[size=28pt]Buhari vs Jonathan: Beyond The Election - part-2 [/size]

By Chukwuma Charles Soludo


Despite presiding over the biggest oil boom in our history, it has not added one percentage point to the growth rate of GDP compared to the Obasanjo regime especially the 2003- 07 period. Obasanjo met GDP growth rate at 2% but averaged 7% within 2003- 07. The current government has been stuck at 6% despite an unprecedented oil boom. Income (GDP) growth has actually performed worse, and poverty escalated. This is the only government in our history where rapidly increasing government expenditure was associated with increasing poverty. The director general of NBS stated in his written press conference address in 2011 that about 112 million Nigerians were living in poverty. Is this the record to defend? Obama had a tough time in his re-election in 2012 because unemployment reached 8%. Here, unemployment is at a record 24% and poverty at an all-time 71% but people are prancing around, gloating about ‘performance’. As I write, the Naira exchange rate to the dollar is $210 at the parallel market. What a historic performance! Please save your breathe and save us the embarrassment. The President promised Nigeria nothing in the last election and we did not get value for money. He should this time around present us with his plan for the future, and focus on how he would redeem himself in the second term—if he wins!

Sadly the government’s economic team is very weak, dominated by self-interested and self-conflicted group of traders and businessmen, and so-called economic team meetings have been nothing but showbiz time. The very people government exists to regulate have seized the levers of government as policymakers and most government institutions have largely been “privatized” to them. Mention any major government department or agency and someone will tell you whom it has been ‘allocated’ to, and the person subsequently nominates his minion to occupy the seat. What do you then expect? The economy seems to be on auto pilot, with confusion as to who is in charge, and government largely as a constraint. There are no big ideas, and it is difficult to see where economic policy is headed to. My thesis is that the Nigerian economy, if properly managed, should have been growing at an annual rate of about 12% given the oil boom, and poverty and unemployment should have fallen dramatically over the last five years. This is topic for another day.

So far, the Government’s response to the self-inflicted crisis is, at best, laughable. They blame external shocks as if we did not expect them and say nothing about the terrible policy choices they made. The National Assembly had described the 2015 budget as unrealistic. The fiscal adjustments proposed in the 2015 budget simply play to the gallery and just to pander to our emotions. For a $540 billion economy, the so-called luxury tax amounts to zero per cent of GDP. If the current trend continues, private businesses will come under a heavy crunch soon. Having put economics on its head during the boom time, the Government now proposes to increase taxes during a prospective downturn and impose austerity measures. Unbelievable!

Fortuitously, just as he succeeded Shagari when Nigeria faced similar situations, Buhari is once more seeking to lead Nigeria. But times have changed, and Nigeria is largely different. First, this is a democracy and dealing with corruption must happen within the ambit of the rule of law and due process. Getting things done in a democracy requires complicated bargaining, especially where the legislature, labour, the media, and civil society have become strong and entrenched. Second, the size, structure and institutions of the economy have fundamentally altered. The market economy, especially the capital market and foreign exchange market, impose binding constraints and discipline on any regime. Third, dealing with most of the other issues— insecurity, unemployment/poverty, infrastructure, health, education, etc, require increased, smarter, and more efficient spending. Increased spending when the economy is on the reverse gear?

If oil prices remain between 40- 60 dollars over the next two years, the current policy regime guarantees that foreign reserves will continue the precipitous depletion with the attendant exchange rate depreciation, as well as a probable unsustainable escalation in debt accumulation, fiscal retrenchment or taxing the private sector with vengeance. The scenario does not look pretty. The poor choices made by the current government have mortgaged the future, and the next government would have little room to manoeuvre and would inevitably undertake drastic but painful structural adjustments. Nigerians loathe the term ‘structural adjustment’. With falling real wages and depreciating currency, I can see any belated attempt by the government to deal with the bloated public sector pitching it against a feisty labour. I worry about regime stability in the coming months, and I do not envy the next team.

The seeming crisis is not destiny; it is self-imposed. However, we must see it as an opportunity to be seized to fundamentally restructure Nigeria’s political economy, including its fiscal federalism and mineral rights. The current system guarantees cycles of consumption loop and I cannot see sustainable long term prosperity without major systemic overhaul. The proposals at the national conference merely tinker at the margins. In totality, the outcome of the national conference is to do more of the same, with minor amendments on the system of sharing and consumption rather than a fundamental overhaul of the system for productivity and prosperity. President Jonathan promises to implement the report of the national conference if he wins. I commend him for at least offering ‘something’, albeit, marginal in my view. I have not heard anything from the APC or Buhari regarding the national conference report or what kind of federalism they envisage for Nigeria.

In Nigeria’s recent history, two examples under the military and civilian governments demonstrate that where the political will exists, Nigeria has the capacity to overcome severe challenges. The first was under President Babangida. Not many Nigerians appreciate that given the near bankrupt state of Nigeria’s finances and requirements for debt resolution under the Paris Club, the country had little choice but to undertake the painful Structural Adjustment Programme (SAP). I want to state for the record that the foundation for the current market economy we operate in Nigeria was laid by that regime (liberalization of markets including market determined exchange rate, private sector-led economy including licensing of private banks and insurance, de-regulation, privatization of public enterprises under TCPC, etc). Just abolishing the import licensing regime was a fundamental policy revolution. Despite the criticisms, these policy thrusts have remained the pillars of our deepening market economy, and the economy recovered from almost negative growth rate to average 5.5% during the regime and poverty incidence at 42% in 1992.

Under our democratic experience, President Obasanjo inherited a bankrupt economy (with the lost decade of the 1990’s GDP growth rate of 2.2% and hence zero per capita income growth for the decade). His regime consolidated and deepened the market economy structures (consolidation of the banking system which is powering the emergence of a new but truly private sector-led economy and simultaneously led to a new awareness and boom in the capital market; telecommunications revolution; new pension regime; debt relief which won for Nigeria policy independence from the World Bank and Paris Club; deepening of de-regulation and privatization including the unbundling of NEPA under PHCN for privatization; agricultural revolution that saw yearly growth rate of over 6% and remains unsurpassed ever since; sound monetary and fiscal policy and growing foreign reserves that gave confidence to investors; establishment of the Africa Finance Corporation which is leading infrastructure finance in Africa; backward integration policy that saw the establishment and growth of Dangote cement and others; established ICPC and EFCC to fight corruption, etc). The economy roared to average yearly growth of 7% between 2003 and 2007 (although average monthly oil price under his regime was $38), and poverty dropped from estimated 70% in1999 to 54% in 2004. Obasanjo was his own coordinating minister of the economy and chairman of the economic management team— which he chaired for 90 minutes every week. I met with him daily. In other words, he did not outsource economic management.

We expected that the next government after Obasanjo would take the economy to the next level. So far, we have had two great slogans: the 7-point agenda and currently, the transformation agenda. They remain empty slogans without content or direction.

Let me suggest that the fundamental challenge for the next government on the economy can be framed around the goal of creating twelve million jobs over the next four years to have a dent on unemployment and poverty. The challenge is to craft a development agenda to deliver this within the context of broken public finance, and an economy in which painful structural adjustments will be inevitable if current trends in oil prices continue. Most other programmes on corruption, security, power, infrastructure, etc, are expected to be instruments to achieve this objective.

So far, neither the APC nor the PDP has a credible programme for employment and poverty reduction. The APC promises to create 20,000 jobs per state in the first year, totalling a mere 720,000 jobs. This sounds like a quota system and for a country where the new entrants into the labour market per annum exceed two million. If it was intended as a joke, APC must please get serious. On the other hand, President Jonathan targets two million jobs per annum but his strategy for doing so is a Job Board— another committee of sort. Sorry, Mr. President, a Job Board is not a strategy. The principal job Nigerians hired you to do for them is to create jobs for them too. You cannot outsource that job, Sir. Creating 3 million jobs per annum under the unfolding crisis would task our creativity and audacity to the limits.

I heard one politician argue that once we fix power, private sector would create jobs. Not necessarily! Well, this government claims to have added 1,700MW to the national grid and yet unemployment soars. Ask Greece, Spain, etc with power and infrastructure and yet with high unemployment. Structural dislocations play a key role. For example, currently in Nigeria, it is estimated that more than 60% of graduates of our educational system are unemployable. You can understand why many of us are amused when the government celebrates that it has established 12 more glorified secondary schools as universities. I thought they would have told us how many Nigerian universities made it in the league of the best 200 universities in the world. That would have been an achievement. Surely, creating millions of jobs in this economy would, among other things, require ‘new money’ and extraordinary system of coordination among the three tiers of government plus the private sector. Unfortunately, from what I read, the CBN is largely likely to be asleep at this time the country needs the most revolutionary finance. This is a topic for another day. Only the President can lead this effort. Moreover, we are waiting for the two parties/candidates to spell out HOW they will create jobs, whether it is the 20,000 jobs per state by APC or 2 million per annum by President Jonathan. Let us know how you arrived at the figures. Whichever of the two that is declared winner will have his job cut out for him, and I expect him to declare a national emergency on job creation.

Surprisingly, none of the parties/candidates has any grand vision about African economic integration, led by Nigeria. There is no programme on how to make the naira the de facto currency of ECOWAS or the international financial centre that can attract more than $100 billion per annum. Where is the strategy for orchestrating the revolutionary finance to power the economy during this downturn? For President Jonathan, I find it shocking that the most important initiative of his government to secure the future of the economy by Nigeria refusing to sign the ruinous Economic Partnership Agreement (EPA) with the European Union is not even being mentioned. President Obasanjo saved Nigeria from the potential ruin of an ECOWAS single currency while to his credit Jonathan safeguarded our industrial sector/economy by refusing to sign the EPA. Or does the government not understand the import of that? It will be interesting to know the APC’s strategy for exploiting strategic alliances within Africa, China, and the world for Nigeria’s prosperity.

If Buhari wins, he will ride on the populist wind for “change”. Most people I have spoken to who have decided to vote for Buhari do not necessarily know the specifics of what he would offer or how Nigeria would be different under him. I asked my driver, Usman, whom he would vote for President. He responded: “If they no rig the election, na Buhari everybody go vote for”. I asked him why, and his next response sums it: “The man dey honest. In short, people just want to see another face for that villa”. But if he wins, the honeymoon will be brief and the pressure will be immense to magically deliver a ‘new Nigeria’ with no corruption, no Boko Haram or insecurity, jobs for everyone, no poverty, infrastructure and power in abundance, etc. As a first point, Buhari and his team must realize that they do not yet have a coherent, credible agenda that is consistent with the fundamentals of the economy currently. The APC manifesto contains some good principles and wish-lists, but as a blue print for Nigeria’s security and prosperity, it is largely hollow. The numbers do not add up. Thus, his first job is to present a credible development agenda to Nigerians.

The second key challenge for Buhari and his team will be to transit and transform from a group of what I largely refer to as aggrieved people’s congregation to build a true political party with a soul from the patchwork of political associations. It is surely easier to oppose than to govern. This should not worry us much. After all, even the PDP which has been in power for 16 years is still an assembly of people held together by what I refer to as dining table politics. I am not sure how many members can tell you what their party stands for or its mission and vision for Nigeria. The third but more difficult agenda is cobbling together a truly ‘progressive team’ that will begin to pick the pieces. The lesson of history is that the best leaders have been the ones who went beyond their narrow provincial enclaves to recruit talents and mobilize capacities for national transformation. In Nigeria’s history, the two presidents who made the most fundamental transformation of the economy, Babangida and Obasanjo, were exceptional in the quality of the teams they put together. I therefore pray that Buhari will be magnanimous in victory – if he wins—to put together a ‘team Nigeria’ for the rescue mission.

If Jonathan wins, then God must have been magnanimous to give him a second chance to redeem himself. Most people I know who support Jonathan do so either out of self-interest or fear of the unknown. As a friend summed it: the devil you know is better than the angel you do not know. One person assured me that we would see a ‘different Jonathan’ if he wins as he has been rattled by the harsh judgment of history on his presidency so far. I just pray that he is right. In that case, I would just draw the President’s attention to two issues:

First, beside the coterie of clowns who literally make a living with the sing-song of transformation agenda, President Jonathan must know that it remains an empty slogan. His greatest challenge is how to save himself from the stranglehold of his largely provincial palace jesters who tell him he has done better than God, and seek out ‘enemies’ and friends who can help him write his name in history. Propaganda won’t do it.

Second, Jonathan must claw back his powers as President of Nigeria. He largely outsourced them, and must now roll his sleeves for a new beginning. I take liberty to tell you this brutal truth: if you are not re-elected, there is little to remember your regime after the next few years. On 7th January 2004, I made a special presentation to an expanded economic management team to set agenda for the new year (as chief economic adviser). The focus of my presentation was for us to identify seven iroko trees that would be the flagship markers for the administration as well as how to finance them. I use the same framework to evaluate your administration. What I say to you, Mr. President, is that your record of performance so far is like a farmland filled with grasses. Yes, they are many but there is no tree, let alone any iroko tree, that stands out. Think about this. The beginning of wisdom for every President in his second term is to admit that he is racing against time to cement his legacy. So far, your report card is not looking great. You need a team of big and bold thinkers, as well as with excellent execution capacity. So far, it is not working!

Under the executive presidential system, Nigerians elected you to manage their economy. You cannot outsource that job. Our constitution envisages a federal coordination of the economy, and that function is performed by the National Economic Council (NEC) with Vice-President as chairman. Indeed, the constitution and other laws of Nigeria envisage the office of the VP as the coordinator on the economy. All major economic institutions of the federal government are, by law, chaired by the Vice-President including the national planning (see functions of the national planning commission as coordinator of federal government economic and development programmes), debt management office, National Council on Privatization, etc. As chairman of National Planning (with Ministers of Finance, Agriculture, CBN governor, etc as members), the VP oversees the federal planning and coordination. Then the Constitution mandates the VP as representative of the federal government to chair the NEC, with only CBN governor and state governors as members—to coordinate national economy between federal and states. No minister is a member of NEC. Many people do not understand the logic of the design of our constitution and the role of the VP. Of course, the buck stops on the desk of Mr. President. Only the President and VP have our mandate to govern us. Every other person is an adviser/assistant.

I bet that you will only appreciate this article AFTER you leave office. Now that you are in power, truth will only hurt! Be assured that those of us who are prepared to die for Nigeria will never spare you or anyone else this bitter truth.

Nigeria must survive and prosper beyond Buhari or Jonathan!

http://blogs.premiumtimesng.com/?p=166625

No time to peruse this long thread.. I need summary

Op your point is ??