty will, clearly, also become reduced where government, responsibly provides other social safety nets such as subsidized education and public health facilities, as well as reasonably priced and efficient mass transit and power systems.
Regrettably, however, despite the earlier promises of preceeding administrations to arrest the increasing surge of poverty nationwide, the reverse has actually been the case, and Nigeria has sadly become listed in the ranks of the world’s poorest nations, even when crude oil price fortuitously exceeded $120/barrel and CBN’s dollar reserves approached $60b in recent years.
Incidentally, no plausible reason, has so far been suggested as cause of the serial failures of former Presidents Obasanjo, late YarAdua and later Jonathan, to bring back some dignity to the lives of millions of our impoverished citizens.
However, with cabinet ministers finally sworn-in to drive Buhari’s change mantra, public expectation still remains very high that this administration possesses a better strategy that would herald rapid success.
Buhari kept faith with the resonant sound bite in his inaugural speech, that he belonged to nobody and belonged to everybody, when he declared at the recent retreat with ministers-designate, in Abuja, that “our economic focus will be policies that will ensure inclusive growth and we will count our achievements based on the number of Nigerians we move out of poverty”.
The unrealised economic objectives of earlier administrations were primarily in relation to job creation, poverty reduction, inclusive growth and diversification of the sources of wealth in the economy. Sadly, without exception, these former administrations all failed in their quest for any meaningful success at economic redemption.
The inevitable question, therefore, is, what will Buhari’s team do differently to create jobs and succeed in positively repositioning our economy. The issues of revenue leakages, wastages, and corruption are often identified as the major hurdles before which past administrations faltered in their strategies to create jobs and give a better life to increasingly more Nigerians.
However, Buhari’s well documented Spartan tradition and his evident abiding passion to wrestle down corruption may minimize the above commonly listed, threats to poverty alleviation. The usual strategy for creating jobs in previous administrations was simply to throw hundreds of billions of Naira into various poorly designed job creation projects, such as the now defunct SUREP;
such interventions, generally also included special loan packages with single digit interest rates for the real sector. Sadly, the more compelling attraction of government’s sovereign risk free borrowings, with the attendant double digit interest rates, invariably guided the appetite of the banking community from actively supporting SMEs, which are inherently more risk prone, with competitively priced loans, from which the banks earned less yield.
It will really be very interesting to see how Buhari’s Economic Team would successfully resolve this traditional systemic contradiction which crowds out the real sector from access to cheap funds while the CBN ironically, simultaneously, continues to pay double digit interest rates to borrow funds that will simply be sterlised and kept idle.
Even till date, the CBN’s dedicated portfolio of SME targeted loans, including BOI interventions funds, do not enjoy enthusiastic support from the banks, and unexpectedly, therefore, remain largely without patronage; conversely, micro enterprises, with their relatively modest credit requirements continue to endure the oppressive burden of over 6% interest rate per month, on loans which are sourced from government registered and supported Micro Finance Houses.
So how will Buhari redress such brazen financial extortion for this category of largely voiceless, small time businesses.
Incidentally, with facilitated access and cheaper cost of funds, over 15million registered micro enterprises nationwide can become empowered to individually create at least one additional job to make a significant dent on the current intimidating tower of unemployment, to provide a livelihood for millions of Nigerian families and effectively reduce the level of poverty nationwide.
Furthermore, in the present austere dispensation with crude oil prices hovering in the $40-$50/barrel range, there would hardly be any residual revenue after deduction of recurrent expenses, to fund those capital projects which would normally create job opportunities and enhance social welfare.
So, despite the attendant oppressive cost of borrowing, unless Buhari’s government commits very heavily to further step up debt accumulation, Nigerians will be disappointed if we expect any significant improvement in the alleviation of social poverty.
Nonetheless, the federal government’s annual average budget of about N5Tn (about US25bn) is clearly inadequate, in reality, to galvanise consumer demand and investments in an economy with a gross domestic product value of over $510bn (now actually below $400bn as a result of about 25% Naira devaluation recently).
Instructively, the real sector that is actually the main driver of employment and growth in every successful economy and government policies are carefully structured to support and fund real sector activities.
However, our economic managers, so far, appear helpless to effectively, positively, modulate the critical monetary indices of inflation, cost of funds and exchange rate; for example, high rate of inflation would stifle consumer demand and induce poverty where incomes are static; understandably, also, without consumer demand, there would be little or no motivation for investments that would instigate job creation.
Similarly, high cost of funds, which are currently above 20% clearly increase the risk of borrowing and therefore restrains investment activities and job creation. In the same vein, a Naira exchange rate that is constantly depreciated by CBN’s inability to successfully manage Naira liquidity, will inevitably also increase raw material and production costs and make locally produced goods uncompetitive, and therefore cripple industrial growth and job creation.
Indeed, President Buhari’s passionate desire to create more jobs and reduce poverty may just remain fantasy, like the promises of former Presidents, if the poison of systemic excess Naira supply which makes the realisation of favorable monetary indices impossible continues to constitute serious distortions in our economic framework.
SAVE THE NAIRA! SAVE NIGERIANS!!