By Dr. Ugoji Egbujo
The economy is ill. It can no longer meet the weak 2% projected growth. Its vital signs are blinking red. Agricultural output was hampered by herdsmen violence and related communal feuds. We should have seen that coming and acted with the required urgency.
The floods have come to dampen and complicate everything. Many of those villages lying under water carry our hopes for food sufficiency. These are not good times.
There is usually capital flight during our election season. But this is one election season with so much commotion. The rhetoric has been fiery. Nothing looks predictable. And that hurts the economy. The stock market is reeling. Foreign reserves are sliding gradually to make up the short fall in dollar flow. We must prevent a stampede.
Boko haram seems indefatigable. Military casualties are still fairly high. The relocation of internally displaced persons to the ancestral homes have not met set targets. The military cries daily for more money. That war has bled the economy.
Oil prices are on upward swing. But an opaque subsidy regime has left us lean. We have to staunch all bleeding points. We cannot fail to save now.
There is a conundrum. We must borrow to maintain and build much needed social infrastructure. But our debt profile is rising. And more frighteningly we are now spending much of what we earn servicing debts. This is a nightmarish situation. While our debt-GDP ratio looks manageable, debt servicing has come to constitute more than one third of our annual expenditures. And we can’t let it increase. But we seem not capable of immediate progress without more Chinese loans. We could be in a fix.
And another conundrum. We have committed ourselves to improved workers salaries. Workers minimum wage is presently an unlivable wage. It breeds corruption and poverty. But our public service already gulps 70% of our annual expenditures. We literally borrow to pay workers. But we must increase these wages. So how then can we finance wage increases without going bankrupt?
We will be occupied by the elections till May 2019. We will take our eyes of the ball. The economy won’t be our priority now. Politicians would do what they have to do to win elections. We may not have a budget till June 2019. The budget for 2017 is still being unwrapped. If the elections go seamlessly we will endure the collateral consequences of uncertainty. If the elections go badly the economy could go into a coma.
A look at the just released 2017 budget performance figures is disheartening. We met only half our revenue targets for oil. And this is despite the fact that oil prices surpassed our expectations. Two things must have drained our revenues. First, hampered poor production and oil theft. Secondly, petrol subsidy. We still don’t know exactly how much petrol we consume in this country. The NNPC funds the subsidy before remitting to the federation account. And that makes it spend prodigally on subsidy without appropriation.
The petrol subsidy regime has to go. We have to deregulate that market now. The military has been another drain on the economy. We are buying new jets and opening new battle fronts. This economy cannot sustain a very large army. It costs much less to make peace. We must make peace aggressively. As aggressively as we fight wars. Otherwise we could get to a point where defense would constitute half of our capital expenditures. And even that wouldn’t give us peace.
Our population is ballooning. It’s going out of control. The population is growing faster than the economy. And we have no effective population control plans in the regions that are heavily implicated. We seem oblivious of the danger. We already have a very youthful population. We are not endangered. So it’s no use producing more youngsters so quickly, and having no food and jobs for them.
The economy has stuttered. We had seen green shoots in economic diversification. Rice and wheat production had risen. But we cannot sustain the diversification of this economy without significantly solving our power problem. Because without power we cannot meaningfully industrialize. If we do not diversify now that oil has given us a breather in appreciable prices we could be in hot soup soon. Oil prices are treacherous. And our oil pipelines are in a volatile region.
This economy is fragile. A look at the 2017 performance shows that we missed our target on non oil revenues by a wide margin. So even though we borrowed so much we didn’t have much for infrastructural development. If we borrow to service debts and fund unproductive capital items then we are digging the graves of our children.
The government is intent on growing the economy. But no growth can be sustainable until the political environment becomes stable and investment friendly. We have lost the tranquility of the northeast and its farmlands. We are losing swathes of farm lands and yields of the food basket in the middle belt. The ERGP will yield nothing if we do not quickly tame these flash points and allow millions of people return to productivity.
The cost of running the government is prohibitive. We pay too many idle executive assistants. We pay too many legislators. The local governments were designed to bring development to the grassroots. But they have been largely irresponsible drain pipes. Our public service is unwieldy and dysfunctional.
The government has made effort to widen the tax net. That is commendable. But it must make effort to alleviate the sufferings of the ordinary people. It must make growth inclusive. Yes, it has established social intervention programs. The N-power, school feeding programme, cash transfer schemes and the trader and farmer moni programmes are all wonderful. The government must be commended. But it must seek to retain the confidence if the public in its ability turn things around. There is a growing hopelessness. The government and government officials must preach frugality with their lifestyles.
The government shows purposefulness at all times. These times demand nothing less. The government must create a shared sense of belonging. We must dissipate less energy on political tensions and bickering. The task at hand is daunting.