De­liv­er­ing the peo­ple’s needs

The Guardian (Nigeria) - - EDITORIAL -

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.

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