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Thursday, 1 January 2015

How to overcome Nigeria’s economic challenges in 2015 - Kunle Rotimi


In the life of any nation, periods of challenges are inevitable. No country in the world is insulated against economic crises. Challenges come in various forms, ranging from political instability, social unrest, religious crisis, local or global economic depression or meltdown, to other sundry crises.

When these challenges occur, it is imperative for the government of the affected country to aggressively galvanise the populace towards harnessing human and material resources in order to maximise all the available potential. So, Nigeria is having its own fair share of the economic challenges which we have not adequately prepared for, unfortunately.

At present, we are facing security, economic and socio-political challenges in threatening dimensions. The spineless terrorists are ravaging some states in the North-East, with sporadic sorties attempted beyond their pliant enclaves. This insurgency has taken a very big toll on the national economy, not only in terms of the needless funds being wasted in combating the insurgents, but in terms of investment disincentives and negative effects on tourism potential.

Local and foreign investors will think twice before venturing into any terrorists-prone nation or region. The cost of maintaining internally displaced people is another negative factor. The costs of rebuilding the ruins created by the insurgents are also being factored into the public expenditures.

The burden of terrorism and insecurity in Nigeria has weighed too much on the national economy in the past few years! Therefore, the earlier this calamity is lifted, the better for Nigeria to overcome the bloody challenge. One of the ways by which we can overcome is for the sponsors of terrorism to apply patriotic sense which they have lost, by taming the hoodlums unleashed on innocent people. Also, all stakeholders like the traditional rulers, clerics, political and opinion leaders in the north can use their acclaimed influence to appeal to their people who are terrorists to stop killing and bombing people. Making them reason that they should not continue to destroy their own future generational legacies!

The politicians generally should avoid creating instability by their desperate attitude to electioneering! The uncouth behaviour of most politicians who make incendiary and inciting statements cannot promote economic growth, as investors will be scared to come to a country where elections appear like war declaration. Our politicians should endeavour to put their emotions or frustrations into better and intelligent use in the national interest.

Another challenge is the profligacy of the public office holders at all levels. As I have always said and written, our public office holders at federal, state and local levels behave like prodigals, by virtue of their riotous lifestyles. Nigerian public office holders are largely very wasteful in the manner of spending public funds and resources.

They are largely ostentatious and capricious in handling public funds. Official cars are abused and not well-maintained most often, unlike their personal cars. They embark on white elephants and create unnecessary cost centres which drain off national resources. The political will to live by example is lacking essentially. They engage more in socio-political and bureaucratic activities than in labour productivity; with low capacity to produce and not being so effective in productive efforts.

A majority of the elected officials at all levels of governance parade hordes of hangers-on and corporate liabilities in the name of “special advisers”, “special assistants”, “senior special assistants” and so on; creating unproductive retinues of political jobbers. In turn, these political leeches also have their own aides, thereby spreading the cost structures at the detriment of profitable capital expenditure. In order to correct these anomalies, public office holders, elected or appointed, should cut down on these wasteful expenditures and empower the masses in lucrative enterprises.

It is unfortunate too that the economic management team does not appear to understand the significance of promoting domestic economy. The national economic team is disconnected from the reality at the micro-level, through their boardroom permutations!

The elitist economists at the Central Bank of Nigeria, the Federal Ministry of Finance and other ancillary agencies dote on macro-economic theories, by superimposing foreign templates on our domestic economic environment. The foreign background of these “economists” has beclouded their focus on the needs of the average citizen. They apply foreign antidotes to our local economic circumstances, forgetting that consumers’ or citizens’ socio-economic perceptions differ from country to country.

The recent decision by the Central Bank of Nigeria to devalue the naira, raise lending rate (MPR) and credit reserve ratio at this time is ill-advised. In a country that runs a cash-economy largely, where a majority of the citizens make purchases by cash, with no effective price control, devaluation of the naira will trigger high rate of inflation.

With the dwindling global price of oil, and the need to reduce the original benchmark for the 2015 national budget, devaluation of the naira at the same time will heighten inflationary trends in a country that is largely import-dependent. The nation itself imports refined petroleum products for local consumption, the citizens also have crazy taste for imported goods, what the economic team and the CBN ought to do was not to devalue naira. The nation can temporarily place a ban on some imported things that we can produce locally. Our local capacity to produce should be encouraged, with stronger political will of government.

Devaluation of the naira below the Ghanaian cedi and the United Arab Emirates’ dirham, will invariably reduce the purchasing power of the impoverished Nigerian citizens as they will have to spend more to purchase their needs, when there are no substitutes or alternatives for the commodities. It simply means a Nigerian needs more naira to get one Ghanaian cedi if he or she needs to by “Kente” dress in Accra! That is the “wisdom” of the CBN in devaluing the naira!

Again, now that the global price of oil has gone down by more than 30 per cent, it means the cost at which the fuel importers get the commodity has also reduced. So, for the Petroleum Products Pricing and Regulatory Agency to keep the pump price at N97 and pay the same amount of subsidy appear insensitive and incomprehensible.

Had the global oil price gone up, the agency and its collaborating subsidy-seeking oil importers would have been hankering after increasing the pump price to meet their costs of procurement. But now, why do local consumers have to buy fuel at the same pump price? Why does government still have to pay the same amount as subsidy to the importers? The right things should be done to assist the citizens, by alleviating their cost burden on fuel.

Again, to overcome the country’s economic challenges in the New Year, we need to curb the high level of corruption at all levels of government. If the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Crimes Commission can wake up from slumber and do more than they do now in their statutory duties, and if the judiciary cooperates in the prosecution of corrupt people, the level of corruption will reduce. But in situations where the anti-corruption agencies mismanage cases before some corruptible judges, corrupt public officers will multiply. Lots of suspects in corruption cases are before the many courts, some from the executive, legislature and judiciary, they still walk around freely because of our docile justice system. If Nigerian laws against corruption and the justice system are made more stringent and effective, our economy will grow in leaps and bounds. What economic and political corruption takes away from the national economy is very huge.

A majority of public office holders, those elected and appointed, keep foreign accounts. These include legislators at the National Assembly and state Houses of Assembly, ministers, governors, commissioners, heads of public agencies and departments.

This unpatriotic practice promotes the economy of foreign countries that keep the loot of these public officers, while our banks face cash liquidity crises; which reduce their capacity to loan money. Our banks cannot loan money to needy entrepreneurs and if the financial institutions do, the interest rates are too exorbitant and unfriendly to profitable investment.

Unwittingly, the Central Bank of Nigeria and its Monetary Policy Committee still decide to devalue the naira so that the funds kept in foreign accounts by the unpatriotic public office holders can continue to yield higher values against the local currency! If the CBN harps on a cashless policy, it should not have been selling dollars to those who claim to be “importers”, but end up in round-tripping! Instead, cashless payments should be made through direct transfer to the countries where imported goods originate!

By such an arrangement, only genuine importers (including oil and other commodities) will demand dollars, unlike fake importers that bid every week for dollars! Commercial papers or dollar certificates can be issued to importers who truly have to import. And the government can also place a ban on commodities which are available or can be produced locally. If such necessities are not created, the importers will not think on close substitutes or invention. America decided to invent Shale oil from bituminous rock formations in order to get alternative sources of crude oil; why must Nigeria depend on imported goods perpetually by encouraging these lotus-eating importers?

However, if the government through the legislature can pass a law, making ownership of foreign accounts punishable with forfeiture and 10 years’ imprisonment, all these looting spree will stop. And the naira will have more value when public office holders keep their money in Nigerian banks.

No American or British or Ghanaian leader, ministers or legislator has bank accounts in Nigeria. But our own leaders, even local council chairmen, save in banks abroad, using this unpatriotic sharp practice as a status symbol. How then will the economy grow?

All social services that can be rendered in Nigeria should not be taken abroad, especially education and health care. Most of our public office holders abandon Nigerian schools and send their children abroad for studies at public expense. Even the federal and state governments still send citizens abroad for further training instead of improving the standards of our local schools to meet the required quality education being sought. In the United Kingdom, local trainers and consultants are used; it is only if the skills are not available that foreign resource persons can be permitted. But in Nigeria, political office holders and leaders import foreign engineers, doctors, tutors, consultants and PR practitioners, when we have millions of qualified Nigerians with better skills to render the services required. How can we grow our economy when we underrate and undermine our indigenous resourcefulness?

Our public office holders rush abroad for medical treatment, including those who wasted more than eight years in government houses. Imagine former presidents, heads of government and other public office holders, rushing overseas for medical check-ups and treatment, as if building good Nigerian hospitals, which they can patronise like other citizens was rocket science! If we can improve hospitals and medical facilities in Nigeria, our leaders can responsibly patronise these and save the meagre foreign reserves from avoidable depletion.

Moreover, there is the need for all elected and appointed public office holders to sacrifice much more now. From the President, Vice-President, Senate President, Speaker of the House of Representatives, the Chief Justice of Nigeria, governors, ministers, commissioners, down to councillors, let their allowances (not basic salaries) be cut by 40 per cent! The amount saved from these pay-cuts can then be pooled together as sacrificial funds to promote micro, small and medium enterprises massively.

Millions of citizens can then be empowered to undertake enterprises. The taxes they pay will increase in ratio to the GDP. Government should also step up the tax regime, to ensure that every taxable citizen and corporate entity will be captured. Effective taxation can shore up national revenue among other lawful sources.

Again, our over-reliance on oil as the economic mainstay has betrayed our national complacency and incapacity to be proactive. Nigeria has lots of arable land for agriculture, on which cash crops can be cultivated to guarantee food security. When the late Chief Obafemi Awolowo was Premier of the Western Region, he did not depend on petroleum to develop the region far above others in Nigeria. He did not use oil money to build the Cocoa House, Liberty Stadium, first African TV station and many other profitable industries under the O’odua Investment Company, still existing till today! The famous groundnuts pyramids in the north assisted the regional economy in those days. But since petroleum products began to pour in easy public funds, our leaders have continued to depend on the proceeds, leaving other lucrative ventures to decline. Oil money has led to corporate laziness and socio-political indulgence on the part of our successive leaders from independence.

Where are the cocoas and groundnuts now? I am glad that agriculture is being revived now in production of cassava, rice and some other produce. These efforts should continue, be sustained and enhanced. There is the need for Nigeria to diversify rapidly and harness all its economic potential. Nigeria is richly endowed in many natural resources in commercial quantities, what we need are the political will, determination to succeed and thinking better out of the box.

Nigerian citizens too can contribute to the growth of the national economy by reducing their propensity for imported goods. A majority of the Nigerian citizens are social counterfeits who prefer foreign commodities to what they can produce and find locally. As soon as these citizens see imported items or know about them, they lose their patriotic sense and dance sheepishly like hungry slaves! Some Nigerians are so frustrated that they write their own country off, devaluing the nation’s image in the presence of foreigners! All these negative attitudes and destructive disposition of the disillusioned citizens affect our economy’s growth, as investors cherish countries with national pride.

If we can be more conscious of our patriotic values, if we can appreciate our national and mental independence by cherishing what is Nigerian, our economy will grow rapidly. If investors know that a majority of Nigerians will go for what is produced locally, they will increase their portfolio inflows, FDIs, production capacities and employ more people.

Kunle Rotimi is a HR development consultant and author based in Lagos.

Credit: Punch

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