The economy has remained prostrate since the pronouncement of the removal of fuel subsidy at the inauguration of the President over three months. Inflation continues on the upward trend while the exchange rate continues to depreciate, with both making the Nigerian economy outputs internationally uncompetitive and domestically out of the reach of the poor and the middle class. Meeting the basic human needs of these groups of Nigerians has been quite difficult and their descent into the poverty trap has become a reality.
The pains grew and the government’s thought to offer palliatives to reduce the pains was a good gesture but the implementation has neither been spontaneous nor standardised across the states. The resultant outcome is an ineffective or lugubrious result in a large part of the federation. That is what happens in countries with a high level of corruption, where people who oversee policy implementation are looking for ways to take advantage of the situation for self-benefits.
Nigeria’s corruption stage is at the highest level. It is what Rose-Ackerman referred to as the competitive-bribery state. In such a state, many corrupt officials deal with a large number of ordinary citizens and firms in unclear terms. A fundamental problem is the potential for an upward spiral of corruption. The corruption activities of some officials encourage others to accept bribes until all but the reconstructed moralists are corrupt. Under that stage of corruption, no good policy or programme succeeds for long. That is why I advocated that this government must first attempt to restore sanity, honesty and accountability in governance if its efforts at restoring growth and development as well as national pride must succeed.
Two incidents brought a silver lining to the darkness that had enveloped the country in the last few years. First was the production of over 20000 passports in less than one week after the new Minister of Interior gave matching orders on passport production. Why did this look impossible in the recent past? The scarcity was created to tacitly encourage corrupt activities. It, therefore, looks like the target of 100,000 passports production given by the minister will be met even before the deadline. However, the minister must not get carried away by this initial success as new channels or windows of corruption will be opened secretly. More appropriately, it is not enough to produce the passport, the destination of getting the passports to the applicants is the most important and must be monitored.
The second incident was at the Murtala Muhammed Airport where the Minister of Aviation instructed that foreign airlines must relocate to the new international terminal. Listening to the comments on the decency and state-of-the-art facilities by passengers who used the facilities for the first time made one wonder why the management locked up the place in the first instance after completion. One hopes the touts who work in the toilets and hoard tissue papers with the intent to squeeze money from passengers will not be allowed into those areas again. Are these samples of things to come? Do civil and public servants require high-handed directives from a minister before carrying out their functions? Why are these activities or tasks yielding fruits after interventions from the respective ministers? The workers should prioritise professionalism over and above personal ego or aggrandisement. Let us now return to the issue of making the economy work in the medium to long term.
Just a few days ago, the President completed the selection of his economic team. He had earlier appointed the Minister for Finance and Coordinating Minister for the Economy, and the Minister of Budget and Economic Planning; while on Friday, a new Governor of the Central Bank of Nigeria with new Deputy Governors were appointed subject to the approval of the Senate. One assumes that the approval will be a sort of formality. The fiscal and monetary sides are ready and should start work immediately. The country should be in the second phase of removing the pains of the subsidy removal and harmonisation of the exchange rates even though the first phase policies were not thoroughly implemented as pointed out earlier. The second phase can take along the residual of the first phase but an assessment of the implementation should be carried out to see what is to be dragged along.
The inflation rate released by the National Bureau of Statistics last week indicates, expectedly, continuous rise. Important in the release are the sources of inflation which should be one of the major foci of the second phase policies. Two major candidates were singled out, namely food prices and the cost of power. A discerning economic mind would know this. The result tells us that the agriculture and power sectors need attention. The size of the import of food and petroleum products is very huge and is part of the causal factors of the continuous heavy depreciation of the naira.
It is hoped that the proper functioning of the Port Harcourt refinery will ease fuel importation and reduce foreign exchange devoted to fuel imports. Assisting the modular refinery to start producing, as was done for the Dangote refinery, will also improve domestic supply if they do not behave like Dangote who refused to produce and supply fuel to the domestic market. Allowing the so-called illegal refineries to produce and complement the ‘legal’ outputs will also go a long way to assist. As advocated recently, the adoption of the ‘illegal’ refineries into the mainstream would reduce perforation of oil pipes, oil bunkering, oil pollution and other nefarious activities and outcomes of their illegal actions.
As regards the agriculture sector, part of the N5bn loans extended to the states should be spent on acquiring simple agricultural equipment for distribution to farmers after training. I have seen some pieces of agricultural equipment such as mowers, harrowing and planters, which can be handled even by illiterates after low-key training. The country has to start simple mechanised farming since a large number of farmers are illiterates and old. The equipment can be sold to farmers’ cooperatives as a way of encouraging the formation of cooperatives and promoting mechanisation. Many youths will start getting interested in farming if the tedious aspect of the occupation is reduced. On a large scale, the River Basin authorities will have to be reinvented to promote irrigation and agriculture in the North and largely agriculture in the South.
One of the major objectives of macroeconomics is price stability and with stable prices, many other adjunct objectives are solved. With stable prices, economic growth is enhanced and this by implication leads to the creation of employment or a reduction in the unemployment rate. So, the release of the data on inflation and the causal factors therein give direction on which the economic managers must focus in the short to medium term if the Nigerian economy is to start a journey to redemption.
The tendency for the CBN to start raising interest rate as in the past in the belief that there is too much money in circulation is erroneous. Raising the interest rate is like adding salt to already salty pudding. The CBN itself is promoting inflation through unbridled lending to the Federal Government to meet budget deficit spending. Funding budget deficit through ways and means is the most inflationary, and usually discouraged. This is because such funding promotes consumption rather than production. The CBN should do well to advise and assist the Federal Government to look elsewhere for funding its budget.
It is instructive to fashion the government’s economic programmes within the context of the Agenda 2050 so that we can have guided development rather than the ad hoc development paradigm of the past. President Bola Tinubu recently mentioned his economic focus. It will be important to integrate the items into the Agenda 2050 in its present draft form. Throughout the period that the Peoples Democratic Party ruled, there was no national plan or national aspiration even when they made VISION 20:2020. That must be why Nigeria is nowhere today. The country cannot continue in a rudderless manner. The rapid development that was witnessed in the 1970s was the result of the 2nd and 3rd National Development Plans that guided the spending of the oil money of 1974/75. Let us learn from the good happenings of our history. Guided development through a national development plan is the sure way to a sustainable growth path.