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Nigerian economy after the elections of 2019

By Dele Sobowale

A week in politics is a long time—  Harold Wilson, UK PM, 1970s

IT is not just in politics that seven days can become a long time. Even in national  economies, seven days can alter the fate of a nation for a long time to come. Most oil-producing nations of the world experienced the most rapid surge, in percentage terms within the first week after the Yom Kippur War between Arab countries and Israel in 1973. Suddenly, crude oil which fetched thirty cents a barrel skyrocketed to $3 (1000%), $4 (1333%) and $5 (1667%) on account of drastic supply reduction imposed by the Arab countries.

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Minimum Wage: Labour, CSOs to hold nationwide protest Tuesday

Nigeria earned more oil revenue in a week than the aggregate revenue of oil and non-oil exports in the previous year. So sudden was the bonanza Gowon’s government did not know what to do with it. What they eventually did is still affecting our economy till today.

Among the measures taken at the time, none has had a more lasting impact than the Udoji Awards – which addressed Minimum Wage at the time. As usual, the agitation started from the Nigerian Labour Congress, NLC, and other unions representing workers. The end result was basic wage adjustments which set all sorts of records in profligacy and demonstrated a lack of self-restraint on the part of those in government. Somehow, the authors of that bill failed to consider the long term consequences of the pact – in the event oil prices dropped.

My office on the day after civil servants were paid their Udoji awards was directly opposite PZ Supermarket situated at the corner of Martins and Broad streets in Lagos Island. Previously, on a good day, PZ would sell about six television sets a day – as I could see from my office window. Refrigerators and air-conditioners sold even less. But, the day after receipt of the awards, including nine months increase paid in arrears, the queue in front of PZ started as early as 6.30 am.

People were there to buy electronics. By 10 am the entire stock had been exhausted. The store manager, a drinking acquaintance requested for more stock at a 25% price increase. Everything was bought before the store closed at 6 pm. Incidentally, Kingsway Stores, Leventis Stores, UTC, Bhojsons and Chellarams were experiencing the same deluge of orders. Each responded by increasing prices every few hours. Still the buyers came asking for more.

Car dealers also had their own bonanza. Until Udoji, a prospective car buyer would have the car delivered same day payment was made. That changed within a week. Thereafter, buyers had to wait and bribe to have cars delivered in less than three months after depositing full amount.

Sadly, though, most of those who rushed out to buy expensive items, especially those nearing retirement, purchased their first and last of such items. Many of the old jalopies, Peugeot 504s in particular, people see in rural areas were probably procured during that national loss of common sense. Few ever thought that the good times could not last forever until Buhari became military head of state. Then, sugar, milk, detergent, sardine, etc., became “essential commodities, essenco”, very scarce and priced out of reach of the common person for a while. A few men decided our fate then. Another few will do it again.

Virtually all those who will determine the fate of Fellow Nigerians are now busy campaigning for elections. They are inattentive to anything concerning the economy from now until the last votes are counted. That will take us to the last week in February. Two months in 2019, at least, will be gone before they bend their minds to it – if all goes well with the polls. An inconclusive result or widespread violence could postpone the time those in charge of our collective economic destiny will have time to consider it. More weeks will be lost in a year which started badly and is trending worse for the nation.

Just as this article was being prepared, an international news report told the whole world that President Trump and the US Government has given the leader of the opposition in Venezuela right to operate the Latin America’s accounts in the US; as well as authority over Venezuelan assets in America. Irrespective of whether one is for the Nigerian ruling party – the All Progressives Congress, APC – or the opposition – the Peoples Democratic Party, PDP, – it must be admitted that Trump has suddenly introduced something new in global economics which Nigerian political leaders must take into account.

What stops the US from seizing Nigeria’s funds in the country and handing it to anybody it chooses to recognise after our presidential election? What will be the consequences of such a measure for our economy which is projected to grow at a mere two per cent this year? Will the economy be forced into a recession and exacerbate our struggle with deepening poverty? Most importantly, what can Nigeria do very quickly to shield most of its external reserves from what would amount to Yankee Banditry?

One does not have to support the Venezuelan dictator, and I don’t, to object to what on America’s part amount to abuse of a globally agreed privilege. Nations’ funds are kept in the US because the dollar is the global reserve currency (every transaction across borders is quoted in dollars). But, there is nothing in that global arrangement which confers on the US the right to dispose of any nation’s funds in order to promote its own national interest. This is an urgent issue which calls for immediate response and leadership. But, the leader is out hustling for votes in his self-interest when indeed the few weeks between now and the election might create the conditions for our loss of control over our American deposits.

Similarly, the untidy situation with the Minimum Wage calls for proactive and intelligent leadership. Nowhere in the world does adjustment to the minimum wage alone end the story. Even a fool knows that if the least paid worker moves from N18000 to N30,000, he would earn more than those several levels above his own. Are officers in levels two and above earning less than N30,000 expected to supervise Level 1 workers taking home more than they do? If not, by how much will their pay-scales be moved up? And, when the exercise is completed, how much will be added to the public sector wage bill at Federal, State and Local Governments? Can they pay and still serve the rest of us who are not public service workers?

NLC officials heckling the Minister of Labour and calling Zamfara State Governor Yari “Ole” apart from demonstrating bad manners are acting like a mob. They are not the only claimants to public funds. And they don’t even speak for more than two per cent of all workers in Nigeria. They certainly don’t speak for me. In fairness to all stakeholders, the governments at all three tiers of Nigeria should first of all publish how much the wage bill will be after the increase and how much revenue they project to collect. All of us should see how much is left after the minority i.e organised labour has been satisfied. Right now, what we have amounts to the blind leading the blind. Nobody has told us how much this increase sought by organised labour will cost us. Their blanket assertion that states can pay is just self-serving.

Here again, we need leadership. With the elections only a few weeks away, all the political leaders, led by Buhari and Atiku, should appeal to Nigerians to ignore the NLC and come out to vote. That is a more urgent need than settling the Minimum Wage dispute. Without that, what happens in the next few weeks could cost us the rest of this year and create a longer term problem.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.