The Nation Newspaper

Tag: austerity

  • Okon unveils a harsh austerity regime

    As the grueling economic meltdown holds everybody in a nasty bear hug, as the bitter reality of a nation  in economic recession begins to sink in, as tempers flare on the streets, it was a dejected and despondent snooper that arrived home last Friday to find the whole house in dire darkness. Meanwhile Okon was lurking somewhere with an eighteenth century torchlight feebly discharging grey yellowish rays. To compound matters, a drunken and triumphant Baba Lekki was regaling Okon with snippets of his lucky escape from a vehicle commandeered by one-chance boys.

    “Oga eku aiki na. Welcome to the Dark Age and say hello to the Dark City Brothers. When blind overseer come jam blind seer, na katakata be dat one”, the old crook jibed.  Snooper ignored the crazy old man, but he was relentless in his pursuit.

    “Oga, dem one chance boy come sit on my belly and I come shit. Dem oga come say na dat shit I go whack when dem reach Golgotha”, the old man cried. Snooper ignored him again and quickly moved to contain the mad theatre .

    “Okon, why is there no light? And what happened to the generator that I just serviced?” Snooper screamed in alarm.

    “Ha oga dem generator com degenerate again. No fuel. Diesel today dem dey sell for 180 naira for one cup”, Okon lamented.

    “Oh my God!! Why am I in the same country with this kind of people?” snooper growled.

    “So oga we  go dey manage with one hour light at nine o clock sharp sharp. Abi na for diesel you wan spend dem pension money?” Okon drawled. Shocked by the mad boy’s temerity, snooper exploded in volcanic distemper.

    “Shut up idiot! What is your business with that, or is it your father that pays me pension?” snooper shouted.

    “Okon, leave the fool. He will soon return to his village”, Baba Lekki sneered.

    “Oga, but I get one solution. You know dem tiny tiny insects dat dey give light for night? Dem dey sell dem for market. One bag na one thousand. Dem call dem solar insects”, Okon offered.

    “ Ha, na dat one dem Yoruba people dey call tanatana. I don dey farm dem too for Okokomaiko. Okon I go bring one basket of dem glow worm make you put am for him room make dem insects bite him blokos well well. Sebi him dey complain say no light, na dis one go remove him yeye pajamas”, Baba lekki hollered with sadistic relish.

    “And oga make una no vex sah”, Okon began with biting sarcasm. “From now on no milk, no sugar, no tea, no egg , no bread and no meat, you go dey manage camel milk, garden egg, cassava bread and dem elephant ear mushroom. I go put plenty locust beans”.

    “So, the essential commodities of the eighties have now become inessential commodities?” snooper lamented aloud.

    “You see stupid man? All that was bourgeois palliatives for an over-pampered elite. Just drink akamu with fried red ants. It is good for your libido . Good night”, Baba lekki sniggered and exited with legless bravura.

     

  • Osinbajo to Nigerians: no austerity measures

    Osinbajo to Nigerians: no austerity measures

    THOSE demanding the Muhammadu Buhari administration’s economic agenda yesterday got a reply.

    Vice President Yemi Osinbajo used the platform of The Nation’s First National Economic Forum in Lagos to make what many described as so far the most far-reaching explanation of the government’s plan.

    This year’s budget, according to Osinbajo, will “stimulate the economy rather than impose undue austerity on the citizens” – contrary to the fear of many.

    “It is pathetic that a nation with over 170 million people benchmarked its budget on the price of oil. We must look beyond oil because it disturbs us from looking at other sectors. In order to move the country forward, we must reduce the Federal Government’s and states’ dependence on sharing revenue made from oil sales,” Osinbajo said to the applause of a huge audience of senior government officials, politicians, media chiefs and ordinary folks.

    He said the government was aware of the overwhelming challenges confronting Nigerians, assuring all that the ongoing reforms in various sectors point to the fact that the situation will soon be a change.

    Said the professor of law and Senior Advocate of Nigeria (SAN): “The foundation for a strong economy demands that we have appropriate fiscal policies that will help the country that is arising from a very low rate of VAT and a low taxpayer’s base. We are focusing on increasing the country’s taxpayers’ base. We are committed to expanding the tax net.

    “For instance, 30 per cent of the country’s budget has been earmarked for capital expenditure.

    “Non-oil sources, comprising company income tax, VAT and others, are expected to contribute N1.5 trillion, which is more than the estimated revenue from oil. This is unprecedented in the history of the country.”

    Governors Akinwunmi Ambode (Lagos) and Rochas Okorocha (Imo) also spoke on the way forward for states, if they must meet the expectations of the people.

    Oyo State Deputy Governor Moses Adeyemo, who represented Governor Abiola Ajimobi, and Mr. Bimbo Ashiru, who represented Ogun State Governor Ibikunle Amosun, also spoke on how the nation can wriggle out of its economic crisis.

    Expected to speak today – the second and final day of the summit – are Borno State Governor Kashim Shettima, Plateau State Governor Simon Lalong, Edo State Governor Adams Oshiomhole and acting Managing Director of Bank of Industry (BoI) Mr. Waheed Olagunju.

    Others are Nigeria’s former High Commissioner to Australia Amb.Ayo Olukanni, United States/Africa Chamber of Commerce representatives and the Manufacturers Association of Nigeria (MAN).

    Osinbajo said the Federal Government will not reverse the privatisation in the power sector because the government is not known to be good managers of businesses.

    He outlined the government’s position on job creation, the power situation and a myriad of other burning issues, including infrastructure.

    According to him, what happened to the former national telecommunication firm NITEL and the defunct Nigeria Airways are enough example to prove that government should not be directly involved in running businesses.

    He said the government will sustain the privatisation of the power sector while it continues its push for the provision of gas to power the existing power generating plants.

    Nigeria, according to Osinbajo, has in excess of 12,000Megawatts of installed generating capacity, but it has just about the chance of wheeling only about 5,000Megawatts. He pointed out that much investment is required to provide the transmission infrastructure to transport the excess to the end users.

    “Even if we transmit the 5,000megawatts currently generated, over half of it will be lost because of inadequate infrastructure,” the Vice President said.

    Osinbajo, who sympathised with Nigerians for the harrowing experience of the lingering fuel scarcity,  said the government is pushing for co-location of refineries  to the existing ones to increase refining capacity, adding that the building of railway lines would be intensified to increase volume movement of goods and petroleum products at reduced cost.

    On projects, Osinbajo mentioned the Lagos-Ibadan Expressway and the Benin-Ore road as among the 33 the government has scheduled for completion, but the government is not considering starting new projects.

    On rail development, he said the Federal Government was in the process of completing the Abuja-Kaduna rail line. The Lagos-Kano rail and the Lagos-Calabar rail axis, are  among top priority projects.

    Osinbajo praised The Nation as a newspaper house that has carved a niche for itself as the locus of progressive thinking through an array of distinguished columnists, who, in his words, “serve us a menu of crisp, critical analysis and writings on a daily basis. This is of course, in addition to its role as a newspaper of repute which tells the news as it is without garnish, sensation or unnecessary hyperbole.”

    The event attracted important personalities, including the Chairman of the Board of Directors, Vintage Press and publishers of The Nation, Mr. Wale Edun, Professor Adebayo Williams, Hon. Wale Oshun, Mr. Ayo Opadokun, Professor Olatunji Dare, Secretary to Lagos State Government Tunji Bello and top government officials from Imo State, among other dignitaries.

  • A guide to the new austerity

    A guide to the new austerity

    WHAT does an empty treasury look like?

    Ask President Muhammadu Buhari. He has just seen one. “The treasury is virtually empty,” he told reporters on Monday, adding that it is a shame that Nigeria can’t pay its workers.

    Well said. The situation has been this horrendous since the dying days of the Dr Goodluck Jonathan administration when oil prices kept tumbling and the desperation to remain in power drove Peoples Democratic Party (PDP) leaders and their collaborators to launch a terrific assault on the treasury, hitting it so hard, like a heavyweight pro boxer tearing away in a street brawl. Reckless.

    Everywhere you turn, there are talks of debts, huge debts that will take generations to repay. Millionaires are facing extinction. The figures come in billions nowadays. Delta State is said to be owing N146.62b. Lagos is owing over N400b, Cross River (N28.29b), Bauchi, where Governor Mohammed Abubakar says he has recovered 25 cars from former Governor Isa Yuguda’s wives, has a debt of N17.51b  and Enugu’s is said to be N13.79b. The other states’ debts come in various sizes.

    How we got into this financial quagmire is a bit clear – massive looting of the treasury amid crashing oil prices, subsidy scam, oil swap fraud, poor budgetary calculations and sheer profligacy, among others. What isn’t clear is how we can get out of the mess threatening to mess up our lives?

    As usual, the situation has spawned a bewildering army of charlatans and crooks posing as finance experts and turnaround surgeons. In other words, out of this crippling cash crisis has sprung a huge business for pranksters, fraudsters and tricksters. Scammers.

    I ran into one the other day in Oyingbo, Lagos Mainland. A huge signboard proclaimed his presence. “A.J. Konigba, London-trained economist and receiver-manager. Liquidation and acquisition. Clearing and forwarding. Come one come all.”

    What was meant to be a short comment of an expert turned into a treatise on leadership in times of financial paralysis as we now have. “How do we get out of this crushing cash crunch?”  Our man chuckled excitedly, shook his head and adjusted his jacket, which seems not to have seen a drycleaner for ages. He cleared his throat in a manner that sent his reading table shaking. “President Buhari will have to lead by example by bringing down the cost of running the Villa,” he  said, his voice booming in the badly-lit room.

    “You see, young man, it is very easy. No more sumptuous state banquets where the menu is a great tribute to the home dishes of the guests, especially diplomats. If there must be one, the menu must be reviewed. No more Chinese dish; Teriyaki beef, stir fried Teriyaki chicken, chicken fingers, crab rangoons, chicken velvet, Wonton soup, cashew chicken, General T’so chicken, Moon Goo Gai Pan and all such stuff, including expensive shrimps – are shrimps not found here?

    “Diplomats should be made to have a taste of our rich culinary culture. We can now have fura dunono instead of Quaker oats and tuwo shinkafa/tuwo masara instead of crispy Chinese rice. In place of canned milk, we can have kunun aya.”

    As for drinks, it is all well that neither Buhari nor Vice President Yemi Osinbajo drinks. They are teetotallers. So, farewell to the days of Champagne and sparkling wines. Cristal. Bollinger. Armand de Brignac. Dom Perignon. These are some of the best money can buy, fit only for the sophisticated palates of our past leaders.

    Unfortunately, local drinks are becoming unfriendly. No fewer than 70 people – still counting – have just died in Rivers State, of drinking ogogoro, the gin called kain kain or akpeteshi, push-me-I-push-you or Sapele water.

    But then, there seems to be a bright side to the strange deaths. Sweet, said the bard, are the uses of adversity. Our scientists are rushing back to the lab, poring over materials in a remarkable cerebral exertion to find out why an age-old reliable merriment companion has suddenly turned an agent of death, killing scores. Now, we often hear of methanol, ethanol, methanal and all such exotic nomenclature. Suddenly, a drink that used to be the delight of the common man, helping him to extract his herbs, keeping  away the biting riverside cold and simply getting him high has become the subject of discussions in government houses and academic circles.

    A professor of chemistry, I am told, is busy seeking grants for his research into this strange phenomenon. The title of his work, said a source with an insight into what he vows will be a huge scientific breakthrough, is “ Nb504-calysed kinetics of ethanol esterification for reactive distillation process simulation in a local gin: A review.”

    Social scientists are also busy, battling to explain the lethal situation. Why do people hit the bottle so hard, until it becomes a killer? Is ogogoro fighting back after decades of abuse?  Is there some elite conspiracy against this traditional, home-made liquor? Any sense in placing a ban on ogogoro as being suggested in some uninformed circles in the cities? Hasn’t hunger killed more people than this innocent drink? Has anybody contemplated slamming a life ban on hunger? The researchers clearly have their job cut out for them.

    Both the President and the Vice President are of moderate weight. Buhari is slim, rod-straight and tall. I recall the veteran journalist-turned-preacher Gbolabo Ogunsanwo drawing a parallel between Buhari’s waist and beauty queen Agbani Darego’s in one of his articles in The Comet, now rested. The thinking then in 1993 , he said, was that Nigerians might not vote Buhari who could sentence everybody to a diet that would banish obesity – a condition many see as a sign of affluence.

    But, talking seriously, as part of the new belt-tightening measures, many of our public servants will have to reduce their weight – willy-nilly. Consider this hypothesis: Why should the President, slim and trim, have Service Chiefs who are rotund and portly? Obesity should have no place in military and paramilitary agencies.

    A source told me the other day that Buhari would have loved to go after suspected treasury looters, seize them and throw them in detention where they will stay until they surrender their loot, but his associates keep telling him: “Ankali, ankali. You must respect the kanstituchan.”

    I do not know now whether the process of recovering Nigeria’s cash will proceed apace, following the President’s announcement that he had secured the support of the West in the recovery drive. Some people are even said to have turned in some cash. When are we going to know who is holding what and who has returned what?

    It is only fitting and proper that in the spirit of this austere season, the Senate has agreed to rework its N120b budget. That’s the spirit. This will be some image burnishing venture, coming after the upper chamber’s resentful election in which some members sought help from the rejected Peoples Democratic Party(PDP) to undermine the ruling All Progressives Congress (APC), placing it  on a perilous path.

    Besides, the National Assembly elections have turned the august body into a subject of beer parlour jokes. A colleague sent this: “A dad was flogging his wayward son who stole his money. He asked him to kneel down and raise his hands.

    “You this bad boy. If you continue like this, you know where you will end up?” Before the dad could finish asking the question, the boy replied: “Yes; I know.” Surprised, the dad asked: “where?” and the boy replied: “National Assembly.”

    In Kaduna, irascible Governor Nasir El-Rufai has cancelled Ramadan gifts, saying “super politicians” were getting the contracts, which became an avenue to steal, even as the masses did not feel the impact of the programme. Besides, he has cut his salary by 50 per cent, asking his appointees to do same.

    An activist-lawyer, who pleaded not to be named because of what he called the security implications of the matter, told me last night of a huge, vociferous movement that is in the works. It will soon, according to the fellow, who I can confirm is not frivolous in any way, spring up in villages, towns and cities to demand a list of all those suspected to have had their fingers in the till. The battle cry will be, he said, “surrender the loot”.

    Will you join?

  • Lagos introduces austerity measures

    Lagos State Governor Babatunde Fashola has raised the  alarm over the dwindling resources which he said would affect the implementation of its budget.

    He added that the global fall in the price of crude oil, effect of the postponement of the general elections, increase in exchange rate and others are serious impediments to the targeted income of the state government.

    Fashola  said the actions of the managers of the nation’s economy have been inconsistent as the nation’s external reserves have dwindled considerably, which he said has seriously affected the revenue of the state.

    Fashola  spoke at an emergency meeting with  members of the Lagos State House of Assembly.

    He stated that the purchasing power of the people has reduced considerably and that the monthly shares of the Lagos State Government from the Federation Account has reduced from N11 billion to N10 billion.

    According to the governor, the gross revenue performance was 86% last year, adding that budget performance could not be measured until the expected money comes in.

    “The budget performance terminates with the revenue, which is about 80%. We are the only government that has performed up to 80% in the last three years.

    “We want to propose an amendment of the budget of all the agencies of government to the actual income of the revenue. It is not reduction of the budget, but to propose that no section gets up to 100% of its budgetary allocation,” he said.

    Fashola maintained that the Nigerian economy is caught in troubled waters, adding that without electricity supply, prospects of alternative economic generation such as agriculture, small scale enterprises, tourism and others would become impossible.

    He condemned a situation, where the government votes less than 30% for capital expenditure and over 70% for recurrent expenditure.

    According to him, the dwindling fortunes of the Nigerian government would affect Lagos State mostly being the most populous state and the one that contributes most to the nation’s Gross Domestic Product (GDP).

     

  • Starting point for austerity should be a cut-back in the cost of governance

    Starting point for austerity should be a cut-back in the cost of governance

    The General Secretary of Nigeria Labour Congress (NLC), Dr. Peter Oso-Eson, in this interview with TOBA AGBOOLA stated that Nigeria is extremely in need of drastic action to ensure that the nation’s economy does not collapse. He said labour will rise to the ongoing socio-economic Challenges and deal with the challenges.

    WHAT is congress’s position on the current socio-economic and political situations in the country?

    I think it is a very genuine question, but you know it is like asking me to deal with the whole burden of this country. But we recently expressed our worries because the socio-political problem in our country today frightens us so much. That is why, recently, we decided that apart from issuing a press statement on the issue, we also addressed it through a formal letter to the president.

    We have not released the letter to the press because we are waiting for the response. But, we thought that there are now very weighty issues that have to do with the security situation in our country. We are also worried that the country is at war, but the body language of our political leaders does not suggest it, they are all going around as if all is well.

    Our fear is that we are getting into a situation that may actually undermine the survival of the country. This is what we have all fought for in the past and we should not allow our past efforts to be in vain. We must all join hands together to save the situation.

    On the security issues, we are concerned that security issues have been politicised and it should not. We have seen a situation whereby political parties tried to use security matters to score a point. We are not in support of this and so we think that there is need for some avenue we can deal with the security matters that will not be put in the political realm and that is why we wrote Mr. President. We hope that Mr. President will take that letter seriously. On whether we will make it public, as I said earlier, it will depend on the response from Mr President. So broadly, these are a consensus and we will try to deal with them.

    Few years ago, a study group in US predicted that if care is not taken, Nigeria would disintegrate this year. Today, we have lots of problems, including insecurity. What is your take on this?

    Yes, you’re right. The study said the country may disintegrate by year 2015 and lots of people have shed their views on it. However, labour doesn’t agree to this. I am confident that the prediction will fail because Nigeria will not disintegrate. Yes, we have these socio-economic challenges,  we are, however, confident that Nigerians will rise to the challenge and deal with these challenges. Nigerians have faced challenges in the past probably more severe than this and we did not disintegrate. I believe that this country has so much uniting it.

    For instance, if we disintegrate today, my daughter who may be married to a man from the North, where will she go? Benson, my colleague sitting beside me here, who may have taken a wife from my village, where will they go? The youths of this country have created a magnitude of social network and nexus that will not be so easily dissolved. The various elements that joined us together are so big and have really grown. All these will make it very difficult for the country to disintegrate. So, in a simple answer to your question, I believe that the prediction will not come true. Of course there are challenges that can lead to disintegration, but we will overcome them. But, what we need to agitate for now is, quick solution and that can happen if we get the right leader(s).

    How does NLC see the austerity measures when they were announced by the Federal Government?

    We are convinced that the starting point for austerity should be a cut-back in the cost of governance. We have always argued that the cost of governance is excessive;  there is a lot of waste and that government can efficiently function with a much leaner expenditure pattern.

    That does not, however, mean that government should sack or reduce its workers or close down some of its agencies or institutions. We are not in support of these. Our position is that with the employment position in the public sector today, most of the costs that are running and weighing heavily down on the finances of government, have nothing to do with the remuneration of the workers. It has to do with the bloated pre-requisites attached to the management of people who are paid under the political officers’ scheme. There are lots of wastes going on.

    So, this period of austerity should avail us the opportunity to revisit and streamline the cost of governance. And that should be the starting point. Also, tariffs should be imposed on luxuries. Because, you see, the extremely skewed distribution of income in our country in which less than 10 per cent of the population control more than 70 per cent of the total income and wealth is not good. Most of those very rich people are not paying tax. Therefore, there must be a scheme to ensure that we get them to pay adequate taxes. But in determining luxury goods, we need to carefully pick those goods. That is, goods consumed mainly by the rich.

    For instance, our airports are being congested with private jets. Some people find it very easy to buy private jets, even with this austerity. This indicates that there some super rich in this country. The wealth of this country is being controlled by some people. In fact, the joke among the rich today is, ‘how many jets do you have?’ If we put heavy tax on such luxuries, that will be great and it’s a good way to start. We have a bottle of wine that can pay somebody’s salary. Those who consume such commodities should be taxed and taxed heavily. So, we need to define correctly what the luxury goods are and we agree with that.

    How will congress react should government decide to retrench Nigerian workers as part of the austerity measures?

    When it comes to retrenchment, we have taken the position all along, that we will resist any retrenchment. And if government try to put the burden of this adjustment on the workers, the Congress in unity with its counterpart, the TUC, will do everything to prevent it. Let me also make it clear here that in terms of the impact on the workers, the area that worries us very seriously is that crude prices are falling. In other countries, what it translates to is that the price of petroleum products and pump head is coming down.

    In the United States, in the last one month, the price of a gallon of petrol has come down from $3 to $2 in response to this price adjustment. In our country, we are not allowed to really enjoy that benefit. What government is doing is that in order to shore up its naira revenue, it has gone to devalue excessively, the naira; $13 devaluation in one day, and then a   continuous process of depreciation. What that does is that because we import petroleum products largely, the gains  from the falling price of crude which ought to translate to we the consumers, are prevented by that devaluation. This is because, by devaluing the cost of the head price, it might even increase and we say that is wrong. The benefits of the falling price of crude must be translated to Nigerians. We want the pump price of the petrol to be further adjusted downwards.

    The real sector of the economy is the hub of economic development globally. What is your impression about the performance of this sector over the last few years in Nigeria?

    If we go by the available statistics, there has been reasonable performance in terms of growth in the key sectors of the economy. You will discover, for instance that the agriculture sector and more recently industry have become the main drivers of the growth which in the last decade has been averaging over six per cent. To that extent, we can say that there are some positive developments in the real sector.                         However, we need to disaggregate that data a little more.  When we talk about the real sector, we know that the main engine that actually drives the economy and capable of inclusive growth is the manufacturing sub sector. We, therefore, need to focus on the manufacturing sector. The collapse of the manufacturing sector, following the Structural Adjustment Programme, dealt a serious blow to our economy. It manifested in low capacity utilisation to the extent that our official figures came down at below 30 per cent. Even though there seems to have been a little pick, the rate of that pick up is not fast enough and we believe that this is the real reason why we are having the high rate of growth and not creating jobs.

    One of the flaws that experts have identified has been the exclusivity of the economic growth. What do you think is fundamentally wrong in economic policies that allow for this worrisome trend?

    When you base your market policies on market fundamentalism, you will end up with exactly what you have. It is not new. We know that there is a nexus of linkage that the economy must have to have true development. There should be linkages across sectors, but market fundamentalism will not lead to that.

    We need government’s deliberate policies that are geared towards the promotion of certain sectors identified as desirable. They may not immediately be too profitable but they are desirable for true economic development. This also brings to the fore the role of the states in the whole process of development. Those who want to take the market purist position say that government does not have business in business. That is the type of economics that our policy makers subscribe to and that is why we always end up with what we have now in which we have high economic growth that is quite high by all international standards, but with little effect on employment generation opportunities.

    In your own opinion, which sectors of the economy would you want government to concentrate on to drive the needed inclusive growth?

    Let us look at the iron and steel sector, for example. It has the potential to galvanise the economy because of its intrinsic value across the different sectors.

     

  • What austerity?

    What austerity?

    The economy requires bold and ambitious measures 

    AFTER failing to stem the industrial scale theft of oil known to have cut oil revenues by more than 20 percent, the Jonathan administration would appear to have finally met its match in the slump in oil prices. With Nigeria’s premium Bonny Light Crude which only a few months ago sold above the $100 mark currently trading at barely $79 per barrel, there are already signs of difficult times ahead for the economy.

    Last week, the Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala rolled out some measures ostensibly to mitigate the impact of the falling revenues on the budget and, by extension, the economy. The measures proposed include pegging the oil price benchmark for Budget 2015 at  $73 per barrel against $78 earlier proposed; ban on foreign travels by civil servants (unless for those deemed as absolutely necessary); cessation of foreign training programmes except those with foreign sponsorship – all in addition to significantly increasing non-oil revenue via an aggressive tax administration which would see owners of private jets, yachts and lovers of Champagne and other luxury goods pay more tax.

    We have nothing against the proposed measures which even at the best of times, are needed to curb wastes and generally to improve efficiency in governance. Our problem is when the Federal Government, for reasons best known to it, chooses to package and sell placebos as cure for a more acute problem, or more appropriately, when the administration indulges in deliberate misdiagnosis of the problem for self-serving reasons.

    Of course, we know the problem with the economy. It is neither the curse of oil nor its famed volatility. As the examples of United Arab Emirates and Nordic countries have shown, oil can truly be a blessing if well deployed. As for its in-built volatility, the challenge is for the managers of the economy to take steps to mitigate the impact when it occurs. Nigeria unfortunately suffers the tragedy of being stuck with choices foisted by utterly self-serving, blind and incompetent elite – a cabal stuck on old paradigms and with it their obsessions with stacking money in foreign shores against deploying them to fix our ailing infrastructure to improve the environment for doing business. The result is a nation hung on huge foreign balances denominated by the number of months of import cover!

    As it is, it is difficult to speculate on how worse things would get before they get better. The prognosis however is far from reassuring, particularly with no imminent signs of recovery in oil prices. While the fall of the naira to N176 to the dollar in recent weeks – its lowest ever – is a measure of how much its fate is tied to the fortunes of oil, it is also a measure of the free-for- all economy in which corrupt politicians and all manner of flight by night businesses could access the foreign exchange market to perpetuate capital flight.

    The way to go calls for bold and ambitious measures none of which the Jonathan administration seems willing to take. Renewed attention to the enablers of the economy – the props which not only sustain the economy but make it truly competitive and diversified– would be a good starting point. One other sure strategy to relieve the current pressure on the foreign reserves is to crack the riddle of new refineries. We have said it before: using a chunk of foreign exchange for fuel importation is bad for the economy. And, if we may counsel: a regime of belt-tightening offers no guarantee for enhanced economic activities; the best it can achieve is to address perceived distortions. Ultimately, the only enduring strategy is to get the economy working full throttle.

  • Democracy, taxation and austerity

    Democracy, taxation and austerity

    Given the rate at which euro zone nations have been beset by street riots over austerity measures there is no doubt that very soon the concept and practice of global democracy will be synonymous with unrests and riot. Let us distinguish the euro zone riots in Greece , Spain and Portugal from the ones against despots and tyrants in the Arab world that started in Tunisia and spread to Egypt and Libya and which at first successfully achieved the objective of removing the dictators but also created fresh problems of governance, security and stability in the process.

    Again let me stress that both the euro zone austerity riots and the Arab street protests stem from how economic resources have been allocated and managed in the two environments. In the euro zone, the location of the world’s oldest democracies the maintenance of the welfare state has taken its toll on the resources of the environment and that has created the problem of higher taxation and decreasing welfare benefits leading to redundancies and massive job losses with workers unions taking to the streets with strikes to protest economic measures by governments to make ends meet. In the euro zone the welfare state has spread itself thin on resources and must rethink its economic solution approach or die a slow and withering death.

    In the Arab world and most of the so called third world, the strategy of state survival is to wrest the resources of the state from a few hands that have cornered it and start a welfare state or a semblance of it and that is if those with the huge stolen resources allow such a change at all. It is a tall order but that should be the direction of political change after decades of thievery and debauchery

    In effect then, we may be talking of two sides of the same coin if we say soaring welfare begets austerity and despotism begets poverty but that each must be experienced before lasting growth can be achieved to sustain prosperity. That however is so much theory as events have shown in recent times both in the euro zone, the Middle East and Africa, that poor management of resources create tension that overheat the socio economic fabric of society and that is taxing direly the concept and practice of democracy globally.

    In Italy former PM Silvio Berlusconi has made a move against the general EU trend of governments solving debt and economic crisis through austerity measures and increased or new taxes. Berlusconi has written letters to voters in key areas of ltaly that he would refund the property taxes they have paid so far in the name of economic reforms if he is elected in tomorrow’s elections in Italy. His opponents and critics have denounced his letters on taxation as a bribe and have asked for him to be prosecuted. Knowing Berlusconi’s highly controversial political antecedents and given the big luggage he already carries in terms of litigations in his past spell as PM of Italy, the prospect of his being deterred by litigation is nil. It is however the possibility of voters reacting positively to the attractive tax offer that fascinates me and leads me to examine the nature of political leadership in a democracy in the face of dwindling economic resources and the peculiarities of each political system. Aside from Berlusconi we will take on the elections in Kenya where one of the front runners is Uhuru Kenyatta who is facing charges for genocide in the Hague and the consequences of that for Kenya’s elections.

    Back to Berlusconi again, it is apparent that God is not finished with him yet, as Jesse Jackson once said of himself, as far as Italian politics is concerned. This is because here was a man written off for many vices and cases he faces involving sex with harlots and under aged girls when he left office last year. But now the polls show he is bouncing back and he even though his party may not win he may get enough votes to be a key kingmaker in ensuing political marriages that make governance a tedious exercise in Italy.

    In addition while Berlusconi may have lost his charisma because of his many flirtations and dilettante he has his club AC Milan to always lure and dazzle Italians soccer loving and passionate to his side. However, this last week luck was on his side as his club AC Milan did the unbelievable by beating defending champions Barcelona in Milan by two goals to nothing. Who knows the impact of football on politics sufficiently to dismiss the possibility of voters voting for Berlusconi again to make the good times of soccer victories come back to Italy under a Berlusconi regime? Surely no one can be certain.

    But if you add the tax offer to an unforgettable AC Milan victory over Barcelona in an election week you can fathom why Italians against all odds may develop sudden amnesia for the many vices of their most controversial former PM and still offer him another chance to lead or mislead them again in the peculiar democracy that Italy has become nowadays.

    Similarly you want to wonder why Kenyans will be asking a man who is on trial at the Hague to lead them as Uhuru Kenyatta is and is still contesting for Kenya’s presidency. A Kenyan woman interviewed on satellite TV was adamant that Uhuru is her choice because the father, Jomo Kenyatta led Kenya well and the economic situation was very good then as there was free education. But then the UK envoy in Kenya was insistent that he may not be able to shake hands with Uhuru Kenyatta if he wins as that is the policy of Britain over those standing trial at the Hague as Uhuru is. Yet both Britain and Kenya are democracies. But if Uhuru wins, will Kenya not have problems with the international community?

    Surely no one but Kenyans can decide this and one must wait awhile to cross that bridge. But I think Kwame Nkrumah of Ghana won elections in 1951 in Ghana while in British colonial jail, and Uhuru at least, is still on trial and has not been jailed yet so there is still some similar legal antecedent to muse over in case Uhuru wins the presidential elections in Kenya

    It is apparent that taxation becomes a huge political problem in hard times in any political system. Here in Nigeria, and as we now know also in Greece, given the Largade List and the name and shame campaign to make rich people, consultants and lawyers to pay taxes in Greece, most rich people go to great extent to dodge taxes. Yet taxes are vital for the supply and maintenance of essential infrastructure like transportation , housing , and security.

    A peculiarity of the Nigerian situation is that tax collection and gathering is done so massively and in a very modern way but the infrastructure on the ground are so old and obsolete that one wonders what the taxes are used for after all.

    In addition Nigerians are so used to constant power failure and would be wondering why people in Bulgaria will be rioting as they did this week because of high austerity taxes and high electricity bills which are a way of life in Nigeria. Yet Nigeria too is a democracy. It is however a unique one that has produced long suffering citizens who never want to rock the boat or bell the cat as long as each person or family is able to make a subsistence level of living literally from hand to mouth, leaving the way for the rich tax dodgers to have a field day and dominate both the political and economic environment maximally. Yet Nigeria is a democracy too but a very calm one where people don’t demonstrate because of high taxes or perpetual power failures or in b-uilt, reinforced, austerity measures from time immemorial.