By Dele Sobowale
“It requires wisdom to understand wisdom. The music is nothing if the audience is deaf.”
Walter Lippmann, 1889-1974, VANGUARD BOOK OF QUOTATIONS, p 275.
Abandon hope, all those who intend to advise the Federal Government of Nigeria, FGN, regarding how to get the economy grow at a faster rate than what we have experienced since 2015. This Federal Government is not likely to listen. I weep for Nigeria. How do I know that?
Simple. Just take a look at the Medium Term Economic Framework, MTEF, just released and submitted to National Assembly, NASS. The NASS, predictably, will accept it without much question and consign Fellow Nigerians to a future destined to be characterised by worsened poverty, recurrent famine, increased unemployment and more banditry. With that document, Nigeria is well on the way to becoming the first Almajiri economy in history. By 2023, more Nigerians will be dependent on those gainfully employed. It will require at least ten years of good governance to bring us to where we are today – which is a bit worse than where we were in 2012. Here is why.
“FG’s 2020-2023 MTDS Will Increase Nigeria’s Debt, Crowd Out Private Sector From Local Market.” — News, February 2021.
Once affluent nations have fallen into hard times for several years; empires have literally returned into dust since the dawn of human history. King Pharaoh failed to listen to warnings about impending danger. Rome burned while Emperor Nero amused himself.
Chile was one of the most prosperous nations during the Age of Copper. Today, without the $5 billion bribe the USA gives annually to Egypt to remain at peace with Israel, that nation would have been a failed state long ago. Each nation had invariably embarked on its long term decline during the tenure of one ruler. It is now certain that Nigeria will experience eight straight years of economic hardship, but, in addition, will need at least another eight years to get out of it.
“Leadership can be summed up in two words: intelligence and integrity…”.
— John Brademas, VANGUARD BOOK OFQUOTATIONS, VBQ p 125
Managing the modern economy requires a great deal of intelligence and some luck as well. One important aspect of brilliance is the ability to foresee some of the consequences of measures taken or ignored.
This administration has been particularly lacking in that area. It certainly never considers the repercussions of its economic policies and programmes. Despite its self-deceit about wanting to diversify the economy, its MTDS is still largely dependent on export of crude oil and the annual increase in cumulative deficits. The deficits will inevitably be funded by increasing the debt burden during the period.
For a start, $1.2 billion will soon be borrowed for what is billed as Agricultural Mechanisation. On the face of it, there should be no objection to more mechanised farming in Nigeria. We need more technology if we want to quickly bring more land under cultivation in Nigeria.
The problem is the integrity of the nation’s economic managers. Loans for agriculture and water resources are very popular. The NASS finds it difficult to reject them. Unfortunately, the funds seldom end up being spent purely on agriculture; and when done the equipment purchased are never put to good use before they are quietly sold as scrap to well-connected individuals. The gains of the few eventually become the burdens of the rest of us.
According to MTDS 2020-2023, the FG proposes to increase the debt-to-GDP ratio to 40 per cent during the period. The ratio was 25 per cent from 2016-2019.
As if it would make a lot of difference, the FG intends to raise more of the loans internally. That means that the nation’s battered economy will be expected to provide most of the loans. Again, it is easy to observe that this FG does not listen to anybody. The stubbornness would have been forgiven if the results since 2016 have justified its position. But, the records available on paper and the harrowing hardship suffered by Nigerians prove conclusively that there is no intelligence, wisdom or integrity in the management of the Nigerian economy.
It bears repeating that the World Bank, International Monetary Fund, African Development Bank, as well as other global financial institutions had warned that our debt-servicing percentage is not sustainable at 25 per cent. What will they think of our government when they read the MTDS raising it to 40 per cent?
Implied but un-stated is the fact that the Central Bank of Nigeria, CBN, will be relied upon to supply a significant proportion of the new loans. As the lender of last resort, it owes a great deal of obligation to bail out the country through Ways and Means operations. Whereas, well enlightened leaders are aware that CBN’s supply of loans is not infinitely elastic, the FGN is ignorant of limits. Collectively, Nigeria’s Economic Management Team reminds me of Uganda under late General Idi Amin (1925-2003).
Amin ordered the Governor of the Bank of Uganda to “go and print more money” — because he could not understand that there is a limit to printing money before the bills become worse than tissue paper”. It should be of concern to all of us that we have another soldier in charge. We might be heading for a similar experience in Nigeria soon.
Already, the signs of trouble are everywhere. Basic inflation has exceeded 16 per cent; the food component is actually over 20 per cent and rising. Just as the FG turned deaf ears to those of us warning about the consequences of bandits, kidnappers, herdsmen/farmers clashes nationwide for food production, the same government is rushing headlong into taking more loans. Already, a serious famine is underway; because farmers have deserted their farms. Food prices are set to continue to escalate with possibilities of widespread unrest. Some people are already warning about political disintegration. No economic index is positive on which we can hope to fashion a strong economic recovery. So, how on earth are we going to repay the loans piled up by 2023.
A NIGERIAN PUZZLE
Dr Adesina is the President of the African Development Bank. Dr Ngozi Okonjo-Iweala is now the Director-General of the World Trade Organisation, WTO. Before those two, Nigerians had headed the Organisation of Petroleum Exporting Countries, OPEC. Chief Emeka Anyaoku was the Secretary-General of the Commonwealth.
What sort of country is this, which sends its brightest and best abroad to help continents and the world to do better; but elects the worst to manage its own affairs? Whose heads should be examined?