In 1999, as President Olusegun Obasanjo was getting set to assume office, Channels TV sampled the opinions of everyday Nigerians on their expectations from the new government. One woman memorably said: “I want Obasanjo to bring the economy down!” You can laugh all you want, but her message was very clear: the economy was fundamentally about the prices of goods and services vis-à-vis her purchasing power. You understand all the theories about consumer price index, producer price index, inflation, substitution effect and all that; she understands the realities of mudus and dericas of garri and rice. All she wanted was for the prices to “come down” to her level. Simple.
Now that the electioneering season is here again, the ordinary Nigerian is full of expectations, as should be expected. Forget all the talk about power shift and Muslim-Muslim ticket — the real issue bothering ordinary Nigerians of all religions and regions is the economy. Most Nigerians would want the next president to bring the economy “down”. Times are hard. Food poverty is on the increase. Millions upon millions of Nigerians are unemployed or underemployed. The security situation could be far better than this. There are global problems and then there are Nigerian problems — and both are now upon us. That is double trouble. Any form of relief at all will be welcome by the people.
That is partly why voters are vulnerable at election times, always imagining and advertising a Moses that would lead us out of Egypt. Sweet political talks take the centre stage and the tendency is for us to lose sight of the tough challenges ahead. We dissipate our emotions on the campaign poetry. In 2015, the All Progressives Congress (APC) did a beautiful job of comparing exchange rates and prices of good and services under the Peoples Democratic Party (PDP) in 16 years to prove the “woeful” performance in power. Four years later, the PDP paid the APC back in its own coin, asking Nigerians if they were better off in 2019 than in 2015 when the party dislodged them from Aso Rock.
Let’s face the home truth before we get carried away again: for as long as our economic structure does not undergo a fundamental change, these regressive comparisons will never end and the seasonal gloating and hubris will never stop. Another party will still compare exchange rates and prices of goods between 2023 and 2027 and use that as a campaign tool. An economy whose joy is tied to oil income will continue to be on a rollercoaster ride — as experts have been saying for years. A Yoruba proverb says for as long as your clothing harbours lice, your fingernails will always be bloodstained. The lice will continue to suck your blood and you will have to keep killing them.
By the way, I am not saying politicians should not use exchange and inflation rates to campaign. That is not my point. It is politics and it has to be played. APC and PDP have used that against each other and it will go on and on and on and on. It is APC’s turn to be taunted. Biting, they say, is part of fighting. My argument is that when all the politicking is over and elections have been won and lost, the winner will be faced with the stark reality: that there are no short cuts or quick fixes to the huge problems facing Nigeria and we will be in for a bumpy ride for years to come. For those of us who are not fanatical about elections and candidates, this is the reality we are already preparing to face.
There are at least three knotty issues the next president will have to tackle. One, debts. The Buhari administration is going to leave behind debts running into billions of dollars abroad and trillions of naira at home. In simple English, Nigeria is broke. Not just broke but heavily indebted. At this rate, the next president is going to inherit about N50 trillion in local debts alone, including the “ways and means” provided by the Central Bank of Nigeria (CBN) to sustain the government over the years. If the CBN had not provided those funds, chances are we would be owing salary arrears of between 12 and 24 months. More so, the MDAs would probably have been completely crippled by now.
But there is a price to pay — as we can see clearly in the key economic rates. Every single note of naira the CBN prints that is not a product of economic productivity invariably devalues every other naira note in circulation. It is that straightforward. That is partly why inflation is untameable. The CBN support has prevented the crippling of government but the consequences on the value of the naira are evident for all to see. The major questions facing the next president are: how do I manage these debts? How am I going to finance my government and fund my projects? Do I take more loans and face the consequences or do I keep running to CBN every month for ways and means?
Several experts argue that the problem with public finance in Nigeria is revenue — insufficient revenue, that is. Some Nigerians insist that the country is rich and the only problem is corruption and waste. Government officials, on their part, say debts are not the problem but generating the revenue to service them. On a serious note, all may be right. However, even if not one kobo is stolen or wasted, our revenues are grossly inadequate for the needs of 200 million Nigerians. And since life must go on, we will have to borrow to make up for the shortfall and keep government running. The next president definitely has to handle the tricky issue of revenue, debts and expenditure expertly.
Two, forex management. Despite all efforts to reduce our import dependency, the monthly demand for forex is in several billions of dollars while the supply is less than $1 billion. The simple law of demand and supply means the naira will continue to fall. The magic solution is for us to have an inflow of multiple billions of dollars every month. It cannot be done by decree. To start with, our oil exports are miserably low and we are not enjoying the benefits of the current oil boom. Getting our production and exports up will be helpful, but we will only be postponing the evil day: we cannot continue to rely heavily on petrodollars to meet our forex needs. We need multiple sources.
There are ways to improve the inflow of forex. For instance, Mr Peter Obi, the presidential candidate of the Labour Party, has said he would discourage multiple exchange rates. Other candidates are yet to tell us their positions. The “official” rate is N436/$, which is not readily available. In the open market, it is N740/$. That is a difference of over N300/$. No investor would gladly bring $1 billion to Nigeria in exchange for N436 billion when it is worth N740 billion on the streets. Some experts want us to close the gap to a single digit to allow a realistic intercourse between market forces. That way, we may get forex inflow from multiple sources, ease the stress on the naira and cage the arbitrage.
But as with every policy decision, there are trade-offs. Some things are still imported or paid for at N436/$, including vital medications. Some of those schooling or receiving medical treatments abroad are lucky to buy at N436/$. Petrol importation is still calculated at roughly N436/$. When we move to a single rate, it will be closer to N740/$ than N436/$, and the implications will be there for some prices and costs. But, in reality, we are already buying imported products at N740/$ while pretending the real value of the naira is N436/$. The federating units are also losing — forex revenue is calculated and shared at N436/$ when they can get far more than that in the open market.
The next president will decide what sort of forex policy to encourage. Will he continue to insist the real value of the naira is N436/$ and continue to encourage forex speculation that is pushing our currency closer to N1,000/$? Or will he allow the official rate to move closer to the open market rate and possibly attract more forex inflow into the system while the prices or goods and services go completely haywire, at least in the short run? Again, there is no shortcut or easy fix. Any choice the president makes will have consequences. There will be plenty beautiful rhetoric during electioneering but the inescapable reality is that something will have to give after the swearing-in.
Three, petrol subsidy. If anything has done extensive damage to public finance in the last three years, the subsidy bill is it. The oil we should be exporting to earn dollars during this boom period is being used to pay for the importation of petrol and sold at N165/litre, roughly a third of the actual pump price. The good side is that Nigerians are getting cheap petrol and are not thinking of taking to the streets to protest. It buys the Buhari administration some peace, especially after the devastating End SARS uprising of 2020. The other side is not just the smuggling and corruption that subsidy fosters but also the lost opportunities. The scarce trillions could be better spent elsewhere.
The Buhari administration will not remove or reduce the subsidy bill, so we are going to spend more trillions before the May 2023 change of government. The next president will then have to decide if to keep spending trillions so that we will keep buying petrol at N165/litre and we will keep short-changing education, healthcare and infrastructure or to let go of the subsidy and face an outcry and possible protests from Nigerians about rising costs of transportation, goods and services. Whatever policy option is pursued by the new president, there will be consequences. Forget whatever comparisons and sweet talks that take place during electioneering. We’ve seen all this before.
I have listed only three issues, all directly related to the management of the economy. There are other knotty issues: the insecurity — which will require more than wishful thinking to resolve; the ASUU conundrum — we have to decide if to grant universities autonomy and allow them charge tuition fees or continue like this and face the yearly strikes over inadequate funding; etcetera. By the way, I love election rhetoric. The poetry is sweet. Many voters will be hopeful that the new president will bring the economy “down”. I am happy for the enthusiasts. But, as a humourist said, “Love is ideal. Marriage is real. Any confusion of the two will never go unpunished.” You have been warned!
AND FOUR OTHER THINGS…
LOVE AND ORDER
Do you know Imam Abdullahi Abubakar? Never mind. In 2018, when another round of killings and reprisals was recorded in the perennial ethno-religious bloodbath in Plateau state, the then 84-year-old Islamic cleric spat at bigotry and shone the light of love in the darkness that descended on the community. He courageously hid over 300 people, mostly Christians, in his mosque to protect them from a certain slaughter by either divide. He risked his life to save those he was expected to help kill. On Tuesday, President Buhari awarded him a national honour, Member of the Order of the Federal Republic (MFR). These are the authentic role models and heroes in our bigoted society. Blessed.
STRIKING RELIEF
When my nephew told me on Friday that the Academic Staff Union of Universities (ASUU) had conditionally called off its eight-month-old strike, I could smell his relief. The medical student should be rounding off at 400L by now, but he has been stuck at 300L. It breaks my heart seeing him struggle to keep himself busy as a result of the strike. These are the people who suffer the most from ASUU strikes. Sadly, for as long as we insist on doing things the old way, strikes will continue to be part of the academic calendar. I repeat: we need a genuine conversation devoid of ideological dogmas if we are to get our universities functioning well for the benefit of all. Pragmatism.
TERROR AND ERROR
On Thursday, a three-member panel of the Court of Appeal, led by Justice Hanatu Sankey, declared that the federal government violated the Terrorism Act, Extradition Act and international conventions and treaties guiding extraditions when it extraordinarily renditioned Mazi Nnamdi Kanu, the leader of the Indigenous Peoples of Biafra (IPOB), from Kenya in 2019. This is instructive. In a democracy, no matter how angry we are, there are laid-down processes in prosecuting even the most heinous of crimes. That is exactly what the court is saying and I hope that government will learn from this. Government may decide to appeal but the message must not be missed. Error.
WAR WITHOUT END
I can’t believe that the big guys in the Peoples Democratic Party (PDP) are still engaged in public spats and altercations. On Friday, Chief Nyesom Wike, governor of Rivers state, and Dr Iyorchia Ayu, the national chairman of PDP, renewed their media wars over the May 2022 presidential primary in which Ayu openly celebrated Atiku’s victory over Wike. At this rate, I do not see Wike and his allies fully supporting Atiku in the presidential election, although I admit things can still change along the line. For a party whose traditional supporters in the south-east, Lagos and Christian north are switching allegiance in droves to the Labour Party, this is tantamount to playing with fire. Danger.
Source: Top Stories