Saturday, September 24, 2016

Towing Nigeria out of her economic quagmire

It is no longer news that Nigeria is in economic recession. Inflation is officially at 17.1 per cent, unemployment is said to be at over 18 per cent while more people are dropping below poverty line for not being able to afford one dollar per day. The administration of President Muhammadu Buhari has been greatly criticized for being long on lamentation and blame game of past administrations for our present economic woes. Opposition Peoples Democratic Party has called on the president severally to resign; a call that has been scorned by the ruling All Progressives Congress. Of recent, different ideas are being pushed forward to tow the nation out of her economic quagmire. Some have called for restructuring, diversification, reduction in the cost of governance and just as the National Assembly resumed from its six weeks recess last Tuesday, September 20, 2016, there have been cacophony of voices about the need or otherwise for the country to sell some of her critical national assets.

The kite for the country to sell some of her key national assets to bailout the economy was flown by African richest man and Nigeria’s business octopus, Alhaji Aliko Dangote.  Among the national patrimony that Buhari administration is being counseled to sell off include the Nigeria Liquefied Natural Gas company (NLNG), the country’s comatose four refineries in Port Harcourt, Warri and Kaduna, some of Nigeria’s airports especially those of Lagos, Abuja, Kano and Port Harcourt, the Ajaokuta Steel Complex, Aladja Steel Complex, disposal of the bulk of aircraft in the presidential air fleet and several others. The reasoning behind the call which has divided Nigerian Senate and indeed members of the general public is that if these assets are sold off, monies realized will be used to fix the infrastructural deficits. The argument is that many of these assets are moribund and have become a bottomless pit or drainpipe of the country’s scarce resources since they are not operating at optimum capacity and are being used by a cabal to milk the country dry.

My take on the way out of Nigeria’s economic woes is that there is no one size fit all solution or a single magic wand that will get us out of the rot. There is need for a cocktail of solutions. I for one am not against the sale of some of our key national assets. However, the history of privatization in Nigeria has been heart rending. There are a lot of underhand dealings and sharp practices involved as these assets are mostly sold well below their current street value and also to cronies and fronts of people in government who lacks the technical depth to revive them.

If we can have a transparent and accountable process, I will throw my weight behind the auctioning of some of these liabilities that we call assets. On June 2, 2011, Presidential Projects Assessment Committee (PPAC) led by Ibrahim Bunu said in its report to ex-President Goodluck Jonathan that the Federal Government was at then executing 11,886 projects at the cost of N7.78 trillion, out of which N2.696 trillion had been paid to contractors.. Some of these projects are white elephants which will not add any value to our dear country even if completed. There are those projects whose needs have been overtaken by events and no longer desirable in contemporary times. Given our parlous state of the economy,  I suggest another committee should be set up to categorise these abandoned projects into those that are still important to be completed and those to be auctioned off. The resources generated from those sold off should be channeled to complete those vital ones. Public – Private – Partnership model or Build – Operate – Transfer model could be explored for the completion of the key abandoned projects if government does not have the funds to complete them.

It cannot be overemphasized that Nigeria’s economy needs to be weaned off overdependence on oil and gas which apart from facing glut in the international market are also being viciously attacked by pirates and vandals in Niger Delta area. Investment in sports, tourism, agriculture, solid minerals and Information Communication Technology are some of the areas Nigeria needs to incentivize people to set up businesses.  I do not subscribe to the school of thought that government has no business in business. That is fallacy of overgeneralization. Government has a role to play in business. While it may not put its money in business, it is expected to set up legal and policy frameworks that will inspire investors’ confidence to put their monies in the identified areas. I for one do not support government putting more money into prospecting for crude oil in Nigeria’s Lake Chad basin, an effort which has yielded no encouraging result in spite of the huge quantum of resources spent on the exploration exercise in about thirty years. Private investors can however be incentivized to continue the search.

If Nigeria will get out of the wood, economy wise, it has to do a number of things. These include the following: Fix the electricity challenge. Electricity is vital to our economic revival. The cost of doing business in Nigeria is astronomic largely because of lack of affordable and clean energy from government. Even though government has privatized the electricity generation and distribution companies, there is still a huge challenge with transmission of power generated due to the weak transmission lines. There is still huge controversy surrounding appropriate pricing of electricity due to lack of prepaid meters. Other issues include huge indebtedness by government ministries, departments and agencies, energy theft by companies and individuals and inconsistent government policies. 

Government also needs to do something about the cost of doing business in Nigeria. Our global ranking on the ‘Ease of Doing Business’ rankles. We are in abysmal position. Something has to be done to ease the bureaucratic bottlenecks on company registration processes, visa issuance, and access to land including getting Certificate of Occupancy on acquired land for business. Also imperative is access to affordable loan facility with single digit interest rate. It is disheartening that high interest rate in Nigeria which is in double digit is a business killer as many entrepreneurs who could not get cheap fund to inject into their businesses have had to fold up thereby worsening the very dire unemployment situation in the country.   Worst hit are small and medium enterprises which are actually the pillar of every economy. Many of these SMEs have been finding it extremely difficult to break even, let alone making profit, because of the high cost of their goods and services which are not enjoying patronage from consumers due to the low disposable income of workers many of whom are being owed salaries and wages.

Jide is the Executive Director of OJA Development Consult.