26052018 - Buhari battles the challenge of CHANGE

ContinueS from pg 12
with its pedigree. But that pedigree is a rejected pedigree.
The PDP has failed to realize that it needs to re brand and
re market itself with new bold ideas .
The PDP prefers transformation to change. But it needs to
undergo one quickly, any one.
A FRAGILE ECONOMY AND
ITS GINGERLY GROWTH.
The economy has limped out of recession. It grew at an
average of 0.8% last year. The rate of growth is slow,
estimated to hover around 2% this year. Cote D’ ivoire is
growing at 7 %. Economic diversification is perhaps
easier trumpeted than achieved. But Oil’s projected
imminent redundancy has created a new urgency for
diversification. Oil’s contribution to the GDP has been
dwarfed by Agriculture but Oil contributes 90% of foreign
exchange earnings and the economy is still precariously
import dependent. A crash in oil prices or production
could be very calamitous. Fortunately crudely oil prices
are at a 4 year high and the federal government has
succeeded in keeping the Niger delta fairly quieted crude
out put at about 1.8-2MBPD.
We would need nimble utilization of available resources
and massive foreign direct investment to fill our huge
infrastructural deficit, without which we may never get
out of the woods.
Foreign capital importation has risen by 500%. Foreign
exchange supply has improved. Naira has retained some
stability. Foreign capital inflow is still all ‘hot money’.
Foreign direct investment has improved only marginally.
The country must seek to attract the much needed foreign
direct investment needed for sustainable growth. The IMF
has endorsed CBN’s handling of the foreign exchange
system but hinted that a more transparent mechanism
would be needed subsequently. The CBN still operates two
exchange windows.
Our foreign reserves are growing steadily. It’s at near 50
billion dollars. That provides some cushion in the event
of a turbulence. But our debts are piling up. Debt to
GDP ratio has crossed 18% but is still within manageable
limits. Debts are not harmful if used on projects that have
multiplier effects on the economy. Many have criticized
the proposed extension of rail lines to Niger Republic
The public service is unwieldy. This government has
weeded off more ghost workers than any government in
history using Integrated Payroll and Personnel
Information System (IPPIS). The government
must trim and reform the public service to
meet the needs of a modern economy.
Our recurrent expenditure leaves nothing for
infrastructural development. So the recourse
is to loans. Inflation has fallen from 19% in
January 2017 to 12.5% in April this year.
There are therefore many signs of
improvement.
But commercial lending to the real sector has
not improved. The lending rates are still
prohibitive. The federal government is
struggling to create room for the private
sector that was crowded out by government’s
domestic borrowings. The central bank has
retained monetary policy rate (MPR ) rate
at 14 % to maintain dollar inflow . Such a
rate ,however, cannot support sustained
growth.
The CBN data shows that Manufacturing
Purchasing Managers Index has shown
expansion for 13 consecutive months. And
Employment level index has expanded for the
12th consecutive month. But unemployment
rates have hit through the roof.
The improvement in the economy needs to be
more inclusive. The ordinary people on the
street reel from hardship and high prices of
basic commodities. That’s the change we
need.
The IMF warns of the fragility of the economy
and the need for urgent diversification. The
government has widened the tax net. About 6
Nigeria could
become a
global top 20
economy if
she lets
digitalization
and rigorous
strategizing
drive an
inclusive
economic
growth
million new tax payers have been added in the last
two years. That is commendable. Nigeria seeks to
move Tax : GDP ratio from 5% to 15 %. That will put
the economy on a firmer footing. VAIDS has worked
.
The Federal Inland Revenue Service has markedly
increased revenue generation.
The Nigeria Customs Service has reduced corruption
at the ports. It has improved general collections
too. But it could do much more.
Many of the land borders have now become
preferred routes for importation because Customs
agents are lax at the borders. Corruption thrives at
the Seme border where importers still routinely
pay bribes to Customs officers and evade payment
of proper duties.
There is evidently a genuine cause for minimal
optimism.
PETROL SUBSIDY
BLEEDING THE NATION
The rise in oil crude prices should lead to huge
savings in excess crude account. We should have
learnt our lessons. But the NNPC has bad news. It
has claimed it spent 800 billion in one year
subsidizing our petrol consumption. The figure
could get really worse as oil prices skyrocket. The
gains of high oil prices could be lost to a perennially
porous subsidy regime . The state governors are
alarmed at the lack of transparency.
The president should have deregulated the petroleum
downstream sector completely.
Our refineries have remained moribund . The NNPC
has remained the sole importer of petrol into the
country because landing costs are higher than pump
prices. But the NNPC has remained incapable of
computing our daily petrol needs. So the subsidy
regime has remained vulnerable to exploitation by
crooks in the system. Rising crude prices could
mean billions siphoned through a subsidy regime
that “change” has not really affected
Many had believed that a president that came in
with so much political capital would discard petrol
subsidy on assumption of duty. The president’s
decision to retain petrol subsidy ostensibly to
protect the masses is unenlightened. Some have
termed it barracks economics.
The president, it seems, has not
changed much.
THE ECONOMY
HAS GREAT
POTENTIALS
Nigeria could become a global top
20 economy if she lets digitalization
and rigorous strategizing drive an
inclusive economic growth. It must
quickly lift rural poverty by
democratizing the mechanisation of
agriculture and rescuing farmers
from poor yields and post harvest
losses. The rural farmers could be
helped to optimize their efforts,
maximize their yields and realize
their profits. Urban poverty must be
checked because it leads to anomie
and societal disorientation. The
increase in minimum wage is a first
right step.
The government must enable job
creation. That is where real change
lies
The government has initiated
economic focus labs. The labs are
designed to bring the private sector,
SATURDAY Vanguard, MAY 26, , 2018—13
experts, and government officials in close intensive
interactions. The interactions should produce
innovations and erase bottle necks against
investments and speedy progress in Agriculture,
Transportation , Power and Gas, Manufacturing and
Processing. The labs are a good initiative but they
must be protected from bureaucracy.
Nigeria must tie economic improvement with
improved living standards for the people. Often
economic data of growing GDP but it never reflects
on the streets where more than 75% live in abject
poverty. The country still baffles the world with its
number of malnourished children and unschooled
young people. And perhaps that leads us to the bill
Gates argument.
THE BILL GATES ARGUMENT
AND THE GOVERNMENT’S
SOCIAL INVESTMENTS
PROGRAMME
The federal government is focused on developing
infrastructure. Budgetary capital votes have increased
to about 30% of total budget. New rail way lines are
sprouting. But in real dollar terms, our investment in
infrastructure has actually reduced. Bill Gates is
bothered about our priorities. We have a huge youthful
population. We have the highest number off
malnourished children in the world. Chronic
childhood malnutrition means a certain poor sick
future. Our infant and maternal mortality rates are
astronomical. Bill Gates believes our greatest asset
are our people. But that is the very asset we have
mismanaged the most. He wants us to spend
disproportionately high volumes on health and
education. He believes the returns on investment in
the people are many times higher than those on
investments in railways for instance.
The government accepted Gates arguments. But
countered that it has not left the pope with attention.
It wants to get the economy working by linking the
markets with the farms and democratizing wealth to
the rural poor. But it has also, through its Social
Investment Programs, employed over 200,000 youths
to help in agriculture, education , health and other
sectors through N power. It has improved child school
enrollment by its school feeding program which has
employed thousands of caterers and helped check
malnutrition and its adverse effects. It has instituted
5000 naira conditional cash transfers to the poorest
of the poor.
That is some change.
It would appear Bill gates wants much more done in
that respect. The government must be commended
for the initiative but must be reminded that it has
only been able to release a paltry 15 % of the one
trillion voted for SIP in 2016 and 2017.
IN 2018, THE
BUDGET CAME VERY
LATE, AGAIN
And came with maggots. That is no change at all.
The budget was passed in May. So much has been
said about the need to have the budget by New year
day. It’s sad that the executive and the legislature
cant find enough patriotism to make an early passage
of the budget a priority. The economy depends so
much on government spending. Delayed release of
capital votes cause uncertainty, hinder effective
planning and slows both public and private sector
growths.
Recurrent expenditure is still too high. The country
needs a radical structural adjustment. The budget
deficit is too high. We are spending too much servicing
debts even after the government has managed to
restructure our debt portfolio.
Our earnings go into overheads. We borrow to repair
and build infrastructural . If we are unable to borrow
then capital projects suffer. Sometimes we borrow
and spend frivolously.
The budgets of 2016, 2017 and 2018 were filled
with capital projects that will not impact the people.
According to BudgIT over 40 percent of line items in
the 2018 budget are for office furniture , consulting,
cars etc.
Many of the items are vague and not track-able. Till
date the federal government that promised
‘change’ has not come clear on exactly how much
was released in 2016 and 2017 for capital projects.
The finance ministry and the budget office cant
agree on figures. It’s sad that in an election eve, the
federal government had room to budget for cars
and furniture rather than projects that would impact
the majority of the people.
Budget monitoring is especially important this year.
Politicians need money to prosecute elections. They
don’t change. And they will have little time to supervise
projects properly. We must not allow the economy
slip.
Continues on pg 14