The news last Sunday, by Finance Minister and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala on plans by the federal government to introduce some austerity measures purportedly to reduce the effects of steady oil price decline has been greeted with weepy criticism. Not a few economic analysts, commentators and the general populace decry the move as a measure to make lives doubly tough for Nigerians, writes Assistant Editor, Joke Kujenya, who sampled opinions
THE term ‘austerity measures’ is not totally new to Nigerians. At first, it came garbed in the coinage, Structural Adjustment Programme (SAP), between 1986 and 1988 during the military regime of General Ibrahim Babangida which came to power in August 1985.
It was also during a period of depressed oil prices in the country. Many citizens, across the board, considered the measure as a means to further sap their already sapped lives.
It didn’t go well with Nigerians as barely months after, creative minds devised various kinds of slogans, such as “Laiye Babangida, olodo gari toro, di sile kan…” “Babangida ti mu aiye le fun gbogbo ara ilu Naijiria…” (In Babangida’s era, a hitherto three penny measure of cassava flour sells for a pound per measure…) and (Babangida has made life unbearable for an average Nigerian…); to vent their frustrations. To say life became unbearable for millions of Nigerians was to state the obvious mildly.
Coupled with SAP, Babangida’s government also initiated what they called Second-tier Foreign Exchange Market (SFEM) that was sold on auction for a near equilibrium price and used for export earnings and import trade requirements under which, according to economists, the naira reportedly depreciated 66percent to N1.00 $0.64 or N1.56 equals $1. The local currency then declined further in value up till July 1987 when the first-and-second tiers were eventually merged. Through these periods, Nigerians’ sufferings were immeasurable.
Also under SAP, falling real wages, redistribution of income from urban to rural areas, reduced health, education and social spending, decrease in spending on social programmes and many others, aided outbursts of voluble domestic unrest as religious riots in Kaduna State in March 1987, urban rioting in April 1988 due to reduced gasoline subsidies, student-led hostility in opposition to government economic policies in May and June 1989 and lastly, a second coup attempt against Babangida’s leadership style in April of 1990.
Before then, General Mohammadu Burahi’s regime had been ushered in amid insoluble economic problems that plagued Nigeria. Along the line, his government nearly crumbled as petroleum prices collapsed in the face of expanding foreign debt.
Hurriedly, he too, instituted austerity measures that added to the already severe hardship meted on an average Nigerian by the previous governments. Coupled with this, political corruption continued unrestricted as politicians jetted to Western countries with millions of dollars siphoned from government coffers.
Decrying the austerity measures’ move announced by Dr. Ngozi Okonjo-Iweala last Sunday, an economist who asked not to be named noted that it you look at the trend, Nigeria’s governments often adopted such measure when it is obvious that they are failing in meeting their obligations.
He said that at this information-soaked stage of our national life, Nigerians would amaze him if they went out en-masse in 2015 to vote any of today’s politicians who have have exhibited blatant failures to govern well.
Okonjo-Iweala, sitting amidst the Director-General, Budget Office of the Federation, Dr Bright Okogu; the Accountant-General of the Federation, Mr. Jonah Otunla; the Acting Chair, FIRS, Alhaji Kabir Mashi, added that Nigeria would be experiencing challenging times owing to the global fall in oil prices.
“But Nigeria does not need to experience fall in her crude oil prices,” said a Political Science lecturer in one of Nigeria’s federal universities, who is also an economic analyst.
He asked: “Why is Nigeria talking about austerity measures when we have no basis for it? Why must we have decline in oil price at all? What this simply suggests is that we only need to re-formulate the oil sector. Sadly in Nigeria, people in government lack the imagination for that.
“I am emphatic, there is an urgent need to overhaul the entire crude oil sector. Once we do that, there wouldn’t be any need for our crude oil prices to decline or have ourselves talking about austere measures. And mark my words, we’re so dependent on crude oil, not just the oil without realising that from crude oil alone, there are over a 100 derivatives that we can get to boost our economy.
“That is why I am hammering it that there is really so much we can accrue from just half of our oil industry. But about 95percent of this goes to other countries that are smarter and more prudent than us. Again, the problem is those that are currently in power lacks the creativity to do things right. But other countries are doing these things so well, why can’t we?”
Looking back at when austerity measures have been featuring in Nigeria, the political scientist added: “While this is not a contemporary phenomenon, it has never been favourable to the populace. I recall during the Second Republic when the government embarked on SAP, another word for austerity measures, Nigerians reacted in the popular culture with slogans like: “austerity measure lode, owo gari di poun merin”; so, it has always been a problem. Then you are forced to ask, why does our government embark on austerity measures at the slightest hint of any problem where there are better options?
“It’s so annoying. Also, think back to the Second Republic when our Economic Stabilisation Act (ESA) was propounded by the Shehu Sagari administration which later gave rise to SAP under Babangida. Now, in the post-SAP era, we are now having austerity measures again. Haba! What for?
“Do you know that lecturers were then reduced to zero? That was the period you hear a lecturer say: ‘My take home pay cannot take me home’… Or jests like ‘My boss is a comedian, what he pays is a joke…’ because that was the reality of the aftermath.
“Perhaps, the only difference between then and now is that the economic tight-rope in the context of democracy, and two, proximate elections, that is, looking at 2015, the ruling party, PDP, representing the Federal Government, must be very, very careful because this can smear their profile.
“Whatever is being done now in half-measures cannot take them through the political temperature. You see, in a context dominated by the ecology of elections, I repeat, the PDP government has to be very careful. Even if it is the APC government that is in power, they too must be careful. I say this with consciousness because what happened in Ekiti State was because politicians under-estimated the significance of the Ekiti syndrome, i.e. that the polity, voters can speak and that they can do that forcefully in the context of their aspirations and inclinations.
“In other words, the Ekiti pattern can happen the other way round, this time, at the national level. So, it is to that extent that the government must be very watchful. On the other hand, part of the benchmark listed by Okonjo-Iweala as in creating a climate for private sector growth is rather heart-warming, at least for now; meaning that government would not go a-borrowing and that we can rely on internal resilience, for me, this is tight and very good.
“Aside that, any right thinking Nigerian must quarrel with a number of things in the measure. Let us look at the tax on jets. Is that really possible? People who own jets in Nigeria, some of the most powerful lots, taxing themselves? So, ask yourself, who own the jets?
“And don’t forget that some, not all of them, get their monies through dubious means, i.e. they got their wealth through what we call in economics a ‘rentier economy’, that is, they are touting unearned incomes. And whenever there is rentier in a ‘nation’, it means the beneficiaries have nothing to pay back. This is why the effects on the general populace, which already have been living on ‘austere measures’ long before now, are unquantifiable.
“So, it is just one austerity colliding with another. For Nigerians in general, it is a case of double jeopardy. Already, that a majority of our people live below a dollar a day is sufficiently austere enough. It is thus baseless to then announce another austerity. And if you look at our system vis the salary structure for the political class, they are out of this world. Just in passing, somebody mentioned that the supposed monthly salary of N1million+ paid the old man that designed the Nigerian flag recently appointed a Special Assistant to the President, now (I’m not using the old man as a classic reference here) plus all the so-called Special Assistants and Advisers that our president alone exhibits, are “visible wastes” in the 36 states of our federation. To be sure we don’t need austerity measures, they must take the right steps to cut down on these wastes.
“So, while we have so many parasites in government, being fed for contributing nothing to the nation’s economy, and living on Nigeria’s cake, you will then begin to see why austerity measures are sheer nonsense because it is not based on visible economic needs which can be curbed by eliminating wasteful spending in government expenditure. Do you know that since 2009 pensioners have been calling for increase in their allowances? But you see a government saying money is not available for such vital disbursement. Even when the prices of oil were high, pensioners were not answered. This set of Nigerians have been living austere lives long before now. Asking them to embrace this new development is just akin to sentencing them to early graves.
“Lastly, Malaysia, Mexico, Iraq and more, are from their own crude oil getting so much resources. But what are we doing with our own? If we don’t understand these things, that we don’t have to depend on oil prices of crude alone, we will continue to run ‘rentier economy’ and making lives harder for ourselves”.
Apparent worried about the dire consequences of the planned measures, Dr. Samuel Nzekwe, former President, Association of National Accountants of Nigeria (ANAN), urged the government to look at how to diversify the economy by creating an enabling environment for industries to thrive, adding that increasing or taxing of more utilities is not the major solution. “Government should make more efforts to diversify the economy and see to it that the agricultural sector and few others thrive”.
