Saturday, 13 August 2016

Nigeria's Road To Economic Salvation

         By Bayo Ogunmupe

     As Nigeria's economy contracts owing to low oil prices, domestic challenges of being unable to meet previous oil production levels, the country of Champaigne drinkers has been overtaken by recession. The profligacy of the past that attracted luxury goods salesmen and investors had disappeared with the naira being exchanged at N390 per dollar and a pound sterling selling for N500. Everyone now knows we are riding out the worst economic downturn in recent memory.
     Price domestic goods rocketed with increases inching on 100 percent, foreign exchange shortages and a lack of investor confidence triggering capital flight. When President Muhammadu Buhari deregulated the oil market a couple of weeks ago, ending decades of wasteful expenditure on subsidies that benefited the corrupt elite  who diverted billions of dollars yearly from productive enterprises. This culminated in many workers leaving their gasoline guzzling cars at home in favour of pool vehicles and public transport as an open testimony for the changing times.
      Now manufacturers are battling to get foreign exchange to import components and inputs with many seeing dwindling disposable incomes due to hyper inflation. Indeed, energy supply is more erratic  than ever, forcing greater reliance on other expensive sources of power. Traffic to the ports are reducing in the wake of a raft of import restrictions leading to a decline in customs revenue. Job losses are mounting, from the banks layoffs have spread to the automobile industry, the newspapers and the printing industry. Inflation is ravaging at 17 percent now.
     Which is why Buhari has continued to come under attack for his lack of focus, his lack of a team of economists to energize the economy. The lackluster performance of the Buhari cabinet and six month delay in signing the budget has eroded confidence in his competence. The President's laudable anti-corruption drive has lost its impetus, undermined by short term utilities shortages. Upon the storm came the Niger Delta militants wreaking havoc in the oil fields. Attacks on oil installations have cut oil production by half, significantly reducing power supply via cuts in gas pipelines to urban centres.
     Undoubtedly, Nigeria has a long road to walk to salvage the nation from the ruins of profligacy, mediocrity and incompetence of its past leaders. Thus, the road to salvation is in reducing cost of governance through restructuring. Then let the President constitute a veritable Office of the Chief Economic Adviser, staffed with a team of economists. Its mandate should be to move Nigeria toward full employment and reasonable price stability within a specific time frame.
       Like the depression in the United States between 1953-55 our economic advisers should deploy neo-Keynesian economic interventions which would result in many families staying in the middle class with just one wage earner feeding our extended family system. But this might entail the establishment of the National Full Employment Programme whose mission shall be to create jobs within the Organized Private Sector. With everyone gainfully employed the backbone of poverty would have been broken.
     However, Buhari's poor economic performance for which the Catholic priest, Reverend Father Ejike Mbaka lambasted the president is worthy of note. But Buhari cannot carry the entire blame alone. These challenges have been piling up since 1999. Like energy exporters now suffering from excessive dependence on oil and gas, Nigeria failed to diversify at the time when oil prices were booming. Then, the governments were too complacent, they neglected small and medium scale enterprises that are the mainstay of inclusive growth. Then, the governments benefited from corruption ignoring justice and security.
      Thus,public assets were stashed away through crony capitalism, with tacit foreign support. Moreover, discretionary award of oil blocs by each successive Nigerian president ridicules government reform claims. That issue was raised by the Niger Delta agitators who listed inequitable spread of oil wealth emanating from their land. They claimed inequitable allocation of oil blocs by past presidents made Northerners stupendously rich while Niger Deltans remained poor. Those facts were released at the 40th edition of the Society of Petroleum Engineers Conference in Lagos recently. These unethical practices are fueling both vandalism and recession.
     Now, that the full impact of our economic illiteracy has come upon us, the next step is to devise  a means of navigating the country out of recession before it deteriorates into depression. We need a series of stimulus programmes such as Arthur Burns did for the U.S in 1953-54. Likewise, Barrack Obama's $831 billion package in 2009 was designed to preserve American jobs. Singapore's $14 billion stimulus package in 2009 provided welfare  for the poor. The Federal Government should stop dithering by taking decisive action. In the weeks to come, Buhari must protect fiscal sustainability by any means. He must reduce imbalances and reinforce  the resilience of the banking sector. Most importantly, he must forcefully execute structural reforms for sustained and inclusive growth.

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