I was compelled to write this piece, and set about it, in the third week of February. That was after the Aboki fruit seller at the road junction to my office in the suburb of Lekki unapologetically refused to allow me to price down one unit of red apple. My Aboki friend had offered to sell one at N500, but, just back in December 2023, he sold me four pieces of the same quality for N800. Was I jolted!
I, however, held back closing this paper until today to benefit from listening to Prof Kingsley Moghalu OON’s, keynote speech at the Leadership Conference and Awards at Congress Hall, Transcorp Abuja on the topic “An Economy in Distress; Which Way Forward.”
My unorthodox thoughts after listening to the erudite lawyer-cum-development economics professor became even more. He is the author of the seminal book: “Emerging Africa; How the Global Economy’s Last Frontier Can Prosper and Matter”. Since I first encountered him in his days as Central Bank Deputy Governor about a decade ago, he has never ceased intriguing me with the clarity of his original hypothesis on overcoming Afrocentric economic development challenges.
Being a roadside economic animal, and using Prof Moghalu as a sounding board, here is my perspective. Nigeria is only an aspirational private sector-led economy. The fundamentals that should underpin its superstructure are fragile.
The structural defect is arguably reversible. But that may only result from an intentional, sacrificial, audacious, strategic and visionary investment of appropriate resources in human, intellectual and engineered processes of change, across critical sectors to achieve competitive and sustainable growth. By nearly all economic parameters, Nigeria is now an under-developing economy – our year-on-year and decade-on-decade regressing GDP statistics alone say it all.
Over the last year, Nigeria’s money supply ballooned to an all-time high of N93. 72 trillion as of January 2024, which amounts to a 76 per cent surge from the N53.14 trillion recorded in January 2023. We prodigally created more money without producing a matching quantity of goods and services to buy them with.
Having neither worked harder or smatter nor produced more than we previously did, there is no prize for guessing why the bubble liquidity is chasing after less than the previous year’s GDP’.
These alarming statistics must be recognised as a doomsday warning. It must task the economic managers (on the fiscal and monetary sides) to swiftly course re-direct towards repositioning and gaining re-admission of the country into the family of developing countries in the medium term.
The resultant effect of this misalignment of means and ends manifests in a distorted socio-economic system which hardly responds to orthodox neoliberal Western-style management tools. The challenge has never been more starkly presented than what the country is currently experiencing – the twin fiscal and monetary policy decisions of fuel subsidy withdrawal and dollar market fusion for pricing parity across the financial market.
This is consistent with President Bola Ahmed Tinubu’s campaign promises and manifesto encapsulated in the Renewed Hope Agenda (RHA). That audacious move required to be prosecuted by thinking outside the box to “fetch water from a dry well”.
Bt as Prof Moghalu wrote in his referenced Book, “Many development indicators are published and tracked, but as informative as they are, it is paramount for success that the portfolio of measures used to track the performance of the strategy are those that matter for understanding progress toward the nation’s strategic destination.”
The unintended but easily predictable consequences of not following through with the required rigorous articulation and heavy-lifting value creation, that should accompany the twin policy choices are Galloping Inflation, Forex Volatility and vulnerability, unmanageable sovereign debt, unprecedented descent into multidimensional poverty by a majority of the population; and now, lately – a jarring food insecurity and threat to peace and security posed by non-state actors.
The time has come for a decisive, all-hands-on-deck, strategic plan of action to be proactively iterated and articulated. That is a move that compels unconventional urgency with the intent to onboard and implement well-defined deliverables by all stakeholders. I am regrettably afraid, that we are, instead, staring at a recipe for an atrophied economy and a state tending to ultimate collapse.
With dwindling foreign reserves largely resulting from progressively contracting revenue from the nations’ mainstay – crude oil, Nigeria is unravelling as less self-sustaining, less productive, less confident of its steps and less predictable for long-term business plans. It is struggling, so badly, to create new opportunities for increased prosperity on a scale necessary to keep more of our people out of poverty (rather than taking them out of that territory). This is despite our geometrically expanding population.
The urgency of the dire situation commends the exploitation of immediate low-hanging homegrown opportunities; those that we have the capacity and competence to explore and swiftly activate. It will be akin to President Roosevelt’s New Deal of the 1930s which rescued the USA from its worst economic depression in history and led to its emergence as the world’s enduring economic superpower. That Deal can be contrasted with the Marshall Plan contrived as an economic reconstruction aid package for post-World war II Western Europe.
So, as an emergency national agenda for economic self-reliance, my vote will be for the Roosevelt Way (aimed at rekindling our self-belief) rather than an aid-dependent Marshall Plan as the preferred lead option. External support by way of foreign investment attraction should only be a sweetener for a country that is sinfully underutilising its enormous indigenous potential. The mantra should be to banish our loss of self-belief and empower Nigeria to confront our fears with daring courage; so that, as that wheelchair-bound President Roosevelt said to his fellow Americans in their lowest moment of economic depression, the only thing to fear … is fear is itself.
Regeneration proposal
It is contended that for immediate hope-re-envisioning and impactful outcomes, the route to go is NOT by experimenting with fanciful palliatives and tokenistic programs or initiatives. The challenge calls for a rollout of audacious, visionary, focused and engineered strategic PROJECT OF FUNDAMENTAL ECONOMIC REBIRTH away from crude oil revenue dependency. This is what informs the proposed PROJECT 3-in-3 RHA. It identifies and nominates three strategic economic sub-sectors for game-changing reinvention in three years. The project will be scoped and kicked off for implementation in a matter of three months with the full participation of a broad spectrum of the populace. All those whose inputs as critical stakeholders outside of government are vital to elicit their unflinching buy-in and involvement must be brought on board.
The project is to achieve predetermined deliverables around a unique publicly promoted ( but not state-funded) massive investment in the development of Railway lines (linking all state capitals), Housing ( to be a mix of quality commercial and social mortgage-ready stock, to incrementally reduce housing deficits) and Agriculture ( encompassing the allied cottage industries and value chain) for recalibration and diversification of the Nigerian economic landscape.
It is to be delivered in the first phase over three years – starting from 2024 – effectively from the date when the Implementation Coordination Team (ICT) (which must be corporate governance complaint) submits the framework that targets the creation of at least 5 million (direct and indirect) new full-time, living wage jobs as a catalyst for reviving our fast vanishing middle class and create two new thriving economic sectors as providers of revenue sources for reinvesting in massive associated infrastructure assets and spin-off businesses in the second phase replicating the proven template.
This project will draw principally from our most underutilised but abundant domestic endowments and capacities (with land as the pivot). The project 3-in-3RHA is to be deployed to reposition the national economic base from consumption and overdependence on offshoring and foreign support; and to lessen pressure on external reserves which may then be reprioritised for use in funding the acquisition of complex high-tech machinery, know-how; with preference to those genuinely unavailable economic input services that the country lacks competitive, practical or suitable alternative domestic substitutes for.
The broad framework will involve the following actionable tasks:
* Constitution of Project 3-in-3 RHA Implementation Coordinating Team (ICT) with the mandate to generate and submit “Project Scope Statement of Work” within 3 months. The team must subscribe to adherence to transparent corporate governance rules and be insulated from bureaucratic public service constraints.
* The “Project Scope Statement of Work” must shift attention to subnational as engines of economic revitalisation by providing competitive, peer-to-peer capacities for states to deepen their productive economic potentials thus becoming less dependent on federally allocated revenue and appropriations to more effectively meet their governance mandates as suits a properly structured federating states.
The target candidate productive sectors (Rail, Housing and Agriculture) are identified as derivatives of land surface resources (not import or forex dependent). Happily, the country has fallow land in abundance. It is still largely socialised under the Land Use Act, such that it can be conveniently aggregated, mapped for use and dedicated to the project with minimal complications and constraints.
* The three project sectors are outside of exclusive federal control and mandate. This makes for flexible empowerment and diversified intervention by sub-national governments and private sectors under federal overarching coordination as the prime fiscal and monetary policy enabler.
* States and local governments as anchor implementers are to leverage their control of land assets as dead capital for conversion into credit for creating a cost-effective financing scheme to fund the Project 3-in-3 RHA. The aim is to convert their dead capital into financial resources for investment in productive,
high-impact, fast-trackable sectors of the economy. My simplified descriptive term for dead capital, first coined by the Peruvian Economist, Hernando de Soto Polar is Idle Asset. In the hands of the rich, it must be appropriately taxed; and in other respects it must be mobilised and invested for optimal return.
* The tripodal economic course re-direction project must be productivity-focused, value- and merit-driven; insulated from legacy cultural constraints of prebendal political patronage syndrome and with preeminent participation of the street-level private sector players and segmentation to accommodate different levels of business models and sophistication for micro-small and medium enterprises. For this reason, the Project must leave out big players who can crowd out the targeted sectors that need the empowerment and grooming. It should embrace an all-inclusive, and party-neutral paradigm.
* Affordable credit guarantees on the back of predictable and credible data-driven inventories and receivables for off-takers of the commercial outputs and services from the projects by leveraging on a robust application of Secured Transaction In Movable Assets Act, of 2017, boosting consumer credit and enhanced financial inclusion to restore peoples inflation-eroded purchasing power and support domestic demands for the sectors’ outputs.
* The Federal Government will have to commit to commission a broad implementation framework, templates and targets to be adapted by each sub-national to suit their local circumstances; and also provide seed credit guarantee through securitisation of inventories and receivables from Project 3-in-3 RHA to raise sovereign bonds in the capital market at market rated (but government subsided single digit) medium tenor interest rates to the tune of TWENTY TRILLION NAIRA (N20,000,000,000,000.00) for disbursement in predetermined tranches through commercial banks to support sectoral milestones over the project timeline.
*The interest subsidies on the bond will cease after the initial five years by which time they will be priced and traded on competitive capital market rates without government underwriting. It is intended to be a creative avenue for mopping excess liquidity driving extant galloping inflation in the economy and to reinvest those idle funds in the ring-fenced productive sectors targeted under the project with the attendant multiplier effects in the subnational space. The expected short-term outcome is that the project will turn the entire 774 local government areas in the 36 states of the country into satellites of productive and quality work sites thus boosting their economies simultaneously.
In the medium term, it should serve to reverse the uneconomic internal migration of unemployed, unskilled and unemployable demographics at state capitals and urban centres in search of perceived opportunities that do not exist. These are the marginalised, hapless citizens feeding crimes and creating an antisocial army of recruits posing security threats across the country.
* The Federal Government will at the same time facilitate a credible audit of accessible domestic and open-source technical research resources immediately usable to drive the project in collaboration with states across relevant research sources and institutions in the respective states.
* There is a need to produce and issue a presidential executive order for mandatory collaboration and patronage of indigenous academic and research bodies imbued with resources and relevant consultancy expertise in close proximity to operational bases of eligible entities. This should be incentivised by its stipulation as a prequalification requirement to access or draw on Federal Government supported credits, grants, subsidies or procurements related to the respective areas of focus under the Project.
The added benefit is to facilitate the creation of a functional and structured interface between town and gown in the candidate sectors as model templates for eventual adoption generally in other segments of the economy. It is anticipated that this strategic innovation will lead to a better appreciation of the scientific imperative of a workable plan for national development as the economy expands in sophistication and depth in line with the goal of the Project. It is unimaginable that any well-conceived plan to revive the country premised on indigenous effort and self reliance will not assign a crucial role for our centres of knowledge and research to play as development partners and facilitators.
* Deliberate effort must be made to reverse the Brain-Drain conundrum’ and retain, in-country, our best and brightest for the new phase of socio-economic revitalisation. As at 2023, Nigeria had 170 universities comprising federal-, state-, and privately owned in a ratio of 43, 48 and 79, respectively. Similarly, there are over 160 accredited polytechnics; they are spread all over the country producing technical and vocational professionals with adaptable skills and competencies in the three candidate sectors of the Project 3-in3 RHA. A considerable proportion of the products of these institutions are presently engaged in flexible online jobs as trollers, content creators, skit makers, bloggers, and data miners, or awaiting their emigration papers to “japa” with their underutilised skills and youthful creative minds.
The project thesis
What Project 3-in-3 RHA proposal seeks to deliver is to extract latent value in the states-owned dead capital (Land vested in states as trustees under the Land Use Act), and use it by way of adaptation of the financial engineering technique in the oil and gas industry to fund and bail out Nigeria from its desperate existential economic crisis that entered steroids territory in 2023.
The Project is conceived to deploy a subnational idle and under-utilised asset – LAND- as a substitute for proven reserves applied in the oil and gas industry for Reserve-Based Lending (RBL) as an extra-budgetary financing mechanism to raise economic revitalisation investment capital. The model will finance Project 3-in3 RHA by mimicking the financing technique that oil exploration and production businesses deploy for huge project funding. The designated land as a readily available collateral asset is to be aggregated and committed in place of RBL as a “borrowing-base” type of loan, sized on the basis of the projected Net Present Value (NPV) of cash flows to be generated by the underlying assets and investments under the Project 3-in-3 RHA business plan.
By this strategy, the Land Use Act provides a diamond in the raw which can be converted into a unique asset class available to states for productive investment as against the constraining role it has played for so long in stultifying efficient exploitation of land for real estate value amplification since its promulgation in 1978.
It is comparable to the hidden value recently unlocked by the NNPC Limited in structuring and collateralising its forward sale to secure lending from Afreximbank in the region of $3.5billion for advance dividend payment to the Federal Government. In the present proposal, fairly long-term funding is to be originated, structured to be repaid from domestic economy that is not dollar-denominated. It will nevertheless be priced attractively enough to whet the appetite of even Foreign Portfolio Investors (FPI), as a repository for repatriated/laundered funds, as well as add to investment baskets of diaspora remittances.
While RBL financing exploits extractive resources vested exclusively in the Federal Government under the constitution (mineral oil); the target asset in this Project is surface right over land vested exclusively in the sub-nationals – the 36 federating states that are performing sub-optimally relative to their true potential as economic enablers. With the exception of Lagos State, being the 5th largest economy in the continent, most of the states are cost centres feeding off federal grants sustained through burgeoning and unsustainable ways and means- while their humongous internal potentials for wealth creation are left unharnessed.
Proof of concept
The audacious Eko Atlantic City in Victoria Island and the Dangote Refinery Complex Corridor at Ibeju Lekki, both erected on expensively reclaimed land from the sea in collaboration with the host state government as their landlord are examples of how viable the land-asset-backed Project may prove to be against the backdrop of land that is ready and available for use from get-go across the 36 states of the federation.
The replication of such bold, ingenuous, rigorous and gusty creative thinking that birthed those signature multi-billion dollar projects in Lagos, is what the present circumstances of Nigeria nation need at this desperate time. But it must now be one that has diversified sectoral application designed to positively impact the fortunes of the entire federation, in order that the country may escape a looming economic collapse.
Expected outcome
Igniting the subnational economic potentials by optimizing their dead capital to reflate and recalibrate their economies productively while taming cost-push, and forex speculation-driven inflation. In addition, it is to provide a robust foundation for a new economic base.
Project 3-in-3 RHA promises validation and seamless translation of the Renewed Hope Agenda for real value creation vide state-backed strategic investment in Railways, Housing and Agriculture over the next three years. It will constitute the nucleus of a new productive economy. It is from its base that other critical economic sectors now struggling or moribund are to be jump-started and resume flourishing for the ultimate restoration of the country on the path of sustainable prosperity.
Proscript
The second part of this thesis will address options for de-dollarising the Nigerian economy with a view to optimally benefiting from the wider and fairer international trade currency regimes free apron strings of the dollar for settlement of cross-border and multilateral financial obligations. The ultimate goal is to create a respected Nigerian convertible currency tied to a basket of foreign convertible currencies most connected to the Nigerian balance of trade objectives.
•Owonikoko, SAN, FCArb, can be reached at synergylaw2@yahoo.com
