The Nation Newspaper

Tag: Mismanagement

  • On the management of mismanagement

    On the management of mismanagement

    At bay in Olduvai Gorge

    Olduvai Gorge is somewhere in East Africa, in modern Tanzania to be precise. Inside its humungous crevices, the oldest human habitations were discovered some time ago. That was until recently when what appeared to be some far more ancient dwelling caves were discovered at Iho Eleru in contemporary western Nigeria. Taken together, both human habitats confirm the scientific hunch that it was in Africa that what has come to be known as human civilization sprouted until humankind began the long trek to Asia, Europe and other parts of the globe. As the founding continent, the African DNA produced the later prototypes of humans and remains the warehouse of its original wiring. If the Iho Eleru hypothesis receives scientific validation, it can be advanced that Nigeria is home to the vestigial remains of what became the basis of modern civilization.

    This is probably why when left to their own devices or when they find themselves in more amenable and conducive circumstances, Nigerians often exhibit extraordinary mental latitude, a physical resilience and astonishing creative capacity which propel them to the top of their game anywhere they find themselves. Yet tragically enough, and despite its vast human resources, Nigeria as a nation has become a top candidate for ultimate state failure and a poster boy for poverty and underdevelopment. How does one explain the horrid mismatch between potential and actuality, and between the oceanic plenitude of natural resources and the parlous condition of the people which has reduced many to the hunter-gatherer phase of human existence reminiscent of their Iho Eleru primitive ancestors?

        When you are in a hole, you must stop digging. A propaganda blitz which hides the roots of failure and the principal cause of illness from the afflicted does not enhance the possibility of swift recovery. Truth is an antiseptic cotton wool which clears the wound of its septic rot. Without this, the wound will continue to fester and suppurate. Let us face the truth so that it can cleanse and clear our wounds for proper dressing. These are not the best of time to be a Nigerian. Our national and international stock has never fallen so low. The level of de-civilization, de-institutionalization and consequent dehumanization witnessed in contemporary Nigeria is enough to send shivers into the heart of the most civilized denizens of the troubled nation.  The consequences of decades of economic brutalization of the people and the mindless plundering of national resources are here with us.

    Read Also; Sokoto: Lamido, Wamakko in supremacy battle

    Everywhere you turn, there are dangerous signs of looming implosion, apocalyptic signals of the end of the times as we know it and the heavy rumbling of a heaving behemoth just about to topple over. The virtual administrative and economic collapse of the famous University College Hospital in Ibadan last week after the stars of the national eclipse finally pulled the plugs on the institution should be a worrisome index of the disorientation and dysfunction that have overtaken us. Before our very eyes, electricity supply in the country has become a criminal franchise in which people with stone hearts and utter lack of regard for state regulation of enterprise hold the entire populace to ransom without any consequence. Bent on squeezing the last penny from an already bitter and pauperized citizenry, they even go as far as to spurn state directives not to offload the cost of procuring new meter bands on the overburden people. So far it appears as if it is the state that is feeling the heat in this economic confrontation with non-state actors.

    Such is the criminal impunity of these people that a top Lagos State official told this writer last week that they can actually get away with murder because they are a monopoly with the capacity to blackmail even the state itself. To buttress his point, the official cited many legal cases pending in court against these power Mafiosi. Even when rulings are obtained against them, they simply refuse to comply. In some instances, it is the officials themselves who goad the consumers to commit infractions only to turn against them after they have collected gratification. In other instances, they employ rogue units within their organization in sting operations only to turn round to accuse the owners of premises of grave infractions.

    It is a colossal and gigantic scam against innocent people in which monthly targets are set and monthly targets have to be met at all cost. As it is and as the nation begins to resemble an Olduvai Gorge of cave people deprived of one of the wonders of modernity and civilization political primitivity is clearly going to meet economic primitivity head on. This is going to be far more severe in consequences than the polite and civilized manner of resorting to self- help. Perhaps we are already seeing the precursor to this final settling of scores in the attempts to torch the facilities of power-supplying consortiums. Like the struggle for oil in which oil thieves are requested by government to prevent oil theft, this one is possibly going to take an equally vicious and absurdist dimension before we arrive at Eugene Ionesco’s terminus of termites.

       The scales of decades of political, economic and spiritual decimation of the country are now falling off our eyes revealing a level of vandalization and elite delinquency probably unique in the history of class formation anywhere in the world. Even our colonial masters must now be secretly wondering about the end-product of their experimentation and the possibilities of an apocalyptic endgame in which semi-Asiatic hordes square up to Nubian mongrels. Having inherited this level of mismanagement from another elite formation within its own party, the government has come up with a rash of measures including the odd fire brigade approach aimed at stemming the rot. But it is also acutely and critically aware of how far it can go without threatening the basis of its own ascendancy.

       Not being radical or revolutionary in its original impetus or inspiration, the government knows how far it can go in a particular direction without bringing down the roof of the unstable coalition that propelled it to power. Hence the resort to what can only be described as the management of mismanagement, a temporizing and stonewalling stratagem of power pragmatism which tries not to give offence to the few that really matter  while ignoring the many that don’t. In the circumstances, anybody expecting any wholesale or holistic restructuring program from the administration is wasting his time at this point. What advocates and lobbyists should do is to raise the game and the level of discourse rather than resorting to old, shopworn rhetoric about devolution of power, fiscal federalism and all what not. Those who do management of mismanagement are not in the least interested in such a display of power virginity.

       But even then and despite all this, such is the fractious and unstable nature of power pragmatism and the management of mismanagement that they are often confronted by the echoes of their own political and economic limitations. Management of mismanagement is a skilled science of political gamesmanship which requires creative brinkmanship and the brilliance of the ultimate trapeze artist. It cannot afford to indulge in ambitious economic and political reform because failure in the project may invite more revolutionary intervention or radical anarchy.  Yet as business-friendly and as politically inoffensive as the ruling administration may be or want to appear to those that matter, there are many who believe that floating the naira and plugging the loopholes in the forex gaming known as subsidy removal have done irreparable and incalculable damage to their business. They are now poised for war.

       At the opposite side of the spectrum are enemy nationals who are engaged in a campaign of permanent economic destabilization of the nation as long as their skewered and schizoid ideal of the nation does not prevail. With their access to the media, they subject the ruling party and its leading lights to merciless excoriation on a daily basis and they in turn respond through their hirelings with commensurate firepower making it feel as if the country is on a permanent siege. It can now be seen that even the management of mismanagement has its work cut out for it to prevent Nigeria from tipping over to the Olduvai Gorge of primitive cave-people and savage hunter-gatherer. At the rate at which we are going, we are not very far from this terminal debacle of the Black race.

      Management of mismanagement, or the capacity to prevent a terrible situation from further deteriorating, is not the best option for a nation rendered economically and politically destitute by a delinquent elite formation. But it has advantages over sheer mismanagement. Although it can never and will never be able to deliver on ambitious economic and political transformation of the country or drive political equity and social justice, it can prevent the situation from tipping into anarchy or prevent the hostile factions from coming to blows by strategic appointments and skillful allocation of resources. How long this will last and how long the ruling cartel can hold forth depends on its capacity to feel its way through the minefield and deliver on the largesse.

  • Lawmakers urge Fayose to probe Fayemi for ‘mismanagement’

    Lawmakers urge Fayose to probe Fayemi for ‘mismanagement’

    Ekiti State House of Assembly has passed a resolution empowering Governor Ayo Fayose to set up an administrative panel of enquiry or a judicial panel of enquiry to probe his predecessor, Dr. Kayode Fayemi.

    The House, at its plenary yesterday, presided over by the Speaker Kola Oluwawole, said the Panel would probe the alleged mismanagement of N852 million State Universal Basic Education Board (SUBEB) funds and other alleged financial impropriety.

    The Leader of Business, Tunji Akinyele (Oye 2), said the panel was necessary because Fayemi, now a minister of Mines and Steel Development, refused to honour three invitations, adding that the inspector-general of Police failed to execute a warrant of arrest issued against him.

    The Deputy Chief Whip, Dayo Akinleye (Ijero), said the House was empowered under sections 128 (2b) and 129 of the 1999 Constitution to investigate the finances of the state, noting that the Economic and Financial Crimes Commission (EFCC) and the police have failed to bring the minister to justice.

    House Committee Chairman on Finance and Appropriation Abiola Jeje (Ido/Osi 2) said besides the N852 million SUBEB funds, Fayemi must clear his name before the panel on the Awo-Eyio Road contract and Ado Ekiti flower project.

    The House Committee Chairman on Information, Samuel Omotoso (Oye 1), enjoined Acting President Yemi Osinbajo to remove Fayemi from the cabinet for refusing to honour the Assembly.

    He said the House petitioned the EFCC twice to probe Fayemi, alleging that the anti-graft agency did not take action.

    Omotoso said the ex-governor’s failure to appear before the lawmakers was an “affront on the constitution.”

    After the debate, Akinyele moved a motion compelling the Executive to raise either an administrative panel of enquiry or a judicial commission of enquiry to investigate Fayemi’s handling of the state’s finances and execution of projects. The motion was seconded by Jeje.

    The Speaker put the motion to voice vote and the lawmakers said “ayes”, after which the presiding officer banged the gavel.

  • Domestic carriers bogged down by mismanagement, others

    Domestic carriers bogged down by mismanagement, others

    Even before the economic recession, most domestic airlines were unable to evolve a sustainable business model for survival. Many of them hardly operate for one decade without hiccups.  MUYIWA LUCAS reports that over the last two decades, more than 40 airlines have shut down operations, while the existing ones are struggling to stay afloat. Experts, however, point the way forward.

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    He was prepared for the trip to Gombe, where he, along with other members of his team, were to attend a crucial meeting between a subsidiary of his company, the host community and representatives of government. Armed with a confirmed ticket, he walked to the check-in counter of Arik Air inside the departure hall of the General Aviation Terminal (GAT) of the Murtala Muhammed Airport, Lagos, to begin the process that would lead to his flight to Abuja slated for the early morning belt.
    But Mr. Ademola Ojolowo, Head of Media, Lafarge Africa, and his travelling team, were not prepared for what eventually happened. “The morning flight to Abuja has been cancelled and would now depart at 1pm,” an Arik Air official explained to him and his team at the counter. No reason was given for the cancellation.
    Desperate to be in Abuja on time to catch a connecting flight to Gombe scheduled for the same airline, Ojolowo and his team opted to forgo their confirmed ticket and hurriedly bought another airline ticket to Abuja. Again, they met a brickwall- the earliest flight to Abuja on all other airlines checked was 3pm. So, the team had no option but to stick with Arik Air.
    He opted to communicate with his team waiting in Abuja to verify flight availability to Gombe on Arik Air. He was shocked to hear that flights to Gombe had also been cancelled by the airline.
    Determined to get to Gombe by all means, the team opted to fly to Kano on Azman Air where they had hope to endure a-five hour drive to Gombe. That option also meant that he and his team would have to wait till 8pm for the only available flight to the “Ancient City” operated by Azman. Therefore, left with no option, Ojolowo and his team returned home, dejected.
    The experience of Ojolowo is one out of the many domestic air travellers are daily subjected to in the country. So many of them have lost contracts and other opportunities as a result of the sorry state of domestic airlines in the country.
    The state of the economy cannot be divorced from the fate that has befallen domestic carriers. As an oil producing nation, the country has had to depend on importation of fuel to run the economy. It is sad to note that for the greater part of last year, domestic airlines grappled with scarcity of aviation fuel also called Jet A1. Most of the airlines blamed this on their inefficiency last year, leading to frequent flight delays and cancellations by airlines.
    For instance, the Consumer Protection Department, a unit under the Nigerian Civil Aviation Authority (NCAA), lamented that between January and September last year, the eight domestic airlines operating in the country recorded a total of 43,196 flights, had 24,075 delayed flights cases, while 854 flights were cancelled.
    Experts in branding and marketing are convinced that delays and cancellations affect the brand integrity of an airline, including the entire domestic aviation industry.
    But while some have blamed the ailing airline sector on the recession, others insist that running an inefficient business model by airline operators, among other factors, brought the industry to its present precarious state.
    This school of thought argue that the bad business model, rather than the recession, accounts for many airlines’ collapse in the country.
    Checks by The Nation revealed that no domestic carrier has exceeded 40 years of operation at a stretch. The longest was Pan African Airlines which operated for 39 years. It was established in 1961 and collapsed in 2000. The average year spent by Nigerian airlines is usually about 10 years before closing shop. This is in sharp contrast to other African carriers such as Ethiopian Airways and South African Airways, which have spent over 70 years in business. Last year, British Airways celebrated 80 years of flying into the Nigerian market.
    Further investigations by The Nation revealed that so far, about 44 domestic airlines have collapsed or stopped operations in the country. For instance, NICON Airways, owned by Jimoh Ibrahim, Chairman of the NICON Group, hardly operated for one year, after it was bought from Executive Aviation Services (EAS) in 2006. EAS was owned by Captain Idris Wada, former Kogi State governor.
    By April 30, 2007, the only functional aircraft in NICON Airways fleet suffered birdstrike preparatory to take off from Lagos airport. The other aircraft in the fleet had its engine removed for servicing in an Ethiopian MRO hanger. That was the end of the airline.
    Similarly, after showing so much promise, Air Nigeria, also owned by Ibrahim, went out of operation too after barely two years. The management had claimed that it would resume operation by September of 2012 after the business would have been overhauled.
    As of the last quarter of 2012, the situation was so bad that only three airlines – Arik Air, IRS, and Aero Contractors – were left in operations. Overland Airline operates largely into fringe airports. Dana Air, whose suspension was lifted about the same period following its air crash of same year, delayed the commencement of its operations till later.
    Old timer, Aero Contractors also stopped operations last year following the huge debt it owed the Asset Management Company of Nigeria (AMCON). The airline has however recently resumed flight operations.
    The entry of new carriers into the market has not really given much hope to the industry. This is because they are equally struggling to remain afloat barely less than three years after entering.
    The Chief Executive Officer, Belujane Konzult, Chris Aligbe, is sad the airline sub-sector of the aviation industry has remained a toddler in spite of the many years of its existence. He is, however, not surprised at the precarious situation domestic airlines have found themselves.
    The situation got so bad that airlines operating in the country were under threat of being blacklisted over failure to pay their insurance premiums by Lloyd’s of London.
    The airlines were severely affected by acute shortage of foreign exchange, no thanks to the monetary policy of the Central Bank of Nigeria (CBN) which led to acute forex scarcity. This situation still poses the challenge of safety to the society because the airlines now find it hard to obtain aircraft parts which are largely denominated.
    “The challenges of sourcing forex with constantly changing CBN policies and Rate of Exchange (ROE) leaves us sometimes in situations where aircraft parts cannot be obtained when ordered,” the Director of Flight Operations, FirstNation Airways, Captain Chimara Imediegwu, explained.
    One problem that has kept airlines in dire strait is finance. A former President, Airline Operators of Nigeria (AON), Steve Mahonwu, said while airlines may be heavily indebted to the industry’s regulatory agencies, it is only part of the larger financial crisis that is threatening to cripple the industry.
    The recommendations of the Paul Dike task force on aviation reforms of 2006 was expected to breathe new life into the airlines. One of the recommendations of the task force was that domestic airlines needed to shore up their capital base.
    Depending on their choice, airlines interested in only domestic operations were to have a minimum of N500 million; airlines wishing to combine both domestic and regional-N1 billion; and those interested in domestic, regional and international-N2 billion.
    This explains the forced recapitalisation of airlines in 2008. However, nine years after the recapitalisation exercise, the airlines are now moving at an alarming rate back to the old order, as most of them have either stopped operating or are on the verge of doing so.
    Even the N200 billion bailout granted to airlines in the past has turned out to be meaningless. The Chief Executive Officer, Overland Airline, Edward Boyo, was chairman of a presidential sub-committee set up to find lasting solutions to the challenges facing the airline industry in the country.
    While submitting the committee’s report on February 18, 2010 to Mansur Muhktar, the then Finance Minister, he canvassed for a 50 per cent reduction in airport charges for airlines just as the five per cent ticket sales charges should be slashed by 50 percent. The report equally requested that the Nigerian Airspace Management Agency’s (NAMA) terminal navigation charges and third party revenue collections be set aside, while airlines should retain 10 per cent of any charges collected on behalf of the agencies as administrative charges and NCAA statutory fees.
    For retired Captain Dele Ore, re-capitalisation is not the only solution. Operators should emulate the defunct national carrier, Nigeria Airways, which employed the strategy of route development for its growth. “Route development is a major part of an airline’s asset, not just financial re-capitalisation. When they develop routes, then they would make a lot of money from it later; for now, they are only enjoying the routes that have been developed by the defunct Nigeria Airways,” he said.
    An aviation consultant, Olumide Ohunayo, is sad that domestic airline operators have failed to explore the merger option. He explained that though mergers and acquisitions would do the industry a lot of good, no operator was willing to let go of his airline. Business owners in this country, he said, are sentimentally attached to their businesses such that they hold on tenaciously to them even in the face of an imminent collapse.
    Ohunayo’s views may have been dealt a big blow with the collapse of NICON Airways. This is because at the beginning of the aviation reforms in 2006, industry watchers and stakeholders had thought the merger /acquisition of EAS by NICON Airways would breathe a new lease of life into the ailing airline, which was struggling to remain afloat after its air crash of May 4, 2002.
    Today, more than a decade after the merger, the airline is completely grounded.
    Top airline managers are of the opinion that the country’s domestic airline operators need to emulate standard global practice. For instance, they harped on the need for local carriers to interline.
    Interlining is a voluntary commercial agreement between individual airlines to handle passengers travelling on itineraries that require multiple airlines. When a ticket is issued for an interline itinerary, one of the carriers marketing flights in that itinerary will be selected by the ticketing agent as the “plating carrier”. The plating carrier collects the entire fare from the customer and is responsible for distributing the proceeds to other carriers in that itinerary, so long as those carriers carried the passenger. A plating carrier therefore gets the benefit of cash flow. With this system, airlines would have saved cost flying an almost empty aircraft to a destination.
    Aligbe’s prediction about six years ago that four airlines would collapse has come to pass. This, he said, has made it very imperative for airlines to merge or form an alliance. “Airlines Alliance is an agreement formed by two or several airlines to establish cooperation in the global aviation industry. This cooperation helps the airlines better their performance with respect to air transport and customer service. Though the degree of cooperation differs between alliances, airlines alliance is more helpful for small airlines,” Aligbe said.
    Group Captain John Obakpolor (rtd) observes that such unions create a global network that can be used by airlines to benefit air travelers to reach a larger number of destinations with ease and extend their services to passengers worldwide. Benefits that can be enjoyed by travelers include lower airfares, increase in the options of departure times, availability of flights to a greater number of destinations, reduced travel time and various special offers. “Very soon, we might not have more than 20 major airlines globally, because all of them have fused into alliances,” Obakpolor said.
    This view is supported by a past Assistant Secretary of AON, Mohammed Tukur, who explained that such arrangement would augur well for the industry and operators. “Why would I fly eight passengers to Jos in a 120 capacity aircraft, and another airline fly 20 passengers to the same destination, when we could have an arrangement to merge passengers and then have a sharing formula,” he said.
    Indeed, airline managers of repute are said to be very scarce in the country. Therefore, as Ore argued, why should there be bailouts for operators or managers that crippled their airlines. He is convinced that an operator who could not manage his operation effectively with his funds or bank facility may just be unable to do same if given a bailout by government. Consequently, he is canvassing that government should probe how operators ran themselves into their present situation.
    For instance, the case of the now defunct Bellview Airline, founded in 1992, has not ceased to amaze industry watchers. At its peak, the airline flew 11 international destinations – among them Amsterdam, London, India and others. It was the first domestic airline to be certified by the International Air Transport Association (IATA). By June 1997, Bellview was worth $15 million, winning both continental and domestic laurels.
    Also, Afrijet Airline, which staged a comeback with fanfare in 2011 soon ran into turbulent waters as it could no longer finance its operations. It had to withdraw due to inability to pay workers’ entitlements. There was no aircraft to operate, as it could not foot the bill to sustain its operations and lease payments.
    Drawing from these, Ohunayo said consolidating by merges was the best option for domestic airlines. He explained that an airline owner may have done well trying to invest in the business, but if his effort has not yielded much result, then he should think of bringing others in to strengthen the business. “Why own 100 per cent of a loss making investment, instead of owning 10 per cent of a thriving and profit-making investment which mergers can create for you,” he asked.
    One point stakeholders are unanimous on is the need to stop the granting of multiple entry slot to foreign carriers. They warned government to be weary of the type of Open Skies agree and Bilateral Air Services Agreement the country enters into, as it is usually a disservice to domestic airlines. “Multiple entry slots to foreign carriers kill our local airline because it allows them to compete with them. For instance granting a foreign airline entry into Lagos and Port Harcourt muscles out local airlines. Instead, the domestic airline should be made to carry passengers to other cities in the country once they land in Lagos. This leaves a window of revenue for the domestic carriers,” Aligbe reasoned.
    Until this is done, domestic airlines may gradually be heading for extinction.

  • Emergency mismanagement

    It is food for thought that the August 25 protest by Internally Displaced Persons (IDPs) in Maiduguri, Borno State, was provoked by hunger. Ironically, the agency expected to ensure that the refugee crisis is well managed has been accused of mismanaging it. Reports said hundreds of IDPs from Marte Local Government Area took to the streets of the state capital because they were not getting enough food and water.

    The accusation was pointed enough. The state’s Commissioner for Local Government and Emirate Affairs, Alhaji Usman Zannah, was quoted as saying: “Thursday’s protests of IDPs over poor feeding was caused by inadequate supply of food items from the National Emergency Management Agency (NEMA). In the last three months, NEMA has failed to live up to its expectation of providing food items to IDPs in Borno, despite Memorandum of Understanding (MOU), which stipulated that the state government provides condiments, while NEMA provides food items to IDPs.”

    No doubt, this picture of NEMA’s alleged failure is bad for the agency’s image, considering that it should normally be rated based on the effectiveness of its emergency response. In this case, it is tragic that the tragedy of displacement by terrorism seems to have been deepened by an organisation established to provide succour to the displaced.

    It is disturbing that camps for IDPs have become camps of hunger and anger. Last month, the United Nations Children’s Fund (UNICEF) said that nearly 250,000 children were suffering from “severe acute malnutrition” in Borno State as a result of acts of terrorism by Boko Haram.  UNICEF Nigeria representative Jean Gough was quoted as saying: “Unless we reach these children with treatment, one in five of them will die.”

    Also last month, the Federal Government declared a nutrition emergency in Borno State following an emergency meeting with the state government on the malnutrition crisis. The conflict in the country’s north-eastern region has reportedly displaced 2.4 million people and has stretched food insecurity and malnutrition to emergency levels. Over half a million people require immediate food assistance, and the majority of them are either displaced by the conflict or members of the communities hosting the displaced.

    There is no room for ineffective intervention. It is lamentable that the country’s terrorism-related internal refugees are hungry and dying as a result of inexcusably inept emergency management – or is it better described as emergency mismanagement?

  • Workers accuse NAICOM of mismanagement

    Workers accuse NAICOM of mismanagement

    •officials suspend protest

    The National Insurance Commission’s (NAICOM) management seems to be at loggerheads with its workers as they embarked on a week-long protest alleging serious issues of corruption.

    The workers alleged that  the commission witnessed mismanagement during the administration of the Commissioner for Insurance, Mohammed Kari, citing lack of staff training and poor security of staff, among others.

    Aside from this, they alleged that a minister of finance confirmed an undergraduate as a director in NAICOM.

    The workers carried placards with some inscriptions: “No to incessant violation of conditions of service, ‘No to incessant violation of financial regulation’, ‘President Buhari save NAICOM from collapse’, ‘Corruption in NAICOM baba must hear this’, ‘PhD holder in NAICOM resigns on confirmation of undergraduate as Director’, ‘Monkey dey work Baboon dey chop’, ‘Pay us our promotion arrears’, ‘President Buhari, please implement White Paper on Nigerian Airways’ and ‘Nepotism in favoritism-NAICOM’.”

    The workers under the aegis of Amalgamated Union of Public Corporations, Civil Service Technical and Recreational Service Employees (AUPCTRE) called on the President, Muhammadu Buhari to checkmate the excesses of the executive management.

    AUPCTRE chairman, NAICOM chapter, Comrade Ibrahim Abdulateefin in an interview with The Nation over the weekend, said the executive management engaged in on various acts of impunity leading to gross mismanagement of the Commission’s funds, welfare issues, among others.

    He disclosed that the strike has been suspended for a while because they reached an agreement with the executive management.

    He said they have given the management timelines to meet their demand and until their demands are met, there would be no industrial harmony.

    Efforts to get NAICOM spokeperson, Rasaag Salami to respond to the claims as at the time of filing this report proved abortive.

  • Oil price crash: Mismanagement, corruption backlash hunt economy

    Oil price crash: Mismanagement, corruption backlash hunt economy

    Though a global crisis, the continued slide in oil prices is taking a debilitating toll on the Nigerian economy. Experts have blamed this on endemic corruption and mismanagement, hindering successive administrations from applying the nation’s oil wealth to provide infrastructure and diversify the economy. The consensus is that the impacts would not have been this devastating and far-reaching had the looting of the commonwealth and the structural defect been addressed. Assistant Editor CHIKODI OKEREOCHA reports.

    It’s a disaster foretold. Nigeria’s oil revenue troubles, triggered by the crash in oil prices, could have been avoided or, at least, mitigated. But, because successive administrations have not been futuristic in their management of the nation’s oil and gas resources, not a few industry experts and analysts believe that the financial hemorrhage plaguing the nation was self-inflicted. Some believe the country walked into an economic cul-de sac because of corrupt and inept leadership. They said successive administrations failed to save for the rainy day by not being prudent in managing the revenues that accrued from crude oil exports when the prices were high.

    The belief is that since the discovery of oil in commercial quantity in 1956, successive governments have failed to invest oil revenue windfall to close the huge infrastructure gap and also diversify the economy.

    According to those who spoke with The Nation, if the nation’s earnings from oil had been invested in  critical infrastructure such as steady and reliable electricity supply, the economy and Nigerians would have been reaping the benefits now that oil prices have tumbled.

    For instance, the industrialisation push would have received a boost, a steady power supply attained to sustain the manufacturing sector  and there would have been positive spin-offs in technology development. They also added that a vigorous pursuit of the economic diversification agenda would have mitigated the impacts of the crashing oil prices. The over-dependence on oil revenue has not only weakened the economy but made it vulnerable to global shocks.

    The chickens have finally come home to roost and the country is paying for the age-long neglect and mismanagement of the fortunes of the oil and gas industry – a development seen as the ripple effects of leadership deficit.

    “The mere fact that Nigerian government is rattled by the continued slide in oil prices shows that successive administrations have not been saving for the rainy day. It also underscores the leadership deficit that has continued to hold down the nation’s economic growth and development,” Obiora Akabogu, a Lagos-based lawyer and analyst, said.

    He added: “Nigeria’s current revenue troubles have exposed the management failure and gross incompetence of the ruling elite.”

    Since June 2014, oil prices at the global market have been on the downward slope, throwing Nigeria – the sixth largest oil producer – into confusion. From over $120 per barrel in December 2013, oil price fell to around $60 per barrel in December 2014, and last month, oil price crashed to about $32 per barrel.

    By January 19, the price of Brent crude, which is the world benchmark price, crashed to below $28 per barrel, the lowest in 12 years.

    As if this is not enough trouble for the country, which depends on oil for 70 per cent of its revenue and 95 per cent of its foreign exchange earnings, some analysts, including the International Monetary Fund (IMF), Goldman Sachs, and Standard Chartered, have come up with price projections that have unsettled the authorities.

    The IMF and Goldman Sachs projected that crude oil price will fall to $20 per barrel this year. And from Standard Chartered came a more discomforting forecast. The investment bank downgraded its oil outlook to as low as $10 a barrel.

    Expectedly, such scary forecasts have sent jitters down the spine of the Federal Government, which used a $38 benchmark to prepare its N6.08 trillion Budget of Change. There are fears that the country may be in for a prolonged economic stagnation.

    Akabogu, who believes the country has been stagnated economically, said: “The way things are, Nigeria in 2016 is in the same position of economic stagnancy it was 30 years ago, precisely in 1986, when Gen. Ibrahim Babangida’s military government introduced its Structural Adjustment Programme (SAP).”

    He said SAP, which came at a time of depressed oil prices, left Nigerians and the economy gasping for breath.

    The analyst predicted that in the foreseeable future, the price of oil will continue on a downward spiral, a trend which he believes has raised the fundamental issue of alternative economic strategies, such as diversification into solid minerals, agriculture and exports.

    According to him, Nigeria is hardest hit by the price crash because of the failure of past leaderships to walk the talk on diversification.

    He identified the fate of the 2016 Appropriation Bill as his greatest concern.

    “Without mincing words”, Akabogu said, “the budget is doomed to fail because it is unsustainable. The basis for its calculation was faulty and it has, once again, exposed the inefficiency of our so-called economic experts, who ought to have been abreast with the global economic trend; that oil price is in a free fall situation and nothing can wedge it.”

    The lawyer argued that President Muhammadu Buhari will be making an economically wise decision by recalling the bill to rework it.

    He, however, cautioned that in doing so, the President should be wary of local economic team, even as he urged the President to consult widely with foreign economic experts and indigenous stakeholders.

    The chairman of the local chapter of the Trade Union Congress (TUC) in Rivers State, Chika Onuegbu, also expressed concern.

     “Any keen observer of events shaping the crude oil price will recognise that we are in for a sustained low price regime. Accordingly, it is doubtful if the budgeted oil revenue of N820 billion will be realised in 2016. If the budgeted oil revenue is not realised, this will negatively impact on the 2016 Budget performance,” he said.

    Onuegbu, who articulated TUC’s position on the appropriation bill, presented by the President to a joint session of the National Assembly, described the budget as “laudable and ambitious, but seems unachievable.” He urged the Federal Government to do a downward review of the proposed $38 per barrel benchmark among other recommendations.

    Why economy,

    Nigerians are hard hit

     

    Because of the economy’s dependence on oil earnings, the current account balance (largely the difference between earnings on exports and spending on imports) is hurting. This also implies reduced accretions to the external reserve (on which the Central Bank of Nigeria (CBN) relies to support the naira).

    Experts say that by pushing up import costs (Nigeria being an import-dependent economy), the situation will drive up inflation.

    The greatest worry is government’s inability to fund the budget for the economy to run smoothly. The fate of the 2016 Budget remains inconclusive for as long as it is predicated on a benchmark of $38 per barrel.

    “If there is no money to fund the budget, it means there will be no implementation of capital projects and it will be difficult to pay workers’ salaries,” said Dr Austin Nweze, a lecturer at Pan Atlantic University, Lagos.

    The university don recalled that a similar scenario played out in 1998 when oil price was very low and salaries could not be paid with teachers on strike and the schools shut. He noted that although, the government has the option of borrowing to fund the budget, the lack of infrastructure from where money could be generated to repay loans remains the issue.

    Dr. Nweze also said when borrowing, countries consider their percentage debt to Gross Domestic product (GDP). According to him, countries with high GDP such as United States can go as high as 80 per cent, but because Nigeria runs a rental economy, its percentage debt to GDP should not be more than 10 per cent even though the standard acceptable limit is 40 per cent. Currently, Nigeria’s percentage debt to GDP is well over 20 per cent.

    To make matters worse, foreign reserves have dropped significantly. From about $42b in 2014 when the crisis started, the reserves currently stands at about $28b. Already, there are fears that if the oil price slump persists for so long, or hit $10 as predicted by Standard Chartered, economic activities and projects may be put on hold and that implies job cuts, retrenchment and downsizing of the workforce.

    Akabogu said workers must prepare for the worse. “Workers are going to feel the pang, as many of them will be retrenched in the name of right-sizing or down-sizing,” he told The Nation, pointing out that already 60 per cent of  governors have said they could no longer pay the N18, 000 minimum wage.

    Describing the position of some governors, who have threatened to stop paying the N18, 000 minimum wage as “immoral,” Akabogu stated that in retrospect, the governors are right because the source (Federation Account) from which they get their financial obligations, including payment of salaries, has shrunk because of dwindling oil proceeds.

    The implications on workers are also not lost on Onuegbu, who described the crisis a threat to workers’ operational environment, exacerbating the already oppressive work environment with serious decent work deficits, as terms and conditions of employment come under severe pressures in both public and private sectors.

    Onuegbu said:  “We urge workers to be prepared for a robust and vigorous engagement of our social partners in 2016 to ensure that they, and indeed, all Nigerians are not negatively affected by the situation.

    “We must all be prepared to engage the government for a new and an enhanced minimum wage package across board for all Nigerian workers to cushion them from its negative impacts.”

    Some governors had threatened to tinker with the minimum wage, a development that has pitted them against organised labour. The Nigerian Labour Congress (NLC) has been mobilising its affiliates for possible showdown with the governors, should they make good their threat. Akabogu said under the circumstance, raising Internally Generated Revenue (IGR) or increasing Value Added Tax (VAT) should have been viable options for cash-strapped governors.

    He, however, expressed regrets that the Nigerian economy is at the moment unproductive and therefore cannot support such tax increases.

     “IGR and VAT are derived from a productive economy. But, an economy that is near comatose makes it difficult for federal and state governments to raise money by increasing taxes, because the masses are impoverished,” he argued, adding that “Nigeria is operating a mono-cultural and precarious economy, which is dependent on one major revenue source, which is oil.”

    He was reacting to an advice by the Managing Director, International Monetary Fund (IMF), Ms. Christine Lagarde, who, during her visit to Nigeria, advocated the broadening of the country’s revenue base by increasing the Value Added Tax (VAT) paid on goods and services. The IMF chief observed that the VAT rate was not only among the lowest in the world, but also well below VAT rates in other countries of the Economic Community of West African States (ECOWAS).

    But, Akabogu insisted that imposing heavy taxation on already impoverished masses in whatever form would amount to an overkill, saying that the hash operating environment caused by the nation’s huge infrastructure gap, particularly electricity supply, has rendered the real sector, including manufacturing and agriculture unproductive and uncompetitive. “Diversification is the only way to go,” he stated.

    Where Nigeria

    got it wrong

     

    Experts had a long time ago warned that depending solely on oil for revenue and foreign exchange earnings has dire consequences and its attendant risks. They also observed that global oil reserves are depleting, warning that time would come when there would be no more oil reserves to exploit.

    The immediate past President of Lagos Chamber of Commerce and Industry (LCCI), Mr. Remi Bello, said divestments by major oil companies and sluggish investment ­­­in exploration as a result of policy uncertainties and security concerns, remains a source of worry.

    Bello and others insist that the present economic situation has again underlined the critical imperative of economic diversification into other sectors. To them, diversification is the tonic to wean the economy from its over-dependence on oil and gas sector.

    However, such counsels have so far failed to hit the right chord in the ears of the authorities.

    Not keeping up

    with global trend

    Supply glut, coupled with weak demand, are said to be main factors behind oil’s plunge. The Nation learnt that the supply glut is likely to be exacerbated this year following the return of Iranian supply to the market, once Western sanctions have been lifted.

    The rise of United States (U.S.) shale oil and refusal by some leading members of the Organisation of Petroleum Exporting Countries (OPEC), such as Saudi Arabia and Kuwait, to agree to the proposal by other members to cut production are also blamed for the situation.

    Unless all OPEC members agree on production cut, the supply glut will linger. The 13-member cartel said it would only agree on lower production targets if non-OPEC states – notably Russia – also signed up to reduce their record output. Also, oil demand by other big buyers, particularly China, has dropped following a lull in the Asian country’s economy.

    However, because of the seriousness of the crisis, OPEC members are said to be considering an emergency meeting to discuss a possible line of action. Nigeria’s Minister of State for Petroleum and OPEC President, Dr. Ibe Kachikwu, dropped this hint penultimate week when he said the various blocs within OPEC have been pushing for a meeting. He said the unfolding market conditions support such push.

    According to him, the meeting may be convened next month or in March.  He said such meeting would afford the organization to review its position and see if there was any need to change its strategy.

    It however appears Nigeria has not been reading the global trend correctly. The consensus of industry experts and analysts, there is nothing abnormal in the rise and fall in prices. According to them, prices are expected to move up and come down in any normal market. They noted that Nigeria shot herself in the foot by not taking advantages of high oil prices in the past.

    According to Akabogu, a colossal management failure and gross negligence of the ruling class prevented the country from anticipating issues that will drive oil prices up or down. Admitting that Nigeria lacks control over oil price, which is internationally determined by market forces, he said the country mitigate the effect locally through building infrastructure such as refineries and electricity, among others.

    Despite being ranked the world’s sixth largest producer and first in Africa with proven reserve in excess of 38.5 billion barrels, Nigeria has not been able to improve and increase local refining and supply of petroleum products at affordable cost. The country still imports almost 85 per cent of its domestic fuel needs due to corruption and mismanagement of its four state-owned refineries.

    The four state-owned refineries in Kaduna, Port Harcourt I & II and Warri have a combined capacity of 445,000 barrels per day (bpd), but none of them has ever been fully operational owing to low capacity utilisation, resulting from poor funding, obsolete equipment, and inadequate maintenance. Attacks on oil facilities by militants in the Niger Delta region also interrupt the flow of crude into the refineries, as well as weak management.

    The sub-optimal performance of the refineries has been blamed for the continuous importation of refined products at huge cost to the economy. According to the International Energy Agency (IEA), the Federal Government is investing $3–$4 billion yearly on product imports and subsidised consumption.

  • Past mismanagement destroyed economy, says govt

    Past mismanagement destroyed economy, says govt

    THE poor state of the country’s economy is the direct consequence of its mismanagement and the looting of the national treasury under the immediate past administration, the Federal Government said yesterday.

    Segun Adeyemi, the senior adviser to Minister of Information and Culture Alhaji Lai Mohammed, said this in a statement issued yesterday in Abuja.

    The statement stressed that the nation’s economic challenge, especially the depreciation in the naira exchange rate, should not be blamed on “any so-called mismanagement by the Buhari administration”.

    This followed Deputy Senate President Ike Ekweremadu’s comments over the “downward slide” of the nation’s economy.

    Ekweremadu warned that unless urgent steps were taken by the All Progressives Congress (APC)-led Federal Government to arrest the situation, the country might witness a major revolution.

    But Mohammed said: “If there was still any honour left among thieves, there is no way the leaders of a party under whose watch the nation’s economy suffered a monumental mismanagement and the Central Bank was turned to the ATM or piggy bank of a few people will have the temerity to insult a government that is working hard to turn things around or the citizens who are bearing the brunt of such mismanagement.

    “It is now clear to all Nigerians that if the Peoples Democratic Party (PDP) had won the last general elections, Nigeria’s economy would not have survived one more month, considering the battering it received under the immediate past administration.

    “It is, therefore, unconscionable that those who should show contrition and hunker down to avoid public opprobrium are the same ones pointing an accusing finger at the Buhari Administration.”

    The minister described the comments credited to the Deputy Senate President as the clearest indication yet that the PDP and its leaders were still in denial about the massive looting they allegedly inflicted on the economy.

    “Senator Ekweremadu complained about the depreciation of the Naira without telling Nigerians who ‘dollarised’ the Nigerian economy by bribing many individuals and groups with dollars during the last elections, thus inflicting a knock-out punch on the local currency. He also failed to tell Nigerians which government presided over the frenzied mop-up of dollars, either for ‘armsgate’ or for slush fund purposes, from the CBN to a point where it almost ran out of the hard currency,” he said.

    The minister added that even though the Buhari administration met an economy that was in coma, it had refused to use that as an excuse for inaction.

    Mohammed said the All Progressives Congress (APC) administration has been working hard on measures that would turn the economy around “and offer relief to the citizenry by lifting millions, not thousands, of people out of poverty through a massive social intervention policy”.

    The minister explained that the outcome of the months of hard work would manifest soon in the 2016 national budget, which, he said, would give succour to millions of Nigerians who were reeling from fallout of the errors of the immediate past administration.

    He advised the leaders of the PDP and members of the immediate past administration, who were allegedly involved in the emerging cases of “looting spree” to urgently return the funds they have stolen out of the commonwealth to government’s coffers.

    “They are lucky that Nigerians are not as incautious as they are, otherwise they would not be able to walk around freely, not to talk of having the effrontery to fire darts at the government that inherited their rot or the people who are suffering the consequences.

    “They looted the billions of naira that were allocated for the fight against insurgency, causing many innocent and patriotic soldiers to die needlessly, yet they are not remorseful. They looted the treasury to influence the last elections, doling out money as if it was going out of fashion, yet they continue to grandstand.

    “In the latest revelation, a minister under the immediate past dispensation admitted to sharing N600 million to six chairmen of the Contact and Mobilisation Committee of the PDP for the last general elections, N300 million to an account given by a former PDP chairman, N200 million to a PDP governorship candidate and N100 million to a former PDP governor. This is just one case out of many; yet these revelations are but a tip of the iceberg of what Nigerians will hear in the days ahead,” Mohammed said.

    The minister assured that despite the “mind-boggling revelations” about looting and the mismanagement by “self-styled economic wizards, the economy will bounce back under the watch of Buhari, who is bringing probity and transparency back into governance”.

  • Ekiti APC accuses Fayose of mismanagement

    Ekiti APC accuses Fayose of mismanagement

    The Ekiti State All Progressives Congress (APC) has accused Governor Ayo Fayose of mismanaging the bailout funds received from the Central Bank of Nigeria (CBN).

    The opposition insisted that Fayose should explain how the bailout funds had been spent.

    But the Peoples Democratic Party (PDP) accused the APC of running what it called a “wasteful government”.

    The PDP said the “Fayose’s numerous achievements had brought the opposition to its knees”.

    The APC, in a statement yesterday by its spokesman, Taiwo Olatunbosun, accused Fayose of refusing to pay last year’s September salary and leave bonus.

    He said: “He has also refused to pay September, half October salary, severance and furniture allowances to former political office holders, who were captured in the bailout fund protocol.

    “The salaries paid into  primary school teachers’ accounts were reversed 30 minutes after they received bank alerts.”

    Olatunbosun warned the governor against the alleged plan to divert the bailout cash, saying Ekiti workers would not take any excuse for any further delay in the payment of their entitlements.

    “We have it on good authority that the governor is planning to divert the bailout and we warn that the era of impunity and bare-face fraud is over.

    “We call on anti-graft agencies to help appeal to the governor to pay workers, pensioners and former political appointees their entitlements and these agencies should monitor the disbursement of the bailout cash to ensure it is spent as approved by the Federal Government,” Olatunbosun said.

    PDP spokesman Jackson Adebayo in a statement berated the APC leadership for its seemingly antagonism.

    “One would have expected a congratulatory message from a genuine and quintessential opposition on visible achievements of the PDP government in Ekiti State and an offer of challenge on other things that are yet to be done.”

  • ‘IT can tackle mismanagement in schools’

    ‘IT can tackle mismanagement in schools’

    The entrenchment of an Information Technology (IT)-based accounting system is the antidote to recklessness and mismanagement in tertiary institutions, Dr Moses Igbape of the Department of Computer Science, Auchi Polytechnic, has said.

    He spoke at the institution’s fifth inaugural lecture held in the school’s new auditorium.

    The lecture was entitled: “Information technology: Antidote to cancerous ailments in Nigerian education system.”

    Igbape said: “With appropriate development of Information Technology (IT) based accounting information system in schools, there can be prudent management of the available funds and elimination of fraudulent expenditure of school money because a lot more information is available in the information system to track income and expenditures. IT boosts the schools internal revenue through subscribed services, training programmes and consultancy.”

    He described IT as invaluable beyond schools to facets of government establishments, including personnel/payroll, revolution in students academic information processing, IT literacy, admissions, students examination malpractice, as well as controlled use of school facilities.

    Others, according to him, were: students enrolments/registration, teaching and learning, and invaluable resource to local, state and federal levels of government for proper and implementable planning etc.

    Igbape, a Chief Lecturer, said Auchi Polytechnic has adopted administrative styles and strategies that rely on IT-based information system for pursuing Quality Assurance. This, he noted,  made the institution more visible.

    “The resolute passion with which the management of the polytechnic have embraced and massively deployed IT facilities in pursuing Quality Assurance agenda has seen the polytechnic ranked as the most visible polytechnic in Nigeria, 10th best tertiary institution in Nigeria and the only polytechnic ranked amongst universities, the best polytechnic in West Africa and second best in Africa consistently for over six years by Webometrics,” he said.

    He admonished the government to put in place appropriate legislations for proper integration of IT tools in managing the education sector.

    “Let there be proper funding of IT-related research projects and sponsorship for production and use of the products of these research endeavors.

    “Government should remove import duties imposed on IT appliances and computers to make them affordable to help schools, organisations and homes in the effort to raise IT literacy level in Nigeria,” he said.

    Also, Igbape identified some draw backs in educational development in Nigeria to include inconsistent government policies, poor funding, inadequate staffing among others, factors Igbape considered ‘undesirable variables.

    He indicted parents, students and education managers as contributors to the problem, noting that policy sommersault and poor implementation of strategies have adversely affected education standards in Nigeria.

  • Mismanagement of oil, gas led to austerity, says TUC

    The Trade Union Congress (TUC) has said that the impunity of politicians and mismanagement of the fortunes of the oil and gas industry by successive governments in the country led to the ongoing austerity measures introduced by the Federal Government, especially following the slump in oil price at the international market.

    TUC also called on the Federal Government to review its policies that would create a conducive working environment for employers of labour and workers in the country, stressing that the nation’s labour movement may have no option than to resist any government policies that would inflict more hardship on workers after next month’s general elections.

    TUC’s President, Comrade Bobboi Bala Kaigama, who made the declarations at an interactive session with newsmen in Lagos on the adverse effects of the ongoing austerity measures on workers, noted that the labour movement is aware that government may pretend not to implement some policies that may affect their political interest in next month’s general elections until March this year.

    He said: “The impunity of politicians and mismanagement of the fortunes of the oil and gas sector by successive governments in Nigeria led to the ongoing austerity measures introduced by the Federal Government on December 17, 2014 as a result of the slump in oil price at the international market.

    “The Congress feels at this time that it is important it calls government’s attention to a number of issues plaguing employers and employees relationship to ensure a friendly working environment this year as we are also aware that Government may pretend not to implement some policies that may affect their political interest in next month’s general elections until march this year.”

    According to Kaigama, Congress laments the way and manner politicians go about their politicking. He said workers’ bravery, doggedness and loyalty to the project Nigeria in the face of gross abuse of human rights, insecurity, terrorism, arson, dislodgment and chaotic situation is an eloquent testimony to the fact that lives of Nigerians are not in the hands of the government nor the Bretton Wood institutions and their perfect policies.

    He noted that what is predominant today in the nation’s democratic governance is government’s use of state’s coercive power, especially the police and resort to use of touts and idle youths to molest political opponents and journalists. “In the 1970s, we had political parties with manifestos, and the likes of Awos, Ziks and Tafawa Balewas’ of this world chronicled what they planned to do and how they planned to achieve them. But what do we have today? Are we wiser now.” he queried.

    In a related development, the Secretary General of TUC, Comrade Musa Lawal stated that government deliberately refused to listen to advice on oil windfall before the oil slump. He said: “The labour movement and some fore-sighted well-meaning Nigerians have on uncountable times called on government to make utmost use of the excess dollar we got by diversifying the economy. Unfortunately, our politicians are only interested in rushing down to Abuja for monthly allocation. Government of allocation, this is certainly not our idea of social contract.”