Wednesday, December 28, 2011

An assessment of Nigerian economy in 2011

2011 started with a lot of promises. Nigerians were hoping and praying for a better year. However, for many, it was an unfulfilled dream.

Even though the 2011 budget was presented to the National Assembly in December 2010, controversies trailed the budget passed by the legislature in March 2011 and had to be amended before the President signed it in May 2011. As at December 2011 only about 70 per cent of the budget has been implemented thus the jinx of budget debacle is yet to be broken.

The financial sector, particularly the banking and insurance sub-sectors witnessed further reform in 2011. Three banks, Bank PHB, Afribank and Spring Bank were nationalised in August while bridge banks were created to take over from the nationalised banks. It would be recalled that under the new arrangement, MainStreet Bank Limited takes over the assets and liabilities of Afribank; Keystone Bank Limited acquires the assets and liabilities of Bank PHB, while Enterprise Bank Limited takes over that of Spring Bank. Also in 2011, banks asked their customers to update their account details and also issued their customers 10 digit National Unified Bank Account Number (NUBAN). On Thursday, April 28, 2011, Central Bank of Nigeria issued a circular titled “Industry Policy on Retail Cash Collection and Lodgement”. In the circular the CBN put a cap on the amount an individual can withdraw from his or her account at N150, 000 while corporate organisations can only withdraw maximum of N1 million in a day. This is to take effect in June 2012.

In 2011, National Minimum Wage Act was signed into law by the Federal Government pegging the lowest minimum wage at N18,000. Unfortunately, this new wage structure has been dogged with controversies as Federal and State Governments foot-drags on its implementation. Several meetings were held with labour unions before federal government pledged to commence implementation by August 2011. Many States are still recalcitrant as they claimed not to have the resources to pay the new minimum wage except the fuel subsidy is removed and /or new revenue allocation formula in favour of State is instituted.

Senate probe of the privatisation programme of the federal government in the August 2011 revealed a lot of sharp-practices and malpractices in the implementation of the privatisation and commercialisation programme. The probe panel headed by Senator Ahmad Lawan (ANPP, Yobe North) whose panel recommendation was adopted on December 20, 2011 shows undervaluation of government assets, non-respect of share purchase agreement by some of the buyers of the ailing government corporations; lack of due process in the sales of some of the corporations; political interference; incompetence of some of the Bureau of Public Enterprises officials, etc. Under the Nigerian privatisation programme, the nation lost assets, revenue, jobs and values.

In spite of the much touted Power sector reform, Nigeria is closing the year with a paltry 4,000 megawatts of electricity. The closure of Egbin Thermal Station in the first week of December 2011 even led to a loss of over 1,000 out of that number. Thus the Nigeria’s power situation remained deplorable in 2011 with attendant negative impact on socio-economic life of the people. Nigeria’s economy continues to be powered by electricity generating machines procured by individuals and companies. This has significantly increased the cost of doing business in Nigeria.

Not much diversification of the non-oil sector viz. Tax, Solid minerals, Manufacturing and Agriculture take place in 2011. Rather, the country continues her over dependence on oil exports as its mainstay of the economy. This is unhealthy. Nigeria is richly blessed with scores of solid minerals which could be explored to augment income from oil earnings but not much has been done in this regard. Manufacturing sector remains comatose.

A newspaper editorial put the issue more succinctly, “The nation’s economy today is in a mess, featuring the collapse of businesses owing to the poor operating environment. Companies are shutting down and others relocating to neighbouring nations. The Manufacturers Association of Nigeria revealed that, in 2009, 834 member-companies shut down while half of those still in operation were ailing. Invariably, over 83,000 persons were said to have been rendered jobless by the closures.

The Central Bank of Nigeria in July put the rate of youth unemployment at 41.6 per cent. Former Finance Minister, Olusegun Aganga, said in December 2010 that 49 per cent of Nigeria’s urban youths and 39.7 per cent of the nation’s rural youths were unemployed. The Ministry of Labour and Productivity had put the figure of graduate unemployment at 41 per cent.”

In the 2011 budget a seed funding of N50 billion was earmarked for National Job Creation Scheme. Even though the president in his budget speech on December 13 said the implementation of this scheme has commenced, there are no statistical data of how much of this money has been spent and how many persons has been employed under the scheme in 2011. In October 2011, President Jonathan launched a Youth Enterprise with Innovations in Nigeria (YOUWIN) with the hope that the initiative will generate about 100,000 jobs in three years. This is a far cry from what the country needs to drastically address the unemployment explosion.

One of the good measures taken to speed up business at the nation’s seaports is the reduction in the number of agencies operating at the port. In October 2011, Minister of Finance and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, disclosed during the inspection of APM Terminals Apapa Limited in Lagos that the Federal Government has ordered the withdrawal of eight agencies operating in the nation’s ports, saying that the number should be reduced from 14 to six with immediate effect.

In the same vein, the Federal Government in collaboration with the top management of Nigeria Customs Service (NCS) disbanded the Customs Task Force and abolished the cargo tracking note (CTN), saying that operations at the nation’s ports must be streamlined to enhance efficiency and reduce the cost as obtainable in developed economies.

The inauguration of Economic Management Team by the Federal Government and the recommencement of publication of monthly allocations to Federal, States and LGAs are other noble efforts of government in 2011.

Unfortunately, the war against corruption is still far from being won. In the 2011 Corruption Perception Index (CPI), released by Transparency International (TI), Nigeria dropped nine places from her ranking of 134 out of 178 countries in 2010, to 143rd out of 183 countries in 2011. Nigeria maintained a score of 2.4 points out of 10, while New Zealand was ranked first with 9.5 points. This poor record could have been part of the reason behind the sack of Farida Waziri, chairperson of Economic and Financial Crimes Commission in November 2011. Nigeria currently languishes in 156th place out of 187 countries in the UN's Human Development Index. This is an indication that standard of living of majority of Nigerians is still very poor while cost of living soars.

Agenda for the economy in 2012

1. Budget for 2012 should be passed by the federal and state legislatures promptly and implemented faithfully by the government at all levels.
2. The removal of fuel subsidy, if it must happen, should be done in phases. This is to cushion the negative effect a total deregulation will cause to majority of Nigerians. Nigeria’s refineries also need to be revamped as a matter of urgency.
3. Human capital development should be given priority in 2012.
4. Power sector should be fixed with significant increase in power generation, distribution and consumption. This is the best way to stimulate the economy, re-industrialise Nigeria; fight unemployment and reduce poverty.
5. Government at all levels should sincerely wage war against wastes, leakages and corruption. Even if fuel subsidy is removed and lip service is paid to anti-corruption war, Nigeria will be worse off. There should be no sacred cow in the fight against corruption as that is one of the ways to deter people from indulging in corrupt practices.
6. Government should embark on pro-poor policies that will make life meaningful for the less privileged. These include subsidized Medicare, mass and affordable housing schemes; qualitative and affordable education; mass transit programmes including rail, road and water transportation.
7. Security of lives and property should also be paramount on government list of priorities. Throwing money at security problem will not solve it. Security personnel need to be well trained and patriotic. Security chiefs that fail to perform should be sacked.

Nigeria's Budget 2012 in Perspective

Over the years, we have listened to very beautiful and impressive budget speeches eloquently delivered in this chamber. Unfortunately, the implementation has not matched the words as economic policies often lack continuity and projects are needlessly discarded or abandoned. Let this budget be the one that will say let there be light, and there is light; let there be roads and there are roads; let there be water, and there is water; let there be employment and there is employment; let there be Medicare and it is so; and let there be food and there is food." – Nigeria’s Senate President, David Mark (December 13, 2011)

On December 13, 2011, President Goodluck Jonathan presented a budget speech of 82 paragraphs spanning 27 pages to the joint session of the National Assembly. The 2012 budget has the theme: "Fiscal consolidation, inclusive growth and job creation", and rests on four main pillars namely, macroeconomic stability; structural reforms; governance and institutions and investing in priority areas.

The budget estimate for 2012 stands at the sum of N4.749tn which is an increase of six per cent over 2011 budget. The aggregate expenditure comprises N398bn for statutory transfers; N560bn for debt service; N2.472tn for recurrent (Non-Debt) expenditure while capital expenditure stood at N1.32tn, representing a 15 per cent increase over last year’s appropriation. The budget is predicated on an estimated oil production of 2.48 million barrels per day; benchmark oil price of US$70/barrel; exchange rate of NGN155/US$; projected GDP growth rate of 7.2 per cent; and projected inflation rate of 9.5 per cent. It is heart-warming that the Federal Government intends to streamline agencies with overlapping mandates as a way to realign public expenditure.

Speaking on the humongous infrastructural deficit, Jonathan in his budget speech (in paragraph 25) said government’s focus will be on the completion of viable ongoing capital projects while also taking on flagship projects already identified in the Transformation Agenda. However, the President was silent on what will happen to the unviable white elephants that past and present administrations have embarked on. Will they just be discontinued? Will government invite the private sector to take over and complete, operate and transfer under the private public partnership? Will they be sold off to enable government to raise additional revenue to complete the so-called ‘ongoing viable projects’?

It will be recalled that on June 2, the Presidential Projects Assessment Committee led by Ibrahim Bunu said in its report to President Jonathan that the Federal Government is currently executing 11,886 projects at the cost of N7.78tn, out of which N2.696tn had been paid to contractors. The report also stated that, "reckoned in today’s prices and allowing for unreported ongoing projects, the total cost needed to complete all the projects may well be as high as N8tn...As a matter of routine, contracts are awarded without securing the required funds in the annual budget to ensure their timely execution."

Guaranteeing 70 per cent of the principal of all loans made for supply of seeds and fertiliser by the private sector for this season; Subsidising of interest rate on agricultural loan to bring it down from 15 per cent to 7 per cent; the proposed zero duty on agricultural equipment by January 31, 2012; and the ban on importation of cassava flour from March 31, 2012 are commendable practical steps towards reviving the agricultural sector.

I, however, do not fully support the increased import duty imposed on rice and wheat. While we have few communities such as Abakaliki, Ebonyi State; and Ofada, Ogun State known for local rice production, these communities cannot yet produce sufficiently to meet domestic demand. I am not aware that wheat is grown in any part of Nigeria and that there is a wholly cassava bread. That being the case, we will need both commodities to still be cheaply imported until such a time that we will attain local self-sufficiency. This obviously cannot be done in the next one year; unless government is essentially saying that bread and rice should now become the menu of the rich and wealthy Nigerians only.

Though the President touched on his youth employment scheme in paragraphs 71 – 75 of his speech, he failed to mention how many Nigerians have been employed under the National Job Creation Scheme which he earmarked a princely N50bn for in the 2011 budget. How much of this N50bn has been spent was also not stated. He only said his Youth Enterprise with Innovations in Nigeria which he launched in October 2011 will generate about 100,000 jobs in three years.

The tax reform of the Jonathan administration is also commendable as it reduces the tax burdens of low income earners, grants tax rebates to companies that create jobs and tax incentives to those donating to social and community development causes while establishing a Tax Appeal Tribunals.

My major concern about this budget is its late presentation, its silence on the tapping of solid minerals to boost non-oil export, as well as the huge amounts budgeted by the Presidency for all manner of things such as stationery, fuel for generators, vehicles, repairs, food and other sundry items. Why purchase so many vehicles in spite of the monetisation policy of government? I also noticed that there was no provision for fuel subsidy which makes its removal a fait accompli. This is not good enough as the issue is still being debated. This speaks volumes.

The sum of N921.91bn budgeted for security at the expense of other equally very important sectors such as Education, Power, Health, Works, Agriculture, Science and Technology reflects a shallow thinking about how best to ensure national security. For me, human capital development, provision of social infrastructure and food are part of national security, not only the procurement of armoured personnel carriers and other instruments of law enforcement and coercion.

My other worry is the National Assembly’s penchant for budget padding. It will be recalled that on December 15, 2010, President Jonathan presented a budget of N4. 2tn to the lawmakers, by the time they passed the budget on March 16, 2011, they had increased it to N4.9tn. This caused an impasse between the Presidency and the Legislature as the President refused to sign the Appropriation Bill. Not until the budget was reviewed downwards to N4.48tn in May 2011, did the President eventually append his signature.

I fully endorse the view of the Speaker of the House of Representatives, Aminu Tambuwal, during the budget presentation ceremony that, "We are moved with the feeling of a new spirit to remove the annual budget presentation from the realm of sheer rhetoric to one of a comprehensive presentation of a workable document. I must, however, note that the budget proposal is again coming rather late in the day. Let me emphasise that selective budget implementation has no place in our constitution and the legislature shall not abdicate its responsibility in ensuring full budget implementation through the instrumentality of oversight. Nigerians deserve better living and this is only achievable through effective implementation of the budget. We expect nothing less, but positive impact of the 2012 budget on Nigerians on account of full implementation". Period!

Tuesday, December 27, 2011

Will 2012 be a happy year for Nigerians?

In a few days time it will be a new year 2012. I look forward to a happy new year and pray that the Almighty will endorse my request. For majority of Nigerians and indeed for the Christendom, Merry Christmas and Happy New Year are traditional greetings at Yuletide. As I watched the horror perpetrated by Islamist Fundamentalist group – Boko Haram on 2011 Christmas Day, I asked myself if the victims and their families will have a merry Christmas and happy new year. With government making the removal of fuel subsidy an irreversible decision for 2012, will majority of Nigerians have a happy new year?

With the spate of armed robbery attacks on individuals and institutions (many banks are now closing by 1 pm while in some towns they remain closed for weeks due to fear of attack by men of the underworld) will the victims of these armed robberies experience a happy new year? Will the victims of kidnappers know a happy new year? Can Nigerians enjoy the New Year in pitched darkness that Power Holding Company of Nigeria (PHCN) had thrown them? Will Nigerian students in public universities and research institutions experience a happy new year when Academic Staff Union of Universities (ASUU) is at present on indefinite strike? Can Nigerians have a better new year 2012 when our hospitals are still largely mere consulting clinics, roads remain deplorable and basic welfare services are beyond the reach of millions of Nigerian suffering masses?

Nigerians deserve a better and a happy new year but our political leaders are not convinced that we should have it, hence they promised to inflict more pains on the less privileged Nigerians. They refused to heed our plead not to remove fuel subsidy. They said electricity tariff will go up by as much as 50 per cent. They said the private sector should start to collect toll on our highway and that we should eat cassava bread and Abakaliki rice when they know that we are not yet producing sufficient quantity to feed ourselves. The Nigerian Constitution in Section 14 (2b) says “the security and welfare of the people shall be the primary purpose of government.” Yet we lacked security neither do we have welfare. What impact of governance do we enjoy? Each family today is a mini local government on its own; providing for themselves light, water, security, housing and other basic needs which are taken for granted in saner climes.

Can government disappoint some Doubting Thomas’s who believe that nothing good can come out of Nigeria’s “Nazareth” by ensuring that we experience a better and a happier 2012? What better way can this be done than by making people’s money to work for them. Will the government at the three tiers use state resources to bring about developmental projects that will impact positively on the lives of millions of suffering masses? Will government consider suspending the removal of fuel subsidy until a more auspicious time when our refineries would be working at optimal capacity and members of the cabal importing fuel to the country who are found to be short-changing the country through sharp-practices and malpractices are brought to book? Additionally, if we must remove the fuel subsidy can this be done over a period of three years? To my mind, this phased removal will ensure that the cost of living does not soar above and beyond the reach of the poor.

Furthermore, government can guarantee a happy new year for Nigerians and foreigners alike when the power sector is fixed and adequate electricity is provided for productive sector of the economy as well as for daily family living. There are not many poverty reduction measures that can work outside of sufficient and affordable electricity. The simple reason being that both commerce and industry depend largely on its existence for business growth. When there is business expansion, more people will be recruited to work in those business concerns.

Will government find the antidote to these incessant killings and maiming of innocent souls by dissidents and gangsters who are gradually making the country ungovernable in 2012? A whooping N922 billion has been set aside for security in the 2012 budget. Will this humongous amount guarantee safety of lives and property for Nigerians? Will it secure our environment sufficiently to enable foreign direct investment to flow into Nigeria’s economy? We wait to see.

In the 2011 Corruption Perception Index (CPI), released by Transparency International (TI), Nigeria dropped nine places from her ranking of 134 out of 178 countries in 2010, to 143rd out of 183 countries in 2011. Likewise, Nigeria currently languishes in 156th place out of 187 countries in the UN's Human Development Index. This is an indication that standard of living of majority of Nigerians is still very poor while cost of living soars. Will the war against corruption receive a boost in 2012? Will there be a significant improvement in Nigeria’s human development index in the approaching year?

Nigerians desire and deserve a happy new year 2012 but from the look of things, they may have to trust in providence than in government. The signs are ominous that Nigerians are indeed on the threshold of another tough year. May God deliver us!

Monday, December 12, 2011

Perspective on Nigeria's 2011 National Honours Awards

National Honours are not merely decorative; they remind us of an important part of our responsibilities as citizens. We must always endeavour to do our best for our country, even as we realise with deep humility that all human beings are fallible, we must look forward with confidence and hope that our country through each and every one of us can indeed put its God-given endowment to the best possible use - President Goodluck Jonathan

It is no longer news that 355 Nigerians and foreigners were recipients at the 2010/2011 National Honours Award ceremony held at the International Conference Centre in Abuja on Monday, 14 November. What have lingered are the many controversies that have trailed the award. Several issues have emerged. They include the rejection of the honour by three of the nominees’ viz. Hon. Femi Gbajabiamila, Minority Leader in the House of Representatives and Prof. Chinua Achebe, a renowned novelist and Prof. (Mrs) Grace Alele Williams, a former University of Benin Vice Chancellor. There was also the criticism that the number of the recipients was too large; that some of the awardees were undeserving of the honour and that there was shortage of medals and certificates.

Every human endeavour is prone to censure. I do not believe that there should be an issue with someone rejecting the award; neither do I share the sentiments that the honourees are too many especially as they were for Year 2010 and 2011. Moreover, in 48 years of the awards, having been instituted in 1963, only 3,924 persons have been honoured in all the ten categories of the award out of a population of 167 million Nigerians, excluding foreign nationals. Out of this number, some people have been honoured more than once. Thus, it is a misnomer to say the number of the honourees was too large.

Contrary to the views expressed my many critics of the award, most of those who were honoured deserved being so recognised. The fact that someone’s name does not ring a bell when mentioned does not amount to the person being a nonentity. I however agree that the award should be performance based. Persons should not be given national honour simply because they occupy a high profile positions (be it religious, cultural, political, social or economic) in the society.

I found it indefensible the explanation offered by the Secretary to the Federal Government of Nigeria, Senator Pius Anyim that the shortage of medals and certificates was due to the large number of recipients. For goodness sake, SGF and his team of organisers have two years to prepare for the events! Production of 355 memorabilia is not a rocket science. The alibi that the National Honours Award was put off in 2010 due to preparations for the April 2011 elections also sounds incredible. The nation is not at war and as such election is not a justifiable reason for the inability to hold the Honours Award.

It has also come out very clearly that Nigerians know little or nothing about the award. There seems to be no sense of history on the origin, importance, benefits, responsibilities, requirements and processes of being conferred with the national honours. What necessitates the design of the national honours? How did we come about the names of the various categories? Why do we have nomenclature like Grand Commander of the Order of the Niger instead of Grand Commander of the Order of Nigeria? Won’t this be less confusing as there is another neighbouring country known as Niger? What sense is in Member of the Federal Republic for a Nigerian? Are we, other non-MFR-honourees, not a member of the federal republic as well? Shouldn’t such a title be conferred on nationalised foreigners?

It does seem that the President’s speech writer did not do his or her homework well on the etymology of the national honours as the President goofed in saying inter alia that “The position you occupy does not give an automatic award except for some positions like the GCFR which is given to anyone who becomes the President of this country or the GCON given to anybody who becomes the Vice President or the head of the National Assembly or the head of the Judiciary.” If the advertorial by a faceless group named “The ‘New Thinking , New Nation’ Initiative” in some newspapers on Friday, November 18, is to be believed, since inception of the National Honours, “over 80 Nigerians have been conferred with the honour of GCON, of which only five were second in command to the Presidents/ Heads of State” A quick perusal of some of the names of past beneficiaries of GCON revealed that many were former military chiefs, permanent secretaries and Ministers.

The advert also went on to say that even late Chief Obafemi Awolowo who was not a president was long ago conferred with the highest title of Grand Commander of the Federal Republic (GCFR). I should want to know what benefits accrue to national honourees. Is there a cash reward attached to the award? Can I use it as collateral to obtain bank facility? Does it guarantee me free shopping at any supermarket of my choice or a business class seat in an airplane or free Medicare at public hospitals? There have been several past honourees who have abused their privileged positions; shouldn’t awardees convicted of crimes be stripped of their national honour? Is there really a code of conduct for recipients of national honours?

Lest I forget, hearty congratulations to the 2011 Honourees made up of one Grand Commander of the Order of the Niger (GCON), 65 Commander of the Order of the Niger (CON), 37 Commander of the Order of the Federal Republic (CFR), 74 Officer of the Order Federal Republic (OFR), 69 Member of the Officer of the Order Federal Republic (MFR), 71 Order of the Niger (OON), 28 Member of the Order of the Niger (MON), two First Class Federal Republic Medalist and three Second Class Federal Republic Medalist.

Even as we pontificate over the national honours, Nigerian newspapers are in a celebration mood having experienced a windfall in advert sales in the week of the conferment of the national honours. In a monitoring exercise carried out by a national newspaper, Thisday, six Nigerian newspapers recorded 726 pages of adverts from congratulatory messages alone between Monday, November 14 and Wednesday, November 16. The daily had on the day of the national award hit the newsstand with a package of 224 pages, the highest number of pages in a single edition of a newspaper in the nation’s media history.