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Ergp and the mountains to climb – 2

By Dele Sobowale

“It does not matter if the cat is black or white as long as it catches rats.” Malaysian proverb.

Those were the words of wisdom from the Malaysian lecturer who delivered the first keynote address at the Nigerian Economic Summit Group meeting in 1992. I still have the hand-notes taken from that promising workshop.

Obasanjo, Yaradua, Jonathan and Buhari

The fact that the Economic Recovery and Growth Plan, ERGP, which has become the main thrust of our rapid economic growth plan is based on an idea which was offered to us free of charge twenty six years ago tells a lot about Nigerian. Now we are paying.

Only God knows how far we would have gone towards becoming one of the twenty biggest economies if Babangida, Abacha, Abubakar, Obasanjo, Yar’Adua and Jonathan had dusted up the records to implement the idea. Buhari, self-admittedly slow, took five months to appoint Ministers. That was something which young President Macon of France did in less than a week, and geriatric Donald Trump finished in three weeks. Fifteen months to the end, his government comes up with a plan which should have been put forward in 2015 and should by now have been implemented for two years. That is vintage Buhari.

Last week, time was identified as the cardinal enemy of ERGP, an idea brought forward by Senator Udoma, who participated at the first NESG workshop. Time, however, is not the only obstacle standing in the way of this infinitely laudable idea. Standing shoulder to shoulder with endless time are limited financial resources.

The plan calls for the Federal Government to come up with $49bn and the private sector is expected to kick in $196bn. Fine on paper, but, is it realistic? Can the FG provide $49bn in the next four years and whatever it must between now and May 29, 2019? The reference to next year May is important because the FG must certainly be aware that unless two things happen, the plan is dead on arrival.

First, Buhari must be re-elected. Without that, all we will have on our hands is another abandoned project – after we have spent billions getting it started before the curtain call on the Buhari administration.

Second, the current National Assembly must have passed the necessary bills and approvals to raise and disburse the huge sums required for ERGP before going into history in May next year as well. If not, even Buhari’s re-election will mean starting all over again to seek NASS approval for the ERGP.

Now, let us place the request for N49bn investment by the FG in context. Nigeria is already neck deep in debt which all financial institutions find unsustainable. Government will need to raise the debt ceiling by double the level it stands at the moment to raise the funds required to pay the $49bn bill. Where will the money come from? Our external reserves have reached $48bn now because the price of crude oil shot up to over  $70  per barrel; not because the CBN was clever. They will decline if the price ever goes back down to under  $40. Even Mr. Emefiele knows that. So, that cannot be a reliable source of funds.

The balance in our Sovereign Wealth Fund is still below $2.5bn and the Excess Crude Account, ECA, was recently depleted to under $2bn with the $2bn withdrawn to fight “defeated” Boko Haram. According to the Medium Term Expenditure Framework, MTEF, the country will run deficit budgets well into 2020.

So, there is little hope for any surplus to help finance the ERGP. It requires no more than first year economics or finance training to reach the obvious conclusion. The $49bn can only be financed by borrowing most, if not all, of it.

That immediately raises the question: who will lend us such huge amounts which represent three times our annual budget for 2018? If the current debt repayment schedule is already regarded as unsustainable, what will all the prospective lenders think of us when we ask for more? The next question follows logically from the first. Will they lend?

Obviously, the ERGP, as it stands rests on foundations that are not entirely under government’s control. In fact, very little of it is under the FG’s control. Its own contributions to the pool of funds depend on how others view the plan. Substantial thumbs down on it will mean the end of the plan. If that happens, where is Plan B?

Finally, there is every reason to be skeptical about any FG initiative in Nigeria. Our history is replete with grandiose plans which have left us worse than when they started. Operation Feed the Nation (Obasanjo), Green Revolution (Shagari), Structural Adjustment Programme (Babangida), $13-16bn Power Emergency (Obasanjo, again), and Power (Jonathan) have consumed a lot of our scarce resources, with nothing to show, after loud promises, still ringing in the years of those of us old enough to have lived through them.

“Wise skepticism is the first attribute of a good critic”, according to James Russell Lowell, 1819-1891, American historian. The Minister of Budget and National Planning and his staff have done a brilliant job. But, given the Nigerian Factor, it might amount to casting pearls before swine. It might end nowhere…


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