Before those who are too young or were too inattentive to remember rush to call it the “Kogi Formula,” I should warn that there is nothing original about it, being more or less a reprise of the “Imo Formula,” an economic stratagem developed on Nigerian soil, by a Nigerian, for Nigerians, unlike those World Bank/IMF remedies that often proved more harmful than the ailments they were supposed to cure.
First, some background, going back to the period following the overthrow of the profligate, inept and corrupt administration of President Shehu Shagari which, in four years turned the heady promise of democratic rule and economic prosperity undergirded by a vast inflow of petrodollars into a nightmare, to the point that its sacking was greeted with dancing in the streets.
The treasury was empty. Foreign exchange was scarce. Consumer goods were in short supply. To discourage frivolous importation, a regime of import licence was imposed. The currency was re-designed. There was no relief in sight for public service employees, especially teachers, who had laboured unpaid for months under the previous dispensation.
It was a dire situation requiring dire remedies.
The breakthrough came from Imo – or to place the credit squarely where it belongs – from Dr Kalu Idika Kalu, the state’s cerebral commissioner for finance, and before then a World Bank economist credited with helping South Korea achieve the turnaround that catapulted it to the ranks of the G17 Nations.
It is not entirely clear why they call it the Imo Formula rather than the Kalu Formula. It may have something to do with Dr Kalu’s trademark self-effacement. I recall that he was reportedly distressed when a well-known newspaper columnist, writing under the pseudonym Bamako Jaji, bestowed the term “Kalunomics” on the theoretical underpinnings of the loan agreement that Kalu would later negotiate with the IMF as Federal Minister of Finance.
Keep his person out of it. Let his prescriptions stand or fall by their merit. That, according those who know him well, is Dr Kalu’s philosophy of public service. There is much to be said for that way of carrying on in a country where everyone who imagines himself or herself a person of consequence wants to hog the limelight.
To return to the seminal breakthrough that was the Imo Formula:
Freeze allowances and bonuses for public employees. From the proceeds, pay teachers their basic salaries while the state looked for ways of widening its financial base. In due course, all civil servants and teachers would have some money to take home at the end of the month. Their morale would rise, as would their productivity. These gains would trickle down and check the rising tide of poverty.
In the popular rendering, however, this elegant, heuristic and parsimonious theory was twisted into something far more dreadful. According to this popular version, fixed salaries had been abolished. At the end of each month, the authorities in Imo would determine just how much was available for salaries. The amount would then be paid out pro rata.
It was not the salary you had grown used to, but it was far better than no salary. That, at any rate, was the popular perception of the Imo Formula. They say it worked wonders.
Perhaps that is why, facing the kind of difficulties Imo faced in 1984/85, Kogi State last week resurrected the Imo Formula, at least in substance, if not in form.
At first blush, the Kogi version has something that the Imo original lacked: Specificity. To put the mater positively, unlike other commentators who are forever dwelling on the negative, public service employees who have received no salaries for several months can now expect to smile home with 60 percent of their statutory pay.
Yes, it is a 40 percent pay cut all right, but why dwell on the negative? Why not emphasise the 60 percent of statutory pay that will now be available where previously nothing was guaranteed?
Why can’t some people be positive for once?
These same negative people have been asking whether the Kogi authorities will now urge suppliers of goods and services to cut prices by 40 percent, so that the new pay will fetch the same basket of goods and services that the old pay used to bring in. Invoking the dubious proposition that “we all buy from the same market,” they say the arrangement is inequitable.
Do we really buy from the same market? What would they say if circumstances compelled the authorities to cut take-home pay to 50 or even 40 percent of statutory salary, as they well might?
Equitable or not, this arrangement may well be the wave of the future as the newly-elected governments find on taking charge that they had been bequeathed empty treasuries that cannot be restored to solvency unless oil prices rebound dramatically or other resources that can yield quick cash on a sustainable basis are discovered.
Unlike one departing governor, the new people will certainly not be able to hire by the dozen and for each ministry, department or agency, chief advisers, deputy chief advisers, principal advisers, deputy principal advisers, senior advisers, deputy senior advisers and assistant deputy senior advisers, not forgetting chief deputy assistant advisers, principal deputy assistant advisers, senior deputy assistant advisers, and so on and so forth.
But governing in a time of economic adversity may well bring out the best in them. Has it not been said that it is far easier to manage scarcity than superfluity? Up to a point, there is some truth to that.
The good news is that, with oil prices on the uptick and President-elect Muhammadu Buhari set to check the obscene profligacy that has characterised government spending for nearly two decades and root out stealing in the public sector on a scale so vast that one must wonder why the economy has not collapsed completely, Nigeria is unlikely to have recourse to the Sukarno Formula.
Dr Ahmed Sukarno was the swinging, charismatic president of Indonesia, and a founding father of the Non-Aligned Movement. No one ever accused him of not dreaming great dreams or of lacking vision. The trouble was that his country did not have the matching resources or the economic management skills that would have catapulted Indonesia to a major actor in world politics.
His communist sympathies alienated him from the West. The Soviet Union admired him but did not back its sympathies with hard cash or meaningful support.
As Indonesia’s economy careened toward a terminal collapse, Sukarno tried every standard remedy in the pharmacopoeia of the economists, but nothing worked.
Then he hit upon an ingenious solution. He would appoint as a cabinet minister any Indonesian who truly believed that he could solve the country’s economic problems. However, if the person did not deliver the expected results within a year, he or she would be executed by firing squad.
There were no takers.
I have often wondered how such a gambit would have played out in Nigeria.
There would have been a surfeit of volunteers. Within the first six months, the minister would have evacuated his entire family from Nigeria. In the ninth month, he would arrange a foreign trip ostensibly to seal a deal crucial to his mission’s success.
It would be a one-way trip.
Correction
Dr Bojuwade is alive and well
In last week’s column I referred to Dr Dokun Bojuwade, former Special Assistant to Uche Chukwumerije in the Ministry of Information, as “since deceased.”
I regret this error and hereby offer again my remorseful apologies for the distress the publication must have caused Dr Bojuwade and his loved ones.
