Tag: end

  • End of an error?

    •Yes, for Ekiti. But for that error to turn a corrective and glorious era, Fayemi must govern with reconciliation and inclusion 

    With the new Ekiti order, and how Ayo Fayose’s “stomach infrastructure” regime hauled Ekiti back in time, you could hardly fault new Governor Kayode Fayemi’s Sisyphus-like frustration, as reflected in his rather combative and divisive inauguration speech.

    Not a few have insisted Fayemi should have been more conciliatory, rallying friends and foes around his cause for Ekiti, as the state battles to recover lost grounds, given the scalding bitterness and fierce division of the post-Fayose Ekiti; epitomised by Fayemi’s non-sweeping mandate.

    Still, look at it from the distraught governor’s way, using as example, Ikogosi, the Ekiti potential tourism trove. Fayemi’s first coming saw a revamped Ikogosi Warm Springs, redolent with new chalets; and virtually beaming “welcome!” to long lost visitors, foreign tourists, in daily search for nature tourism; and Nigerian travellers, drinking in the hidden treasures of their vast country.

    To Ikogosi, there was also a commercial component: the Gozzy bottled spring water, a joint Ekiti-private sector enterprise that did, indeed, employ some local youths; and was set to put even more to work.

    But after four short years of Fayose, with his empty sloganeering of stomach infrastructure, everything was gone: the Ikogosi chalets had fallen into disuse; and Gozzy? Shattered and smashed, by the Fayose era retrogressive hurricane, tens, if not hundreds, of jobs with it.

    Given that the new governor would have to start all over again, is Ekiti then cursed with the fate of Sisyphus who, in Greek mythology, was doomed to rolling a heavy boulder up a steep hill, only for the stone to roll back, for poor Sisyphus to start the hard chore all over again?

    Indeed, Ikogosi is rich symbol for Fayose-era ruin, in all manifestations of Ekiti life: the political aberration of cheap and infantile populism, bossing careful and meticulous planning; a gubernatorial cynic that turned the state parliament into a circus; and a governor-elect whose supporters not only sacked the courts, pummeled judges and razed court records, in new lows in anti-judiciary terrorism, but that also banished parliament, thus committing a grave democratic infraction.

    From then till a four-year term reeled off, government in Ekiti became a huge bag of distraction. That has ensured that Fayemi would pretty much have to start all over again, instead of consolidating on his first-term strides.

    To make matters worse: he has effectively two years to govern. After that, the politics of gubernatorial and allied nominations would begin, with long knives from gubernatorial hopefuls, for now pacified with National Assembly tickets, if they win their respective legislative seats, in the general election of 2019.

    Which is why the new governor should have been far more conciliatory and far less combative in his inaugural speech. In a bitterly divisive polity as Ekiti’s, holy indignation against a past misdeed — even as brazen, willful and savage as Fayose’s — seldom gets the problem solved. On the contrary, that tends to harden attitudes to a destructive fight to the finish. That is the last thing Ekiti needs right now.

    As far as policy statements go, however, the Fayemi clock, so far, has been chiming solid gold: the stoppage of development tax by primary and secondary school pupils, whose parents are nevertheless owed months in salary arrears, and in a region where the great Obafemi Awolowo launched free primary education in 1955; the restoration of the social safety net stipend to the most economically vulnerable in Ekiti; and the promised launch of the Federal Government’s school feeding programme, for primary school and junior secondary school pupils.

    These are exciting developmental initiatives that could quickly mitigate Ekiti’s current bind, stanch the effect of crippling poverty and build towards a progressive and prosperous future, if the people re-apply themselves anew. Even then, Fayemi needs everyone on board; and the prime tool is reconciliation, reconciliation and more reconciliation.

    Yes, let history condemn the ruins of the Fayose era. Let us all track back, analyse and project toward avoiding a future recurrence of that avoidable tragedy.

    But if that monumental error must be corrected and replaced by a golden era, then as many as possible must buy into the new Ekiti dream. Fayemi must galvanise his people as reconciliator-in-chief.

    All Ekiti — and history — would thank him for it.

  • End this scarcity

    End this scarcity

    • It’s an embarrassment for a major oil producer

    Like a bolt from the blue, fuel scarcity resurfaced in Lagos and other parts of the country last weekend, at a time many Nigerians had thought they had seen the last of such an ugly spectre of motorists queuing for fuel at filling stations.

    The latest experience is evidently a manifestation of failure of planning on the part of the Nigerian National Petroleum Corporation (NNPC). Ndu Ughamadu, the corporation’s group general manager, group public affairs division attributed the scarcity in Lagos to “a slight change in the distribution network” in Lagos, which is currently being supplied by members of the Major Oil Marketers Association of Nigeria, MOMAN. “At the weekend there was a hitch in discharging of petrol by ships which has been rectified,” Ughamadu said adding that “today, 250 trucks have been discharged to Lagos compared to less than 200 trucks usually allocated to Lagos at the weekend.”

    Definitely, Nigerians cannot continue like this. By now, we expect NNPC to have a template of demand and supply to avoid the perennial embarrassment of people queuing for fuel in what obviously is perhaps the only crude oil producing nation that is importing petroleum products. The annoying part of it is that instead of coming clean when the scarcity occurs, NNPC would be shopping for excuses. We admit that there could be hiccups in any human arrangement but when that becomes the norm rather than the exception, it gives room for speculation and distrust.

    It would appear that Nigerians are yet to be told the real reason for the recurring scarcity this time around. We say this because fuel supply at filling stations in the country has become epileptic since the steady increase in crude prices, especially in the past few months. Crude price hovered around $39 per barrel when the present N145 per litre of fuel was fixed in 2016, up from N86.50. Today, it is about $65 per barrel. We do not need anyone to tell us that the N145 per litre template can no longer be realistic, especially since the bulk of the fuel consumed in the country is imported.

    The implication is that the major marketers that hitherto supplied about 65 per cent of the country’s fuel needs when the going was good could no longer continue to import and sell at the rate fixed by the government. This position was made known to the Federal Government (as if they needed to do that for the government to know). The lot then fell on the NNPC to be importing fuel consumed in the entire country, a task it is evidently not equipped for.

    The truth of the matter is that today, fuel subsidy is back, but the Federal Government knows the possible backlash of asking Nigerians to pay more for fuel and is not willing to toe that path. This indeed would be a hard sell, especially for people who were only in May 2016 asked to bear the pains of the increase from N86.50 to N145 per litre. Moreover, they are not responsible for the refineries that are not working, necessitating importation of petroleum products.

    The NNPC has to get its act together. It is shameful enough that a major crude oil producing nation like ours is importing fuel for domestic consumption, when in actual fact we should be producing for export as well; that we cannot even do a simple thing as import and distribute to maintain a seamless flow of the products adds salt to the injury. Seeing Nigerians on fuel queues for hours is not only bad for the country’s image and economy, it is also a big minus for the Federal Government. It is neither a good way to end nor start a year as we have experienced with the current round of scarcity.

  • National Assembly seeks end of fuel queues

    National Assembly seeks end of fuel queues

    A Joint Committee of the Senate and House of Representatives on Petroleum Resources yesterday mandated the Nigeria National Petroleum Corporation (NNPC) to end the lingering fuel scarcity and queues  at filling stations within seven days.

    The committee also asked the Nigeria Customs Service and other security agencies, especially those at the borders, to halt the alleged diversion of fuel tankers from Nigeria to neighbouring countries.

    The Chairman, Senate Committee on Petroleum Resources (Downstream), Senator Kabiru Marafa, gave the ultimatum after a  meeting of members of the committee.

    The committee meeting was preceded by another meeting with the Group Managing Director of the NNPC, Maikanti Baru, and other top officials of the oil corporation.

    The lawmakers were said to have demanded explanations from the NNPC on why the fuel shortage had continued to linger with queues returning to major towns and cities across Nigeria.

     

     

  • Govt making efforts to end petrol scarcity, says APC

    Govt making efforts to end petrol scarcity, says APC

    The ruling All Progressives Congress (APC) has appealed to Nigerians to be patient while the problem of petrol scarcity is being addressed.

    In a statement by National Publicity Secretary Bolaji Abdullahi, the APC “acknowledge the difficulties Nigerians are currently experiencing as a result of the unfortunate fuel scarcity across the country; especially at this Yuletide period.”

    It added: “We understand the unhappiness of Nigerians at this situation, which is happening for the first time in the Christmas period since the APC administration came to power.

    “We also wish to note that while we accept the choice of the opposition PDP to make political gains out of the difficulties that Nigerians are experiencing as a result of this fuel scarcity, we however condemn their desperation to make the government and our party look bad by maliciously fabricating and circulating fictitious statements in the names of our government and party officials and then attack us on the basis of those same statements that they fabricated in the first place. This is bad politics.

    “We appeal for patience with the Federal Government as they make efforts to improve the situation and find lasting solution to this problem that has bedevilled every administration in our country, including the PDP administration under whose government, Nigerians would recall, the oil cabal enjoyed unprecedented prosperity.”

  • Mugabe’s disGraceful end

    Mugabe’s disGraceful end

    For Robert Gabriel Mugabe, it all ended on Tuesday as he left office in disgrace after losing the opportunity to go with dignity. For one week, he held his country up as he rebuffed the army’s entreaties to bow out.

    The army, which struck last Wednesday,  has behaved responsibly so far in order not to give the world any excuse to condemn it. The army struck to restore law and order because Mugabe was running the country like his personal fiefdom. Ironically, it is this same Mugabe, who with other revolutionaries, fought the British imperialists to free the then Southern Rhodesia from the colonialists’ grip.

    When Zimbabwe became independent in 1980 and Mugabe took office as its first prime minister (PM), it was the dawn of a new era for the country. Hopes were high that things will look up for Zimbaweans. They were no longer under any overlord but were being governed by their compatriots. Unknown to them, Mugabe had a different agenda and that was to perpetuate himself in power.

    From PM, he became president in 1987 and in the series of elections that have followed since then, he was always returned to power. He was planning to elongate his tenure by making his wife Grace his successor when the military intervened. His plot backfired because he tangled with another veteran revolutionary, Emmerson Mnangagwa, who knows all the intrigues surrounding power. If Mugabe had not moved against Mnangagwa, he probably may not have run into trouble. Anyway, you do not toy with someone called “the crocodile”, which is Mnangagwa’s nickname,  without paying the price.

    Following his sack by Mugabe as vice president, ‘’the crocodile’’ retreated to plan his return in a bigger way. He, Mugabe and the army chief Gen Constantino Chiwenga have known themselves since their revolutionary days. The freedom  fighters had grown from guerrilla warriors to political leaders. They saw their country as their personal kingdom and they prevented others from smelling power.

    Their compatriots got a raw deal from them. Mugabe, 93, became power drunk and he did not want to leave office again. His cup became full when he moved against Mnangagwa, the 75-year-old former security chief. Mnangagwa’s constituency would not allow the slight to go unchallenged. Quietly, the ousted vice president moved to South Africa to plot his return, with the Chiwenga-led army on his side. Mugabe suddenly found himself all alone as his erstwhile allies turned against him. Not even Gucci Grace, the power behind the throne,  who he was propping up to succeed him could save him when the time came for him to go.

    The military has been playing it cool with Mugabe because first he is a comrade (in the struggle for Zimbabwe’s freedom) and second because coup is no longer fashionable in Africa. The soldiers have been restraining themselves from doing anything to incur the wrath of the world. But one thing is clear the world is united on the need for Mugabe to go. He has not lived up to the mark of a freedom  fighter. He was a freedom  fighter who ended up as a dictator. It is so, so unfortunate.

    Out of respect, the army asked him to resign, but he refused, insisting on hanging on to power. But he suddenly threw in the towel when moves to impeach him were initiated. The people trooped out to celebrate his long overdue exit on Tuesday. To them, it was good riddance to bad rubbish. May his likes never be seen on this continent again.

  • How to end insurgency in Nigeria, by experts

    How to end insurgency in Nigeria, by experts

    •Texas has about 234,000 victims of labour trafficking

    NIGERIA must combat hunger, unemployment and inequality to tackle terrorism, insurgency and pockets of agitations in some parts of the country.

    A professor of security, Kenneth Fauth and founder, Protection Plus Security Services Ubong King gave the advice  yesterday at the ongoing American Society For Industrial Security (ASIS) 2017 seminar and exhibition holding at the Kay Bailey Hutchison Convention Centre in Dallas, Texas.

    Fauth, a former United States (U.S) Army Reserve Officer and Certified Protection Professional (CPP), said Nigeria must deal with the myriad of social and economic injustices bedevilling it to surmount its security challenges.

    Acknowledging that no country globally was immune to terrorist attack, Fauth said nations like the USA were winning the war because of the value and respect for the citizenry.

    According to him, should Nigeria combat poverty, respect the rule of law, provide social justice and security for the populace, Nigerians would be willing to stake their lives to protect the country.

    Fauth said: “Your country has many issues and it’s because your country is very poor. They don’t have jobs for people. So, people who are smart relocate to other countries to survive. They don’t stay back to help build Nigeria.

    “The truth is that Nigeria is where the USA was 300 years ago. It really needs to identify itself and that starts with the people because they must stand up and take ownership.

    “For them to do that, the country has to provide food security. There should be jobs and then there must be physical boundaries that must be respected.

    “To protect those boundaries, you have to put military personnel there and pay them well. Nigeria needs a military that will protect the nation. For now, the military is almost as bad as the enemy and there’s corruption with the police department. Nigerians must totally stand up against corruption to overcome it.

    “The military and police departments should have reasonable wage so they can support their families in order to put in their best. You need to have people with commitment and patriotic goals who are treated equally and with respect. You have a constitution that must be respected. Politicians also need to be honest. I know that Nigeria has some physical barriers like the sea and I think enhanced security should be put in place to protect her borders against people who come in from outside to commit crimes.”

    The professor of security added: “In this year’s exhibit, you will see a lot of security gadgets that could be of help to your country. It needs more vigilance around its boundaries. But the most important thing is for Nigeria to treat its citizens right so that they will live and die for country.

    “So much of insecurity, even in the USA, goes back to the absence of basic needs for people. Without the provision of basic needs such as food, shelter and health, it is hard for any country to grow. That is why the USA and the United Nations (UN) have not been able to achieve global peace despite all the huge efforts being made.”

    King said the country was having many security challenges because there are a lot of smart and unemployed graduates, who had devoted their time to criminality.

    He said: “The greatest danger any country could face is to have so many intelligent and jobless graduates. It is a serious risk and that is the situation we have found ourselves in.

    “The way out of our current mess is social reengineering. The government and even private individuals must start to invest in the development of human minds. They need to invest in people not buy luxury cars. Let our youths be positively engaged. All those young people doing Internet fraud could be reformed and their skills tapped into for improved security.”

    It was learnt yesterday that there are approximately 234,000 victims of labour trafficking in Texas, U.S., who are exploited $600 million by their traffickers, the Department of Homeland Security (DHS) said yesterday.

    DHS stated this during the American Society For Industrial Security’s (ASIS) Crime Prevention and Loss Prevention (CPLP) Council lecture on “Innovation technology to combat human trafficking.”

    The agency decried the spate of minor and youth sex trafficking in Texas, noting that approximately 79,000 are victims and it cost the state about $6.6 billion annually to fight the crime.

  • End in sight?

    •Government comes up with new ideas to check herdsmen/farmers’ clashes

    Although the title of the three-day National Conference on the Transformation of the Livestock Industry held in Abuja this week gave the impression that the entire gamut of the livestock industry would be the focus at the event, most of those who spoke dwelt extensively on the need for ranches, to reduce, if not eliminate the frequent clashes between herdsmen and farmers.

    This is understandably so.

    In recent times, herdsmen and farmers’ clashes have become rampant in virtually all parts of the country, leaving in their trail tears, sorrow, feelings of marginalisation and death. Unfortunately, the Federal Government does not appear to be doing much to stem the tide, thus giving the impression of bias on its part in favour of the herdsmen.

    Although herdsmen have been itinerant by nature from time immemorial, trekking long distances from the northern part of the country to the south in the course of grazing their cattle, this mode of doing the business has become antediluvian. In many parts of the world, cattle are no longer made to go through the stress of traversing long distances on farmlands and other places, which ultimately affect the quality of beef and livestock production generally, apart from damaging crops on farms which often is the basis for the clashes.

    While the herdsmen of old were noted for carrying daggers, bows and arrows and other soft weapons, these days, they carry sophisticated weapons, including AK-47 rifles. They say they have to be so armed to protect themselves against the activities of cattle rustlers. While we recognise their right to protect themselves and their cattle, the fact is that; one, they are not licensed to carry such arms. Again, in the course of grazing their cattle, they have also destroyed farmlands and become generally hostile to their host communities whenever the latter protest the destruction to their source of livelihood. The tension thus created led to a situation where some state governments decided to take their destiny in their hands by banning the activities of the herdsmen on the streets, or curbing them in some other ways.

    The matter became so serious that the Federal Government could not continue to ignore the calls for modernisation of cattle rearing. In September, last year, the national farm to market rail scheme commenced in Gusau, Zamfara State, when about 500 cows were transported from Gusau to Lagos by rail. It was historic in that before this time, cows had always been transported by road, with its attendant problems – bad roads, heavy tolls and other losses. Laudable as this scheme was, it was suspended early this year for inexplicable reasons.

    Even if it had not been suspended, the scheme alone could not resolve all the challenges posed by movement of cattle on road. For instance, we continue to find cattle on school fields, classrooms, sporting facilities, including the National Stadium in Abuja. It has become apparent that there is no other way than ranching, and this, mercifully, was the preponderance of opinion at the conference.

    It is heartening that the Federal Government seems to be warming up to the idea of ranching, by providing insurance and about 3,000 heavily-armed agro-rangers for ranch operators to secure the ranches. This should make the operators happy since they would not pay for the services of the rangers. Although we have always believed that cattle-rearing, like other endeavours, is strictly a private business, we support the idea, even if in the interim, at least to reduce tension occasioned by herdsmen/farmers’ clashes.

    We hope the Minister of Agriculture, Prince Audu Ogbeh, would live up to his promise that “at the end of this conference, we will take the recommendations seriously and begin to implement them.” There is also the need to address other challenges in the sector as the country still spends a lot of money on importation of frozen chicken, turkey, among others, when we have the capacity to produce enough, with the necessary encouragement and support from the government.

  • Recession to end this year, says Emefiele

    Recession to end this year, says Emefiele

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele is optimistic that barring further shocks, Nigeria will exit the economic recession by December.

    Emefiele believes that with sustained efforts by the CBNand other monetary and fiscal authorities, the economy will bounce back before long.

    Delivering a lecture titled “The dilemma of monetary policy and exchange rate management in a recession: Potential options for Nigeria”  at the Second  Homecoming of the Department of Economics, Faculty of Social Sciences, University of Nigeria Nsukka (UNN), at the weekend, the CBN boss foreclosed the possibility of cutting benchmark interest rate from 14 per cent. Doing so, he said, would amount to failing in the apex bank’s responsibilities.

    He said the regulator would rather encourage commercial banks to be “more considerate in interest charges on customers”.

    Emefiele explained that with inflation rate still hovering above 16 per cent, the CBN would be failing in one of its key mandates if it cuts interest rates.

    The CBN-led Monetary Policy Committee (MPC) is expected to hold all rates constant, tackle inflation and consolidate on recent gains in the foreign exchange market as it meets today to review events in the global and domestic space.

    “Interest rates reflect not just the cost of capital but also the cost of doing business, and so we need to also look at interest rates from the perspective of the lender. Given that most banks have to individually provide security, power, and other infrastructure, it is not surprising that some of these costs are passed on to customers in the form of high interest rates,” he said.

    The CBN boss challenged tertiary institutions to focus on research that will boost economic development, and assured all that the CBN will work with stakeholders in education to stimulate research for the overall good of Nigeria.

    Emefiele, who is an alumnus of the institution, was concerned that the educational sector had lost its glory, noting that any country desirous of growing should focus on its health and educational sectors.

    On the economy, he said: “The growth indicators are there for us to see. In January 2017, inflation was 18.8; now inflation is down to 16.24. By fourth quarter of 2016, growth was negative 1.72 per cent, first quarter of 2017, growth had improved to negative 1.52 per cent, which means we’ve seen an improvement in growth by 1.2 per cent, if we see another 1.2 per cent growth in second quarter, we are out of recession,” he said.

    The CBN governor said the economic crisis had its roots in the external sector, following the continued slide in crude oil prices since the second half of 2014 as it impacted the country’s foreign exchange receipts and fiscal position, undermining the funding of the foreign exchange market. The recession could further be traced to  a long-standing culture of under-investment in domestic productive capacity, lending itself to decayed infrastructure, worsening conditions for doing business and persuading banks to channel credit to the real economy. According to Emefiele, in view of the global shocks, the nation officially slipped into recession after the second quarter of 2016 when the Gross Domestic Product (GDP) dipped by 2.06 per cent. “The growth rate declined by 1.70 percentage points compared with the contraction of 0.36 per cent recorded in preceding quarter and lowered by 4.41 percentage points compared with the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015.”

    He said the fluctuations in the exchange rate (depreciation/appreciation) equally had great consequences on output, inflation and other components of aggregate demand, which directly impact the welfare of the ordinary man in a consumption and imports-dependent economy like Nigeria’s.

    Emefiele, who received the award of national development as a distinguished alumnus of the department, said while efforts were being made by the CBN and other bodies to get the country’s economy out of the woods, there were some policy options that could futher quicken the process.

    According to him, the government needs to spend more money in rebuilding infrastructure, explore more opportunities for Private Public Partnerships (PPP), pursue growth-enhancing fiscal policies and jumpstart agriculture and agribusiness.

    Others are: exploration of opportunities for more revenue, pursuit of non-oil exports, introduction of import reducing policies and curbing inflation, which stands at over 16 per cent presently among others. He said the nation’s propensity to import had also had damaging effects on the economy, noting that the CBN “believes that it is high time we started looking inwards and stopped supporting the importation of items that we can produce locally using Nigeria’s hard-earned Foreign Exchange”.

    The convener of Concerned Nigerian Professionals and Entrepreneurs Forum (CNPEF), Mr. Emeka Ugwu-Oju, who is the organiser of the event, said the lecture had come at the most auspicious time and would provide tentative road map to the future of the nation’s dream.

    He said professionals were bothered about the seeming indifference of the academic community (both staff and students) on burning national issues, such as the agitation for self determination and political/economic restructuring.

    “Intellectuals and professionals should be at the forefront for developing options for national renaissance and growth,” Ogwu-Oju said.

    Vice-Chacellor Prof. Benjamin Ozumba  described Emefiele as one of the best alumni of the university.

    Ozumba said: “Economists play vita role in any country as they determine what the economy of any country will look like.”

  • Recession will end before December, says Fed Govt

    Recession will end before December, says Fed Govt

    Nigerians got yesterday some cheery news – the recession that has kept everyone panting will end before the year runs out.

    The yet to be passed 2017 Budget has been structured to achieve the goal, Budget and Planning Minister Udoma Udo Udoma told State House correspondents at the end of the Federal Executive Council (FEC) meeting.

    He said: “Yes, we are determine, to get the economy out of the recession before the end of this year. And the 2017 budget is structured to do just that.

    “So that is why we are anxious to get the budget passed so that we can begin the implementation and begin to take all the steps we need to get the economy out of recession.”

    The ministry briefed the Council on the National Bureau of Statistics Third Quarter GDP Report and the full report on 2016.

    “I also informed council of the release of the Economic Recovery Growth Plan which is already on the website of the ministry of budget and National Planning as well as the Budget Office,” Udoma said, adding:

    “With regards to the NBS report, as you are aware, the fourth quarter of the economy contracted by 1.3 per cent, which is lower level of contraction than the previous year and which indicates that we are already turning and we are beginning to recover even though we are still in recession.

    “And the overall result was better than what many people projected. The IMF report had thought the GDP for 2016 was going to be -1.8 per cent and it turned out -1.5, so that’s better than expected but we are not out of the woods.

    “It is encouraging but we have to do and continue to do more to make sure that we get the economy out of the recession this year.

    “So we are encouraged but we are even more energised to put in more effort in agriculture, which is doing very well to do even better. To put in more efforts in solid minerals to make sure that our infrastructure is revamped because that is what will stimulate our economy, if we continue in this way.”

    Udoma went on: “You saw yesterday the acting president went to break ground for the railway from Lagos to Ibadan all the way to Kano.  As you know, the economic recovery and growth plan focuses on three objectives; one is restoring growth and that is what we are determined to do.

    “Two, inviting our people; our people are our greatest resource and three, building a competitive economy because ultimately the economy cannot do well unless it is competitive.

    “And as you know the five priority areas that we have are one, stabilising the micro economic environment. Two, achieving agriculture and food security. Three, ensuring energy sufficiency – power as well as petroleum products. Four, improving transportation infrastructure and five, driving industrialisation, focusing on small and medium scale enterprises. So we are determined with this plan to make this economy great again. We are determined by the end of the plan to move from the negative growth that we experienced in 2016 to the growth rate of 7 per cent by 2020.”

  • When will recession end?

    When will recession end?

    Nigeria is in a deep recession, a grave economic quagmire, with no respite in sight yet. In 2015, after a decade of impressive growth of nearly seven per cent annually, the economy stalled and went rapidly into a tailspin. There is now palpable and widespread public concern that the recession may slide into a depression. It has led to a massive loss of jobs, increased unemployment, spiralling inflation and infrastructure decay. The macro economy is in complete disarray. The poverty level in the country has worsened considerably as more and more people are falling into the poverty trap daily. At both the federal and state levels the governments have fallen into arrears on salaries and pensions. The FG and state governments are now borrowing to meet their financial obligations. Technically, our country is now almost insolvent. The CBN is reluctant to lend the FG more money.

    The long recession, possibly the worst in Nigeria’s recent economic history, has virtually wiped out the limited economic gains of recent years. For most Nigerians the future has never been more bleak or uncertain. The country was already in a recession and a grim economic situation when President Muhammadu Buhari took over in 2015. But he is now in charge and it is his government’s responsibility to end the recession and restore the economy to stability and growth. The buck stops with him. But the recession will not yield to quick fixes. It is largely structural. The solution to it has to be equally structural. The government has got to be more serious about introducing the painful structural reforms now needed. Basically, this task involves cutting imports and increasing non-oil exports. The trade balance has to be restored.

    Though baffled that its stimulus spending is not yet working, the Federal Government remains upbeat this strategy will soon begin to yield some positive results. In fact, the Governor of the CBN was reported a few months ago as declaring that the recession had virtually ended, that it had bottomed out, thereby raising false hopes among the people. But this was premature. Recessions do take a long time to resolve. To work effectively the stimulus spending has to be complemented by a range of fiscal and monetary policy instruments that are not yet fully in place. Until these measures are implemented fully, we cannot begin to talk about ending the recession. In its report for the third quarter of 2016 the National Bureau of Statistics announced that the economy recorded a negative growth of -2.24 per cent, down from -2.06 in the second quarter of the last FY. The report for the last quarter of FY2016 is not yet out. But it will almost certainly show that the recession is not yet over. A negative growth of that magnitude cannot be restored in a single quarter. If it does it would be a major economic miracle. So, a lot of work still has to be done by the financial authorities to tackle the root causes of the recession before we can even begin to think of economic stability and growth. This is by no means an easy task. It requires an appropriate, determined and consistent response to a financial crisis caused mainly by external shocks, triggering off maladjustment in the domestic economy. Is the government up to the task?

    The Federal Government appears optimistic that the measures and strategies it has introduced for ending the recession will impact soon positively on the economy. A few weeks ago, President Buhari assured the nation that the recession should end by the middle of this fiscal year. We can do with a dash of optimism all round, but this prediction may prove to be premature as well. It is overly optimistic and based more on hope than on the current economic realities in our country. We can forget the optimistic predictions of the religious seers and prophets who, as usual, have predicted our economic recovery this year. They are equally off the mark. These predictions are totally misleading and speculative. They should be totally ignored as voodoo economics.

    Now, why do I take a dim view of these optimistic predictions about the economy? Why do I believe that the recession is not about to end soon? It is simply because I believe the fundamental problems and challenges of the economy have not yet been fully grasped and addressed. Basically, we are in a recession because of the sharp fall in oil exports and revenues. The recession will end only when there is full recovery in oil exports and revenues. Earnings from non-oil exports have remained insignificant: less than eight per cent of total foreign exchange earnings. In the short run, earnings from agricultural exports cannot fill the gap in our foreign trade balance and foreign exchange earnings. This will take decades even if there is some expansion in agricultural exports. The much needed diversification of the economy away from its over dependence on oil revenues has not materialised over the years, despite record income from oil exports. This was easier to achieve during the decades of the oil boom. But that opportunity was lost again. Imports grew as rapidly, if not more rapidly, than exports, including the oil revenues. The overall cost of governance also increased significantly due to massive corruption in the public sector, and the half-hearted measures to bring it under control. There has recently been some recovery in oil prices rising from $30 per barrel to nearly $60 now. But this is still far short of our normal oil revenues before the economy went into a recession. This means that we are still short of the financial resources needed to pull the economy out of its deep recession. Without massive spending the economy cannot be pulled out of recession. And Nigeria’s financing gap, even with the record oil revenues of the last decade before the recession, was estimated at over $10 billion annually. With the massive loss of oil revenues, the financing gap has obviously grown much wider. Hence, the massive external borrowing by the Federal Government: another future debt burden.

    To this huge revenue deficit must be added Nigeria’s high import dependency. It is estimated that Nigeria spends well over N1 trillion a year on food imports alone. Its manufacturing industry, based on import substitution, a failed strategy, is also largely dependent on imports. And there is virtually little manufactured exports going on. It is the food imports, raw materials imports for industry, and other imported luxury goods that collectively put the domestic economy under intense foreign exchange pressures. This may seem elementary, but it is a lesson that Nigeria’s political leaders have consistently failed to learn over the years. Nigeria was in a similar dire financial predicament following the oil shocks of 1983-5, and a structural adjustment programme had to be reluctantly introduced by the Babangida military regime to address the problem. The economic situation in 1983-5 was, in fact, worse than it is now. There was a recession then too, far worse than what we have now. Nigeria fell into balance of trade and payments disequilibria as it could no longer pay for its vital imports. It was in payment arrears and its creditors cut it off from further credits. At first, we refused to even consider devaluation as a policy option. But later, when it became clear that we had limited options, the Babangida military government was forced in 1986 to devalue the naira. The strategy worked. It was painful as prices soared, but it worked. It was this painful economic stabilisation programme, particularly the naira exchange rate adjustment that ended the recession. Imports began to fall. Coupled with an increase in oil exports and revenues the economy returned to the path of stability and growth, averaging 5%. But regrettably, once the economy appeared to have recovered, Babangida undermined its future growth by frittering away the gains of the recovery on frivolous public expenditures. This was to hurt the domestic economy very badly.

    To some extent, this is what President Buhari has to do now with some modifications to end the recession. As we have no serious balance of payments disequilibrium now, the challenges involved are less serious than those that confronted Babaginda. But Buhari’s economic strategy has to be broadly similar to that of Babangida. He has very reluctantly ended some of the wasteful subsidies in the economy. You cannot pay subsidies with borrowed funds, but from a budget surplus. He was initially strongly opposed to any adjustment of the naira exchange rate, but he has now been forced by compelling circumstances and the realities of Nigeria’s economic situation to come to terms with this measure. But much valuable time was lost by the delay in deciding promptly to allow any devaluation of the naira.

    Timing matters in devaluing a currency. In fact, the devaluation of the naira should have begun in 2013 as soon as it became clear that global oil prices were falling. President Jonathan should have started that process. But by that time political pressures in the PDP, then the ruling party, had begun to build up in preparation for the 2015 elections. When a national currency such as the naira comes under exchange rate stress early devaluation as a policy adjustment has to be introduced promptly. By the time Jonathan left office the prevailing exchange rate of the naira was no longer tenable or sustainable. It had become grossly overvalued. It made imports attractive and cheaper and exports unattractive. And right now, the issue of the naira exchange rate is not yet fully resolved. The present inter-bank rate is N305 to the US dollar, while the rate in the parallel market is now close to N500 to the dollar. The gap between the two rates is much too wide and bad for economic planning of any kind. It is speculative and allows for much round tripping. This regime of multiple exchange rates creates financial uncertainties and is bound to hurt the economy badly, as it constrains foreign investment in the Nigerian economy. Already, because of the recession and other economic uncertainties in our country, Nigeria is no longer the first destination of foreign investors in Africa. It has been replaced by South Africa, Angola, and the Maghreb countries of North Africa, where there is far greater economic and exchange rate stability than here in Nigeria.  To restore our position as the first destination in Africa of foreign investors, we must bring to an end this system of multiple exchange rates. We should allow the naira to float freely. Yes, costs and prices will go up, but it will also restrain and reduce imports. There is no need for bans as they can be counter- productive. A combination of a unified exchange rate and appropriate tariffs on non-essential imports will stabilise the exchange rate of the naira.

    As for the possible impact of this year’s proposed N7.3 trillion budget on the economy and the recession, I doubt whether it can achieve much. Nominally, it is a huge budget. But when discounted for inflation and exchange rate adjustment it is not that huge. The budget deficit is very large with the government hoping to borrow nearly half of the budget at home and abroad. It is unlikely that it can meet either its revenue target or loans. Even if it does there is the perennial problem of budget implementation, the bugbear of budgets in Nigeria. It was estimated that last year only 56% of the budget was implemented due to financial and administrative constraints. It is unlikely that things will be different this year. As for the planned foreign borrowing, the government should instead seriously consider selling off some of its core assets in the oil industry. For instance, it holds 60 per cent in Mobil. There is no longer any need to hold a controlling share there. If the Federal Government sells only 20% of its shares in Mobil Oil, this will immediately yield US$20 billion, which will reduce its resort to foreign borrowing considerably. And this can be used for infrastructure development. The government must put its thinking cap on and be more serious and focused on tackling the recession more vigorously. Otherwise, it will take much longer than predicted for the recession to end.