Many Nigerians sorrowfully misconstrue the supposed looting spree that characterised the successive Nigerian governments as the epicentre of the economic muddle the country is facing today. Some think that recession set in because Nigeria refused to save during the days of oil boom. But lack of true federalism is simply the mother of Nigeria’s many woes, particularly the recession that has affected the economy at the moment. Nonetheless, there are some underlining principles – diagnosis and prognosis – that this essay will suggest to further provoke the country’s economic growth. They are aimed at affecting all facets of our human endeavour, and sustainable Gross Domestic Product (GDP) surpluses. Without rhetoric, let’s go straight to the point.
Countries that operate economic freedom mature faster into high rates of economic development than those with controlled economies. For instance, in the 19th century, Britain with her open-door policy for free-trade, gained economic supremacy. China started from an incredibly squat base of economic production, and by the 18th century, she had become the strongest economy. But over the years, poverty has been written on the faces of majority of Nigerians even during the days of oil boom, due to monopolistic economy – lack of true federalism. If we take the USA for an example, Nigeria is not as corrupt as the USA. But an average American is sure of food trudge, which is not less than $150: An amount many Nigerian university graduates without paying jobs do not have the hope of making for months.
The USA subsidised housing, even government, in order for surplus to get to the grassroots. Accommodation, healthcare, feeding and other infinitesimal necessities of life, seen as luxury in Nigeria, are no longer the problems of the poorest American. Come to think of it, recession is like a long-drawn-out culture living with many Nigerians. Before the country-wide economic recession, many Nigerians of age were still living with their parents, as a result of poverty. Many of the parents are even poorer. They have not found life easy with themselves, let alone fending for their wards.
Power of true federalism
Few years ago, a governor of Virginia, USA, was investigated for $65 billion dollars corrupt applications. That sum was more than the budget of Nigeria in 2007 and 2008, pooled together. The entire residents of the USA did not feel the impact of the money. The loot did not affect food supply, housing subsidy, healthcare provision, security, transportation system, and so on. The reason they didn’t feel the impact was because their livelihood was not dependent on the sole management of the USA government. Unlike what obtains in Nigeria, where the 36 states across the federation are not given the exclusive right for public liability generation and empowerment. So, when there is an economic molestation at the federal level in Nigeria, the states have nothing to rely on or back up the system. The states are even reliant on Federation Account. And when any person has an opportunity to pilfer any money from the Federation Account, it affects the supply chain, and the populace will grossly bear the brunt.
For instance, when there was an allegation that someone or group stole from the Police Pension coffer, the money taken away affected the entire country. But, if the states had their own police, the money pilferer, perhaps, could not have had an opportunity of such a large amount. And when he or she does, it will not affect the entire country.
Self-inflicted economic recession
The voice of Mr Tunde Bakare, senior pastor at Latter Rain Assembly, resonated at the 14th anniversary celebration of Foursquare Gospel Church, held on October 22, 2016. Bakare was saying that the economic recession that Nigerians are experiencing was fundamentally self-inflicted. He was not far from the truth.
The self-infliction was chiefly and deeply triggered during the six months that President Muhammadu Buhari stayed in office without a cabinet, knowing or unknowing that the different states depend on the Federation Account to survive.
Buhari had a view that he was preparing for the best for the country, oblivious that his action was for the worse. Six months without a functional cabinet of ministers, ambassadors and so on, were enough to damage the country’s economy than just recession.
If we comprehend recession from economist’s perspective, Nigeria experienced uninterrupted economic deterioration, which was more than a quarterly period that recession expertly sets in and affects authentic gross domestic product (inflation attuned), during the Buhari’s six months sleeping government. The six months borne decline in economic activities across the country’s economy. There was total collapse in manufacturing, invention, employment, real income and wholesale trade. The six months sparked-off deep cut in the fragile leadership in the country, economic-wise.
Impediment of power
Buhari centralised power in the presidency when he assumed office, and increased his busyness of junketing the world, when he moved into Aso Rock, after spending unfruitful three months at home. There were no ambassadors to the countries that he was travelling to, which would have helped in chief economic matters or diplomacy. He had neither decision-making nor policy performance towards the economy. Yet, everything stopped at the President’s desk.
He invested his energy on so-called war on corruption that has been indefinable, instead of on the economy. He boot-laced his several overseas’ trips with a promise that he was imploring foreign investors which, till date, Nigerians have not seen in the country.
The President hijacked the Central Bank of Nigeria (CBN) from being autonomous. As a result, the body suffered jeopardy in the international market. Buhari refused to shift from his carriage of not devaluing the naira. He forgot that demand and supply are the tenets that obtain in the money market.
Drift in governance
Buhari was at his ego’s best in manning the currency market with presidential clout. The CBN’s monetary policy was not favourable to investors. And investors were afraid to invest their money in the country for fear that the policies of the government might not go down well with their investable resources.
President Buhari delayed to inaugurate his cabinet, and also never assigned portfolios to the ministers nominated in October, till November; having been sworn in as an elected President on May 29, 2015. Yet, the cabinet was purely inconspicuous. The cabinet was disempowered by the political arrowheads called Buhari Aides. But in the eyes of Nigerians, the cabinet was constitutionally empowered.
Within the six months period, the economy which was supposed to be tackled headlong, suffered a serious setback. There was a managerial drift, as businesses were not expanded; no assigned professional was monitoring the GDP, hence it crashed. There was hardly any employment within the six months lacuna.
Observing that he had goofed, Buhari used the fall in oil price as an excuse for his government’s refusal to consent to the 2016 budget, earlier. How can a country run without a budget and the CBN was on the other side introducing incomprehensible monetary and foreign exchange policies?
But if Buhari had constituted his government as at the time he was inaugurated in office, the government would have found out that there were imminent issues it was supposed to tackle in the economy.
All Progressives Congress’s propaganda
With the All Progressives Congress (APC) at the centre, the government tied the recession on propaganda and denied the cries of Nigerians that there was recession till recently, the APC never accepted that it caused the recession. The government and its ruling political party had refused to take responsibility for the recession. It rather blamed the immediate past government of President Goodluck Jonathan incessantly of alleged mismanagement of funds, which resulted to stabbing the country into recession.
But after several months of the APC blaming the People’s Democratic Party (PDP) for the wretchedness of Nigeria’s economy, the former on October 24 2016, accepted responsibility of being Nigeria’s problem. This was divulged by Governor Rochas Okorocha of Imo State, when the governor briefed journalists on the position of a meeting the party held with its governors and President Buhari at the Presidential Villa, Abuja.
Conversely, before the recent dungeon the economy has been pitched into, the economy of the country was adjudged the highest in Africa before Buhari took over the helm-of-affairs of Nigeria. Nigerians were made to know that against the outcry by Buhari that he inherited an empty treasury on assumption of office, ex-President Jonathan left behind a whooping $30 billion. This is part of the many falsehoods of the Buhari-led government that was vehemently exhumed and refuted by Jonathan and his allies.
Central Bank of Nigeria
President Buhari was everywhere, insidiously calling Nigerians criminals and what not. His comments were scary to policymakers and investors, who already had difficulties accessing forex, which the CBN had made to thrive formidably in the black market. The inaccessibility of the forex led to 17.6 per cent level inflation in the country, which was a follow-up of the bad decision that the CBN took by shamming exchange rate of the naira for 16 months. Many saw such decision as not a cogent economic mindset, but biased. The CBN failed with the fiscal policy. And the Federal Minister of Finance, on whose table the policy was, seemed lackadaisical to ask questions in scrutiny to address the issue.
Borrowing/reliance
Even though that Nigeria was adjudged the biggest economy in Africa during the Jonathan presidency, Nigeria was borrowing. The six months Buhari stayed without cabinet, created a chasm which helped the debts to affect the economy of the country, drastically.
In the times of oil boom, the country saw productivity as a taboo, because it lacked true federalism. Nigeria became recipient in the hands of multinational oil companies. Nigeria refused to venture into oil production, or, any other. It concentrated on exporting oil. When oil was $10 during the headship of military president Ibrahim Badamasi Babangida and latter rose to $140 per barrel, the country was still borrowing. However, the presidency has not published its revenues and expenditures punctually, making transparency to be in doubt.
The Paris Club, HIPC debt reliefs and many others that Nigeria benefited from, the country did not recuperate with them. These borrowings were not superficial, but within. To an extent, $8 billion external debt was on the country’s balance sheet. It is obvious that these debts have culminated to Nigeria spending some percentage of her income in servicing debts. In the face of these, Nigeria hardly checked the import duty of the countries she imported goods from paid. The executive depended on oil to a large extent to generate revenues and for its foreign exchange earnings and the state governors depended on the executive before they would function, and did not give proper attention to Internally Generated Revenue (IGR)
Nigeria lacked Gross Domestic Product (GDP), which is the worth of goods and services created in an economy. There was no growth! Nigeria relied on foreign trade to survive, whereas she could produce domestic and school wares she was importing. In short, Nigeria relied on China to survive, oblivious that she was dying.
Getting out of the conundrum
Nigeria hopes to attain a seeming economic utopia today, but she should do away with all forms of decision bias, a tendency that always makes her think that her decision is final, and that ideas of others do not matter. Economic growth does not survive on the mentality of near-miss approach or luck. They negate the principle of effective planning and aversion of crisis before they surface. Levy, allowances, the workforce, and the business environment should be taken humourlessly. Like Europe has 2020 goals to achieve, the different states in Nigeria have to work in synergy and eschew their different precedence for the country’s formational procedures and alterations to be achieved.
Nigeria has to focus on creating wealth as she is in dire need to fix her economic slump, and curb the shortfall. It will not be a wise strategic thinking for her to fix the amount of money she wants. The country has to narrow some of her policies into a few boxes in order to realise this prospect, especially now that the world is a global village. Constraints on gross domestic product should be removed. Capitalists who make money to build fast-growing companies should be checked so that they do not impose hardship on citizens because of gains, since every business venture is for profit maximisation.
Over the years the Western world has built multi-faceted tools for formal economic development that include title deeds, cheques, credit papers, IOU, commercial papers. Since these are merely methodologies for transactions, and not for money creation, it’s obvious that the confrontational politics in Nigeria today among our leaders, movers and shakers in the field of policy formation, should give way, and instead focus on getting what they do not have from one another through the relevant instruments.
This would help trade to work better. They should jettison any mindset of a fixed sum of money somewhere in the world or introduce negative interest rate to boost the economy. This backfires.
Proposition
Worldwide, the number of children dropping out of school is on the increase, and Nigeria is not exempted. The country should, therefore, put modalities in place to curtail this in order to take away the scourge of poverty. Boost bigger markets as an economic vehicle to spin incomes. The country has to base her pursuits on necessity and invention, ingenuity and creativity, which are key ingredients in the demand and supply chart. Before now, Nigeria had driven her economy with a seeming stagnation-policy, with policymakers even compounding her woes.
Nigeria needs a demographic shift. It is vital that she addresses her rising inequality, by raising the allocation for women and old people in the workforce; and slow-down population growth and shore up growth in productivity. Nigeria should not undermine investing in research and development and work towards the actualisation of her climate and energy objectives.
The financial rat race of the world is hinged on a naive system that someone must get big while the other gets small, depending on their level of awareness on what they are pursuing. Nigeria should also avoid exchanging gold with rice. Rather, plantain should be exchanged with diamond. We’ll not suggest ways to make money like guesswork, heritage, stealing, swindling, domination, lobbying, bogus, and many other shoddy ways to make money. Nigeria should avoid these!
Economic freedom
There should be a true devolution of power, which is concentrated at the executive; given that economic freedom is the chief driver of economic improvement. No economy grows without building on entrepreneurship and innovation. These capture the enthusiasm of investors in this digital era.
Corporations like Apple Computer have grown beyond expectation within a short period of time. Such companies are growing because they embraced innovation. Human capital development is essential to the growth of any country to recognise opportunities. Countries cannot achieve this without the involvement of experts as consultants. Experts help in developing novel products and services – interiors and field services. Taking a clue from the European/American market on Amazon, which sells books made available to Africa, and Nigeria in particular; it is one idea that can help Nigeria to make huge revenues.
Such businesses have a long span for creation of jobs for the teeming unemployed. There are countries European companies like Shell have messed up. Cleaning the oil-polluted environment of the affected areas can create money and job opportunities for Nigeria. By extension, the continent with her delicate development in technology, can take such advantage and start recycling businesses, such as reprocessing plants to make plastics, fibres, and other goods.
Nigeria should also embrace the policy of purchasing land. In some parts of the world, land is used to raise capital for the purpose of building factories; and a factory is a source of generating capital and employment for growth in the GDP. Land is huge a valuable asset in accessing credit facilities, and it is expedient for Nigeria to acquire more lands extending outside her shores for the purpose of generating revenue through manufacturing or re-selling after years they must have accumulated.
For instance, immigrant Europeans in Zimbabwe own about 80 per cent of the farm land in that country. While their aboriginal counterparts are scampering helter-skelter to raise assets to harvest credit, the Europeans with arable lands are not ignored when they apply for credit in any part of the world. It is, indeed, necessary that the continent makes priority on artisans, and others.
Engaging foreigners
There are policies in Nigeria that allow any eligible international candidate that meets with the immigration requirements of Nigeria to come in. Conversely, many of these immigrants are university graduates who may be looking for jobs in Nigeria, and actually not in Nigeria to create money and wealth or job opportunities for the growth of the country.
Thus, reviewing the immigration policies to include, majority, skilled immigrants into Nigeria will bring about international innovation in the country and boost the economic recovery. Immigrants who meet up with the requirements of doing business in the country should be given every support they need. The most important is to grant them “Green Cards”. They will help to build start-ups, and it is invariably that each of the start-ups will create at least five jobs, thereby dousing the tension in employment opportunities.
Reviewing policies and laws
Nevertheless, the would-be culprits of narcotic drugs among them should not be incarcerated. They should rather be treated or rehabilitated and taxed, placed on such drugs they take. There should be Start-Up Loans and the management of money supply should be adhered to. The country should support short-term demand, by boosting long-term supply.
Nigeria spends huge resources on imposition, but taking lead in legalisation of drugs will earn the country revenues. Allowing for fiscal policies will play a durable impact on the economy. The unemployed should not be rewarded as this policy encourages unemployment, because a paid jobless person will rather remain jobless than go look for a paying job. It is palpable that Nigeria will create revenues when these persons volunteer, at least, in not-for-profit ventures in the areas of community work. It is confirmation that the persons build skills while doing such works. As the saying goes, idea rules the world.
Healthcare costs have to be pruned. Railway cargo quantity, electricity procedure and bank loans should be reviewed to measure the dictates of the time. Deregulation is cutting across the divides of the world, and Nigeria should not be exempted. Opaque and dim-witted laws have to be repealed. Such laws bar investors who do not know when they go contrary to such laws, especially when they do not obtain in their home countries.
Insufficiency has to be cut by parliament. Unnecessary wars should be avoided and the security agents treated with fairness. Religion and its activities should be a personal thing, although there should be laws to checkmate their activities. If Nigeria must invest abroad, she has to put measures in place to smash enriching corrupt officials. Citizens should be engaged in skill acquisition programmes before their twenties.
Overview
Deficit has to be reduced, not only in cuts. The right education on any business should be a top priority. Reform the welfare system. Investing in infrastructure must be a continuous affair, just as government should shun doing businesses that are expected of the private sector. Unionisation should be disintegrated. Margret Thatcher, the former tough premier of Britain, on assumption of office as leader, saw that unionisation was killing the economy of the state and she disintegrated unions and allowed government to regulate their activities; thereafter, the economy of Britain grew.
The private sector shouldn’t wait for the budget of Nigeria before hitting the road running; government should put severe mechanism in place for the private sector, because the economy of a country drives when demanding infrastructure is in place. Privatisation is the key to astronomical growth of the economy.
Security must be guaranteed in order to drive every other socio-economic activity. Without doubt, the economic strategy of Nigeria will not be achieved if there are no veritable avenues to realise the envisaged growth. It appears the much desired value cannot be achieved without a viable land to operate on. At the moment, the challenge before researchers and opinion leaders boils down to how to make more money and create wealth for Nigeria.
Credit: Odimegwu Onwumere