Critiquing presidential economic team’s review of Nigerian gloomy indices


By Engr. Shehu Ahmed

Presidential Economic Advisory Council (PEAC) has recently sent a review of the Nigerian economy. At the center of the advisory is the recognition of the world economy recovery from impact of COVID-19 pandemic. How does the advisory affect us is the key question we need to consider. The council is concern about the key driver of exit from COVID-19 pandemic, which is the vaccine, and the apparent uneven distribution or access to it. The statistics have shown that the high-income countries have 83% access to vaccines, whereas the low-income countries averaging 0.3%. The council’s review noted the abysmal 0.1% vaccination rate in Nigeria. This has serious far-reaching implications on travels, trade, and ultimately economic growth. Nigeria needs to have a strategic plan urgently, otherwise more and more businesses will collapse either due to lack of access to raw materials, spares, or expertise, and our economic woes will worsen.

With the world economic recovery coming along, commodity price is increasing across the globe as a result of massive stimulus packages and easing of lockdowns. A barrel of crude oil is now hitting $69 and sugar hitting $17/lbs. For us in Nigeria oil is key to our survival and wellbeing. While this high crude oil price will significantly improve our revenue, it will equally affect our import-dependent economy. As of today, Nigeria cannot maintain the current regulated price of petrol at N167.00 per liter unless we want to subsidize it with attendant consequences on the revenue accruable to the states and local governments. In other words, for economic stability, we should be ready to pay N220.00+ per liter of petrol going forward.

There is also a growing threat to states’ ability to pay their wage bills with most of the states spending over 90% of their federal allocations on salaries of civil servants. For example, Kaduna state’s March 2021 wage bill was put at about 4.45 billion naira (representing over 90% of state’s federal allocation). This huge amount was spent on less than 100,000 civil servants in a state with over 6 million inhabitants. It should be obvious that this is not sustainable or a fair distribution of state resources. This pressure will continue to push for greater scrutiny on the number and quality of civil servants. The economic realities have now pushed Kaduna state to lead in the right sizing of its civil service. It is note worthy that Kano state also could not pay 100% of its salary bill in March 2021. We should expect right-sizing efforts across the states.

Inflation is on the rise (18.17%), and PEAC attributed this to world economic recovery and growing insecurity. They suggested a decisive military defeat of Boko Haram, dialogue with regional agitators, and better security intelligence effort on banditry and kidnappings. They also questioned the prudence of the military in utilization of resources made available to them and call for an investigation. I share the objectives but differ on methods to start with. We need to isolate the actual people that are active in the creation of the insecurity, and to do that we need to grow our national identity management system (NIN) and Geographic Information System (GIS). That way our forensic unit can track fingerprints, transactions, communications and movements. As such, the National Assembly in collaboration with the federal government should pass a bill mandating every citizen to be registered within 2 months and the federal government to deploy every resource to capture data on all the citizens and close access to all services without NIN; including SIM, banking services, government activities, public transportation, access to markets, etc. It is a definite “no, no” for dialogue with regional agitators, and defeating Boko Haram is beyond military actions. Boko Haram is an Ideology war, and in order to defeat them, we need to open a psychological front and prosecute it in earnest.

While PEAC acknowledged not fully understanding the dynamics of our over 42% youth unemployment rate, they largely attributed it to access to farms on account of insecurity and lack of irrigation competence- standing at about 2% of our land under cultivation. Such assertions make one wonder why we have the Ministry of Water Resources and the usefulness of the entire civil servants in that ministry. In any case, I believe access to farms is a key driver of unemployment, especially in the north, but I also believe that the right approach will be to take a closer look at the economy sector by sector and tweak it to address the issues that are holding the different sectors back. Again, this is a serious indictment on civil servants in the Ministry of Labour and Productivity as well as the Ministry of Trade and Industries. It is puzzling that the dynamics of unemployment in the country are yet to be determined. We need a targeted approach to sectors that have the capacity to absorb the unemployed youths. My suggestion is to rework our mortgage finance system and get some serious people to replace the current management of our primary mortgage bank. The fund that will be freed from that industry will become an excellent investment capital that will stimulate growth in other sectors, besides the spur of new activities from the new funding source. Of course, agriculture remains central to youth employment, and the actual challenge in this sector is centered on the poor yield. This can be addressed by a partnership with development partners that are already doing great works in the country.  

The council took a swipe at the current position of the Petroleum Industry Bill that appeared to be mangled by a weak understanding of the workings of the industry, and they made useful suggestions that include establishing a single regulator instead of two being proposed in the bill. Deregulation of petroleum downstream and commercialization of NNPC are all excellent suggestions but both the legislature and the executive lack the will to go through with such amendments. The bill does not appear to have a driver despite the quagmire the industry is currently in. Today, DPR farmed out some acreages and no investment will come in without PIB passage. No refinery is working, but the government is working on refurbishment instead of commercialization. No additional investment is coming to gas processing, because of inappropriate gas pricing and PIB issues- yet the government is expanding the gas infrastructure while available gas cannot meet 30% of current demand or infrastructure capacity. To cap it all, NNPC sent a letter to Ministry of Finance that it couldn’t contribute “sisi” to the federation account in May 2021 on account of a line item on its expenses, which is a petrol subsidy. Ironically, NNPC has a wage bill exceeding 350-billion naira per annum, for just about 7000 staff.  More than half of them are posted to units that are not functioning. We need to rework our entire business strategy for oil and gas industry and we need to be practical about it.

The take home messages from this analysis are: Our suffering will continue unless we do something drastic stop it. All businesses should anchor agreement to inflation. Don’t KEEP naira. Work Harder. Create multiple incomes. Borrow, Borrow, Borrow oooo, you will pay much less at the end of day. Unless this government gets the civil service to work efficiently, we will not achieve much.

My two-penny thought.

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