Delivering the people’s needs
BILL Gates has declared that the Muhammadu Buhari administration’s implementation of its economic plan did not reflect the Nigerian people’s needs. Co-chair of Bill and Melinda Gates Foundation (BMGF) which has committed US$1.6 billion on a polio vaccination programme in Nigeria, Gates came on a visit in March reportedly “to see firsthand the progress in primary health care provision, polio eradication, nutrition and financial inclusion” in a donee country which has been under the Buhari administration since 2015. It is an open secret that the administration is disdainful of culpability for the period’s harsh statistical verdict on the slide into economic recession that subsequently gave way to low growth rate with resultant rising absolute poverty level but would rather equate its achievements with any volumes of funds frittered away on pet projects or programmes and amounts of foreign loans acquired. So apparently anticipating that Gates would give an account of the BMGF’S success as shared achievement under the administration, he was invited to address a special meeting of the National Economic Council (NEC) that was expanded to include “the business community, academia, traditional rulers and some multilateral organisations.”
However, Gates spoke bluntly. Notwithstanding the BMGF’S philanthropic accomplishment, he lamented that Nigeria’s average life expectancy of 53 years was below the average of 62 years for low income countries; that Nigeria was the fourth worst country in the world in terms of maternal mortality rate; and that one in three children was chronically malnourished. He therefore accused the administration of failure to prioritise investments in health and education or human capital development that reflects the needs of the people above investments in physical capital and infrastructure in the implementation of its economic plan. He also pointedly criticised the poor choice made by the political leadership over the years for the non-realisation of Nigeria’s unmatched economic potential.
Gates’ observations call for detailed scrutiny. Firstly, the charge that the leadership’s wrong choice has botched the country’s economic potential cannot be controverted. The economy has been afflicted by what may be termed original-sin sovereign policy choice of fiscal and monetary practices that run against international economic best practice since the demise of the Bretton Woods system of fixed exchange rates in 1971. Legion is the economic evil that springs from the wrong policy choice such as artificial naira exchange rate, excessive fiscal deficit and macroeconomic instability that derails economic objectives. It is unclear why Gates did not explicitly name the archevil and prioritise its excision in order that investment in human capital would be beneficial. For unlike the biblical original sin, Nigeria’s economic original sin is erasable.
Secondly, what Gates termed low fiscal equilibrium was an understatement. Even by overlooking the fact that the bulk of BMGF’S $1.6 billion committed in Nigeria was expended in and to the benefit of developed countries that produced the vaccines and other health requirements, it nevertheless represents 22 per cent of the 2017 total capital budget proposals of N2.24 trillion for all the various sectors slated for that year. In effect, contrary to the claim that the plan implementation favoured physical capital projects, the country’s physical infrastructure remains dilapidated, under-funded and/or inade- quate. Because of the paucity of public funds, the reconstruction of a road, for instance, at the Apapa Port which ordinarily government could fix in a jiffy and keep motorable at all times is being handled free of charge to government but at snail’s-pace and excruciating pain to the public by two private firms. Thirdly, Gates recommended the reordering of the implementation of the strategic objectives of the 2017-20 Economic Recovery and Growth Plan (ERGP). Its three objectives are restoring growth, investing in the people and building a globally competitive economy.
The fact that the first full-year implementation of ERGP posted GDP growth rate of 0.83 per cent practically predicts the fate of the plan’s first strategic objective. Indeed, according to the IMF, “under unchanged policies” ( read under continued refusal to adopt economy-wide single forex market-determined naira exchange rate), GDP growth rate would stay flat and trail population growth rate signifying steadily increasing poverty among the people.
In this connection, Gates may be unaware that the onset of economic underperformance, which became noticeable in the late 1970s, took a toll on the standard of education and quality of health care, both of which had not long before then belonged to the top ranks in British Commonwealth countries. The economic underperformance led to, beginning in the 1980s, brain drain and a rising tide of skilled-worker emigration, a phenomenon dubbed “Andrew checks out” during Buhari’s first coming. Till date, rather than stem the plunging quality of health and education, their standard is being officially undermined by the sale in dollar cash of a significant portion of forex in the banking system including remittances by Nigerians in the Diaspora to bureaux de change to not only fund medical and educational tourism but to finance largescale smuggling as well. In the circumstances, Gates’ call for focus on ERGP’S second strategic objective through investment in human capital development may actually be a recipe for escalating brain drain and intensifying skilled-worker emigration from Nigeria to strengthen the green and blue card havens of America and the European Union while Nigeria would sink deeper into poverty. Nevertheless Gates should still be given the benefit of doubt.
Fourthly and with regard to ERG’S third strategic objective, the expanded NEC meeting was attended by multilateral organisations including presumably the Bretton Woods institutions. The Imf/world Bank act in loco Western interests. The then Paris/london clubs of creditor countries in 2006 extorted $12 billion ransom for external debt extinguishment and additionally commissioned the IMF/WB to suborn the CBN to both fix the naira exchange rate using the wholesale Dutch auction system (WDAS) and disburse withheld Federation Account dollar allocations through bureaux de change for outright dissipation. (It is a different matter should Gates question the rationality of the leadership that accepted and continued to abide by those terms). The economic impact? Continued naira depreciation and high domestic cost of production, weakening economy and ever-rising poverty among the populace. But following needling questioning, the WDAS was pronounced discontinued only to be returned and dressed in camouflage. The operation of the yearly Appropriation Act exchange rate and everdepreciating multiple exchange rate segments is analytically and impactfully akin to instituting WDAS naira exchange rates by different names. Consequently the ERGP’S third strategic objective is a pipe dream. No wonder after Nigeria exited external debt trap in 2006 under terms that have hamstrung the economy, Western countries have resorted to hawking to Nigeria’s leadership economic partnership arrangements that consign the country to the status of a banana republic.
Furthermore, the business community invited to the expanded NEC meeting has numerous umbrella bodies, all of which were/are participating cooks that spoilt the economic broth which was served under the ERGP. For a strong Nigerian economy, it is incumbent upon all residents in Nigeria including government and corporate persons to be immersed in naira and transact all legitimate business activities in naira and to only access forex to import clearly defined need-based eligible items. Only that state of affairs constitutes the groundwork for managing and growing the economy in a manner that reflects the people’s needs.
In the BMGF’S home country, USA, as Gates may be aware, domestic credit provided by the financial sector to the economy as a proportion of GDP was 253 percent in 2014. That indicator for Nigeria was 18 percent in 2017. Now, suppose Nigeria whose 2017 GDP at current basic price stood at N114 trillion also posted the 2014 U.S. bank credit indicator level in 2017. There would then have been bank credit-financed private sector investment representing 37 times the federal budget size (assume that it is constant) in various sectors of the economy as against just three times level achieved. To graft Japan’s bank credit indicator of 374 per cent of GDP in 2014, the bank creditfinanced private sector investments complementing the federal budget would rise to 56 times. Such investments in backward and forward linkage enterprises would address the gamut of the people’s needs including investments in robust human capital development and thereby provide employment, promote economic boom, undergird ballooning prosperity among the people as well as stem brain drain and skilled-worker emigration. The country’s development should neither be borne entirely by government nor be dependent solely on oil revenue.
To take a glance back to better highlight Nigeria’s miserable score among a few other countries, the bank credit indicator (in 2014 World Bank figures) was Nigeria (22 per cent), South Africa (186 per cent), Hong Kong (237 per cent) and The Netherlands (230 per cent). Note that progressive rise of bank credit utilisation level is dependent on sound management of the domestic currency and liquidity level thereby ensuring low and competitive lending rates.
There is immense economic advantage in complementing the federal budget size with cheap and non-oil-revenue-dependent bank credit-financed private sector investments that could leapfrog the current prostrate three times level to the dizzy 50-fold size elsewhere over time. The fact that this possible feat depends essentially on domestic financing should spur any thinking leadership and economic managers of any serious country to not only shun the slow economic death arising from the self-serving advice by foreign agents but also dump the defective and miasmic 47-year-old originalsin fiscal and monetary practices.
And for the Vice President, the constitutionally recognised head of the national economic team, to merely plead “strong economic growth and development ambitions” that are unrealisable under the policies being implemented unconscionable.