Money talks”; and virtually all the state government just finishing their first 100 days in office had very little to say because they are broke. In the past, print media was bombarded with 100 days reports from every state. We sometimes had insufficient space for them. Now, we have next to nothing to publish.
As the deadline drew near, I actually got in touch with some Chief Press Secretaries of some states to ask them if they had any press release. Hitherto, the new Governors were too eager to announce what they did in such a short time. In my long experience on these pages, most of what was touted as “achievement” was a lot of malarkey – hastily implemented decisions later to be regretted. A few were outright frauds. Two famous scams would help to illustrate the point.
A PDP governor from the South-East, in the Class of 1999-2007, pioneered the trick. Within the first 100 days, he had a few schools, primary and secondary, repainted and some renamed. Then each school was photographed from three different angles. Suddenly, the world was presented with about thirty new schools supposedly “donated” to the people of the state. Only people like me who had travelled to the state several times saw through the fraud.
Among the Class of 2007-2015, it was a South-South governor who copied from the playbook of the former; and then added some of his own gimmicks. In addition to declaring that he had increased school enrolment by 200 per cent (when his predecessor has already ensured almost 100 per cent attendance), he went in search of projects that were 80 to 90 percent completed, hastily finished some, commissioned some not completed. He even performed the magic of building and equipping and donating a dialysis unit to a Teaching Hospital complete with 17 machines in a three-bed unit!!! Till today nobody knows what happened to the machines because the unit was built and the machines fully paid for by his predecessor.
The current set of governors is the first whose members have either not shown much interest in the 100 days race or have their hands tied by the hard realities they met on May 29. My hunch tells me that it is probably the latter. Just as Emilokan got into Aso Rock and discovered that the Federal Government’s revenue for the next three years has been spent by Buhari, before he left, all the new governors are facing empty purses in addition to mountains of debts to pay.
And, they are all in this predicament just as the prospects for increasing aggregate revenue are poor. Despite the perpetual noise about diversifying the sources of revenue, the FG and states are still largely crude oil revenue dependent. I have bad news for them: Unless President Tinubu can find a way to reverse the downward trend in volume of crude officially and legally exported, the states, already poorer compared to 2015, will become increasingly poorer.
Before explaining why the states are in increasingly dire straits, it needs to be pointed out that by loosening the exchange rate and inherently devaluing the Naira, Tinubu has done the states a favour. Over N900 billion was distributed in the last two months. That is both good and bad news. The good news first; most states would not have been able to pay their staff and run government without the increased allocation. The bad news now; because the increased allocation was made possible by high exchange rates, it is unlikely rates will come down soon. The most important point to bear in mind is this: Our states are poorer and sliding further into distress. Why?
VICTIMS OF POOR LEADERSHIP – PAST AND PRESENT
“Those who do not remember the past are condemned to repeat it” – Gorge Santayana, 1863-1952.
Governor Soludo, as governor of the Central Bank of Nigeria, CBN, temporarily introduced a measure, a certain percentage (if memory serves me correctly, it was 10 per cent) of the monthly allocations of the states was paid in dollars. It was controversial at the time; but I fully supported it. What was fascinating to me was the opportunity for states to develop the knowledge and skills needed to operate foreign accounts; to know when it would help them to buy and sell.
Incidentally, the late Governor Segun Agagu, of Ondo State, asked me to come and discuss how to help his government manage its foreign exchange allocations before he was dismissed by the courts; and Mimiko took over. I went to see him for another matter, but, the discussion drifted to foreign exchange management. I started by telling him that any government taking foreign loans or getting involved in Public-Private sector deals must open a domiciliary account and actively operate it. The reason for that is simple: Dollar debts must be repaid in dollars; not Naira. As revenue is generated mostly in Naira, governments with foreign obligations need to have an idea of what the rates might be in the short, intermediate and long terms in order to plan properly for repayment.
Permit me to repeat a point made about this year’s exchange rate movement. In the first week of January, writing in the VANGUARD WEEK-END paper, I made the forecast that the rates will rise to at least N800/US$1. A few weeks after, based on certain developments, a new forecast was made – N1000/US$1 by year end. We are still in September; and despite the attempts by the FG and CBN to bully reality, the exchange rate today has jumped to N950/US$1 on the street.
Obviously, every government with foreign debts must generate more Naira to repay the debt. Consequently, they will have less Naira to meet their obligations. That is why the states are happy about the high rates. They are repaying workers and contractors with devalued currency. Unfortunately, we are all getting poorer with each upward march of rates. Here is why:
In 2019, former Vice President Osinbajo declared that the FG, states and local governments would have to share N750bn per month in order for them to pay their bills as a group. The exchange rate was about N250/US$1. So, they shared $3bn a month. In July and August 2023, N900bn was shared; with exchange rate now officially at N700+/US$1. So, only $1.29bn has been shared per month in the two months. That is the stark reality of our existence today.
It seems so obvious to me that every state governor, whether or not exposed to foreign debt, must receive forecasts about exchange rates and make use of them in financial planning. Otherwise, their states will continue to be worse victims of a situation over which they have little control.
BUDGET 2024 AND EXCHANGE RATES
As we approach the final quarter of 2023, governments are preparing the 2024 budgets. States accept the foreign exchange projections of the FG and CBN. On the face of it, there is nothing wrong with using the monetary authority’s guidelines as basis for decision making. However, in a situation in which the CBN has been proved wrong, year after year, states must seek expert advice elsewhere in order to make decisions that are in the interest of their people.
Budgets for 2024 have become very crucial for the survival and strengthening of our democracy. People everywhere are hungry and angry as never before. Tensions are rising; and there is a need for governments to be seen to be in control of events. I have predicted, more accurately than the CBN, the direction of foreign exchange in the last three years. Why? Mostly because my calculations are more objective; unlike the CBN, which is under political pressure to produce acceptable forecasts.
Nobody in CBN or any other bank could have announced N800/US$, not to talk of N1000/US$ this year without being sacked. But, here we are, and leaders in the private and public sectors are grappling with a reality for which they were not prepared. The question is: Will they alter course in 2024; change direction and be more pro-active? I am waiting to read the budgets. But, I doubt if our leaders can change. Yet, there is a reason for them to change.
FORECAST FOR 2024 EXCHANGE RATE
“Winners learn from their mistakes; losers never” – Anonymous
Advanced nations worldwide have one attribute in common. They learn from their mistakes; and they learn from anybody. The backward countries, like Nigeria, seldom learn from their mistakes; and never listen even when lessons are offered free of charge by people outside the establishment. Nobody in government has ever asked me how I get it right every year; while they blunder. I am preparing predictions for 2024 now. It will shock Fellow Nigerians to the bone marrows. It will also be different from the illusions which FG will serve.
Let me give you a hint: N950/US$1 is only the beginning. Destination? That is a secret for now.
GIVE THEM A PALLIATIVE TO ENJOY
Is your company still busy bussing staff across the bridges from Lagos Island or Ikoyi? The costs, already unsustainable and unpredictable, produce unpleasant results for all. Bring them to Lagos Island; within walking distance of Broad Street and Marina. That is a palliative they will enjoy and thank you for it.
OBASANJO AND THE REPERCUSSIONS OF BAD BELLE POLITICS
“The evil that men do lives after them…” – William Shakespeare, 1564-1616.
Nigeria is in this mess with our polity, and partly with our economy, mostly because President Obasanjo, in 2006-2007, made certain decisions which have led us to where we are. I am not alone in this view – which has been sticking in my mind for a long time. The man’s observations, regarding Africa and democracy, were akin to waiving a red flag before a bull. His denial of the financial trap into which Agunloye led us was another one. Finally, his condemnation of Buhari’s financial recklessness was too much for me to bear.
I will take them all briefly.
After failing in his third term bid, he decided to impose his successor. That is not what is done in a real democracy. Idowu Akinlotan in THE NATION, on Sunday, September 10, 2023, reminded us of how Obasanjo manipulated medical and financial reports in order to impose Yar’Adua, a man terminally ill, and Jonathan, a man ill-prepared for the presidency, as President and VP respectively. Yar’Adua collapsed under the weight of office. Jonathan stepped in and messed things up. We ended up with Buhari and bigger mess.