For the second time in five years, under the regime of the President, Major General Muhammadu Buhari (retd.), Nigeria has slumped into its worst recession in over 35 years.As most discerning minds have affirmed, this was very avoidable. In fact, this should not have happened.
This is another recession that should not have happened if we had excellent and creative fiscal managers in this Buhari regime. Any government that continually pursues unconventional, non-commonsensical, contrarian, counter-posing, non-complementing and discordant fiscal and monetary policies interface as the one we have in Nigeria today will continue to create a multitude of problems for its citizens.
Disturbingly, the current recession is worse than the previous one because all the economic indicators point terribly south.
Today, Nigeria’s youth unemployment and underemployment rates are 34.9% and 28.6% respectively. Real inflation rate is at over 33% (mainly driven by high food commodity prices and massive depreciation in the value of the naira to the dollar).The SMEs are closing shops in their numbers because of the effects of multiple taxations, absence of supportive infrastructure and hostile operating environment.
Why are we where we are today?
For whole five years, the Buhari regime refused to go beyond half-truths, rhetoric and propaganda to truly diversify the Nigerian economic base from a fossil fuel dependent and support holistically and sustainably the SMEs, which would have helped us to create jobs in the country.
For whole five years, the Buhari regime refused to totally reform and fully deregulate the oil and gas sector, unbundle the NNPC, sell of the obsolete refineries that they have used to misappropriate over N750billion in 5 years, and inject transparency in our oil and gas industry.
For a whole five years, the regime refused to drive a massively reduced all-inclusive cost of governance, less profligacy and waste in the public sector. Our non-recurrent expenditure has continued to balloon while our revenue base tanks.
All through the duration of this regime since 2015, it refused to curb the heightened insecurity in Nigeria. Boko Haram, bandits and terrorist herdsmen are having a field day in the North . Kidnappers and cultists are having a swell time in the South-South and the South-East. Nigerians in practically most of the Northern states pay ransoms to bandits so that they can have access to their farmlands. Yet, none of the security chiefs is fired or replaced.
How do we get out of this recession?
1. The cost of governance in Nigeria is the most atrocious in the whole wide world and must be totally pruned down. Over 120% of the total revenue accruing to the Federal Government of Nigeria is applied to take care of the wages and non-wages profligacy of less than 0.5% of our population (political office holders and civil servants).
To reduce this bloated cost of governance, we must dust up the 1963 Republic Constitution, adopt wholly its fiscal, socioeconomic, resources control, regional autonomy and governance frameworks. Use it wholly to replace the 1999 “satanic verses” called constitution immediately.
2. We must totally unbundle the Nigerian National Petroleum Corporation, wholly privatise the three obsolete but loss-emitting refineries or scrap them within the next three months, fully deregulate the downstream oil and gas sector so as to create the needed transparent operating environment for that sector to thrive.
3. Divest the FGN/NNPC holding in the upstream oil and gas JV arrangements with the IOCs to 40%, sell off the divested FG holdings to deep-pocketed and capable private sector Nigerians, so that the JVs can become incorporated, have their own independent balance sheets, avoid the needless cash calls and be able to operate more transparently like the NLNG.
4. Reduce tariffs on imported vehicles and other hardware/ equipment to five per cent and open the borders. This will help us kill smuggling and bring back investments into Nigeria. This country will become the maritime and shipment hub for West Africa.
5. Create Agro-industrial clusters in all the 8,890 electoral awards in Nigeria. Each of these clusters will have all the supporting mechanised agroinfrastructure, development and processing infrastructure that will aid massive food commodities production in Nigeria .
The above scheme which should be wholly private sector-driven under a properly designed PPP arrangement will help us to cultivate new 2,000 to 3,000 acres of fully mechanised, irrigated, and protected farm gates in each of the 8,890 electoral wards.
Any government that continually
pursues unconventional, non-commonsensical,
non-complementing and discordant
fiscal and monetary policies interface
as the one we have in Nigeria today
will continue to create a multitude
of problems for its citizens.
This scheme, which will require over $2bn-$5bn global agro intervention funds to execute (without adding a kobo to the public sector balance debt), will help us to cultivate 10.8 million acres of farm gates, create over 30 million sustainable jobs, set up over 2, 000 new agro processing cottage factories, enhance rural security, food security and help curtail the surging food commodities inflation in Nigeria .
6. Create PPP-driven micro industry cluster of just 2 hectares per location in areas of conversion goods like tailoring, offering free electricity, import waiver etc on the grounds that 60% of their products must be for the export market (no need building unwieldy structures when we can pool several small scale workers to produce big).
The MSMEs account for 96% of businesses and 84% of employment in Nigeria. So, we must remove all the multiple tariffs and taxes on MSMEs and put in place long term grants and funding support for them.
7. Overhaul the whole Nigeria security and policing architecture. Nigeria is already the most terrorised country in Africa and the second most terrorized in the world. Execute a massive purge and sacking of the top guns across our army, police, DSS and other security agencies. They have failed totally and spectacularly. It is a shocking tragedy that the Abuja -Kaduna road has been overtaken by bandits.
It is shocking that Nigerians now pay bandits for protection in a country that is not at war. No sane investor will ship their money into such a country with such an atrocious insecurity conditions.
Dr Obiaraeri, FICA, wrote in from Ikoyi, Lagos.