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Thursday 21 May 2015 10 BUSINESS DAY COMMENT BILKIS BAKARE Bakare is of the Features Unit, Lagos State Ministry of Information & Strategy, Alausa, Ikeja. With the emergence of Akinwunmi Ambode as the governor-elect of Lagos State, the question of who succeeds Governor Babatunde Fashola when he leaves office has now been finally laid to rest. Many people are understandably interested in who succeeds Fashola judging from the unusual style of governance he brought on board in Lagos State. That Fashola has transformed Lagos State in the last eight years is an understatement. Without a doubt, Fashola has done enough to ignite hope on revival of value delivery in public administration in Nigeria. Lagos State under his leadership has become a model for good governance in the country and a brand that markets Nigeria to the international community. Right from the inception of his administration in 2007, Fashola promised a “Brighter, Rewarding Future” for the inhabitants of the state. To actualize his vision of making Lagos State Africa’s model megacity and global economic and financial hub through the eradication of poverty, sustainable economic growth and aggressive infrastructure renewal and development, he created a development document called Ten Point Agenda (TPA). The TPA is the compass for the implementation of policies, No doubt, with his pedigree, the incoming governor, Akinwunmi Ambode, is up to the task as he is passionate about developmental issues. He has been raising young leaders and professionals through his NGO and contributing to the society comment is free Send 800word comments to comment@businessdayonline. Consolidating Fashola’s successes in Lagos programmes and projects of the Fashola administration. Under the agenda, the state’s development challenges are grouped into roads and transportation, power and water supply, public security, food security, health, education, housing, environment management and physical planning, employment generation and revenue enhancement. On each of the TPA’s areas of focus, the Fashola administration has recorded landmark achievements. For instance, the administration has demonstrated creativity and doggedness in its environmental regeneration programme. An example that readily comes to mind is the transformation of the once-notorious Oshodi. Equally, Lagos highways and streets are now cleaner and beautiful as flowers and trees adorn once-neglected and rejected spots which have now been transformed into recreational centres. The administration developed an integrated transportation system through the Bus Rapid Transit (BRT) scheme, first of its kind in sub-Saharan Africa. The administration also commenced the construction of the light rail system which the in-coming administration is expected to complete. Various road projects were embarked upon, both in the urban and rural areas. The latter was geared towards opening up the hinterland with the vision of achieving improved economic activities in these areas. Also, Lagosians now have access to qualitative health care without financial, cultural or political barriers. This was achieved through the various Eko Free Health Missions, the revitalization of primary health-care centres to run for 24 hours with the aim of decongesting the secondary health facilities. Maternal and child-care centres were built in various locations in the state as well as the construction of 20-bed Highway Accident and Emergency Centre at the Toll Gate, Lagos/ Ibadan Expressway. However, based on new realities, the administration’s recent focus on PATH (Power, Agriculture, Transportation and Housing) is a reflection of a new resolve to move the state forward and along the path of emerging world economies such as Brazil, India, China and South Africa. In order to address the shortfall and ensure stable power supply, the administration constructed Independent Power Plants at Ikeja, Ikorodu, Akute and Lagos Island. It is currently pursuing similar projects at various locations in the state. Nigeria was listed by the World Bank as one of the countries with the highest domestic food price increase among 58 countries surveyed by the Food and Agricultural Organisation. To correct this imbalance, the administration built a 20,000-metric-tonnes-per-annum rice milling plant, established the rice-for-job programme to productively engage the youths in the state, and set up the Lagos State Marine Agriculture Development Programme for the utilization of the state water resources. Emphasis was placed on the intermodal model of transportation through the implementation of two rail lines – Red line to run from Agbado to Marina and Blue line to run from Okokomaiko to Marina. Operation of efficient ferry service system, side by side with the now-tested-andtrusted BRT system and very comfortable privately-operated taxis shows that the Lagos State government is already breaking new grounds in the transportation sector. Delivering on its promise to provide functional and comfortable shelter for the residents of the state, regardless of their status and cultural backgrounds, the Babatunde Fashola administration introduced the Lagos Home Ownership Mortgage Scheme (Lagos-HOMS). The progress made on the scheme was as a result of rigorous planning, financial discipline, prudent management of resources and sheer commitment. A visionary and creative leader, Fashola has always reiterated the need to prepare for a future without oil. According to him, the most visible way to achieve this is to embrace tourism. Tourism in the state could as well become a major source of investment and revenue for the state. Diverse programmes such as the Black Heritage Festival, The Lagos Carnival, etc are some of the various ways in which the government is attracting tourists and subsequently generating employments and revenue for the people and the state, respectively. There is no doubt that the Fashola administration has rebranded Lagos State and its legacies will, undoubtedly, remain indelible. It has, therefore, become a huge task for the incoming administration to consolidate as well as surpass the achievements of the outgoing administration. The incoming administration should be ready to build on the existing policies and programmes in Lagos State to further maximize the potentials inherent in them. No doubt, with his pedigree, the incoming governor, Akinwunmi Ambode, is up to the task as he is passionate about developmental issues. He has been raising young leaders and professionals through his NGO and contributing to the society from which he has gained so much. A retired civil servant who served Lagos State meritoriously for 27 years, Ambode held key positions across all cadres of the state’s civil service such as the auditor general for local governments, permanent secretary, Ministry of Finance, and accountant general of Lagos State. These experiences coupled with his youthful energy and vision will assist him in delivering on his electoral promises to the people of the state. So, Lagosians should be prepared for a jolly good ride because Ambode’s campaign slogan – Itesiwaju Eko, ohun loje wa logun (I am concerned about the progress of Lagos) – is a pointer to the fact that the gains of the Tinubu and Fashola years are about to be properly consolidated for the common good of all Lagosians. Send reactions to: comment@businessdayonline.com OWOLABI ADEKUNLE Adekunle is a financial analyst. With May 29, 2015 around the corner, many critics and self-appointed analysts of the Goodluck Jonathan administration have become more vociferous than ever. Ordinarily, this should not come as a surprise. But when criticisms begin to take on elements of personal vendetta, then someone has to stand up for the truth and set the record straight. One major theme that runs through the various anti-Jonathan arguments has to do with the management of the economy. And expectedly, Ngozi Okonjo-Iweala has been the prime target of mudslingers. Dear governors, where is our money? agement of the oil price crisis by the outgoing administration. One major step in this regard was the implementation of measures like surcharges on luxury items, reduction in overseas trainings by government officials, voluntary cut in National Assembly budget, salaries of President Goodluck Jonathan and other top government functionaries as well as State House budget. Furthermore, the minister of finance has relentlessly pointed out the need for the country to save more. Picking up from where she left off in former President Olusegun Obasanjo’s administration, Ngozi Okonjo- Iweala continued to stress the importance of saving for the rainy day. But today, Nigeria cannot boast the kind of savings As the minister of finance and coordinating minister of the economy, Okonjo-Iweala has always been in the spotlight. The personal integrity and professional acumen with which she has managed the Nigerian economy in these trying times are nothing short of commendable. Although most Nigerians have known this for a long time, her ingenuity was again applauded at the recently-concluded World Bank/International Monetary Fund Spring Meeting in the United States of America. Commending Nigeria’s strategic response to the decline in oil revenue, the IMF managing director, Christine Lagarde, passed a vote of confidence on the efficient manit had in 2008 when $22 billion in the Excess Crude Account shielded the country from the global economic recession. Against the commonsense position of Okonjo-Iweala, the state governors favoured a culture of sharing over the discipline of saving. Ironically, these same governors are the first to shift the blame on the minister of finance when their revenue could no longer sustain their extravagant practices or even fulfil basic responsibilities such as paying salaries. The governors should be honourable enough to admit the short-sightedness with which they arm-twisted the Federal Government to drain the reserves and the carelessness with which they blew the proceeds on electioneering. The attempt by some sections of the political class to hoodwink the public into believing that Ngozi Okonjo- Iweala drained our reserves is an ill-contrived plan that cannot see the light of day. By now, the detractors should know that no amount of attacks against this woman of impeccable character can tarnish her image. The governors would do well to stop hiding behind a finger. They must take responsibility for their rapacious proclivities which they have continually catered to at the expense of the people they are voted to serve. Send reactions to: comment@businessdayonline.com
Thursday 21 May 2015 comment is free Send 800word comments to comment@businessdayonline. KAYODE OLUWA Oluwa, a former secretary-general of Nigerian Council of International Chamber of Commerce, wrote in from The Executive Business School, Lagos. The prospects for economic transformation, prosperity and sustainable development will depend to a large extent on the political will, strength of character, sincerity of purpose and strong commitment of the leadership – much more than the mere vision statements or contents of economic policies – in terms of bold, pragmatic and effective implementation of the economic reform agenda. At this juncture, let me serve a note of caution to the new government which, considering the present dire financial straits of the country, may want to be tempted to go for external borrowings/foreign loans, especially from the Bretton Woods insti- BUSINESS DAY 11 COMMENT Economic agenda for the new government (2) es and leakages in the economy, the country should be able to mobilise enough internally generated resources without having to succumb to the temptation of external loan with the attendant prohibitive cost of a potential debt trap and untoward consequences on the long-term development of the economy. In this regard, Nigeria can learn from the experiences of the “Asian Tigers”, especially their type of homegrown structural adjustment What Nigerians expect from the Buhari administration is a visible, fundamental change that will positively impact on their lives in terms of stable and uninterrupted electricity power supply, functional and affordable education at all levels, employment generation for the teeming jobless youths tutions. While bilateral loans/ foreign assistance from friendly countries may be considered purely on their economic merits and national interests, the government must avoid the temptation of externally-imposed multilateral financial institutions such as World Bank/IMF’s ‘prescriptions’ of “wrenching structural adjustment and devastating austerity measures”. We, as a nation, have travelled this tenuous route before with the concomitant unsalutary impact on the economy. The need to avoid the dictated terms and “conditionalities” of the IMF, especially for a developing country like ours, has been further espoused by Paul Volcker and Toyo Gyohten in their book ‘Changing Fortunes’ in which they underscored the double standard of IMF’s crisis resolution. As they put it, “When the [International Monetary] Fund consults with a poor and weak country, the country gets in line. When it consults with a strong country, the Fund gets in line.” I strongly believe that if the new government can effectively tackle corruption and plug all the inherent loopholes, wastagreforms undertaken without external borrowings, which have culminated in their spectacular economic performances and competiveness today – from their hitherto crisis-torn, inflation-ridden economies. The new government should, therefore, be able to manage and resolve the “tension between short-term palliatives and commitment to a long-term strategy” of economic reforms, without external borrowings, if we are to rebuild our ailing economy along the lines of sustainable development. Finally, as Buhari assumes office as Nigeria’s president come May 29, 2015, he must avoid the euphoria of change voyeurism and realise that the change Nigerians desire and have been yearning for is not a mere cosmetic change for the sake of change, nor a symbolic, momentary change of political power at the Presidential Villa! What Nigerians expect from the Buhari administration is a visible, fundamental change that will positively impact on their lives in terms of stable and uninterrupted electricity power supply, functional and affordable education at all levels, employment generation for the teeming jobless youths, good network of roads and integrated mode of transportation system, efficient and modern public infrastructure, well-equipped hospitals and affordable health-care system, access to potable water supply, adequate and affordable housing and food supply, security of lives and property, including the protection of citizens from internal and external aggression, defeat and routing of Boko Haram out of the country including the return of the kidnapped Chibok girls, visible and drastic reduction in the poverty level and gap between the rich and the poor, stemming of the rising inflation rate, enhanced value of the naira, improved economic, business and investment climate, elimination of corruption, especially in the public sector and government at all levels, institution of good governance and democratic tenets, visionary leadership and an egalitarian society where the rule of law, justice, fairness, equity, peace and progress shall prevail. Send reactions to: comment@businessdayonline.com OLUSEGUN SOTOLA Sotola is head of research with the Initiative for Public Policy Analysis, a public policy research organisation based in Lagos. Reports indicate there is fiscal crisis in 22 of the 36 states in Nigeria. Salaries and allowances are in arrears in these states and many welfarist policies like free school lunch, social benefit payments and ongoing infrastructure projects have been suspended. Before now, many of the affected states have used external funding sources like bonds and short-term loans as buffer but they have stretched that option. The servicing of those debts is partly responsible for the financial crisis across states. The major concern is that the future outlook is gloomy as there are no indications that states’ fiscal situation will likely improve soon. Since mid-2014 when crude oil prices crashed from $115 to about $50 per barrel in April, the size of federal sharable funds has depleted. There are no strong indications that the crude oil price will rise significantly in the immediate future. A report by The Brookings Institute, a US think-tank, finds that crude price will most probably hover around the current price till 2016. Also the Excess Crude Account, which has been the usual shock absorber, is almost exhausted. It currently has a balance of $2.45 billion, down from over $20 billion in January 2009. It will eventually get exhausted if crude price situation failed to improve soon. Similarly, it is less likely that banks will States’ fiscal crisis self-inflicted mercially viable. What is the benefit of an airport to a state 80 percent of whose citizens are below the poverty mark, and why build an airport that only state-owned or chartered aircraft use occasionally? The level of income that informed the decision to embark on those projects has eroded and these states cannot curtail these expenses without collateral damage. The crude oil crash is only an immediate cause; the problem touches fundamentally on the nature of the Nigerian state. The idea of state creation that started from 1967 has undermined the very essence of federalism as it has disincentivised states’ ability to develop at their pace, design their economy in a way that is sustainable from locally generated revenue. The states in Nigeria are not federating units as expected in a federal structure, rather they are provinces created for administrative convenience thereby creating a dependency problem. Given that there is bound to be occasional bust cycle in crude price, states must design their growth independently of each other and according to their income. Salary, emoluments and conditions of service of staff should be determined by a state’s ability. There is no point for Kebbi and Rivers States to be paying the same salary scale. Resource control by states has been championed as a solution, but this could be a medium-term solution as states are differently endowed. The ultimate solution is for the Nigerian state to be willing to give unbridled loan going by their previous cataclysmic experience to over-exposure. In fact, there is an existing Central Bank of Nigeria (CBN) regulation that banks should not give public sector loan in excess of 10 percent of their overall credit portfolios. It is doubtful whether many of the states could substantially increase their internally generated revenue beyond the present level. Apart from two or three states, economic activities are at subsistence level in the remaining states. Effort to boost internal revenue might not actually translate to increase in available fund. States’ power to tax citizen is dependent on citizens’ ability to pay and their perception of how efficient the state is. Where this is lacking, there is a natural inclination to resist further payment. It is easy for state officials to blame the global crude price fall or the Federal Government as some states have done. There are, however, facts that suggest the fiscal problem is self-inflicted. Buoyed by the rise in global crude oil prices between 2003 and 2013, states bit more than they could chew. Some state governments set up more agencies, bureaucracies and recruited more political appointees while imitating economically-vibrant states. Some initiated the so-called empowerment programmes. Many states remembered they ought to have a university, while others doubled theirs. Some built an airport despite that it is not compractice federalism in spirit and principle. The above points touch on the issue of viability of the states. The present cash crunch in some states exposes the folly of using political exigencies as the sole criteria for state creation. State as a coordinate unit in a federal system serves the purpose of independently driving development within its territory and as such must have adequate economic power to fulfil this mission. The reality is that states in Nigeria are not functioning as independent and coordinate units but more as administrative units in a unitary system. It is typical for states to want to shift the blame on global crude instability and embrace another form of short-termism, like seeking overdraft in banks or running cap in hand around for bailout. Such approach is not sustainable. The immediate solution to this fiscal crisis is for state governments to do what is reasonable in the face of cash crunch: limited government. Scrap or merge agencies and ministries that seem duplicative. Reduce the number of political appointees. There is no defensible need for senior special assistants, special advisers, senior special advisers and the likes. They render no obvious services. Quite a number of them are unwarranted and ultimately constitute a drain in the state’s purse. State governments in this situation might be tempted to increase taxes and levies as a way of generating more internal revenues. This will be counterproductive. It will kill existing businesses and frustrate new ones. Already, many states are harsh on business. According to the recent World Bank doing business report, some states impose levy and unnecessary permits which successfully kill new initiatives and frustrate existing businesses. Rather, emphasis should be placed on blocking the leaks in revenue collection. A reasonable way to boost IGR is to stop the corrupt practices associated with it. Every state governor is keen on sharing the Excess Crude revenue. The primary purpose of setting up the account is not to augment recurrent expenses but for capital projects such as power and infrastructure. The Federal Government should not be tempted to use the ECA balance for patronage among the states. Instead state governors should be made to understand that running their states aground financially is tantamount to bankruptcy. The newly-elected governments across the country should use their popularity to take hard decisions and address the fundamental cause of the cycle of fiscal issues. History teaches us that crude oil price by nature is unstable and state development should not be unstable. Send reactions to: comment@businessdayonline.com
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