Nigerian economy in reverse gear

The Nigerian economy is bleeding and in need of blood. Unfortunately, that is the language that the government does not want to hear, not when the government was just rejoicing that the country had exited recession! This is happening for the wrong reasons and policy outcomes being inadvertently misinterpreted by the government.

Truth has a way of showing up in the midst of suppression. There was a news report recently, that the country’s industrial sector experienced a serious decline, inflation continues to climb and the major driver of the inflation is in the food sector.

This is because, partly and naturally, the weather has not been favourable but avoidably, the herdsmen, with the connivance of those who should protect famers, have taken over farms using their cows to destroy crops and their guns to kill farmers and/or instil fear in those farmers who want to produce food for the populace and raw materials for our industries. Insecurity that we thought we voted out in 2015 is now an aided monster.

Unemployment continues to rise because the industries are shrinking rather than expanding because of rising cost of production from naira massive depreciation, high energy or fuel and electricity rates to high interest rates on borrowing. Workers are not being paid wages regularly or paid well and government is also taxing heavily the little they are paid through high cost of living engineered by fuel price hike which affect food and transport cost. This invariably lowers consumption which should by itself encourage production and by extension generate employment.

The Central Bank of Nigeria just introduced a “naira for dollar” policy to encourage remittances inflow from Nigerians in the Diaspora. This was in spite of the rising volume and price of oil and expected improvement in external reserve. The policy could also serve as an encouraging signal for potential ‘Andrews” to move abroad with continuous loss of skilled manpower needed to engineer growth in the Nigerian economy.

The same Nigerian graduates being condemned as of low quality are being lured by developed countries to serve their hospitals and industries. When we should do all we can to fund education for quality products and continuously create jobs with quality labour, equipment and conducive environment, including commensurate wages to retain our manpower, the government feels movement of skilled labour abroad is part of its exports. An unfortunate malaise!

Even the education sector that is supposed to be strengthened to produce the needed human capital is under siege by the Federal Government. Research results have shown that it is not just education, but education with skill development focus is the difference between and among categories of economies as tagged – developed, emerging and developing economies. This implies that education at the tertiary level is the most desirable. A serious government cannot afford to allow its education at any level to stop for a day or a week. We are all aware of how long the public universities closed down before the issues were partially resolved.

Even now, there are still threats, indicating that important issues are still outstanding. What I am aware of is that salaries of a large proportion of the lecturers that participated in the strike are being still being withheld while some are paid haphazardly. The category of labour involved are those that can easily vote with their feet as happened in the 1980s.

The trend in the Nigerian capital market has remained bearish for a large part of this year such that any slight bullish event is celebrated like winning a jackpot. It implies first, that less investment is taking place in the market vis-à-vis profit taking, and secondly, businesses are not expanding. How can there be a fall in unemployment? The government believes that “we have to borrow our way out of recession” and has borrowed beyond limit but now spending about 20 per cent of the annual budget to service such debt. When someone loses job as we lost market when COVID-19 was at its height, I think the first thing is to cut down expenses and look for another job rather than rush to friends for loans to survive at the same level of consumption. The Nigerian economic managers think differently and probably are wiser! As we are earning more money in the oil market, we are using the same money to service and pay off debts. We warned the government but what do we know about economics and political economy of debt?

In addition to the above problems, corruption continues in an upward trend. At least, five days in a week of seven days, there must be reports in the news, of fraud, loss of budget-approved and released funds in transit, mismanagement of funds and outright stealing with impunity. Free fall in exchange rate resulting from importation of raw materials and finished products; speculative attacks on the naira in foreign exchange market and movement of illicit or looters funds abroad in foreign currencies and payment of school fees abroad also in foreign currencies, largely by the politicians. The first generation of politicians studied abroad but, as nationalists, came back to establish standard and well-equipped schools at home. The latter-day politicians studied at home in those standard schools but destroyed them and send their children to study abroad and stay there to maintain their parents’ estates abroad and prepare the ground for their escape when they finish with Nigeria. Nationalism is not in their dictionary. If any of the children shows interest in politics, they ferry them to Nigeria to occupy a position of authority and what happens therefrom is a good guess.

The Economic Commission for Africa produced a long-term continent-wide Development Plan tagged ‘Agenda 2063’ to encourage individual African countries to take a queue. Many economists from Nigeria were part of the experts that produced the Plan, yet, the same Nigerians cannot produce National Plan for the country. After many years of asking for a national Plan, the government eventually succumbed. But the government prefers foreigners who have no knowledge of our economy to supervise or direct Nigerians on what to do. The Nigerian experts seem to have rejected that arrangement and the long-term Plan which started sometime last year, has since remained on the drawing board. The government in the meantime has returned to a medium-term Plan to meet borrowing requirements. All those emerging economies have long term Plan of a minimum of 25 years duration because a country that fails to plan, plans to fail. More importantly, a country with the level of Nigeria’s human capital can produce a national Plan without assistance from outsiders. Our government is already looking towards further borrowing from abroad and would want those countries involved in the Plan so that they can support their borrowing plans.

Nigeria cannot continue to drift backward. The people have to speak up for the government to wake up. There is the need to turn around for good. Government has to be decisive in stopping herdsmen and bandit attacks on agriculture and farmers so that the coming rains can give us hope of good harvest at the end. There must be intervention in industrial production through subsidy on energy by reducing electricity and diesel price for industries, Also, introduction of tax relief or holiday for industries that can almost double their current production within the next one year; as increased production will lead to fall in unit cost of production and sales prices with increased employment as by-product.

The importation of fuel must stop and so is payment of subsidy, which I believe does not exist. If the NNPC is not producing oil, why maintain and pay large labour force? I have a hunch that the refineries are producing and the fuel is the so-called imported fuel. Given the congestion at the ports and in the high seas, how did fuel laden ships by-pass the queue on the sea and deliver fuel regularly for our daily consumption? Over $1bn has just been approved for another year’s maintenance or turnaround of a’ non-working’ refinery. Does anyone engage in regular servicing of a stationary vehicle? How much does it cost to build a new refinery? It’s time for another money laundering. There is the need for some transparency and investigation to happenings in the oil sub-sector.

It is high time we stopped external borrowing and looked inward for wealth creation. The current level of external debt has put the present and future generations into growing poverty, given the proportion of our revenue going into debt servicing. In fact, the government should hold meetings with our creditors to negotiate moratorium of five years minimum on our loans citing the problems caused by COVID-19 pandemic and the resultant world economic problems. It happened before by debtors of the Third World. Also, there should be some restriction in currency movement across borders. The free capital mobility regulation has to be adjusted or controlled and this can be relaxed when the economy picks up. In the Asian financial crisis of the late 1990s, the country that regulated the free flow of its capital was the first to survive the crisis before others learnt their lessons. If the government continues to run the economy with the present level of arrogance, it will be difficult to halt the current economic slide. In the One-Day Seminar of the Nigerian Economic Society in 2020, the country was warned the weight of the external debts would kill the economy; the IMF and World Bank surprisingly also warned. Now, combinations of debt and corruption have put the Nigerian economy in a reverse gear.