By Dan Agbese
Vice-president Yemi Osinbajo was in Washington last week to talk shop with US and World Bank officials on issues that matter to our country and the rest of the world. His takeaway from that trip will most likely be the brief lecture given him by the World Bank Group president, David Malpass, on the management of our stubborn national economy. Osinbajo was shopping for support from the World Bank on the vexed challenge that has defeated every president since our return to civil rule in 1999: fuel subsidy. Yes, that again.
Malpass thought the vice-president was looking for a solution in the wrong place because, as we say in this country, the solution is in his sokoto, not in Sokoto. The Daily Times online publication captured the essence of his advice to the vice-president with this headline: “World Bank to Osinbajo: Go home, address your staggered exchange rates, over-bloated fuel subsidy.”
I hope the vice-president kept a straight face as he listened to
him. As diplomatic talks go, that was not particularly diplomatic. It was
brutal. You could not blame Malpass for telling the vice-president the truth
that does not taste like sugar, this truth is often difficult to swallow
because it is not sugar-coated. He told Osinbajo that “Nigeria’s economic
challenges are more of internal than external.” Right. We should look for the
solutions here not in Washington or London as we customarily do because we
believe that experts in those cities hold the key to the remaking of Nigeria.
The World Bank boss drew the vice-president’s attention to two
critical areas in the current management of the national economy. One was what
he described as “staggered exchange rate” and the other was the fuel subsidy.
An exchange regime that is more or less in free fall cannot but hurt the national
economy.
Malpass made this point when he told the vice-president “…that a
unified exchange rate will significantly improve the business enabling
environment in Nigeria and attract foreign direct investment and reduce
inflation.” A unified exchange rate has the potential of stabilising
it too. Sounds so simple you wonder if the managers of our national economy
ever gave some thoughts to this new but nasty problem with the national
economy.
The staggered exchange is fuelling inflation. We are all groaning
because we are being crushed by the increasing weight of inflation. Prices of
local foods and other things are daily adjusted in obedience to the dictates of
the exchange rate with the US dollar. The Naira keeps falling and prices of
food items keep rising beyond the reach of the over 100 million of our people
who live below the minimum of less $1.9 a day. This is clearly bad for the
nation, its people, and its economy.
The more vexed and lingering issue is, of course, fuel subsidy.
Its primary purpose at its conception was to make the citizens of an
oil-producing nation pay less for fuel than say the citizens of Burkina Faso.
That objective, noble in intention, has since been lost in the corrupt and
incompetent management of the regime with the result that those it was intended
to help bear the brunt of its mismanagement.
The World Bank and the IMF have cried themselves hoarse over the
years. They have consistently and stoutly opposed fuel subsidy. Both
institutions believe that the very corrupt fuel subsidy regime has done nothing
but unnecessarily bled the economy. Ending it would free good money for the
government to take on some critical challenges of a developing economy. They
encouraged each of our presidents to summon the will to end it. But that will
either refused to be summoned or it was and is lacking, as in none of them has
had the balls to do so. And so, Nigeria “for the first time,” according to
Malpass, “since its return to democracy and as the only major oil exporter,
hasn’t been able to benefit from the windfall opportunity created by high
global oil prices due to its rising petroleum subsidy.” Good money lost because
the will lost its way in many a baban riga pocket.
Each one of our presidents knew that fuel subsidy was and is
hurting the economy, but each one of them chose to skirt around the problem
introducing populist but short-lived palliatives they deemed necessary to save
the poor from being crushed by the periodic increments in the pump prices of
our petroleum products. They were solutions that solved no problems; or rather,
they were solutions that fouled and further corrupted the system – and left the
country increasingly poorer and the oil cartels and their compradors in the
NNPC and the public service increasingly richer.
President Muhammadu Buhari was a commissioner for petroleum
resources in the Murtala/Obasanjo military regime. He must have watched the
goings-on in the industry that he was familiar with and was persuaded that fuel
subsidy was bad for the economy and must be removed. He said so and loudly too
before he assumed office as president in 2015. Foolishly, I crowed.
It did not happen. Buhari is the minister of petroleum resources.
The subsidy remains and has progressively encircled the jugular of the national
economy, virtually throttling it. To be fair, fuel subsidy carries only part of
the blame in the management of our national economy. It is, of course, a huge
part of the problem. Buhari and his team of economic managers have shown no
creative approach in reflating the economy and giving it a new lease of life.
Under them, the economy went into recession twice. Its health has never been
the kind of feel-good story you would write home to your mother.
A few months ago, Dr Iyorchia Ayu, national chairman of PDP, said
the Buhari administration had run the economy aground. Not many of us who go to
the local markets would disagree with his assessment. The economy is in a
pretty bad shape buffeted as it is by ill-winds blowing from every direction –
insecurity that has made local production of food impossible, the unchained
corruption that everyone, including the foot soldiers of the anti-graft war,
are too tired to talk about let alone fight it.
The economic management style of the federal government is
deleterious to the health of the economy. The economy is managed essentially
with loans. It makes the sickly economy sicklier. The director-general of the
Debt Management Office, Mrs Patience Oniha, recently appeared before the house
of representatives committee on finance on the 2023 – 2025 medium term
expenditure framework and fiscal policy paper and confirmed again that the
country’s debt profile as at March this year was N41.6 trillion. The federal
government will increase the current debt level by borrowing N11 trillion to
finance the 2023 budget.
The managers of the national economy are confronted by the twin
problems of a shortfall in revenue and deficit budgeting. Loans are taken to
bridge the shortfall in revenue – and they create their own serious problems.
Oniha told the honourable members: “…let’s begin to look at revenues because as
debt is growing, debt service is increasing.” Our debt servicing is not
sustainable because a huge chunk of the revenue is ploughed into it, leaving
the country with capital projects that remain on the drawing board for
eternity. It is thus much worse than you ever thought.
In a country where political campaigns are issue-based, the
economy should take the centre stage in the 2023 general elections. If we do
not get the economy right, nothing will go right in the country. Insecurity
will worsen; poverty will worsen, and life generally will be brutish for
millions of our citizens who neither politicians nor the beneficiaries of
political largesse. All those aspiring to the right to occupy Aso Rock Villa
next year should see the economic challenge as it real challenge confronting
our nation.
But I can see that the aspirants in the major and the mushroom
political parties are walking down the traditional political path, dropping
hints of glib promises to turn our country from a third world country into a
first world in the time it takes to say politics. It is glib and false. Human
management and development are processes that do not admit of magical
abracadabra.
Our economic burden is rather too heavy and too complicated to
yield to the usual glib promises by politicians to do the impossible when they
do not even know what the possible is. We, the electorate, will be complicit in
the continued ruination of our national economy and our national development if
we allow ourselves to be sweet-talked once more into giving power to those
swift of tongue but bereft of moral and intellectual capacity for the
leadership of our dear, complex, and complicated nation.
*Agbese, a veteran journalist, is a commentator on public issues
No comments:
Post a Comment