Awash in the great tide of politics, we must not forget why politics can be a noble endeavour. It leads to governance. When done correctly, governance can reform a nation and improve the lot of the people. In the hands of the ignorant and the mean, governance casts abundant misfortune upon a nation and upon the welfare of its citizens.

This commentary concerns governance and policy more than it does politics. I offer it to generate debate on an important economic issue. No matter who is in power, we must do whatever is in our capacity to do to steer the nation away from economic woes. The people have suffered too much hardship already. Neither side of the political divide should seek to purchase transient advantage at the high price of dousing the people in greater economic calamity. Thus, I suggest this progressive position on how best to shape economic policy during this period of falling oil prices. I state this hoping those in charge will take pertinent advice from any quarter. My prayer is that they are not so stubborn as to adhere to a strategy that will deepen the economic misery of our people even when better policy measures are proffered.

I confess to writing this also for a reason essentially political but non-confrontational. It accentuates the distinction between the conservative Peoples Democratic Party and the progressive All Progressives Congress. The nation faces momentous elections when next year turns to its second month. The choice is a stark one; but many people do not believe as such. The differences are vast especially regarding economic policy. On the one side, the PDP champions a conservative, elitist economic model based on the theory that wealth money must first go to the already rich and well-heeled who shall determine how small a fraction of it will trickle down to the rest of society.

On the progressive side, we believe government can fillip economic growth and development in such a way that brings the fairness of prosperity to all of society. We don’t seek to penalise those who already have but we will do our utmost to remove from the clutch of poverty the bulk of our people. We seek to turn the hungry suffering of our poor and working classes into a dignified livelihood that provides a dignified existence for all.

Global oil prices have fallen from over $100 a barrel to approximately $80 per barrel. This slide has caused a corresponding drop in government’s dollar revenues. With this, the Federal Government claims it has less money at its disposal and the paucity of dollars necessitates austerity measures. Most people accept this position as gospel; debate about its correctness has been nil. Yet, the stakes are much too high to assume this subjective position as an economic certitude or uncritically accept its propriety. What they proclaim as policy is not based on any unassailable economic principle. It is statement of economic bias that beckons to the wealthy while auguring unnecessary hardship for most Nigerians.

Look at jobless and poverty levels as well as the diminished status of our middle class. After viewing these statistics, most objective economists would conclude Nigeria is mired in a long-term, secular depression. Forget the rosy GDP figures. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the current administration, the haves shall become the “have-mores” and the “have-nots” shall become the “have even less.”

The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidises their economic bounty. A tight confederacy rides an economic skyrocket while the bulk of the people languish in the swamp. For one group, the economy is a effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.

For this government to speak of austerity is to further enrich the affluent while casting the average Nigerian into greater hardship and deeper socio-economic depression. As with the Eurozone the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor.

Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don’t have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a comity of beggars and street urchins. The austerity that the current administration offers is an insensitive, myopic policy that lends primacy of favour to meaningless accounting figures instead of to the material well-being of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due.

Listen carefully to the position of the Jonathan administration as articulated by the finance minister and you shall collide into the barricades of illogic and its weighty consequences. The claim is that government is low on funds because the lower price of oil means fewer dollars are being collected from oil sales. This sounds logical but for one fundamental point. The dollar intake is basically irrelevant to determining the amount of naira the government commands and places into the political economy. This fundamental point reveals the government’s position to be the antiquated relic of a past era. It is the way of the gold standard which ceased to exist over 40 years ago. As such, government’s stance is based more on superstition than on the actual functioning of modern economy with a sovereign fiat currency of its own.

• Asiwaju Tinubu is the National Leader of the All Progressives Congress

SOURCE: http://www.punchng.com/opinion/slump-in-oil-prices-a-progressive-way-out-1/

Here I was thinking that he wanted to give a clear and unbiased way to go above this oil price decline and once again I was proved wrong. He raised good points though but he didn't fail to bring in their usual PDP vs APC battle and blackmail. A typical example of enriching the rich which he accused pdp of is Lagos State. The govt schools are suffering, those living in the slumps are either chased out or are still suffering. He controls almost every govt investment in lagos state. The atlantic city and banana island and lekki etc are not meant for the poor. I will only hope they keep telling us how they will change the country by coming out the way he did. I like it and that's what nigerians are asking them to do but he spoilt it with his progressive and conservative speech. Why was fayemi voted out? Was it not cos he was more of an elitist governor?

^^^^^

I believe that this is part 1. Maybe part 2, Tinubu will tell us what APC will do about the problem and how the party will go about solving it

From what I understand Tinubu to be saying, He opined that Austerity measure never solves the economic problem facing Nigeira.
But what I failed to point out is his progressive solution to the problem. Maybe another progressive will feel me in.

Ok.

It is not just enough to criticise a policy, an alternative economic policy should also be suggested. That notwithstanding, it is a welcome development to see a major opposition leader writing about government economic policy, we hope to see more of this kind of economic debate as we approach the general election.

What we are experiencing now is as a result of failure of successive government to fix other sectors of the economy using the oil $$$$. They rather fix every sector of their Family, friends and collaborators. If they had fixed the Manufacturing sector, it will drastically reduce importation and improve our export. It will tell on our balance of trade, the Naira will benefit greatly and the oil earning will take care of contingencies.
We failed to fix our tourism sector which should have been another source of earning. Our economic, technological and political terrain is too tough for entrepreneurs to survive. We are shamefully at the mercies of the crude oil price since 1958 till date. Sadly, our Political leaders and followers have not been impressive. We need to have some deep thinking and fashion out policies for our long term growth and development. Total dependence on oil will grind this country to powder. We need to Change

barcanista:
What we are experiencing now is as a result of failure of successive government to fix other sectors of the economy using the oil $$$$. They rather fix every sector of their Family, friends and collaborators. If they had fixed the Manufacturing sector, it will drastically reduce importation and improve our export. It will tell on our balance of trade, the Naira will benefit greatly and the oil earning will take care of contingencies.
We failed to fix our tourism sector which will be another source of earning. Our economic, technological and political terrain is too tough for entrepreneurs to survive. We are shamefully at the mercies of the crude oil price since 1958 till date. Sadly, our Political leaders and followers have not been impressive. We need to have a deep thought and fashion out policies for our long term growth and development. Total dependence on oil will grind this country to the powder. We need to Change

More like survival and I am not kidding.

ibedun:


More like survival and I am not kidding.

It is crazy how Nigeria's problems keep recycling over and over again. I recall in 2008 when Oil Price started to drop, it dropped from $147 per barrel to $35 per barrel. What saved us was our relatively fat external reserve that had grown to the tune of $64 billion. Sadly, our reserve today is a bit higher than half same amount in 2008. The government should blame themselves should anything happen to the economy.

brainpower:
Here I was thinking that he wanted to give a clear and unbiased way to go above this oil price decline and once again I was proved wrong. He raised good points though but he didn't fail to bring in their usual PDP vs APC battle and blackmail. A typical example of enriching the rich which he accused pdp of is Lagos State. The govt schools are suffering, those living in the slumps are either chased out or are still suffering. He controls almost every govt investment in lagos state. The atlantic city and banana island and lekki etc are not meant for the poor. I will only hope they keep telling us how they will change the country by coming out the way he did. I like it and that's what nigerians are asking them to do but he spoilt it with his progressive and conservative speech. Why was fayemi voted out? Was it not cos he was more of an elitist governor?

My brother, Tinubu, raised a poser and actually wrote that his intention is to spun credible debate. All these your needless venom shrouded in ignorance is not going to help. I think you'll be better off to go back to the write up and seek to understand, because to me all what you wrote here is more like a D intellect trying to assess an A submission

oshyno:
From what I understand Tinubu to be saying, He opined that Austerity measure never solves the economic problem facing Nigeira.
But what I failed to point out is his progressive solution to the problem. Maybe another progressive will feel me in.

1. I think his write up is first to open a debate to challenge the status quo. It is not about proffering solution yet. He seeks to demystify the norm of using austere measure to solve economic downturn like we're are about to face.
2. The first challenge is for us to assess his submission and critique. I beg us all, let's not turn this into PDP vs. APC daft arguments that NL posts drift to

JAkpayen:
I have observe intently as oil price has started falling since the middle of the year. The major heat started after US shut its door on our oil export. From an economic angle, every nation want to be self-sufficient rather than rely on others for economic growth.

The issue of oil price drop should have been foreseen when biofuel invention started. Nonetheless, from my observation the FG has plan B which is to diversify extensively in agriculture and agro-allied products for sustenance. But the big question: Can we reap the dividend from agriculture soon to sustain us?

1. My brother I think there is even a bigger problem in the offing. You're right in part about America shutting its door on our export. America will do much more than that.
2. There is likely going to be a price war in the Oil international market and countries like ours will get badly burnt.
3. America's shale oil and gas is more of the issue here. Even in America, at the major entrance of shale gas into domestic market, the price of gas dropped from almost $10 to less than $2. Now Imagine when they begin to flood the international market with these products, causing oversupply, and crashing the price further.
4. The Only thing preventing the scale shifting from OPECs, Russia and Venezuela to America, China and Canada (an probably briefly) is the cost of production of Shale Oil and Gas...... and when better technology in the offing causes low cost production we're toast.
5. The current price drop is an apparent signal to America from Saudi Arabia. The idea is to deter them with a warning signal, to moderate their aspiration of exporting shale oil and gas.
6. Hopefully the forth coming OPEC conference will regularize the Oil price and things will come up
7. But this is a great warning lesson to us all. For how long will we continue in Nigeria to pursue this rent seeking orientation. We keep creating states that are not sustainable. I dare say that I cannot count 3 other states apart from Lagos that can survive on IGR.
8. No wonder madam Okonjo's recent cry. Governors are going to get burnt. There monthly allocations are dwindling like crazy.

This is food for thought

barcanista:
What we are experiencing now is as a result of failure of successive government to fix other sectors of the economy using the oil $$$$. They rather fix every sector of their Family, friends and collaborators. If they had fixed the Manufacturing sector, it will drastically reduce importation and improve our export. It will tell on our balance of trade, the Naira will benefit greatly and the oil earning will take care of contingencies.
We failed to fix our tourism sector which should have been another source of earning. Our economic, technological and political terrain is too tough for entrepreneurs to survive. We are shamefully at the mercies of the crude oil price since 1958 till date. Sadly, our Political leaders and followers have not been impressive. We need to have some deep thinking and fashion out policies for our long term growth and development. Total dependence on oil will grind this country to powder. We need to Change

1. God bless you my brother.
2. Seem the generation of our fathers and today's generation have wasted the greatest opportunity to prosperity. I urge anyone to get the book "THE PRIZE - The Epic Quest for Oil, Money and Power" by Daniel Yergin. We will get to know that America attained virtually the offshoot and prosperity of every sector of their economy from Oil. Once oil was found, it spurred developments in Refineries, Automobiles - Both Land, Sea and Air, they even took the major decision of converting the coal based engines of Naval Ships to Gasoline. It led to rapid developments of roads, infrastructure...virtually everything
3. What Tinubu said in part is classic with our leaders just collecting and sharing money. What we should have invested in infrastructure, human capital etc is now what we pay 1000% more to a typical Tomopolo and the likes for security...
4. Dubai, Kuwait etc has built their economy on Oil and given birth to the World class tourism industry.........

We need to go back to the basic. We must meet look inwards and address domestic issues. Human Capital development, Infrastructures and Food must be rapidly accelerated.

ogbenicodes:
The claim is that government is low on funds because the lower price of oil means fewer dollars are being collected from oil sales. This sounds logical but for one fundamental point. The dollar intake is basically irrelevant to determining the amount of naira the government commands and places into the political economy. This fundamental point reveals the government’s position to be the antiquated relic of a past era. It is the way of the gold standard which ceased to exist over 40 years ago. As such, government’s stance is based more on superstition than on the actual functioning of modern economy with a sovereign fiat currency of its own.

• Asiwaju Tinubu is the National Leader of the All Progressives Congress

Bola Tinubu has clearly propounded his own solution in the last paragraph. It is not one of austerity but expanded government spending as was done in the United States. He wants the government to print more naira to stimulate the economy and build infrastructure. I do not know how effectual this policy would be but it is something different and an answer to those that are saying APC has not brought forward any policy based on the write up.

mapet:


1. I think his write up is first to open a debate to challenge the status quo. It is not about proffering solution yet. He seeks to demystify the norm of using austere measure to solve economic downturn like we're are about to face.
2. The first challenge is for us to assess his submission and critique. I beg us all, let's not turn this into PDP vs. APC daft arguments that NL posts drift to

My take on the issue had absolutely nothing to do with PDP or APC. I'm more concerned about his stand vis-a-vis the current economic situation. Get this: I like the fact Tinubu x-rayed some economic implication of using austerity measures.

In using austerity measure, taxes are increased, jobs are lost. If these were not used to solve d budget deficit the Govt is about to face, next is to fall on IMF to bale us out by borrowing. I understand Tinubu is saying the current austerity measure the govt is using is inimical to middle class, I tend to find it funny how that will put more money on the "wealthy cum capitalist" pocket.

Moreover why I'm inclined to believe his views has lots of political undertones is his luv for the middle class. He posited that the middle class will be worst hit if the govt goes ahead using the austerity measure but fails to provide alternative. If u say what am doing is bad u shud be able to provide an alternative. Now if govt fails to listen to his alternative, that is entirely another ball game.

mapet:

1. God bless you my brother.
2. Seem the generation of our fathers and today's generation have wasted the greatest opportunity to prosperity. I urge anyone to get the book "THE PRIZE - The Epic Quest for Oil, Money and Power" by Daniel Yergin. We will get to know that America attained virtually the offshoot and prosperity of every sector of their economy from Oil. Once oil was found, it spurred developments in Refineries, Automobiles - Both Land, Sea and Air, they even took the major decision of converting the coal based engines of Naval Ships to Gasoline. It led to rapid developments of roads, infrastructure...virtually everything
3. What Tinubu said in part is classic with our leaders just collecting and sharing money. What we should have invested in infrastructure, human capital etc is now what we pay 1000% more to a typical Tomopolo and the likes for security...
4. Dubai, Kuwait etc has built their economy on Oil and given birth to the World class tourism industry.........
We need to go back to the basic. We must meet look inwards and address domestic issues. Human Capital development, Infrastructures and Food must be rapidly accelerated.

Food production domestically because like it or not we wouldn't have enough dollar to import food in the not too distant future.

We have practically killed ourselves economically with the pump and spend mentality around oil.

Frighteningly Tinubu's ideas may not work given the low productive capacity of our economy, it would merely create Zimbabwe style inflation and consequently dollarisation. A lot of our children (sebi we kuku have a talent for making those if nothing else) should be prepared for life as domestic servants in countries that have made the right choices with their petrodollar over the year.

Those who fail to prepare for the future will have it designed for them.

I like the kind of discussion going on here, this is the exact thing Tinubu wanted, to stimulate a debate. I just pray pdp and apc supporters will not come to derail this thread.

Solid article from Jagaban, a continuation of the first he penned during the 2012 Petrol subsidy Protests.

For those who might not understand his premise,he is urging a pseudo-Quantitative easing to negate
the effect of the Fall in oil prices and also to stop basing our budgets on oil benchmarks(price & production)
But on what we require for Economic growth and development.The probable downside of this as he points out
is inflation and devaluation.

My personal opinion on the issue is mixed, as i am torn between his prescriptions and those of Dr boyo,
I do support the idea of Nairalization by the CBN ,of fiscal deficits for Governments(state and federal).This would be
effective in reducing the urge our Our banks have for Government securities and its attendant effects on
Lending costs for Businesses, mortages etc.I.e If a bank can buy bonds at 14% interest rate, why would
they lend to you unless of course you are named Aliko and such thinking prevents growth of Small and medium
businesses.

But then there is an inherent risk of deficit binging as some state governments might take the easy way
of collecting the Free Naira and using such frivolously on unwise spending or dollar buying which would lead to
runaway devaluation .Also the low productive base of our economy makes this a Risk as we would are
import dependent and many other Unknown Unknowns might lead us to zimbabwe/weimar germany scenario.

Thus to reduce the Risk of this we should implement this in phases, 25-30 % of all deficits for the first year and
observing the effects.Also to increase productivity in the short term, we should be going the way of
teacup refineries as that would reduce our import bill, provide employment and enable to add value
to our most important commodity.

donguutti:
Solid article from Jagaban, a continuation of the first he penned during the 2012 Petrol subsidy Protests.
For those who might not understand his premise,he is urging a pseudo-Quantitative easing to negate
the effect of the Fall in oil prices and also to stop basing our budgets on oil benchmarks(price & production)
But on what we require for Economic growth and development.The probable downside of this as he points out
is inflation and devaluation.
My personal opinion on the issue is mixed, as i am torn between his prescriptions and those of Dr boyo,
I do support the idea of Nairalization by the CBN ,of fiscal deficits for Governments(state and federal).This would be
effective in reducing the urge our Our banks have for Government securities and its attendant effects on
Lending costs for Businesses, mortages etc.I.e If a bank can buy bonds at 14% interest rate, why would
they lend to you unless of course you are named Aliko and such thinking prevents growth of Small and medium
businesses.
But then there is an inherent risk of deficit binging as some state governments might take the easy way
of collecting the Free Naira and using such frivolously on unwise spending or dollar buying which would lead to
runaway devaluation .Also the low productive base of our economy makes this a Risk as we would are
import dependent and many other Unknown Unknowns might lead us to zimbabwe/weimar germany scenario.
Thus to reduce the Risk of this we should implement this in phases, 25-30 % of all deficits for the first year and
observing the effects.Also to increase productivity in the short term, we should be going the way of
teacup refineries as that would reduce our import bill, provide employment and enable to add value
to our most important commodity.

I believe matching the nairalization with some fiscal policies may pay off, eventually. Policy thrust of government will determine the failure or success of this approach.