Nigeria’s Distressed Economy:
Which Way Forward?
Keynote Speech
By Prof. Kingsley Moghalu. OON.
Chairman, Advisory Board & Board of
Directors, Africa Private Sector Summit (APSS)
Former Deputy Governor
Central Bank of Nigeria
Leadership Newspaper Group
2024 Conference and Awards
Congress Hall, Transcorp Hilton, Abuja
March 5, 2024.
Every choice we make has consequences; but we have
no choice over the combined consequences of the choices we have made - Anonymous
Nigeria’s
economy today is, to use the title of the classic novel by Gabriel Garcia
Marquez, the Chronicle of a Death Foretold.
Will there be a resurrection? I believe so, but only if we fix the
FUNDAMENTALS. There is nothing that is happening today – hyperinflation, the
crisis of the value of the Naira, debt distress and the revenue challenge,
unemployment, and extreme poverty etc – that should surprise any thinking
citizen or professional observer of how our country’s economy has been
mismanaged for a long time. Choices have consequences: there is hunger and
anger in the land.
The past 10
years were particularly ruinous. They were the years of the locust, marked by
unprecedented mismanagement of fiscal policy, unproductive external borrowing,
unnecessary budget deficits, illegal Ways & Means lending by the Central
Bank of Nigeria to the federal government to the tune of N30 trillion, and
unprecedented corruption. Earlier, a combination of oil price shocks and an
incompetent policy response from the CBN, in the form of an attempt to fix the
exchange rate, all helped give us two recessions within seven years. Many of
these things happened because, as we witnessed, there was a successful
political assault on the independence of the central bank, with the storekeeper
willingly handing over the store keys to the marauders.
We are in a
crisis. Regardless of whatever short-term measures that are taken, and the
success of those measures or lack of it, this crisis and its effects will be
with us for a minimum of 3 -5 years.
Although the immediate aspects of the Mexican peso crisis lasted for two
years from 1994 to 1995, the effects lasted for about 6 years. The Asian crisis of
1997-1998 was relatively brief and over in two years. That crisis originated in
Thailand after the Thai government floated the country’s currency, the baht,
owing to a shortage of foreign currency to support its peg to the US Dollar. As
with Nigeria, the Thai central bank stopped defending the baht after some
months of pressure on the currency, and the baht fell quickly and deeply in
value. The contagion spread to other Southeast Asian countries. But the increasingly
strong economic fundamentals of these countries helped their relatively quick
recovery.
We must not
waste the present economic crisis. While we attempt to tackle our immediate
problems, we must understand that these challenges today are simply symptoms of
root causes we have long ignored. We should not repeat the cycle of past crises
that did not force us to fix our economy for good, to be productive and create
wealth and jobs for the average Nigerian. It is time to reposition our economy
for the long term, out of the lessons of today's challenges.
I maintain
my position, which is a matter of record, that the decisions to remove the
petrol subsidy and forex subsidy were bold and correct. We have lived a lie for
40 years and the chickens have come home to roost. Given the country’s revenue
challenges in the crude oil production and export sector, Nigeria could no
longer afford to subsidize the importation of refined petrol, at least fully,
and could no longer afford to defend the value of the Naira artificially.
Nevertheless,
there also are some immediate causes of today’s economic mess that can be
traced to significant strategic errors by the present government early in its 7
months in office (so far). I point these out not as recrimination, but only so
we can learn lessons for the future. The first error was the precipitate nature
of the introduction of these policies without a thorough preparation for the
morning after. Nigerians should first have been educated on the economics of
why these subsidies had to go, and on what steps the government was taking to
mitigate the anticipated impact, e.g., with a subsidized mass transportation
system across the country. The forex reforms at the central bank should have
benefitted from prior, in-depth consultations with institutional investors who
are the movers of global capital and in the absence of robust revenues from
oil, influence forex liquidity through capital importation..
Second,
exchange rate unification and a further effort to “float” the naira in an
environment awash with naira liquidity
(a loose monetary environment) was a mistake. This contributed to the
naira’s race to the bottom. The policy should have been accompanied, or
preceded by, immediate monetary tightening. But we know that a substantive
Governor of the CBN was appointed only several months later, and the Monetary
Policy Committee was only just appointed and confirmed in office – last month,
I believe. That these two important institutional props of Nigeria’s economic
policy making were not in place for several months after the new administration
was sworn in, created policy uncertainty and damaging gaps in investor
confidence – even as investors were broadly in support of the reform direction.
The CBN’s recent increase of the MPR by 400 basis points, and the cash reserve
ratio by 12.5%, from 32.5% to 45%, although belated, is appropriate in our
circumstances today. Better late than never.
Third, the
appointment of the President’s cabinet took too long in a sensitive period of
transition. When the appointments were finally made, the cabinet’s composition
turned a predominantly “political” one instead of a strong bench of apolitical
technocrats to address the economic crisis, which investors had hoped for. This
was a lost opportunity. It is always the case that when a government inherits an
economic mess of humongous and fundamental proportions, the wiser course of
action is to invest in the confidence of both the investor community and
citizens with a clear departure from “politics as usual”, in favor of a
stronger “technocratic quotient” (TQ) in constructing the highest echelons of
the executive branch of government.
II.
ECONOMIC
REVIVAL: THE FUNDAMENTALS WE MUST ADDRESS
1. The Absence of Nationhood
Economic
development and transformation can only be achieved if the quest for these
outcomes is anchored on a shared understanding of nationhood. This is a task of
nation-building. When a country’s population has a shared understanding of
where they come from and where they are going, purpose and a common destiny,
the unity of purpose leads to concentrated effort without the distraction of
fundamental divisions. This usually yields economic progress over time. The
United States is a remarkable example of the role of nation-building and
nationhood in economic development. The Revolutionary War of 1776, the U.S.
Constitution adopted in1787 which guaranteed property rights and the
inviolability of contracts and the rule of law, provided the foundation for America’s
exceptional growth in the 19th century. It is no surprise that an
intellectual property clause that provides for patent and copyright systems was
enshrined in the very first article of the United States Constitution,
directing the U.S. Congress to “promote the progress of science and useful arts
by securing the authors, and inventors the right to their respective writings
and discoveries.” The same principle of nationhood as a prime driver of
economic greatness applies in Singapore (expelled from the Malaysian Federation
in 1965), China (civilizational pride), Taiwan (expelled from mainland China
after a civil war), Japan (which dominated East Asia in the early 20th
century before the rise of China).
In Nigeria,
the absence of nationhood, the primacy of the primordial identities of
ethnicity and religion, prevent a shared understanding of the purpose of the
state and the unity of purpose without which transformational economic policy
and management cannot be achieved. It is “every group for itself and God for us
all”.
2. Bad Governance
Because
there is no shared understanding of the Nigerian State and its purpose, the
real aims of politics, the contest for power and authority are not good
governance to improve the welfare of its citizens. The absence of good
governance, marked by efficient, competent, effective, transparent and
accountable administration and the effective rule of law, is a foundational
reason for Nigeria’s recurring economic crisis including the present one. When,
as is the case in our country, the government is subverted to service of
entrenched self and vested interests, institutions are not strong and
independent, and instead serve the parochial interests of political parties in
power. Industrial scale corruption reigns, fiscal indiscipline and waste are
the norm, and even basic security cannot be guaranteed. The state is
fundamentally weakened and rendered unable to create an enabling environment
for business and wealth creation.
A state
that lacks capacity to protect its citizens and control its territory,
administer taxation efficiently, and administer social services such as health,
education and social security (note: not “palliatives”) cannot create a strong
economy. We have seen the impact of insecurity on food security and inflation.
Because
Nigeria has weak governance systems, we run a crony economy in which a few
oligarchs are stupendously wealthy, and use access to power to benefit
themselves, while the vast majority live in poverty. The enthronement of
nepotism and mediocrity means that competent policies cannot be framed and
executed, and competent citizens have no opportunity to contribute to economic
management because they are shut out by nepotism. Our national economy suffers
as a result.
3. Ad Hocism- Absence of Strategy
A nation
that has been propelled to a stage where, to quote the Nobel Laureate Wole
Soyinka, “almost every episode comes across as little more than a grand gesture
subsisting for significance and substance” needs an economic strategy.
We lack a
real strategy for governance and economic management in our country. We are
permanently in ad hoc, reactive mode towards crisis, including the present one.
This is an instinct to “be seen to be doing something” while in reality not
much is being done. “Create a committee!” Motion without movement. This is why
Nigeria’s economy is permanently crisis-prone. We make “plans" for the
economy but rarely ever achieve it. Vision 2010, Vision 2020, “ERGP, etc are
all dead and buried, with no tangible achievements.
Real strategy
is what will make the difference, and is what Nigeria needs, rather than yet
another committee of “stakeholders”. Strategy is first and foremost about
thinking, far more than it is about planning. The way we as Nigerians think, or
don’t think, determines whether we can make progress with our economy. Thinking
is more important than we think (forgive the pun). We must THINK more deeply about our economy than mere ad hoc reactions that
don’t move the needle. As the strategist Max McKeown writes in the context of
corporate organization, but also applicable to countries, “Strategy is about
outthinking your competition”. That is why it is so important that you think
before you plan.”
In
practice, formulating a coherent strategy for a country can be daunting, as
macroeconomic challenges are often complex and interdependent. This is
Nigeria’s case. However, without a clear destination and a plan to get from
here to there, we cannot make progress. The difference between having a
coherent strategy and not having one is that those countries without one are
highly likely to be implementing numerous policies with no coherence to them
(Nigeria’s case), while nations with a real strategy are more likely to achieve
desired outcomes.
UAE is an
example of a country with a strategy-based approach to economic transformation.
A desert country, known previously for its production of dates, palms, UAE has
transformed its economy over the past 50 years with a conscious strategy into a
diversified and competitive economy, increasing its GDP more than 247 times,
from AED 6.5 billion when the union was established to AED 1.6 trillion today.
In 1971 oil was 90% of GDP. Today it is less than 30%. The country invested
large portions of its oil revenues in SWFs (Sovereign Wealth Funds) which today
yield significant profits, and invested the balance in tourism and industry.
4. Absence of Philosophy and Knowledge
Every
successful economy in the world is anchored on a philosophical foundation.
Nigeria’s economic management suffers from philosophical confusion. Are we
capitalist, mixed economy or socialist? We have oscillated from capitalism to
faux socialism under different administrations and back to capitalist economic
thinking as indicated by the reforms being instituted by the present
government. But, if we are capitalists, we must be a productive capitalist
economy, because capitalism is anchored on economic activities.
We need to
understand the three requirements of successful capitalism- property rights,
innovations, and access to capital. None of these three things drives the
Nigerian economy. Land (the most important property) is held by the state under
the Land Use Act. Inventions do not drive productivity in Nigeria, whereas in
the West and Asia productivity is anchored by science, tech and innovation.
Only the rich have access to capital in Nigeria, which many abuse and default
on their loans with no consequence.
We also do not operate the Nigerian economy with
any evident understanding and clarity as to whether or not we an
entrepreneurial capitalist state like the USA, a welfarist capitalist state as
in the Scandinavian countries of Europe, a crony capitalist state like Russia
(which in reality, is what we are, but a somewhat more primitive version), or a
state capitalist country such as China.
This absence of philosophy and knowledge has
resulted in our inability to balance the state and the market. This is why we
hear policies about airport bans, border closures, price controls, fixing of
forex rates and all sorts of artificial controls on market dynamics, well
beyond responsible and appropriate regulation. A huge amount of arbitrage is
the result, because in a capitalist economy, the state cannot play the role of
the market. This is economic populism. It has failed in Nigeria, especially as
we have seen in the past ten years.
Effective
capitalism creates a free market with real competition. That is the incentive
to get a reasonable price for goods and avoid price gouging. If we want any
product to be cheap, we must have several companies that manufacture and sell
that product! When only one or two companies do so, it is not a truly free
market because there is little or no competition!
Real
knowledge should drive the management of Nigeria’s economy, but has not done
so. This also includes an understanding of the relationships between human
development (water, nutrition, health, education, etc.), economic growth (the
sum total of goods and services produced in a given year) and structural
economic transformation (when an economy achieves prosperity by complex, value-added production than on the
export of crude natural resources, such as oil or subsistence agriculture).
This is why economic policy in Nigeria is fixated on GDP growth, while poverty
rises, quality of life declines, and we have remained vulnerable to external
shock from global oil prices for more than 40 years.
A knowledge-based management of the economy will
understand that successful economies are managed at four different and
interrelated levels- philosophical, institutional, macroeconomic, and human
development. We tend to focus on the macro economy and ignore the rest. And we
have not even managed our macroeconomy well.
5. Financialization
and de-industrialization
According to the National Bureau of Statistics
(NBS), the manufacturing sector’s contribution to GDP declined to 8.23% in Q4
of 2023. The ratio has hovered between this extremely low level and 13% over
the past decade. In Malaysia, the manufacturing to GDP ratio is 23%. It is 24%
in South Korea. Export as a percentage of GDP is 10.74% in Nigeria, in
Malaysia, the ratio is 73.84% of GDP, and in Turkey it is 80.50%.
Nigeria has
been progressively de-industrialized over the past 40 years. Instead, our
economy has been increasingly “financialized” without a productive base. The
banks and the bankers are kings, serving a rentier political class for healthy
profit, while productive sectors suffer.
Productive,
export-based economies can devalue competitively, to make their exports cheaper
to attract more revenues and forex. But the Naira’s woes are simply a symptom
of this underlying crisis. Until we fix the fundamentals, “quick fixes” to the
current crisis may be only temporary and not sustainable.
Nigeria
must create a productive economy of diversified value-added exports, but our
political cultures foster a rentier economy. Malaysia, Thailand and Chile, all
originally resource-based economies, all achieved “economic complexity”,
manufacturing and exporting increasingly sophisticated goods over time.
Nigeria’s leaders will need strong, sustained political will, and a measured
implementation strategy to achieve this.
6.
Electricity
Let there
be light! There is no way out of Nigeria’s economic quagmire without adequate
electricity. Without this vital requirement, our economy cannot become
productive. Nigeria needs to move to at least 20,000 megawatts of electricity
within the next three years. It is doable, but only if we enable the private
sector with the right business environment for private investments, at the
levels of state governments. The first priority for power investments should be
manufacturing clusters, such as Lagos/Ogun state, Kano, Onitsha/Nnewi. The
inauguration of Geometric Power in Aba is a hopeful breakthrough, after two
decades of setbacks. It is a model that should be replicated.
7.
Population
crisis
Nigeria’s
unchecked population growth over decades has contributed to the crisis of
unemployment and poverty. The geometric growth of uneducated and unskilled
youth in an already stressed and unproductive economic environment has negative
implications for both economy and security. This is already evident in some parts
of the country. The population crisis has gone on for too long because of a
lack of political will to address it, flowing from sensitivities around
culture, religion and politics. I argue that these sensitivities are ultimately
self-defeating for Nigeria as a country, more so, when our population growth
trajectory is projected to climb to 400 million by 2050, making Nigeria the
third most populous country in the world after China and India.
III. The Way Forward: Possible Solutions
The
challenge Nigeria faces today calls for the rollout of a bold, visionary, and
engineered strategic project for FUNDAMENTAL ECONOMIC REBIRTH. This project
which we shall for the purpose of our discussion call Project “3-in-3”, should
be aimed at the rebirth of three strategic sectors in three years. The project,
to be scoped and commissioned within the next three months, is to be predicated
on massive investment in the development of railway lines (linking all state capitals), housing (mortgage-ready and qualitative to incrementally
reduce housing deficits), and agriculture (covering the value chain), to be
delivered in the first phase over three years beginning in 2024.
Project 3-in-3 should target to create 5 million new direct and indirect jobs. It will create two
new thriving economic sectors. The purpose is
to stimulate productivity in agriculture and housing, two sectors that do not
depend on foreign exchange, and depend on locally available resources across the 36 states. That resource is land.
The three
project sectors are all outside of exclusive federal control, constitutionally.
This will allow flexible and diversified intervention by subnational
governments and the private sector under an overarching federal coordination.
State and local governments as anchor implementers should leverage their
control of land assets as debt capital to create value chains under the
project.
The federal
government should commission a broad implementation framework, template and
target to be adapted by each subnational unit, according to their local
circumstances; and also commit to provide seed credit guarantee through
securitization of inventories and recoverable from project 3-in-3. RA-H-AG will
raise sovereign bonds in the capital market at market-rated (but government
subsidized single digits) medium tenor to the tune of 20 trillion naira for
disbursement in predetermined tranches through commercial banks, to support
sectional milestones through the project timeline.
The
interest subsidies on the bonds will cease after the initial five years after
which they will be priced and traded at competitive capital market rates
without government underwriting. This is intended to be a creative avenue to
not only mop up excess liquidity that drives galloping inflation, but also to
reinvest those idle funds in the long-fenced productive sectors envisaged in
the project, with multiplier effects.
I also
recommend the issuance of a presidential executive order for mandatory
engagement of indigenous academic and research institutions located close to
the operational bases of the program as consultants. This will create a needed
interface between “town and gown” as a model for the rest of the economy as
obtained in the industrialized countries.
This
proposal essentially seeks to use land as a borrowing base for reserve-based
lending in the same manner as unproven reserves are used in
Reserve-Based-Lending in the oil and gas industry. The Land Use Act is thus
converted into an asset rather than a constraining factor in wealth creation
for the broad masses of Nigeria. Atlantic City in Victoria Island, Lagos, and
the Dangote Refinery Complex Corridor at Ibeju Lekki are examples of how this
concept can be applied. Both projects were erected in expensively reclaimed
land in collaboration with the host state government. The expected outcome of
project 3-in-3 is a reflation and regeneration of the economy productively
while taming cost-push and forex speculation driven inflation.
2.
Fiscal Policy Must Wake Up!
Revamp
fiscal policy making. Fiscal policy in Nigeria has been extremely weak for many
years. The failure of fiscal policy led to excessive reliance on the CBN by the
government. Urban and interstate
transport infrastructure such as roads should be private sector-led. The
federal government’s budgets are excessively politicized and fund too much
recurrent expenditure that is unproductive and drives inflation, instead of
capital projects targeted at opening up the rural economy. constructed by private
sector entities through PPPs, freeing up resources for appropriate social
infrastructure such as health, education and potable water as well as social
security. Nigeria’s budget, including the 2024 budget of the FGN, is a
set-piece of waste and corruption. All budgets must be subject to forensic
audit before presentation to the National Assembly. The practice of lawmakers
of NASS adding budget items on their own after presentation by the executive
and before appropriation in my view is unconstitutional and should end. The
appropriation power of the NASS is predicated on budget proposals by the
executive branch of government. Deficit budgeting should be drastically reduced
and contained within lawful limits. The Nass role in supporting illegal ways
and means loans from the CBN to FGN must never be repeated if we are serious
about getting out from our economic crisis in a sustainable manner.
3.
End Oil Theft and Reduce Corruption
The NNPC
must be reformed to promote transparency and accountability in order to battle
oil theft at source. The corporation remains too opaque. The level of oil
production in Nigeria must be measured with the necessary meter equipment and
transparently published, along with revenues received from crude oil sales. If
the high level of crude oil theft that goes on in Nigeria is not truly and
evidently curbed, fiscal balance, revenue generation and an exit from the
current crisis will remain difficult, if not impossible in the short and medium
term.
More
generally, the government of Nigeria must wage war on systemic corruption in
all spheres of the economy and rescue Nigeria from the vice grip of vested
interests that appear to have become more powerful than the Nigerian state
itself. It is imperative to publish the amounts of all funds recovered from
those who have looted our country’s resources, and they must be brought to
account by being named, shamed (based only on concrete evidence) and
prosecuted.
4.
Continue Monetary Tightening
The Central
Bank of Nigeria should continue its recently announced monetary policy stance
of tightening the money supply for the next 24 months at least until inflation
is brought under firm control in the single digits. At a moment of crisis such
as this, a choice must be made between macroeconomic stability, in particular
price stability and growth.
Some have
criticized the central bank's rate hike by a dramatic 400 basis points (4%),
noting that Nigeria’s present hyper-inflation is much cost-push in nature than
demand pull. This criticism, while understandable, does take the full picture
into consideration. First, forex instability is a major cause of cost-push
inflation. Loads of Naira sloshing around in loose monetary conditions
contributes to the huge demand pressure on the US dollar and other foreign
currencies as capital flight intensifies. This vicious cycle must be broken.
Doing so will help achieve both price stability and exchange rate stability in
the medium term. It is also calculated to increase confidence among investors,
who need attractive yields in order to bring in portfolio investments that will
help stabilize the exchange rate and do not wish to invest in high-inflation
environments that erode value.
The CBN
must also keep an eye on financial stability, as high interest rates will
stress the ability of businesses to repay or obtain loans. Non-performing loan
rates will likely increase. The CBN must now proactively wear its risk
management hat to manage the implication of its new found hawkish monetary policy
stance for the banking sector. Granted, the CBNs actions are geared more to the
short or medium term, and the Bank needs to develop a longer term perspective
regarding its mandate. But the Bank's efforts are part of a necessary
multidimensional onslaught. Our weakest link in the financial sector, however,
remains Nigeria’s fiscal management.
5.
Crack Down on Banks Playing Footsie
Beyond the
current actions by the CBN, the Bank must demonstrate a willingness to go hard
on forex speculation that is going on in Nigeria’s banking sector. It is not
enough to focus on cryptocurrency P2P (peer to peer) platforms such as Binance
who do not have political godfathers in Nigeria. The central bank must have the political will
of a regulator to crack down on erring banks and bankers. Making examples of a
few proven cases of forex hoarding will undoubtedly set heads straight and
improve the forex situation. As is well known, the CBN under the overall
leadership of Sanusi Lamido Sanusi (during which period I served as deputy
governor) boldly and successfully cracked down on corruption in the banking
sector after the global financial crisis. This approach helped save Nigeria’s
banking sector, and thus the economy.
6.
Consider an IMF Stabilization Facility
To get out
of Nigeria’s foreign exchange crisis, the FGN must very carefully CONSIDER
whether it should take a formal stabilization package of $20-30 billion from
the International Monetary Fund (IMF). This option should be subjected to a
thorough analysis by experts, as opposed to any knee-jerk action or uninformed
public opinion. While there is typically a strong emotional and substantive
argument against this approach in our country, it has clear pros and cons.
Regarding the pros, a substantive IMF facility (it would have no impact if it
is not a big package) would markedly increase forex liquidity and our forex
reserves in a more transparent manner. It will improve investor sentiment and
attract a marked increase in foreign investment because of the confidence it
will give investors, all of which will further stabilize the forex market while
we pursue more fundamental and structural changes. It will also impose more
fiscal discipline in the country’s fiscal management. In any case, the reforms
(removal of subsidies) really are part of the Bretton Wood template. Why take
all the pain that is creating anger, without the gain of robust inflows and improved
investor sentiment?
On the
cons, a major critique of IMF programs is that they do not solve the
longer-term problems of borrowing countries, although they are helpful in the
short to medium term – if and when the program is implemented in full. The
experiences of Ghana and Sri-Lanka demonstrate the limitations of IMF programs.
Both countries have borrowed from the IMF 17 times and 16 times respectively.
Both have continued to experience economic crises in recent years. Perhaps one
response to this dilemma is that the responsibility for any country’s economic
transformation remains the country's, not that of the IMF. Countries should
plan well ahead of stabilization packages that create temporary relief. Another
major risk of IMF borrowing is the debt sustainability challenge it can create.
This is relevant to an already debt stressed country such as Nigeria. A default
on an IMF loan will create a negative credit rating and restrict opportunities
for future access to financing. IMF loans also affect a country’s sovereignty
by dictating in reality economic policies and choices of borrowing countries.
7.
Create a Full-Time Economic Advisory Council
The
President of Nigeria should create, following careful consideration, a
FULL-TIME, high-level and professional Economic Advisory Council of 7
economists. The Tripartite Economic Advisory team he appointed recently has
some important limitations. The most important thing is that it is a part time
assignment. Nigeria’s economic crisis today needs far more than part time
advisers to be effectively managed. The distinguished members of the group all
have full time business and political commitments that will limit their
availability, concentration, and consistency.
This was
the same approach taken by President Muhammed Buhari in his appointment of an
Economic Advisory Council whose members worked part time on the assignment and
met infrequently. Predictably, the Council could not influence economic
management. In addition, the appointment of serving elected politicians and
full-time corporate business leaders creates the potential for conflicts of
interest in a country whose economy has suffered from the influence of vested
crony interests. While the members of this new group undoubtedly have value to
add, their mandate needs to be redefined and renamed as an external
CONSULTATIVE GROUP, perhaps a State-Business Advisory Council (SBAC).
The full
time, 7-member Economic Advisory Council Nigeria needs today should have the
following summarized characteristics and functions:
a.
Be a full-time public-sector body of the government at
appropriate rank.
b.
Be composed of distinguished economists and economic
thinkers with a track record of research, publications, executive experience in
the economic field.
c.
Be composed of persons with SPECIFIC specialization,
skills and expertise, in particular:
Agricultural Economics, Labor Economics, Industrial Policy, Fiscal
Policy, Trade Policy, Business Economics, and Development Economics or Political
Economy. It is the combination of these specific skills and competences coming
together in a structured framework that can give the Nigerian economy the
solutions it deserves –provided the political will exists to implement their
recommendations.
d.
The council should have a chairperson and a vice-chair.
e.
Report directly to the President.
f.
Advise the President on a roadmap to the structural
transformation of Nigeria’s economy to one marked by competitiveness,
productivity and value-added exports.
g.
Advise the president on the short- and medium-term
resolution of the present economic crisis.
h.
Monitor the implementation of its advice to the President
by relevant ministries, departments and agencies as directed by the President
and compare with projected outcomes in the country’s economy.
In short,
this full-time advisory council will recommend the reforms and implementation
steps to truly diversify Nigeria’s economy and turn the country into a full
Emerging Market economy such as Malaysia, Chile, Turkey and Thailand within the
next 10 years. Of particular importance for the work of this council will be
the challenge of poverty – how the government can take 100 million people out
of poverty into the middle class in 10 years – and advising on how the human
development-GDP growth/GDP per capita-structural transformation continuum can
be achieved.
8. Cut the Cost of Governance:
The
humongous cost of governance in Nigeria must be drastically curtailed in a systemic, well thought-out and
efficient manner. While the present government's decision to implement the
Oronsaye Report is commendable, the taste of the pudding must remain in the
eating, as previous governments have announced decisions to implement the
report but never succeeded in doing so. Moreover, as the purchase of an
estimated 57.6 billion Naira worth of imported SUVs (while Nigerian Vehicle
Manufacturers such as Innoson Vehicle Manufacturing and Nord could have
satisfied this demand) for members of the NASS has demonstrated, cutting the
cost of government in an effective, measurable and transparent manner must
begin with elected and appointed political leaders. This is essential in order
for the ongoing reforms to obtain buy-in from Nigerians. The people must not
bear the costs of austerity while politicians live large.
9. Asset
Sales
Sell down
government assets under the oversight of the Ministry of Finance, Incorporated
(MOFI) to raise $20billion, to be pumped into the external reserves.
10. Create
Effective Social Security
End the populist corruption-riddled
“palliative economy”, develop and ensure implementation of an effective social
security system.
11. Population Policy
Design and implement a VOLUNTARY population
policy to control Nigeria’s population in the midst of poverty. Such a
population policy should be anchored in education and incentives.
12. Let There be Light
Design and
implement a blue-print to increase Nigeria’s electricity output to 20,000
megawatts within 3 years, driven by private sector investments and anchored on
the principle of a sustainable energy transition.
13. Confidence:
Reshuffle the Cabinet
President
Tinubu needs to revamp his cabinet of ministers not later than his first year
anniversary in office, if public and investor confidence in the capacity of his
government to grapple effectively with the present economic crisis is to
improve.
President
Tinubu’s government should adopt, and domesticate, the 24-point Private Sector
Bill of Rights advocated by the Africa Private Sector Summit (APSS) in order to
improve the investment and business environment in Nigeria, and position
Nigeria as Africa’s largest economy to take advantage of the African
Continental Free Trade Agreement (AfCFTA). These rights include those to a
secure and stable environment for business, good governance, customs and ports
reform, infrastructure, an efficient taxation system, and a corruption-free
business environment.
IV. CONCLUSION
The best
approach to exiting Nigeria’s economic malaise and its potential for social
unrest is to think and move with strategy, not with populist, knee-jerk
reactions that only create new and further opportunities for corruption. To
think structurally and lay long-term foundations. To fix Nigeria’s crisis
today, we must act for tomorrow, and deal with all the issues that have brought
us to where we are. In economic reform, you cannot do one thing and not the
other. You must do ALL that is required. This calls for joined-up thinking,
policy, and action. Systems thinking.
Let there
be no doubt: we can beat this crisis, and save tomorrow for our young people.
But we must ask ourselves honest questions, and answer honestly. What is the
purpose of political power and Government? To improve the welfare of the masses
and create national wealth, or to create personal wealth and to serve vested
interests? To vaunt our tribes, or to build a nation? Is it endless politics
for its own sake or is it effective governance? When we look in the mirror, we
should see one figure: the average GDP per capita for Nigeria since 1960 has
remained in the region of $2,000. That is a testament of failure. What will our
GDP per capita be in the next 10-15 years? That is the question we must answer,
NOW.
Nigeria is
too important to fail. If it fails, we all have failed, most of all those we
have entrusted with the responsibility to secure our today and tomorrow. When
we compare where we are today with where many other countries are, with the
talents that abound in our country, we should have a new resolve: We are God’s
children too. We deserve a place under the sun in this world of 7 billion
people. It’s time to stop the worship of the god of small things – corruption,
tribalism, cronyism, nepotism, mediocrity. This “religion” is why we are poor
and comatose today. It is Time for a new religion: meritocracy, strategy,
discipline, competence, integrity in governance, the organizing principle.
Thank you.
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