“If you don’t know where you are going, you will wind up somewhere else.”
Nigeria’s economy is currently being managed by a leader who has the worst grasp of what is required to achieve sustainable economic development. Despite all the attempts to deceive Nigerians about phantom great achievements, the results in the last six years prove conclusively that the country is back-sliding. In no single year was the Gross Domestic Product, GDP, up to 3 per cent – the minimum required to maintain per capita income stable. Instead, the average Nigerian is getting poorer in real and comparative terms. An employee earning N240,000 per month in May 2015, when the exchange rate averaged N300/US$, took home $800. Today, with real market exchange rate of 540/US$ he will trek home with $444. Yet, on October 1, 2021, President Buhari’s address to the world was replete with half-truths and unbelievable falsehoods. It was pathetic.
More pathetic, however, is what the future holds for Nigeria after Buhari departs in less than twenty months time. By then, so much damage would have been done to the economy, it will require at least three other governments to clean up the mess. And, each of them will need divine assistance in addition to sound economic policies; as well as outstanding implementation.
Four cardinal errors underlie the FG’s absolute failure: spending more on current consumption at the expense of capital expenditure; borrowing without plan to recover the loans from revenue generated; destruction of agriculture and under-funding education. Corruption is left out of the discussion for now. But, FG officials must be the only people left believing he is fighting corruption. It has probably not occurred to him that spending public funds for treatment abroad without disclosing how much is dishonest. He is totally amoral about it.
Let me now address briefly the four major reasons economic development is put on hold in Nigeria – apart from having the wrong leader at this time.
CONSUMPTION VERSUS CAPITAL DEVELOPMENT.
“At the moment in Nigeria, 80 per cent of Nigeria’s revenue is spent on running the administration. You cannot develop with 20 per cent…Any nation that commits 80 per cent of its resources on bureaucracy will never progress.””
Alhaji Tanko Yakasai, Elder Statesman.
Baba Yakasai is not the first; neither would he be the last, to make that observation. For that matter, the Buhari administration is not the first to fall foul of that axiom of economic development. Even the Jonathan administration, which enjoyed the largest dollar revenue, with Dr Ngozi Okonjo-Iweala as Finance Minister was just as guilty. So, poor governance, in that regard, has remained as standard operating procedure. Some of those who were part of previous governments always become wise and patriotic after leaving office.
The Buhari administration is exceptional in this case because it is the only one which now takes on loansprimarily to pay arrears of doctors’ emoluments, to settle ASUU and to repay previous loans. Very little goes into development.
MINDLESS DEBT WITHOUT REPAYMENT PLAN
“So, we need to borrow to be able to build these projects that will ensure that we are able to develop on a sustainable basis.” Minister of Finance.
To the best of my knowledge, Nigeria’s Minister of Finance is not an economist. Consequently, her knowledge of development economics is not up to par. But, she would be well-advised to visit Doha, Dubai, United Arab Emirates, Singapore and China. There she will see cutting edge development projects – airports, hotels, railways, highways, science centres – built without governments incurring loans. Once the need for those projects are established, governments invariably turn to the private sector first to undertake them instead of going borrowing as the Buhari administration likes to do. The private sector will ensure that the loans taken will be fully recovered with interest.
The Minister was being a bit economic with the truth with respect to why we prefer loans to concessions. A two-time former Minister of Finance has summarised the guidelines for nations seeking loans in a recent interview.
Dr Kalu Idika Kalu, KIK, explained the matter this way. “You cannot talk about borrowing in the abstract. It is not the absolute size of the borrowing that should alarm us, but whether what we are borrowing would yield the wherewithal to pay back.”
If we use that global test of sound borrowing practices to Nigeria, it is easy to see where the Buhari administration has repeatedly missed the point. Take for instance borrowing to build a road. Unless toll gates are installed, there is no way the road will repay the loan. That was why the Gowon administration, properly advised by the four Super-Permanent Secretaries, placed toll gates on the first expressways. It was “know-it-all” Obasanjo, who demolished the toll gates; and we can all see the result of that stupidity on the Lagos-Ota-Abeokuta Expressway today. When there was a toll, a strict percentage of the revenue went into scheduled repairs and maintenance of that road. It would not have become a reason for “war” now. The Buhari administration is repeating many of the errors of the past by taking on unnecessary loans.
UNDER-INVESTMENT IN EDUCATION PRECLUDES DEVELOPMENT.
“Numerous are the streams that lead to social prosperity; but, all spring from the same source and that is public education.” Gaspar Javellanos, 1744-1811
Despite paying a lot of lip service and publishing false reports about the progress made in education, the real truth is Nigerian governments, especially this one, continue to under-fund education.
On October 4, 2021, a national paper published a report by the United Nations Educational, Scientific, and Cultural Organisation, UNESCO, on its front page. “Against UNESCO’s recommendation, Nigeria Budgets N3.6trn of 55.3trn for education in six years.” The report went on to point out that Nigeria is far behind Ghana and South Africa in percentage terms. That partly explains why the number of Nigerian students seeking university admissions in Ghana is rising. There is no rush of Ghanaians coming to Nigeria. It is quite possible that despite reports about xenophobia in South Africa, with Nigerians as targets, more than half of Nigerian university students will trek all the way to SA if given admission. That should tell us something about our status in Africa.
There is one reason for this. From something I read a few years ago, the children of most public officials in SA are in school there. It is doubtful if any of the children of Nigeria’s top elected officials – President, Governors — are in public, or even private, schools here. That explains why they don’t give a damn.
FOOD FIRST, NIGERIANS STARVE, FG IGNORES BANDITS.
“Burn down your cities and leave your farms; your cities will grow up again as if by magic. But, destroy our farms; and grass will grow on the streets of every city.
William Jennings Bryan, 1860-1925.
Something absolutely tragic occurred when President Buhari delivered the address to the nation for October 1 celebrations. Granted, people now know that it is impossible to be a politician and be honest. But, there are lies and there are lies! No President should utter statements which the people know is untrue. When Buhari blamed the high prices of food on middle men, he was indirectly shielding bandits and kidnappers who have turned farming into a perilous business. Why is he seating on the list of sponsors of bandits and kidnappers who drove millions of farmers off the land? This is pathetic leadership.