The Nation Newspaper

Category: Dapo Fafowora

  • Increased Chinese loans to Nigeria

    Increased Chinese loans to Nigeria

    During his official visit to China, President Muhammadu Buhari concluded with the Chinese president a $6 billion loan to Nigeria for the construction of the Lagos-Calabar rail project. Nigeria is to provide some N40 billion as counterpart funding for this huge infrastructure project, the largest since the Chinese built in the 70s the Tan-Zam railway, linking Tanzania with Zambia.  It is the largest ever Chinese loan to an African state. Despite some legislative hiccups here in Nigeria over the counterpart funding, the project will almost certainly go ahead. Nigeria needs it badly to provide a coastal railway between Lagos and Calabar with future possible lateral rail connections on the route. The critical importance of this project to Nigeria is so obvious that it should not evoke any controversy. It should go ahead as speedily as possible.

    In recent years, China’s loans and investments in Nigeria have increased significantly. Before the current $6 billion loan, total Chinese loan to Nigeria was $13.3b, roughly a third of its total loans and investments in Africa. In 2015, President Goodluck Jonathan secured a Chinese loan of $1.5b for infrastructure support, including the development of the aviation sector. Chinese investments in Nigeria and Africa have become even more critical in view of the global recession, the fall in oil prices, and the inability or unwillingness of the G7 states to make fresh investments in infrastructure developments in Africa. For instance, in 2015 President Barack Obama announced a miserly $8b as the total US foreign direct investment in Africa. Over the years cumulative G7 investments in Nigeria and Africa have fallen sharply, partly due to disappointment with African states in the management of their economies, particularly over the prevailing corruption on a massive scale in these African states, as well as internal pressures in the G7 countries for greater internal social development. There is growing turmoil in most of the advanced industrial countries that makes foreign investment less attractive and a distraction from facing their own domestic severe economic challenges. The home front has become a priority for them.

    In this situation, China is better placed to take up this slack in foreign investment in Africa. It is the second global largest economy and has the largest reserves of US dollars. It is investing massively in Europe, Asia and the Americas, including the US where it is buying up blue-chip companies. Though its economy has slowed down to only seven per cent this year, it is still the fastest growing economy in the world. China’s interest in Africa, particularly Nigeria, should be viewed largely on economic terms. It is not wholly benevolent. China will in future need new and large commercial markets, which only Africa can provide. Increasingly, China’s exports will face restrictions in Europe and the US, currently its biggest markets. It will have to look for new markets in Africa where the population projection is that in the next two or three decades, Africa’s total population could be close to two billion. It is this huge market that China is eyeing. The Chinese have a reputation for long range planning, in decades, well ahead of their economic and industrial rivals.

    Until recently, Nigeria has been rather slow in seeking closer economic relations with China. As Amb. Olu Sanu, a former Nigerian Ambassador to China, observed in his recently published biography, Nigeria was really not serious about promoting economic relations with China, until recently. From 1972, when Gen. Yakubu Gowon first visited China as head of state, virtually every Nigerian head of state, including the late Gen. Sani Abacha, has paid an official visit to China, to ask for Chinese technical and financial assistance. When granted by the Chinese, who were eager to promote economic relations with Nigeria, these offers have not been duly taken up by the Nigerian authorities.

    For most of the time the military were in power in Nigeria, they were suspicious of the Chinese spreading their socialist doctrines to Nigeria. Such suspicions no longer exist. Nigeria recognised China in 1973 and supported its admission to the UN, thus ending China’s international isolation. In addition, the periodic oil boom made offers of Chinese financial assistance somewhat less attractive. Now, the situation has changed. China is still a one party communist dictatorship, but its economy is becoming increasingly diverse, freer and capitalist in structure. China is no longer interested in spreading its socialist doctrines to any country, particularly in Africa.

    Nigeria’s economic and financial situation has changed drastically. Its estimated growth rate this year will be only two per cent, a drastic fall from its 2014 growth rate of nearly seven per cent. Without the injection of fresh foreign capital, its future economic growth prospects are dismal. New jobs, on a massive scale, are badly needed to contain and reduce possible social tensions that may tear the nation apart. It is in this light that the $6b Chinese loan for the Lagos-Calabar rail lines should be viewed. The project will create new jobs. The Chinese are already involved in the development of railways in Nigeria. They handled the refurbishment of the Lagos-Kano line, as well as the fast train from Kaduna to Abuja. They have an impressive global reputation and record in the business of railway development. Even in Europe, Chinese expertise in this respect is highly valued and respected.

    Of course, Nigeria should be concerned about its growing trade imbalance with China. Chinese exports to Nigeria represent some 80 per cent of its total trade with Nigeria. This is an awful trade gap that Nigeria should seek to address. Nigeria must also find ways of blocking Chinese exports to Nigeria of cheap and fake products, such as textiles, plastics and drugs. It is obvious that Nigeria, with the connivance of our own traders, is being used as a dumping ground for cheap Chinese products. It is up to Nigeria to take proactive measures within the ITO provisions to reduce this huge trade imbalance. It should take advantage of the Chinese ‘benevolent trade policy’ to reduce the trade imbalance between the two countries. Under this policy, the Chinese are obliged to buy up our surplus export commodities, as it is doing in Tanzania in respect of coffee and tobacco. The problem is that Nigeria has little or no agricultural surpluses that the Chinese can buy up.

  • Ambassador Sanu at 86

    Ambassador Sanu at 86

    Ambassador Olu Sanu, one of Nigeria’s most accomplished career diplomats, turned 86 on March 24. To mark the occasion, he made a public presentation of his eagerly awaited memoires, titled, ‘Audacity on the Bound; A Diplomatic Odyssey’ in Ibadan, his home town, on March 29, which was my own birthday. I had the privilege of reviewing the book. There was an array of dignitaries at the presentation, including his numerous friends, former professional colleagues and admirers from all over the country. These included General Yakubu Gowon, Chief Emeka Anyaoku (the Chairman), Alhaji Femi Okunnu, Alhaji Ahmed Joda, Chief Philip Asiodu, Amb. B.A. Clark, Amb. Tayo Ogunsulire and several of his former colleagues in the Nigerian diplomatic service. Their royal highnesses, the new Olubadan of Ibadan and the Alake of Egbaland were also there. It was a proud day for him and his family. To have written such excellent memoires at 86, mostly from memory, is a remarkable feat. His exceptional and hugely successful diplomatic career saw him serve as Ambassador in Addis Ababa, his first, Brussels (EEC), Washington (twice, first as a desk officer), China and Australia where his distinguished diplomatic career ended suddenly after 26 years of meritorious service to our country.

    Amb. Sanu received his secondary education at Ibadan Grammar School, and his university education at Howard and Harvard Universities in the US. He joined the new Foreign Service in 1958, after a year in the civil service of the old Western Region as an Assistant District Officer (ADO). He was not too happy in the Western Region. With a double masters’ degree in Economics and Public Administration from the prestigious Harvard University in the US, he felt he deserved better than being posted as an ADO to Ubiaja, a Western Region outpost in those days. In fact, as he writes, he was only grudgingly offered appointment as an administrative officer in Ibadan after a long, difficult and disagreeable interview.  His recruitment into the Foreign Service in 1958, in the second batch of such recruitment, provided him with the opportunity to show his intellectual and diplomatic mettle later in his distinguished diplomatic career. He says he was interviewed by Sir Samuel Manuwa of the Federal Civil Service Commission for only 15 minutes and was promptly offered appointment.

    Within two weeks of his appointment he was posted to the Nigerian Liaison Office in Washington for training. Nigeria was still a British colony and did not then have a full fledged Embassy in Washington. That was how his diplomatic career began. Now, only a few years after Howard he was back in Washington, this time as a full-fledged Nigerian young diplomat. He was at the new Nigerian Embassy in Washington when our national flag was hoisted in the Chancery on October 1, 1960. It was a proud moment for him and our country.

    At the Washington Embassy, he did so well that he earned the respect of his superiors as a promising young diplomat. But he soon got into trouble with the Foreign Minister, Jaja Wachuku, and his Ambassador in Washington, Chief Udochi, when he sent a report home that the Nigerian Economic delegation of 136 to Europe and North America, headed by the Minister of Finance, Chief Okotie-Eboh, was too large and wasteful. His report was audacious and right, but it was unsolicited and not the kind of advice needed or appreciated by his superiors. As punishment, he was posted from Washington to our Permanent Mission at the UN, then headed as PR by the legendary Chief Simeon Adebo.

    At the UN Chief Adebo read him the riot act and put him firmly in his place. But he also recognised his potential and exposed him for the first time to multilateral diplomacy in which he later became pre-eminent. He was assigned to the 5th Committee and the Ad Hoc Committee on Administrative and Budgetary Questions (ACABQ), one of the most powerful committees at the UN. It was in this committee, made up mostly of Ambassadors, that budgetary issues at the UN are debated and determined. Amb. Sanu did so well in this committee that the UNSG, U.Thant, appointed him a member of the “Committee of 10 Wise Men’ set up to advise the UNSG on the administrative reform of the entire UN system. Chief Adebo was so impressed by Sanu’s diligence that he recommended him to Mr. Bode Wey, Secretary to the Prime Minister, for appointment as one of three Permanent Undersecretaries to assist Mr. Wey in the Cabinet Office. It was a mistake on the part of Chief Adebo. Great men make mistakes too. In anger, Mr. Wey who, as Secretary to the Prime Minister, was nominally Chief Adebo’s superior, got Sanu recalled from the UN and appointed the Chief of Protocol in the Foreign Ministry. It was a posting he did not like as it could be demeaning on occasions. But when Mr. Wey resigned in disgust in 1966 following the second military coup that brought General Yakubu Gowon to power, the change paved the way for Sanu to go to the Cabinet Office as one of three Permanent Undersecretaries.

    It was at the Cabinet Office that General Gowon, the new military head of state, who was good at spotting talent, discovered Sanu.  He promptly appointed him Ambassador to the OAU and the Court of Emperor Haille Selasie in Addis. This was during Nigeria’s civil war and Gowon needed a strong, versatile and steady hand in Addis to counter the powerful Biafran propaganda in the OAU. Amb. Sanu proved to be competent. Gowon sent several powerful delegations to Addis which included the late Chief Anthony Enahoro, federal commissioner for Information, Alhaji Femi Okunnu, federal commissioner for Works, Chief Philip Asiodu, permanent secretary, Mines and Power, Mr. Allison Ayida, permanent secretary, Finance, and Alhaji Ahmed Joda, all of whom  lent their enormous weight and experience to Amb. Sanu’s diplomatic efforts. In addition to his activities at the OAU, Amb. Sanu also collaborated with Professor Adebayo Adedeji, who was then the UN under secretary general for the ECA in Addis, to produce the Lagos Plan of Action, which was adopted by the OAU as an alternative economic strategy for growth in Africa. As a prescription for growth it was a masterpiece.

    It was from Addis that General Gowon again appointed him as Ambassador to Belgium and the EEC, succeeding the legendary Dr. Pius Okigbo. In Brussels, despite strong opposition from France, he was elected by the 46 African, Caribbean and Pacific (ACP) countries as their leader in the complex and difficult negotiations that led to the conclusion by the EEC and the ACP of the Lome Convention. It was the first time in multilateral diplomacy that this kind of economic agreement and relationship had been successfully established, after 18 months of gruelling negotiations, with the powerful EEC countries. As he writes in his memoires it was the highlight of his diplomatic career. It earned him global respect as a multilateralist in diplomacy. Again, General Gowon reassigned him to Washington as Ambassador. Soon after General Gowon was toppled from power. His tenure in Washington was brief, but he managed to assuage deep US irritations about Nigeria’s policy in Angola where it had recognised the MPLA government there. Following the fall of Gowon from power, Ambassador Sanu was recalled to the Ministry where he served as head of the international organisations department. (IOD)

    After two years at headquarters in Lagos, the Obasanjo/Yar’adua military regime appointed him Ambassador to China and North Korea. He writes that he considered the posting punitive, as China was regarded as a hardship post. But undaunted, he worked very hard to promote economic cooperation between Nigeria and China which was making steady strides in the modernisation and transformation of its economy. Sadly, his efforts were undermined by his own government which was not really keen on fostering economic relations with China. Several official delegations went to China, but only as tourists, and not really to concretize economic agreements reached with China. He was frustrated but after some three years he was posted to Australia.

    At the time, he did not realise that Australia was going to be his last diplomatic posting. He was sent there ahead of the Meeting of the Commonwealth Heads of Government which President Shagari was to attend. As usual, Nigeria embarrassingly sent a delegation of over 130 even though the Australians had informed all participating countries that only five delegates from each country would be provided with the usual courtesies. Suddenly, and without any warning, query, or misdemeanour he was sent what he calls ‘a laconic letter’ from the Ministry that he had been retired from the diplomatic service by the new Buhari military regime. Altogether some 86 Foreign Service Officers, including many distinguished Ambassadors were peremptorily sacked.

    After his painful exit from the diplomatic service, he was appointed a Fellow in International Relations at the University of Ife, under a grant funded by the Ford Foundation. He was there until 1990 when an internal dispute in the Department of International Relations forced the Ford Foundation to withdraw its generous grant. He was promptly appointed by General Babangida as his special envoy to the Sudan six years after he was retired from the diplomatic service. When he was retired at 54, after 26 years in the Foreign Ministry, he had no house abroad, or in Ibadan, his home town. He had to start all over again. He has in the intervening years devoted his services to Ibadan where he is highly respected as a community leader. He has been happily married for decades with adorable children and grandchildren.

     

    My best wishes to him and his family.

  • Aso Rock as a sort of Mecca

    Aso Rock as a sort of Mecca

    The social diary of the presidency at Aso Rock, the official residence of the head of state, is quite formidable. Since coming to power last year, President Muhammadu Buhari has spent a lot of time receiving both local and foreign visitors at his official residence. Hardly a day passes without some important and not so important guests calling at Aso Rock. In the case of foreign visitors, particularly his counterparts from foreign countries, it is perfectly understandable that the President should receive them personally when they visit Nigeria, either at Nigeria’s invitation, or at their own request. These visits are usually profitable to both sides. But that is not quite the case with local visitors to Aso Rock, some of whom are not really needed or wanted.

    Usually, these calls are intended either to congratulate President Buhari, or to express the august visitors’ support for the new government. In most cases these local visits to the President at Aso Rock are used to request from the President personal favours that are not necessarily in the interest of the country. In this respect, one might mention oil blocks, huge contracts and choice land that, in the past, were casually given away by the presidency to the visitors after such visits. Official advisers to the President are not usually present on such occasions to offer the President any advice.

    Virtually, all former living heads of the federal government, military or civilian, have made courtesy calls on Aso Rock since President Buhari came to power. These include Jonathan, Obasanjo, Abdulsalami and Shonekan, with many of them visiting the President several times. I am not sure whether Gowon should be included on the list of former heads of the federal military government that have since paid a courtesy call on President Buhari. The only former military head of state who has so far not visited Aso Rock to express his solidarity with the Buhari federal government is former military President Babangida. Obviously, he is not yet welcome in Aso Rock. It was he who deposed Buhari from power in 1985.

    In some cases, when these former heads of the federal government visit the President, they are usually accompanied by foreign CEOs of local or foreign companies in which the visiting former heads of state may have some financial interests. This is morally unacceptable as Nigeria’s economic and financial interests may not possibly be served when foreign CEOs of companies are taken directly to see the President. In such a case, it is unlikely that Nigeria’s true interests are being served. This practice is the source of much of the financial scandals that have been unveiled in recent years in our country, such as Halliburton and Siemens, in which our country was simply ripped off. The Jonathan presidency was undermined by these social visits from his cronies that eventually led to the frenzied and vast sharing and looting of public funds. During Obasanjo’s presidency, a certain Uba, little known and politically obscure then, could even brag publicly that he was often received in the President’s bedroom.

    Not to be left out of this unnecessary pilgrimage to Aso Rock are the bishops, the senior clergymen of all denominations, and the senior Islamic clerics. To this list must be added the various traditional rulers, except the Oba of Benin, the Awujale of Ijebu land, the Owa of Ijesha land and the Alaafin of Oyo, who traditionally hardly ever venture outside their domains.  And this is why they are respected and held in high esteem by the public. It is ungainly for traditional rulers to beat the doors for admission into Aso Rock merely to seek personal favours from the presidency. Even the newly installed Ooni of Ife has paid the President a courtesy visit. Even men of letters, academics, vice chancellors, heads of professional associations, all seek to visit the President. I am not sure that even Professor Wole Soyinka has not yet felt obliged to visit the President despite his well known disdain for the ‘establishment’ and the power elite. It is as if the President has nothing better to do than to spend valuable time receiving visitors.

    It is perfectly understandable that when a new government is elected, the entire ‘establishment’ should wish to reconnect with it immediately. In the Nigerian political setting, it is vital for members of the ‘establishment’ to remain in the ‘magic circle’ where important political and economic decisions are taken, regardless of their true political persuasions, or lack of any. To be left out of this ‘magic circle’ can be politically and economically costly. And the fastest way to reconnect is to wangle a visit to Aso Rock. Such visits, which are usually given much publicity in the local press, are also used, or misused, to lead the public to believe that the visitors are in good standing in the seat of power, even if they are not. Being seen publicly with the President can yield valuable political and economic dividends for the visitors.

    To some extent the doors of Aso Rock should be kept open to those who have legitimate reasons to wish to see the President. There is considerable advantage in running Aso Rock, the President’s official residence, in an open manner, as both a national institution, as well as the official residence of the President. An accessible and open presidency is good and healthy for the country as this promotes a ‘corporatist’ style of government in Nigeria, one in which all interests are taken seriously and are involved in vital decision making. An open and all inclusive government is far better for Nigeria than one dominated by parochial and other selfish interests that do, in fact, hurt the country.

    Having said this, I do believe, however, that the time has now come when the President should discourage too many visits to Aso Rock, except by those that he really considers are useful to his government and the country, and whose advice or views are really needed. If the President wants to invite anyone to Aso Rock, they are only a phone call away. He has the facility to reach anyone in the country that he wants to talk to. President Buhari is faced with so many political and economic problems that he needs all the time he can find to address these problems. Too many calls on him in Aso Rock are a waste of time and should be discouraged. His social diary should be well managed to enable him concentrate more on the grave challenges facing our country. He should be mindful of any form of cronyism in his government.

  • Can CBN save the naira?-2

    Can CBN save the naira?-2

    The debate on the adjustment of the exchange rate of the naira is beginning to gather momentum. The nation is understandably divided over it. If it can be avoided no one wants a devaluation of the naira. But the naira is now under increasing demand pressures. The unofficial exchange rate now stands at nearly N400 to the US dollar, while the official rate hovers around N200. The following article by me on the issue was first published in this paper in October, 2015. At the time the naira exchange rate in the parallel market was N238 to the US dollar. It is being published again, without any editing by me, because I believe that a downward adjustment of the naira exchange rate is now inevitable. The CBN cannot save the naira from devaluation now unless there is a substantial build up of our foreign reserves through increased oil exports and revenue. This is unlikely in the short to medium term. Further delays in allowing a more flexible exchange rate will worsen the situation and constrain economic growth.

    As in 1984-5, Nigeria is again at loggerheads with the international financial institutions. It is under strong and persistent pressure from the World Bank (WB) and the International Monetary Fund (IMF) to devalue its national currency, the naira. At a recent meeting of the WB/IMF group in Lima, Peru, a senior official of the IMF was reported as urging Nigeria to devalue its currency ‘as a way of adjusting to the reality of the current (global) economic conditions’. These conditions include the sharp decline in the global price of oil, as well as a fall in the price of non-oil/commodities exports. Specifically, the IMF official argued that exchange rate pressures in Nigeria and other oil producers had been considerable since last year. Nigeria’s oil exports and revenues have fallen considerably, while the high demand for foreign exchange in Nigeria has continued to exert considerable pressure on the exchange rate of the naira. In other words, while earnings from oil and non-oil exports have in the past year declined by over 70 per cent, the demand for foreign exchange to finance Nigeria’s huge import bills has not fallen. Because of Nigeria’s high import dependency, there is a supply/demand gap in foreign currencies that is putting pressure on the naira exchange rate. There was also some reference by the WB/IMF to ‘uncertainties in Nigeria’ about the May elections and the policy direction of the new federal government regarding urgent policy reforms. These were claimed by the WB/IMF as additional factors that have led to pressures on the naira. Very few informed analysts will dispute this.

    But the CBN Governor has rejected the calls for the devaluation of the naira. As an alternative to a more flexible exchange rate, the CBN has introduced administrative measures that are intended to limit access to foreign exchange, as well as a ban on some 41 listed import items as a way of reducing the demand for foreign exchange. The CBN Governor has vowed to defend the naira at all costs against any devaluation, adding that it was a question of nationalism. Economic nationalism is good and popular, but it has to be based on the prevailing economic realities. If it has any potential of hurting the economy, then it should be reviewed. The WB/IMF has dismissed the CBN administrative measures aimed at import restriction as detrimental to the Nigerian economy, as both local and private investors see these measures as very detrimental to their economic activities. There is already considerable concern in the Nigerian business circles over these restrictions, as their impact on business in Nigeria will be negative, with loss of productivity and jobs. Instead of these administrative measures, the WB/IMF are urging the federal government and the CBN to permit the naira exchange rate to adjust so as to reduce the demand for more foreign exchange, and to help contain the level of imports that is no longer sustainable in the light of the external shock (the decline in oil revenues) to the Nigerian economy. So far, the CBN has ignored these local and foreign pressures to devalue the naira.

    In all these, it appears that, right now, the federal government is in support of the position of the CBN that the current exchange rate of the naira should be maintained at all costs. In effect, for now, President Buhari has ruled out any further devaluation in the exchange rate of the naira, despite its volatility. This is not surprising. When he was in power from 1984-85 as a military ruler, Buhari rejected similar calls by the WB/IMF on Nigeria to devalue its currency. Then, Nigeria faced a severe external shock, worse than the current one, with severe balance of payments disequilibria, a huge foreign debt, and lack of foreign credit. Nigeria had drifted into economic chaos during the Shagari government, which lacked the capacity to effectively tackle the underlying structural problems of the Nigerian economy. Tougher economic measures had become urgent and imperative. The nation was on the verge of total economic and financial collapse. Productivity in the manufacturing companies fell, leading to a rise in unemployment and long food queues. Nigeria resorted to rationing ‘essential commodities’ as a result of severe import restrictions.

    In response to the severe economic and financial crises, the Buhari military regime also resorted to import licensing, trade by barter and counter trade. But all these administrative measures failed to address the underlying structural imbalance in the domestic economy. Buhari rejected the advice of the WB/IMF to introduce a structural adjustment programme (SAP), the highlight of which was the devaluation of the naira, to curb imports and promote non-oil exports. Buhari considered the measures being urged on him as impractical and politically inexpedient, as it would certainly lead to an inflationary spiral in food prices and other vital imports. In Egypt, similar currency devaluations had led to ‘bread riots’ and instability in the Arab world, a situation that could threaten the survival of his new military regime. He considered the WB/IMF prescription for devaluation as an invitation to suicide and so rejected it.

    But in December, 1985, Babangida replaced Buhari as military ruler. Shortly after, he introduced what he called a ‘home grown’ SAP after a long and heated debate in the country, with the overwhelming majority of the Nigerian public rejecting any devaluation of the naira. But courageously, he pushed through the tough economic and financial reforms that the situation called for, including the massive devaluation of the naira. The reforms soon paid off. Imports fell and non-oil exports expanded considerably. Nigeria returned to fiscal balance and balance of payments equilibrium. New foreign credits were extended to Nigeria, the food queues ended and the economy recorded a modest growth. Of course, the global rise in oil prices assisted the process of economic recovery, but the exchange rate adjustment introduced at the time by the Babangida regime and the CBN made this modest economic recovery possible. Had he not taken those urgent and necessary monetary and fiscal measures, particularly the devaluation of the naira, Nigeria’s economic crisis would have worsened. Of course, Babangida later abandoned some of these effective economic and financial measures for reasons of political expediency. This soon undermined the modest economic recovery achieved during his regime.

    Right now, we are at a similar crossroads as in 1985-86 when the issue of the exchange rate of the naira evoked very strong negative response from the government and the Nigerian public. Again, the CBN has rejected all calls for a downward adjustment of the naira. But can it really save the naira from further devaluation? Right now, the official exchange rate of the naira to the US$ is N200 to 1, while at the parallel market, the exchange rate is N238 to the dollar. This is a clear indication that the naira is overvalued. One indicator of overvaluation of a currency is the difference between the official nominal exchange rate and the parallel market exchange rate. The parallel exchange rate is probably nearer the net effective exchange rate than the official rate. One possible cause of the probable overvaluation of the naira is the rising inflation rate that now stands at nearly 10 per cent. This was caused by the excessive expansionist policy of the federal government in recent years. So, the issue of devaluation is not simply a question of nationalism or patriotism. It has more to do with the global recession, the fall in the value of our exports and the failure caused by our inconsistent economic reforms over the years to diversify the economic base.  Nigeria’s domestic economy is not yet mature. Growth is still fragile as it depends mainly on oil exports. This situation makes it difficult for the Nigerian economy to successfully withstand the external shocks we have now had for a year. Market conditions are not always perfect. They can be easily manipulated by financial speculators. And devaluation is not always the answer to external shocks of the kind now facing Nigeria. But any alternative offered by the financial authorities must be effective, sustainable and credible. Administrative restrictions lack these qualities.

    To save the naira from further devaluation, oil exports and revenues need to rise significantly. The short term prospects for this are not encouraging. Commodities’ prices are also falling and do not offer Nigeria any real alternatives. Nigeria’s foreign reserves now stand at less than US$30b, enough only for four to six months’ imports. The SWF of US$1b has been depleted by US$700m to meet domestic deficits, leaving a paltry balance of US$300m. Our foreign debt is growing, exports are falling, and there is a rising demand for foreign exchange from the manufacturing sector. The volatility of the naira exchange rate is leading to capital flight and a disincentive to both local and foreign investment in the economy. Planning is made more difficult by the volatility in the exchange rate of the naira. Foreign investors will be looking to other countries with financial stability, particularly in respect of exchange rates. In the circumstances, it will be tough for the CBN to maintain the current official exchange rate of the naira.

    Of course, the World Bank and the IMF are sometimes wrong when they urge devaluation on developing countries facing external shocks, irrespective of their respective situation. Some countries need it, while others do not. And the refusal to undertake the necessary exchange rate adjustment is not simply a question of patriotism or nationalism as the Governor of the CBN was reported as claiming. Even China, the second largest and fastest growing economy in the world, has had to devalue its national currency by nearly 30 per cent to boost its exports. The result has been positive. This year, China’s economy will grow by nearly 7 per cent, while Nigeria’s growth rate will fall from nearly 7 per cent to only 2.5 per cent. Actually, the US wanted China to revalue its currency. Instead, it devalued it to promote its exports. Many of the advanced industrial countries have also had to devalue their currencies at one time or the other. In 1966, the British Labour government devalued the pound sterling when it needed to borrow from the World Bank and the IMF.  Brazil, Chile, Argentina and Mexico are some of the BRIC countries that have had to devalue their currencies in recent years to cope with external shocks to their economies. Most African countries, including Ghana, Zimbabwe and Tanzania have had to devalue their currencies in the past year. If it devalues, Nigeria will not be the only African country to do so. And it is always better to devalue early than later under stronger international pressure.

    So, if it decides to devalue the naira, Nigeria will not be an exception, as it is simply a matter of adjusting to external shocks. If we do not devalue now, then we will have to take additional economic and financial reform measures, as tough as those of the Babangida years. These will still have to include the devaluation of the naira. Such reforms will have to include a review of the existing oil subsidy, which cannot be sustained financially for much longer. Major reforms will also have to be undertaken in our oil sector to eliminate the vast corruption and oil theft there. The cost of government will have to be cut considerably. As long as the reform measures are fair and transparent, they will be accepted by the Nigerian public. Smuggling of imports into Nigeria through our porous land and sea borders will make nonsense of the present strategy of import controls. Unless there is a significant recovery soon in our oil exports and revenues, I believe that Nigeria will be forced to devalue its currency, the naira, before too long. In fact, by the second half of next year the dollar exchange rate could be as high as N300. An early and modest devaluation of the naira will be in the overall economic interest of our country.

  • Nigerian press, anti-graft war and rule of law

    Nigerian press, anti-graft war and rule of law

    The Nigerian press has an impressive record of which it can be justifiably proud. In the colonial era it was in the vanguard of the long and difficult struggle to rid our country of the degradation of colonialism. This era produced such fine writers and editors as Ernest Ikoli of the then Daily Times, owned then by the Alakija family, Anthony Enahoro of the West African Pilot, owned by Dr. Nnamdi Azikiwe and S.L. Akintola of the Daily Service, of which the Doherty family were the proprietors. The latter eventually became a politician and controversial premier of the old Western Region. A succession of bright, fiercely independent and determined journalists has since maintained this fine tradition of the Nigerian press.

    In those early days, the Nigerian press and journalists were united in their opposition to colonial rule and to any form of social injustice in our country. Later, after independence, they helped define the political and economic challenges facing the country, and fought hard in defence of the liberal values they believed in, such as democracy and respect for the rule of law in our country. Much more importantly, they mobilised the people and the country against any form of authoritarian rule and political excesses by those in authority. Some Nigerian journalists have paid a heavy price for their determined opposition to the excesses of our rulers, particularly during the long period of military rule in our country. Under military rule many of them were detained, and some actually jailed. One can easily recall how Messrs Tunde Thompson and Tony Irabor of The Guardian were tried by military tribunals and sent to prison by the military government. As may well be expected, independent journalism, the freedom of speech and the rule of law suffered terribly during the long period of military rule in Nigeria. Our nation owes them a debt of gratitude for their dogged fight against any form of arbitrary rule. We owe the limited freedoms we enjoy today to their eternal vigilance.

    Today, the political situation in Nigeria has changed largely because of their tenacity in defending personal freedoms. The press is certainly freer. It is more robust in its defence of the democratic process and the rule of law in our country. The political space is freer and journalists are now less likely to be hauled off to jail for expressing views and opinions that the authorities may not like. There is also a far greater variety of news media and views than ever before. Most of the newspapers are now privately owned and there is a healthy rivalry and competition among them for circulation. All this augurs well for the future of the Nigerian press and the rule of law in Nigeria. Altogether the press in Nigeria represents a countervailing force that cannot be ignored for too long by those in authority. It is playing a leading role in exposing and fighting public corruption in Nigeria. To a large extent, it was responsible for the defeat of the Jonathan PDP federal government by exposing the corruption of leading members of that government. President Jonathan lost the presidential election because of his failure, or inability, to take urgent action against some of his ministers known to be corrupt. For this, the nation remains grateful to the Nigerian news media.

    But the enormous power and influence currently being enjoyed by the press impose on it some obligations and responsibilities as well. It must continue to uphold and defend the basic freedoms of our people from any unwarranted assaults by those in authority. It should remain committed to the defence of the rule of law in our country. Whatever else may divide us as a people and a country; we must collectively uphold the rule of law. This is what binds us and our country together. Without it our country and people will not have any future of which we can be proud. So, the defence of the rule of law and basic freedoms in Nigeria is paramount. It is a value that the press should continue to uphold for the good of our country. Without it our country can easily fall apart.

    However, we do not do the rule of law any good when we use it to try and restrain, or impede, the government from discharging its responsibilities to the nation, particularly on such an aggravating issue as the fight against the widespread public corruption in our country. The entire nation is behind President Buhari and his APC federal government in its efforts to stamp out public corruption in our country. The social and economic consequences of corruption for our country are so grave that we should all, including the press, continue to support the government fully in its efforts to stamp it out and restore financial accountability to our country. There will always be some irritations about this but we must keep the goal clearly in our sights. President Buhari should not be blamed for fighting corruption in our country. He has the mandate to do so and he knows that if he fails to tackle this evil, the defeated and corrupt PDP may regain power in the next election.

    President Buhari was elected primarily because of his pledge to rid the country of public corruption. He has the support of the entire people of our country to take urgent and practical measures against public corruption in our country. In fact, most of our people feel he has been too slow in tackling public corruption. They want those suspected of corruption to be tried swiftly. But this is not a military regime and President Buhari is obliged to follow due legal process in his fight against public corruption. If this were a military regime, many of these people suspected of corruption will be in detention already. In Ghana, four former military rulers were once executed by Jerry Rawlins, then Ghana’s military ruler, on charges of public corruption. We must condemn such a crude and extra judicial method in our country, but it rid Ghana of corruption.

    Now, President Buhari is being unfairly criticised by some sections of the press and newspaper columnists for complaining that undue delay in the legal process is a major hurdle in the fight against corruption. In fact, his resolve to fight public corruption in our country is admirable and should earn him our full support. He has not in any way interfered directly with the independence of the judiciary, which has often been accused of corruption… As I write this, the media has reported that an Abuja High Court has ruled that the re-arrest after bail of Dasuki, the embattled former NSA, does not in any way amount to a breach of the rule of law. The country has persistently asked for a massive reform of the criminal justice system in our country. Every Chief Justice of Nigeria has had to complain publicly about corruption in the Judiciary and the delay in the delivery of justice in Nigeria. This is the point that President Buhari tried to make. The press has often taken the lead in attacking the Judiciary for its massive corruption. It has exposed many corrupt judges and some of these have been retired. Corruption in the Judiciary is so bad that many suspects, except the poor, escape trial and convictions in the courts by resorting to all kinds of legal subterfuges, including, contrived delays and frivolous injunctions in the courts. In most cases, the trial of suspects takes years and is often inconclusive. Both Ibori and Alamieyeseigha, two former governors, escaped conviction here in Nigeria for massive corruption, but were subsequently convicted in Britain for money laundering. Is that not a clear indication that the Nigerian Judiciary cannot be trusted to dispense justice swiftly where the suspects are leading public figures? Is this not a clear case of double standards in the Nigerian criminal justice system in which the rich are treated differently from the poor, a negation of the basic principle of the equality of justice for all people in the courts? Is this not a breach of the rule of law by the few bad eggs in the Judiciary?

    There is a pervasive and justifiable feeling in our country that the political elite enjoy some kind of immunity from prosecution for public theft and corruption. Our prisons are full of convicts, usually poor people, rightly jailed, for minor criminal offences. Some are detained in the prisons for years while still awaiting trial, often deliberately delayed. They are hardly ever granted bail by the courts. In the case of the rich and powerful, the courts tend to treat them with kid gloves by granting them bail capriciously. This is morally unacceptable and reprehensible, as many of them who were granted bail by the courts fled the country and have refused to return home to face trial for public theft and corruption. There must be scores of these public officials abroad who fled the country after securing legal bails.

    The Nigerian press must remain committed to its defence of the rule of law. This is in the interest of the country. But it must be careful enough to avoid, or create a situation, in which the fight against public corruption is unwittingly turned into a fight against the government. This can only give comfort to those being tried for looting the national treasury. Is corruption not itself a breach of the rule of law? Is that not why it is a criminal offence against the state? Does it not undermine the basic freedoms of the people and their inherent economic rights to decent living standards? If there is any breach of the rule of law, those standing trial for public theft and corruption are rich and powerful enough to contest such alleged breaches of the rule of law in court.

    These people are enemies of the state and, if found guilty after a fair trial, they must pay the full legal penalties for their crimes against the nation. They should not be allowed to use the press to bail themselves out of the financial mess created by them. There is no need to call into question the motives of a few columnists and journalists who, in this grave matter, have written very passionately about possible breaches of the rule of law. They fight for a lofty and noble ideal. But the evidence that President Buhari has interfered or plans to interfere with the Judiciary, as claimed by some journalists, is weak and untenable in present circumstances.

  • Remembering January 15, 1966

    Remembering January 15, 1966

    On Saturday, January 15, 1966, 50 years ago, five Army majors and accomplices of the Nigerian military seized power, overturning the democratically-elected civilian coalition federal government of Prime Minister Tafawa Balewa. It was the first time the military  intervened directly in Nigeria’s political affairs. The coup was bloody, leading to the death of several key political figures, including the Prime Minister Tafawa Balewa, his Finance Minister, Chief Festus Okotie-Eboh, the Northern Region Premier, the Sardauna of Sokoto and the Western Region Premier, Chief Ladoke Akintola. In the course of the military coup d’état, scores of senior military officers, some of the best in the Nigerian Army, were also killed.

    It is a date that I will always remember, but not simply because the first ever military coup in Nigeria took place on that day. Rather, it is because it was the day that I had chosen to marry and proceed to London on my first diplomatic posting abroad. I had joined the Foreign Service in 1964 on graduating from the then University College, Ibadan, and looked forward eagerly to my first posting abroad. That date, January 15, 1966, also my wedding day, turned out to be ominous. In my memoires, Lest I Forget’, published in 2013, nearly 50 years after, I have made some brief references to the events of January 15, 1966, as they affected me personally Some of the materials in this article are from the memoires.

    There had, for some time, been rumours of an imminent military coup in Nigeria, but very few really took those rumours seriously. Although there had been a lot of tension in the country in the wake of the lingering political crises in the then Western Region, the Nigerian Army had a solid reputation as a professional, loyal and stable army that was unlikely to stage a coup against the federal government. It had been involved in maintaining peace under UN forces in the Congo in 1960-61, and in 1962 and 1963 had helped the governments of Uganda and Tanzania to put down the rebellion of their own armies. So, most people ignored the persistent rumours of an imminent army coup. As we were to learn later, even the Balewa federal government ignored intelligence reports that a military coup against the government was in the offing. The coup took everyone by surprise. The coup destroyed the professional reputation of the Nigerian Army.

    I woke up early that Saturday morning on January 15 to prepare for both my wedding in the morning at 10 am and my departure with my wife for London in the evening. I left home early for my wedding that Saturday morning thinking of only my wedding and my departure for London later in the evening. Suddenly, I saw a convoy of military vehicles, including APCs behind my car, at Kingsway, Ikoyi, driving furiously, with their sirens blaring. This was quite unusual in those days. I recognised the head of the Nigerian Army, Major-General Aguiyi Ironsi, in the lead car and quickly pulled my car off the road, after which I proceeded to my wedding without being unduly worried about the military convoy. The wedding over, we had planned a modest reception at my residence for our family and friends. But as we were leaving after the wedding, there were a lot of whispers that there had been a bloody coup in the country. Military check points and APCs began to appear all over Lagos. There were also reports that military checkpoints had emerged in the regional capitals of Ibadan, Kaduna, Benin and Enugu, and that both the Sardauna and Chief Akintola had been killed in the coup. But these reports could not yet be confirmed. The telephone lines had been cut,

    Obviously, we could not in that tense and uncertain situation hold a wedding reception. At mid-day, there was a terse announcement on Radio Nigeria that ‘some dissident elements of the Nigerian Army ‘had abducted Prime Minister Balewa and his Finance Minister, Chief Festus Okotie-Eboh and that their whereabouts  were unknown. The situation in Lagos was very tense and confusing. I felt irritated that the coup had occurred on our wedding day. In fact, I had been attached to Archbishop Makarios of Cyprus who was in Nigeria for the meeting in Lagos of the Commonwealth heads of governments. I was to have accompanied him to Enugu on his official visit there, but as I was proceeding to London, another officer replaced me. Otherwise, I would have been with him in Enugu when the army majors struck. He was brought back to Lagos hurriedly and flown out of the country.

    The wedding over, my wife and I returned to our residence and, in the midst of the melodrama in Lagos, continued with our wedding arrangements. Our flight by British Airways to London from Ikeja Airport was scheduled for 10 pm. But in view of the widespread disturbances in Lagos, we decided to leave home early at 6 pm for the airport. But we could not, at first, get to the airport. We were turned back by an unruly band of soldiers at the Ikeja military Cantonment. They appeared ready to shoot at the slightest provocation. There was a complete breakdown of law and order in Lagos. Then my late mother in-law, a matron at a Yaba hospital, offered us an ambulance to take us to the airport. We accepted her kind offer, but we were not sure how the soldiers would respond to our ploy. Happily, we scaled through unhurt. The ambulance was searched but we were waved through. The soldiers believed we were on a genuine mercy mission.

    When we arrived at the airport at 9:30 pm there were a lot of British school children returning home after their holiday in Nigeria with their parents. It was not until midnight that the plane was cleared for take-off. We were stressed but relieved that we had finally left the chaos in Lagos behind us. We discovered later that all our friends and relations, including my father, who had gone to the airport to see us off on that day, were subsequently delayed at the airport for two days before being released.

    We thought our ordeal was over, but this was not quite the case. When our plane landed at Kano airport at 1am, a military officer, who I recognised as Lt.-Col. Odumegwu Ojukwu, boarded the plane with some armed guards and conducted another search of every passenger on board the aircraft. He looked very stern. When he got to me and saw my diplomatic passport, he demanded angrily to know what the purpose of my mission to London was. I told him I was going there on posting. Not satisfied with my response, he ordered that I should disembark from the plane. I was then taken to a small military guardroom for further interrogation after which I was allowed to return to the plane. It was difficult to tell from his action whose side he was on, the federal government, or the coupists. Later, I came to the conclusion that he was simply an opportunist, who had decided to make the best of a confused situation in the Army. It is unlikely that he was personally involved in the coup plot.

    When we arrived at London’s Heathrow  Airport early on Sunday morning, I was totally unprepared for the rowdy reception we got there. We were the first passengers to arrive in London after the coup in Nigeria. The airport swarmed with journalists and camera crew eager to have first news about the disturbing situation in Nigeria. I was bombarded by the press with questions about the tragic events in Nigeria. As I knew very little about the situation in Nigeria, I declined all requests for my comments.

    The experienced protocol officer, who met us at Heathrow, rushed me and my wife to a private waiting room, away from the prying eyes of the media men. We were driven off and taken to a hotel at The Strand, near Trafalgar Square. There he handed me a note from the acting High Commissioner, Mr. (later) Justice L.J. Dosumu, inviting my wife and I for lunch at his residence. He was naturally eager to be briefed about the coup in Nigeria, but I had very little information that could be useful to him. Telephone lines to Nigeria had been cut. It was not until several days later that the British press reported the horrifying events that had taken place in Nigeria on that Saturday, January 15, 1966, including the death of Prime Minister Balewa, the Sardauna and Chief Akintola.

    In his broadcast on Radio Kaduna on the day of the coup, Major Nzegwu, the leader of the coup, claimed that “the aim of the Revolutionary Council is to establish a strong, united and prosperous nation, free from corruption and national strife…Our enemies are the political profiteers, swindlers, the men in the high and low places that seek bribes and demand 10 per cent, those that seek to keep the country divided permanently so that they can remain in office as ministers and VIPs of waste….We do promise you freedom from fear and freedom from general inefficiency.” Very strong and idealistic words which the military never kept. Nigeria was laid bare and devastated after 29 long years of military rule. It is worse off today than it was on January 15, 1966.

    I was in the High Commission in London when the country erupted into civil war in 1967. When the war ended in January, 1970, I was at Trinity College, Oxford.

  • President Buhari’s courageous budget

    President Buhari’s courageous budget

    Last week, on Tuesday, December 22, President Muhammadu Buhari presented his government’s budget estimates and proposals for FY 2016 to the National Assembly. In view of the falling revenues from oil and non-oil sources this year, it is a bold budget. The Federal Government intends to spend N6.08tr in the fiscal year, of which N1.84tr (more than 30 per cent of the budget) will need to be borrowed from internal and external sources. The FG is optimistic it can cover the deficit. As the president observed in his budget speech at the National Assembly, the budget deficit, though huge, is equivalent to less than three per cent of Nigeria’s GDP. But it will take our overall debt profile to 14 per cent of the GDP. This is well within the acceptable threshold of debt to GDP ratio.

    As it was his first after his election as president the budget was eagerly awaited by the public to see how the promised changes in the country would be reflected in it. Fiscal year 2015 had been quite bad for the domestic economy. It is estimated that the growth rate which had averaged seven per cent before 2014 dropped to less than five per cent this year. Revenue from oil exports fell sharply by nearly 70 per cent. In the course of the year, the FG resorted to huge deficit financing to the tune of about N1.5tr to keep the economy going. Twice, the outgoing PDP and the new APC federal government had to borrow from the CBN to pay salaries and pensions. Only a month ago the new APC federal government secured the approval of the National Assembly for a supplementary budget of N500bn. And last week the Finance Minister announced that funds available for sharing by the three tiers of government in November fell by N132bn from the previous month. The ECA has been virtually depleted. The SWF and the limited foreign reserves are facing pressures.

    Revenue/Expenditure Profile

    Revenue projection of the FG in 2016 is N3.86tr, a little over half of the proposed budget of N6.08tr. The FG intends to finance the deficit by a combination of domestic borrowing of N984bn and foreign borrowing of N900bn totalling N1.8tr. In both cases, it is going to be tough financing such a huge deficit. The crude oil benchmark is $38 per barrel but the price of oil in the global market has dropped to $32 per barrel. There is some expectation in official quarters that the oil price will rebound next year, but this is by no means certain. On account of this, the projected revenue from oil in 2016 is only N820bn. Non-oil revenues from Company Income Tax, VAT and Customs and Excise is expected to yield N1.45tr.

    On the expenditure side, the budget provides N1.8tr for capital projects, an increase of N557bn on the 2015 budget. The balance of N5tr will be accounted for by recurrent expenditure, still rising despite the government’s efforts to reduce the cost of governance. There is a special intervention fund of N200bn to take care of the government’s phased social welfare programme.

    A mildly reflationary budget

    The proposed FG budget did not elicit much surprise as it was, basically, a modestly reflationary budget, intended to give the spluttering domestic economy a short in the arm, Although many commentators thought it to be the biggest FG budget ever, it is not quite so. In 2014, the PDP federal government planned a bigger budget. It was forced to scale back the budget by prevailing economic realities. Its projected revenue was given as N7.33tr. In the current year it was N6.83tr. But there was a loss of some N1.5tr in revenue in the course of the year. The actual FG expenditure in the current year, including the deficit financing of some N1.5tr, is quite close to the budget proposals of N6.08tr for 2016. In spite of the fall in oil revenues the government recognised the need to increase public expenditure to stop the economy from going into outright recession. It was already stagnating. The approach of the new FG to the 2016 budget is neo-Keynesian. It is bold and it involves spending more to keep the economy afloat, even if it means a huge deficit financing, essentially more borrowing from domestic and foreign sources. The alternative to this mildly expansionist budget is slower growth, if any.

    However, some questions need to be asked regarding revenue projections. The obvious sources of additional revenues are company tax, customs duties and taxes, all of which are projected to rise in FY 2016. But I think that, in present circumstances, the optimism regarding revenue increases from those sources may prove illusory. In the case of customs duty, the prohibition placed on some imports will negatively affect total revenue from that source. This is one of the reasons that tariff increases are considered preferable to outright bans. In the case of taxes, revenue from company tax is unlikely to increase by much, if at all, as the manufacturing industry has slowed down in the last two years. With regard to VAT, an increase from five per cent to 10 per cent, will not lead to a significant addition to the national revenue as income from VAT represents an insignificant part of the total national revenue. An increase in VAT could also lead to a reduction in consumption and tax derived from it.

    Again, it was thought that savings from a reduction in the cost of governance would release additional funds for spending. Here, the savings will not be much as there are still 37 ministers. Though a commendable achievement, the reduction of federal ministries from 36 to 27 will not lead to much savings. The federal bureaucracy remains unduly large and President Buhari, understandably, does not want to stir up political and ethnic crises by applying a severe cut in the federal bureaucracy. A merger of some federal agencies is on the cards. While this has become necessary it may not lead to much savings. It was argued that privatisation of some public enterprises would reduce the cost of governance. It should have, but it has not as new FG agencies were started again.

    The Oil Subsidy

    Although President Buhari has carefully refrained from announcing the end of the so-called oil subsidy, it appears he has been finally persuaded that it is time for it to go. It is no longer financially sustainable. There is no explicit provision for it in budget 2016. Nearly 30 per cent of the total FG budget (some N1.5tr annually) was being spent on this subsidy. Even after the fall of global oil prices, the oil importers were still claiming subsidies on their oil imports. For instance, the price of diesel, long deregulated, at the gas stations has fallen by over 30 per cent. But not so oil. This shows clearly that the so-called oil subsidy was a massive fraud. Some of the fortunes made by the oil importers almost certainly found their way into the PDP electoral war chest.

    If a rigorous audit of the NNPC, a cesspool of corruption and theft, is done, it will be discovered that these oil importers were some of the biggest financial donors to the PDP in the recent presidential and general elections. If the subsidy is finally removed, there will be savings of some N1.5tr. This will substantially reduce the huge budget deficit of the federal government. It might not need to borrow more than N500bn in the next financial year. In fact, what the FG should do is to place oil imports on open licence. With competition among the importers the price of fuel in Nigeria will fall rapidly and significantly. It will then be seen clearly how, over the years, the nation has been massively defrauded by its oil importers.

    Sectoral Allocations of the Budget

    It is in the sectoral allocations of the budget that one can see a lot of bold initiatives by the Buhari APC federal government. Power, Works and Housing get a hefty N433.4bn, the highest ever. Considering Nigeria’s huge infrastructure deficit, this allocation is commendable. But though quite capable, many think that the Minister, former Governor Babatunde Raji Fashola, is being overloaded with responsibilities for three key economic sectors. It is better for him to handle power alone, the most critical of the three sectors, while an additional minister is appointed for Works and Housing.

    Both Education (N369.6bn) and Health (N221.7bn) have also received reasonable allocations, while Transport will get N202bn, not unreasonable in our present difficult financial situation. However, it is doubtful that the continuing rehabilitation of the railways, the completion of the southern coastal road, the Lagos-Ibadan highway and the second Niger Bridge, can be fully addressed within these limited financial provisions for public transportation, unless it is the intention of the FG to resort to external borrowings for these huge capital projects. Alternatively, these projects may be included in the medium term plan and executed over five or more years. It is unlikely that foreign investors will show any interest in these giant projects, or lend funds for them. China and India have both been forced by the global economic slow down to cut back on their investments in Africa.

    Defence will get only N294bn. This is strange in view of the ongoing insurgency and other internal threats to the security of our nation. However, interior/police will get N145bn. When added to the defence vote, this is as high as the vote for Power, Works and Housing. It is also possible that the new APC federal government has found ways of increasing defence spending in the current fiscal year, including the $1bn it had planned to raise abroad.

    The Proposed Welfare Package

    To redeem its electoral pledge, the APC federal government will introduce two new welfare packages next year. These are the feeding of school children once a day and a welfare payment of N5,000 per month to the poorest in our country. The cost of these has not been shown in the budget. But it is likely to be minimal. First, there are less than 100 federal secondary schools in the country. The programme will not extend to the states, some of which have similar programmes. Equally, the number of the poorest to benefit from the N5,000 per month largesse will be kept pretty low, far less than the 25 million originally planned. If not, the two commendable programmes will be unsustainable. The President also deserves commendation for his plan to recruit some 500,000 university graduates as teachers in federal institutions. This will have a positive impact on the situation of mass unemployment that is a source of concern in our country, as it has the potential of fuelling social conflict.

    Altogether, this is a courageous budget reflecting official concern for the poor in our country. It points the way to the development of a more compassionate society. As usual, the implementation of the budget will be difficult, as there will be some major constraints, one of which is that Nigeria does not yet have the executive capacity for such a huge budget. Some aspects of the budget, such as the removal of oil subsidy will be resisted by Labour, which is also asking for an increase in the minimum wage. The government has to find a way of mollifying Labour on these issues to avert damaging industrial disputes and strikes in the country.

  • On real issues arising from abuse of N32b security votes

    On real issues arising from abuse of N32b security votes

    Former President Goodluck Jonathan has a case to answer regarding his role in the sordid matter. It should not be swept under the carpet.

    The nation has been stunned in recent weeks by intense media revelations on the security funds disbursed by the former National Security Adviser, Col. Sambo Dasuki (rtd), as slush funds to prominent members of the former ruling party, the PDP. The estimated total of the slush funds is N32billion. It is probably more. In addition, it has been alleged by the EFCC that the sum of $2.1billion meant for arms purchase has simply disappeared. It was allegedly diverted into private pockets, principally those of Dasuki to purchase choice properties here and abroad.

    There is a palpable feeling of public outrage in our country over the cavalier manner in which the slush funds were handed over to some prominent leaders of the PDP. Dokpesi, the owner of DAAR Communications, got a hefty N2.1billion of state funds to spruce up the image of the party for the general elections. The former vice president, Sambo, got a hefty N20million monthly from the funds. Not to be left out, Obaigbena collected a cool N700million on behalf of some newspapers for damage to their vehicles and newspapers by overzealous security agents of the Jonathan PDP federal government. As the trial of the principal actors in this disgusting event begins, we shall learn more about the full extent of the abuse of the security votes under the direct control and authority of former President Jonathan.

    Col. Dasuki, the former national security adviser, was at the centre of this financial scam in which such vast sums of money were shared out to the PDP chieftains ostensibly to facilitate the re-election of Jonathan as President through outright bribery of the electorate. State funds were used in a partisan manner to serve the political interest of the PDP. In a true democracy this is unacceptable. It was Dasuki who, pleading security considerations, asked for and obtained a postponement of the May elections. This, and the use of slush state funds to fraudulently secure Jonathan’s electoral victory was, subversive of the democratic process that we are trying to develop in our country The plan failed completely as he suffered a woeful defeat in the presidential elections. The slush funds probably never got to the voters. They were simply diverted into the private pockets of the PDP leaders. If Jonathan had been re-elected, nothing would have been known by the public about this gross abuse of power by the Jonathan PDP federal government.

    What is even more galling about the whole sordid affair is that even after President Jonathan’s defeat, Dasuki continued to hand out state funds to the PDP hacks without any caution at all about the possible future consequences of his action. In a statement issued yesterday by the EFCC, it said Dasuki was being tried because ‘he was involved in various activities that bordered on economic sabotage, a compromise of the nation’s security, and endangering the lives of Nigerian soldiers involved in the anti-terrorism fight with Boko Haram’. In other words, this man who had primary responsibility for the nation’s security was busy subverting the nation’s security and the fight against the terrorism of Boko Haram. Some soldiers who refused to fight because they could not cope with the superior fire power of the insurgents were tried and convicted for mutiny. It was only the change of government that saved them from summary execution.

    There is some justifiable media speculation that the funds involved in this financial scam were from the recovered Abacha loot, recovered mostly from some helpful foreign countries and warehoused in the Central Bank. The foreign countries involved demanded and obtained from the PDP federal government assurances that the recovered funds would be spent on useful public projects. Instead, and in effect, the funds stolen by Abacha and recovered were stolen again and shared out to the leaders of the PDP, the ruling party at the time. This is very damaging to our country’s foreign image and our integrity as a nation. At the time this vast amount of money was being shared by the PDP leaders, the federal government could hardly pay its workers’ salaries and pension. This year it borrowed about N1.5tr to meet its financial obligations to its workers. It had no funds to fix our decaying social and physical infrastructure. It is this kind of massive corruption at the highest level of government that makes it difficult for the government to meet its basic obligations to the people. It is why that vital road, that vital bridge, those useful and necessary schools and hospitals, cannot be built. It is the massive theft of vast sums of public funds that has deepened mass poverty in our country.

    So far, former President Jonathan has remained studiously silent about the whole sordid affair, and his role in it. But his silence is deafening as the nation needs to know who fraudulently authorised the diversion of the arms purchase fund as well as the abuse of the security votes. It is not possible that this vast financial scam took place without his knowledge. Specifically, Dasuki has claimed that Jonathan was aware of the slush funds and that he acted on President Jonathan’s instruction. Of course, even if this was the case, it does not exonerate him. A public official is not under any moral or legal obligation to carry out the instructions of his principal, including the president, if he considers such instructions illegal. President Jonathan cannot legally claim immunity from prosecution for an act or actions that were clearly illegal. Presidential immunity does not cover criminal activities. He must be made to account for his action in the court of law. He is reported to be seeking a meeting with President Muhammadu Buhari on this disgraceful matter. But a meeting with President Buhari over this matter is not necessary. It is for the courts to determine his innocence or guilt. He should be invited by the EFCC to account for his actions regarding the slush funds.

    In the light of this unprecedented official financial heist at the highest levels of the Jonathan presidency, it is time for the National Assembly to enact a law that will put an end to the so-called security votes which are being enjoyed and grossly abused by the governors, and even council chairmen. In some cases, it is even being used to finance private armies that pose a direct threat to our national security. It is the major source of official corruption in our country. All funds intended for our national security should be handled directly by the security and intelligence agencies, and not the president. As we have seen in recent years, it is subject to abuse and is subversive of the democratic process in our country.

  • Tribute to Victor Adetunji Haffner (1919-2015)

    Tribute to Victor Adetunji Haffner (1919-2015)

      The following excerpts are from my written tribute to Pa Victor Adetunji Haffner at his funeral service on Friday, November 27, at the Cathedral Church of Christ, Marina, Lagos

    The home calling on November 5 in Lagos of Mr. Victor Adetunji Haffner, at 96, marks the end of a glorious era in the profession of engineering in Nigeria. This era produced some of Nigeria’s finest engineers and public servants in colonial Nigeria like the late Chief S.O. Fadahunsi of the old LEDB and Chief T.M. Aluko of the Lagos City Council, who is probably better remembered as a notable novelist. Pa Haffner was in this esteemed group of pioneering pre-independence engineers. He was a pioneer in telecommunications engineering, the first in his field. He served his country proudly and diligently. For over two decades, from 1954 to 1975, he straddled and shaped the future course of the development of telecommunications in Nigeria. In 1964, he became the first CEO of the Nigerian External Telecommunications (NET), the first state-owned telecommunications company in Nigeria. Pa Haffner was buried in Lagos on Friday, November 27, 2015, after a moving and well attended funeral service at the Cathedral Church of Christ, Marina, Lagos.

    Engr. Haffner was born on September 1, 1919 at 10, Haffner Street, Lagos. After attending the Church School at Broad Street, he received his early education at the CMS Grammar School, Lagos, from 1932 to 1938. Among his classmates of the 1938 set were Pa Akintola Williams, the first Nigerian chartered accountant, and his younger brother, Chief Rotimi Williams, the distinguished Cambridge educated lawyer, now deceased.  My late father, Chief Olagunju Asaolu Fafowora, was of that set too. Of the 12 students who performed brilliantly in the Cambridge School Certificate Examinations in 1938 and went on to have brilliant professional careers, only Pa Akintola Williams is alive today. He was a month older than Pa Haffner. They remained close friends until the end.

    After a brilliant academic record at the CMS Grammar School, Lagos, from where he obtained his Cambridge School Certificate in 1938 at the age of only 19, a remarkable feat in those days, Mr. Haffner worked for a while as a clerk in the Accountant-General’s office of the colonial service. It was from there that he proceeded to Northampton College, London, (now City University) for the first part of his engineering course. After that, he studied at the famous Regent Street Polytechnic (now Westminster University), from where he graduated in 1954 as a Chartered Engineer, specialising in telecommunications engineering. He was the first Nigerian in this field. He worked briefly with the English telecoms firm, Cable and Wireless, from where he was recruited by the Nigerian colonial government in 1954 as a pupil engineer in the old Post and Telegraphs (P&T) department. His rise in the P&T was meteoric. In 1963, he was seconded to the newly formed company, Nigerian External Telecommunications (NET), as deputy general manager. The following year, he was appointed the managing director of NET, a post he held until his sudden and inexplicable retirement in 1975 by the Murtala Mohammed military regime.

    It was under his watch at NET that satellite communications was first introduced in Nigeria. It was also during his tenure as MD that NECOM House, the magnificent 32- storey headquarters of NET, was developed at 12, Marina, Lagos. He always wanted the best for his country in the field of telecommunications. When, at 95, he presented his memoirs, “Reflections on Nigeria’, to the public last year, his professional colleagues acknowledged him as the pioneer of telecommunications engineering in Nigeria. After his sudden retirement from NET, Marubeni, a Japanese communications firm, offered him a consultancy. This provided him with some financial succour. As he noted in his memoirs, he made more money with Marubeni than he did at NET.

    But it is not simply as a distinguished and an accomplished engineer that Pa Haffner will always be remembered. He had very wide social and family connections and he touched many lives for good. He was versatile, cultured and a good churchman. In his public life, he stood up for principles that he valued, based on noble ideas that he never compromised, no matter how strong the opposition was. Many thought of him as being controversial. But he always stuck to his guns, no matter whose ox was gored. He also left an enviable legacy at the Cathedral Church of Lagos, Marina, with which he was so strongly connected from birth. From the age of nine he was in the church choir. He was also a most influential member and secretary of the Standing Committee of the Cathedral for many years. He was honoured with the Cathedral Parish Award for his immense and varied services to the Cathedral. When the Cathedral needed to buy a new pipe organ, it was to Pa Haffner that it turned. As Chairman of the Church Organ Fund Raising Committee, Pa Haffner successfully accomplished this difficult task.

    I also personally owe him a debt of gratitude for providing me with very valuable advice and information when I was writing the history of the Cathedral. Over two dinners at his pleasant Ikoyi home, he provided me with a mine of information and insights into significant historical events in the church of which he was a personal witness. He was proud of his old school, the CMS Grammar School, Lagos and, until his death, contributed immensely both materially and financially to its physical development in recent years. When I was privileged to serve as the President of the Old Grammarians’ Society (OGS), he gave me his encouragement and unstinted support. I knew I could always count on him and his old classmates, Pa Akintola Williams and the late Chief Rotimi Williams for support. In fact, he was honoured posthumously by the school on  November 21, 2015, for his valuable contributions to the progress of the school over the years.

    Considering his privileged pedigree and distinguished family ancestry, one could say that Pa Haffner was born with the proverbial silver spoon. He was a direct descendant of the Creoles, the immigrant Brazilian families that dominated the social and political life of the old Lagos colony under British colonial rule. But as he wrote in his memoirs, which it was my pleasure and privilege to review, he had to work hard for his professional success, in a career that took him to the top as a telecoms engineer in Nigeria. Pa Haffner’s father, Mr. Frederick Matthew Haffner, was an official of the Lagos City Council. His mother, Victoria Adepeju, was a niece of the legendary John Otunba Payne, a brilliant lawyer and first Nigerian Registrar of the Supreme Court of Nigeria. He was also a Church Warden at the Cathedral Church of Christ, Lagos.

    Pa Haffner also had as his grand uncle, Dr. Henry Rawlinson Carr, who graduated from Durham University at 19, and had such a brilliant career in the colonial civil service, rising to the post of Resident of Lagos, and next in rank to the colonial Governor of Lagos. When Pa Haffner was a student at the CMS Grammar School, Lagos, then at Broad Street, he lived with Henry Carr at his sprawling mansion at Tinubu Square. As Henry Carr was never married and had no children, he took Haffner as his adopted son and nurtured him carefully. This was a rare privilege which, no doubt, had a profound influence on Haffner as he grew up. It was Henry Carr who ensured that Haffner joined the Cathedral choir at nine. That was when his love of both church and classical music began. He learnt the piano and became quite good at it. He was a patron of the Cathedral Choir. He grew up to be a man of culture and pleasant manners. My wife and I would normally visit him in his lovely home on his birthday anniversaries. These visits were always a great pleasure and delight, as Pa Haffner was such a splendid host, taking every care to make sure his visitors were relaxed, happy and convivial.

    In 1957, Pa Haffner married Grace Olubunmi Majekodunmi, a cousin of the late Dr. M.O. Majekodunmi of Abeokuta. She died in 2007 at 81. They were blessed with three children, two boys, and a girl, Bimbo who, in his last years, looked after him with such devotion and affection.

    To his family, numerous friends and professional colleagues, I offer my deeply felt condolences. May Papa’s soul rest in perfect peace.

  • On the Fed Govt’s proposed welfare relief fund

    On the Fed Govt’s proposed welfare relief fund

    It appears the Buhari APC federal government intends to do something, no matter how little, to provide some financial relief for some 25 million people considered to be the poorest of the poor in our country. Two weeks ago, the APC spokesman, Lai Mohammed, now the Federal Minister of Information, assured the nation that the APC would honour its electoral pledge to the nation and pay some 25 million people N5, 000.00 a month. This was in response to claims by the PDP opposition party that the APC had reneged on its electoral pledge to provide some financial relief to the poorest in our country.  Well, it is not yet official. The federal government has not yet confirmed that it would honour this pledge. We may have to wait for a while to confirm that it is committed to fulfilling this pledge. In any case, nothing can be done right now by the federal government about the pledge.  There is no provision for it in the current budget. It is also doubtful that it can be captured in budget 2016.  But there is no time limit for redeeming the pledge. It can be done later in the life of the current APC federal government when it finds it financially feasible. Right now, when the federal government is so badly pressed for funds, redeeming this electoral pledge cannot be its priority despite its mass and electoral appeal. Elections are not due for another four years.

    The idea of providing some financial relief for the poorest in our country is commendable. It shows some compassion for the poor in our country who have wallowed for so long in abject poverty. We need to build a more compassionate society. Some might even consider the gesture too late and too little. For far too long, the existing vast income inequality has created social divisions and conflicts in our country. It erodes our moral values. It fuels crime in our cities, such as armed robberies, kidnappings, even religious insurgencies. Boko Haram thrives on the extreme and widespread poverty in the North East of Nigeria. In response to the challenge, the federal government has rightly introduced a sort of ‘Marshall Plan’ there to tackle the problem of poverty and end the insurgency there. If we fight poverty in the North Boko Haram will cease to have any appeal among the poor in the North.  Nigeria will be more peaceful and more prosperous.

    But poverty in Nigeria, as in most underdeveloped countries, is really structural. It is man made. It does not exist because of lack of natural resources. It exists because of the colossal mismanagement of the national economy and the greed of the few who are in power and use that opportunity to enrich themselves. Recently, there have been shocking revelations about widespread corruption among some prominent politicians in our country. This is what creates mass poverty.  Less than one per cent of the population control over 70 per cent of total national financial assets. It is estimated that 70 per cent of our people are made to live on less than US$2 per day, defined by the UN as the minimum permissible. This means that more than 100 million Nigerians live below the poverty line. The N5, 000.00 that will be offered to the poorest is still very much below this threshold. It will not lift them out of poverty. It is only a palliative for a deep seated financial and economic maltase. We have to look more closely at the basic causes of poverty in our country. We can only tackle it effectively if we fully understand what is responsible for it.

    Most poor Nigerians are poor because they are on the margins of the domestic economy. They neither have the education nor the skills to be fully integrated in a modern, competitive and productive economy. They live on the margins of the economy because they have no access to any kind of financial assistance from the state. Banks that are supposed to lend to the poor lend instead to the rich who, as we have seen in the recent banks’ disclosures on debtors, refuse to pay back the bank loans. In fact, the poor have a better record of repaying bank loans than the rich. Most of the bank loans taken by the rich are salted away to acquire choice properties abroad. It is invested abroad, not at home where jobs are badly needed. This is morally reprehensible. There can be no moral, even economic justification for this scandalous situation. Any nation that has so many of its citizens cut off so brutally from meaningful economic activities cannot optimize its economic growth. It cannot effectively fight poverty. Any responsible government must take prompt and adequate measures to redress this gross imbalance between the poor and the rich. It is in this light that we must view the apparent determination of the APC federal government to do something practical to alleviate the pitiable conditions of the poorest in our country. It is a right that the poor should demand from the government.

    However, there are some practical difficulties that the financial authorities must consider in preparing for the implementation of the proposed N5,000.00 a month relief to the poorest. The programme is targeted at some 25 million poorest Nigerians who will get this relief. This translates to N1.5 trillion a year, or more than a third of the average annual N4 trillion budget of the federal government. When the existing fuel subsidy of over N500 billion is added to the proposed welfare relief fund the total subsidies involved is about N2 trillion, or half of the total annual federal budget. We must not forget that such a huge relief programme will create its own vast bureaucracy and additional costs.  It is doubtful that this is financially sustainable. Right now, due to the fall in oil prices, Nigeria has lost about 70 per cent of its total annual revenue.

    Virtually all the governments of the federation, including the federal government, are running huge budget deficits to meet their financial obligations, including pensions and the salaries of workers. Where then will the funds for the proposed welfare programme come from? It cannot be met by additional borrowing. The Federal Government cannot continue to borrow indefinitely from the CBN. This will create an inflationary spiral that could damage and undermine the stability of public finance in Nigeria. Already the huge domestic debt of the governments of the federation is causing some concerns in the banking sector. Most of the banks cannot lend any longer because of the huge domestic debts. Subsidies are normally paid from budgetary surpluses, not from deficits which have to be paid back in due course of time. It is unlikely that Nigeria will have any budgetary surpluses in the short term to repay any budget deficits. Next year the budget will have to be reduced substantially. No welfare allowances can be paid to the poor, Even if there is a substantial reduction in the cost of governance, the savings will not be enough to pay out N1.5 trillion as welfare subsidy to the poorest.

    But apart from these financial considerations, there will be political and administrative problems in the implementation of the programme too. Political squablling over the administration of the fund can undermine it. Who determines the 25 million poorest Nigerians being targeted in the programme? What are the criteria to be applied in identifying those who might qualify to receive the welfare benefit? Is the distribution going to be spatial or based on federal character? As most of the 25 million poorest Nigerians probably live in Northern Nigeria and should qualify for the largesse, will there not be some objections from other sections of the country. Will it be acceptable to other regions of Nigeria? There is already in existence a vast relief and rehabilitation programme funded by the federal government in the North East? Will this not lead to complaints from other regions of the country that the North is getting more than its fair share of our financial resources?

    Given the huge size and population of the North special financial measures and investments are needed to enable it contribute more economically to the nation. The prevailing deep poverty there cannot be ignored. It is Nigeria’s Achilles heel. And there is also a special programme in the Delta region funded by the federal government. That is also justifiable in view of the ecological damage to the region from oil exploration. It is the major source of Nigeria’s oil revenue. It has to be taken care of to reduce social discontent and conflict in the region. But in view of the tribal structure of Nigerian politics a balance must be maintained between the North and South in the disbursement of this proposed welfare benefit. Otherwise, it will create political tension in the country.

    There is yet another reason for expressing some reservations about the proposed welfare scheme. Similar programmes in the past have been high jerked by the political elite. Instead of the funds going to the poor for whom they are meant, they tend to end up in private pockets, with minor state and local government officials simply diverting such funds to their pockets. In public housing, houses developed for the poor are seized from them by the rich. If anyone has any serious doubts about this trend, they should be reminded that similar funds introduced by the states governments for poverty alleviation were diverted. Most of these funds never really got to the poor for whom they were meant. They ended up in the pockets of the officials managing the programme. Even pensioners are being deprived of their pensions by the greed of these petty and mean government officials who are supposed to manage the pensions. We also have the case of the fuel subsidy from which the rich have benefitted more than the poor. In the circumstances, there is no reason to believe that the programme can be more efficiently handled. It will be mired in massive corruption at both the federal and states levels. It will provide the rich with another opportunity to further enrich themselves at the expense of the poor.

    So, what is the alternative to the proposed welfare programme that will achieve the objective of providing some relief for the poorest? It is the creation of jobs. And it is the state that can facilitate the creation of jobs by the private sector through the appropriate fiscal and financial incentives. The vast sum of N2 trillion being proposed for the programme can be more readily and efficiently used by investing more in the development of human capacity in Nigeria, still one of the lowest in the world. Most of the poor in Nigeria have little or no education. They cannot help themselves because of their lack of education and technical skills. There is a limit to what the state can do really to assist them. Since most of the poor are engaged in agriculture we must find a way of making agriculture more productive and financially rewarding. Even petty farmers can work their farms more profitably with the right technical support and other incentives. A good physical infrastructure will also make it easier for the poor farmers to earn more as they lose most of their produce due to poor roads and public transportation. As we have seen, when the structural adjustment programme was introduced in 1986 the farmers responded positively by increasing their farm output. The price of cocoa increased significantly and many farmers benefitted immensely from this development.

    Another way of helping the poor is by increasing public spending on health and education, sectors that are of direct benefit to the poor. If we spend more in these social sectors more jobs will be created and more poor people will be empowered to make more contribution to the domestic economy. The economy will grow faster and the poverty level will be reduced thereby. All our African neighbours spend considerably more on improving their social sectors than Nigeria, which is far richer. In addition, the federal government can intervene directly in the improvement of physical infrastructure by making use of Nigeria’s vast and underutilized labour. The unemployed can be used to build roads and bridges, now falling apart in our country.

    Instead of simply giving the poorest N5,000.00 naira monthly, a miserly amount that cannot even meet their basic needs, we will in effect achieve the same objective by investing more in the development of human capacity and skills of the poorest in Nigeria. Instead of waiting indefinitely for jobs that cannot be found, many young Nigerian University graduates are now self employed using the skills acquired in the course of their training to earn a decent living for themselves. This is a far better and more practical approach than the one being contemplated.