The Nigerian Middle-class Everyone Should Worry About

Recently, a Ph.D. candidate friend came to Lagos on field assignment for research work; studying the trends of migration in Nigeria with the specific focus on migration rate, the location of choice and the class and profession of migrants. I was opportune to proofread some of her findings report and I was alarmed by the rate and class of migrants leaving Nigeria.


The preferred location of choice was Canada through the Canadian express entry for highly skilled immigrants, but what was distressing about her report was that the class of people leaving were not necessarily having a hard life in Nigeria. Secondly, the occupation of those leaving Nigeria meant that in less than ten years, Nigeria will have a huge deficit in its medical, education and finance field. Further, this report also found that the approval rate for Nigerians was declining and not only that, it was beginning to negatively impact US visa approval rate as well.
Following this, without giving it much thought, on Canada day, July 1st, I tweeted that the Canada government should reduce the approval rate of migrant visas for Nigerians by 60% and that also, the program should give preference to applicants below a certain income gap and the social media sphere went crazy on me. Up until this time, I was slightly ignorant of the fact that the average Nigerian, I mean the majority are seeking a way out of the country in pursuit of the Canadian dream. What I cannot seem to understand is the assumption that life is necessarily better abroad. And the entitlement connoted by the backlash I got is fueled by the idea that the West owes poor countries something and must pay for the failures of our bad government.  We seldom forget that these countries have their own issues too and were not always this functional and good governance was enforced by their citizens who were angry and frustrated enough to force a revolution. As such, Nigerians who do not have to leave are the ones leaving in droves and therefore should be restricted because the change Nigeria needs will require more of the standard income earning set of middle class because the lower income earning middle-class demography are slowly slipping into poverty and are the class every economist and development expert should pay attention to.
For long, the Nigerian middle class has been a class of people economically living a lie; living paycheck to paycheck and spending everything they earn. More recently, the poor economic management and the self-inflicted challenging times of the Buhari government divided the Nigerian middle-class into two groups;

  1.  The economically delusional: This class of medium income earner who spends everything they earn, sometimes they have more days than money later to survive and end up borrowing to cover a deficit. Most of this class of median income earners whose economic reality cannot accommodate all their basic needs and wants are doomed to be trapped in this survival circle.
  2. The vulnerable middle-class; these are the working-class income earners who have not been paid a salary for months, some for as much as seven months. It is important to note that this set of staff are the ones the companies could not afford to let go after the Buhari ill-economic policy-induced hardships which saw many multinational companies close and exit Nigeria while others were forced to do a drastic downsizing. Howbeit, besides bad economic climate, companies such as payporte, Wakanow, Etisalat are highly irresponsible and abusive to staff because they know that Nigeria is a lawless nation, they could easily get away with this. For example, Payporte prioritizes sponsoring the TV show Big Brother Nigeria over offsetting salary arrears or even a part payment.

In February 2018, the Poverty World Clock hypothesized that Nigeria had overtaken India to become the new global headquarter of the nation with the highest number of absolutely poor people. While this hypothesis is not back up with field research, it is relevant to note that, taking into attention the downward spiral the Nigerian economy has taken since early 2017; the job cuts, job loss, factory close down, the harsh policies such as arrest of street traders inhibiting the poor from generating their own income and forced evictions across Nigeria which is rendering hundreds of thousands homeless and without stability to continue their livelihood practices. Any business that depends on importing raw materials has been struggling since early 2017; laying off staff and at extreme cases closing up. For example one year after setting up a $300 million factory in Agbara, Ogun State, Procter and Gamble has shutdown due to the government policies making sources and getting raw materials into Nigeria challenging and economically unreasonable. Over 300 employees are being gradually laid off in preparation for a final shutdown. Evidently, more Nigerians are shift demographies from the weaker middle to relative poverty. The impact of this will affect ability to access healthcare and greatly impact school enrollment and attendance. Whether or not the Poverty World Clock is a clever hypothesis, it is clear to see how Nigeria rapidly became the home to the highest number of the most vulnerable poor people globally.

In analyzing the current welfare climate in Nigeria, what quickly becomes apparent is that the lower middle earner who has now been forced into vulnerability are slipping into relative poverty, while the former relatively poor demography is shifting into absolute poverty.
It is this set of middle-class that economist and development expert must begin to pay attention to, as ignoring this class is detrimental to Nigeria’s growth and development.
In a country that citizens buy and pay for everything they still pay the government for, it is imperative that as many people as possible are harnessed to generate their own income.

If Nigeria is remotely serious about achieving the SDG goal, 1, 2, 8,10 and 11, the government must begin to stop and pay attention to how the policies are creating more inequality and poverty, and device interventions to support and not inhibit income generation as well as slum upgrades and not forced evictions. Because any policy that bans and imposes sanctions on informal activities as opposed to creating management structures to support is unwise.

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The Intricacies of Buhari’s False Economy

In 2016 when the Buhari led administration embarked on the currency swap deal with China it was obvious that China, had the upper hand and this was doomed to failure at inception. The currency swap was never a deal for Nigeria because Nigeria realistically, Nigeria will not be better for it. If anything, this deal showed that the Nigerian economy under President Buhari has no directive and is driven by a “copy and paste” preconceived notions of the direction Nigeria should be taking. For a vulnerable economy such as ours, the bilateral trade works best with the cash and not swap because the Naira is not a convertible currency in the global scale of things and our oil earning is in US dollars. Unless Nigeria trades with China and collects their yuan anything else is unintelligent in its situation.

There are broad lessons that we can draw from Buhari’s failing economic model. Cutting a deficit economy off from the rest of the world by strict and corrupt FX policy is generally a bad idea. All nations urbanize but some plan ahead and don’t impose a path upon itself. It’s generally best to let your economy do what it turns out to be best at rather than forcing down a narrow path, however, when the need arises, the government can step in to support and not inhibit it back to recover. The idea of micromanaging economies are generally a disaster, particularly for emerging nations such as Nigeria.

One of the biggest mistake made by this administration’s economic team is the monocausal justification for everything. For example, asides oil prices dip, Nigeria’s economy is struggling because past administration was corrupt, yet the past administration met a deficit economy almost ruined by an ill President Musa Yar’Dua whose illness left the office susceptible to intense looting, yet managed to navigate an economic leap.  My point is, reducing everything to simplistic explanations don’t work, and however, staying out of the way of economic activities, reducing heavy regulations and the singular exchange rate will do the economy better right now.

This has prompted so much uncertainty now much more than existed three years ago when oil prices were high,  now the reduction in oil price affects government’s spending and not necessarily the economy in the real sense of it. I say so because government spending does not translate to the market wellbeing or economic growth nor can government spending induce a bottom-up growth, but sound policies that support the bottom, especially the bottom businesses and the informal sector will kick-start the economy.

That being said, one explanation to this assumption is that economist around the world have no straightforward formula for development, as such, the solution remains maximum free markets, maximum openness and support for all activities, particularly informal sector.  The logic is that this will increase the chances of discovery of new opportunities and as long as new opportunities are supported the market will do well, thus, the economy. Somehow, the finance minister and the CBN find this difficult to grasp. What is obvious is, as usual, the Nigerian economy is designed intentionally to favour those it favours; the elites; as it is continually reinforced by the CBN and “bureau the change” through the multiple exchanges.

My main stance is that the government step up to see a role for – a bigger role as an orchestrator of a discovery process. Such process involves a stronger amount of government agencies supporting but not picking winners particularly those at the lower end of the chain by coordinating a kind and less stringent insider system of key business leaders, trade unions, and others in a long-term process of interaction about a national development strategy using markets.

Lastly, Nigeria has a trade deficits relationship with almost all the countries in the world; we import everything and export nothing but unrefined oil. Shutting down an economy that relies on import through the stringent FX access and multiple exchange rates makes no sense even to a first-year economic undergraduate.  This single policy has created more poverty and unemployment than any other policy in Nigeria’s history in the last two decade.

By all indications, this administration’s economic plan is built on sheer delusional and ignorance of an economic illiterate team or purposely seeking to put Nigeria through economic hardship for reasons yet unknown!.

 

 

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Slave Trade in Libya like the Deaths in Medditterian Sea is Caused by the African Governments

The horrifying reports brought to light by the CNN film crew who secretly filmed actions of humans being auctioned as a slave in Libya two weeks ago has created an uproar globally; causing shocks and condemnations. Majority of the slaves are Sub-Saharan Africans.

As much as this is a human rights crisis deserving of global attention, beneath the surface and most importantly, is the underlining migration problem plaguing most of Sub-Saharan Africa. Howbeit, popular opinion and politically correct perspectives of blaming the international community for evading international responsibilities and commitment to international laws drive this narrative.

For many Africans, the autopilot response is a sweeping generality that the West owes us something, has for years created this learned helplessness and a certain level of entitlement. For the most part,  this has made Africans fail to hold their government accountable.
It is for this same reason that Nigeria handled the death of young Nigerian girls who died at the Mediterranean Sea while trying to migrate to Europe in search of the better life with such nonchalance and indifference; like their lives meant nothing. For decades African leaders have been irresponsible and inciting their people to look to the West often for a solution to problems that they as a government should solve.

That is the reason why many African leaders are silent on addressing these steep issues that are deserving of worthy attention that should be pioneered by them, African leaders. But, the reserve is the case across all affected Sub-Saharan nations; these leaders are dead silent.

While we are at this, let’s not forget the unpopular stories of the Nigerian women slaves in Libya whose slave owners are fellow Nigerians who abuse the desperation of citizens who want to seek a better life in Europe, illegally,  the nearest and most convenient route in Libya. Let’s not forget the little African girl trafficked for prostitution in Libya under the disguises of a better life in Europe or getting a job elsewhere. Let us not also forget the many Africans who die of dehydration in the Moroccan desert while trying to cross over to Spain.

Think about this for a second, do you think a Congolese will willingly with the availability of alternative possibilities leave Congo on the journey to Europe through Libya? Will a Nigerian medical doctor who is paid a decent salary and regularly by the government migrate to the UAE or Saudi Arabia to practice? Why should IOM pay ransoms for the Africans to be freed in Libya to return to their countries?

The answers to these questions are the reason why Nigeria like many African leaders fails to address these issues. Yes, they know why Africans would risk their lives for the possibility of the unknown in a strange land. Many of these Africans are aware of the hardship fellow Africans face on the streets of Europe but still see it as a better alternative than the sense of helplessness that is their realities in their respective countries.

Silence and or indifference is the best response of African leaders to these issues because for them it easier than looking at it from a practical perspective. Are things that hard that citizens are taking these sorts of risk? Of course, yes, but our leaders ignore it because addressing these will force them to face the reality of the bloated cost of running the government in comparison to how much they budget and spend on education, healthcare, opening up the economy to accommodate small businesses which is the main driver of most African economies and human development.

For example, the Nigerian University Commission (NUC) 2018 budgeted eight million Naira out of its 2018 four billion Naira on research for the entire year, while eighty-five million Naira was budgeted for the purchase of cars for the commission’s secretariat in Abuja.  What is the rationale for this of budgeting? Why are we spending less on human development and expecting anything good to come out of this country?

The Washington post recently condemned the Italian government desperate attempt to keep the migrant’s numbers low by paying Libyan traffickers more money to keep them from allowing migrants crossover. Although this is wrong, the Italian government is just trying to protect itself; refugees and illegal migration cost these countries a fortune.

But this is often disregarded like it does not matter, yet African government blame everyone else but themselves.

President Alpha Conde of Guinea criticized the European policy that allows migrants to be sent back to Libya where they came from saying “Our European friends are wrong for asking Libya to keep immigrants in detention.

As Africans, we are failing our future by refusing to come to the realization that, these countries owe us nothing and that our governments are solely responsible for the ongoing slave trade in Libya and the death of many who die at the Mediterranean Sea.
Blaming the world, then Libya is a futile exercise that cannot solve the fundamental issues beneath the surface these horrible situations.

Libya is a weak and failed nation that cannot even protect and provide for Libyans, it is, therefore, unnecessary for the West and Africans to expect any better from them. And the West should consider alternative ways of returning Migrants to their countries, as using Libya as a dumping ground for these migrants is wrong on their part.

 

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Nigeria’s Political Economy & the Implication for Sustainable Development

The 2006 British White paper on good governance opens with a bold assumption, stating that good governance is about good politics, period! That good governance is predetermined by the nature of politics (good or bad). Politics is central to reducing service delivery as it shapes and influences policy making. In other words, politics determines who gets what. Furthermore, underlying politics are elites who fund campaigns; making money the most essential tool in politics.

What this means is that economic and political elites are a recycled small group of people who determine who gets into what public office and for how long. As such, governance is driven by loyalty to the elite, paying back loans and ultimately mostly serves these elites, leaving many behind. Public office holders are neither elected nor appointed based on capacity but on the ability to buy votes. After which the elected officer ignores the needs of the poor to satisfy those who got them into office. This drives the huge disparities that exist between the elites, struggling middle class and Nigeria’s most vulnerable group; the poor.

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As such, money itself has become a dominant factor in African politics. Money seems to have taken the centre stage in the political process in most countries and even more so in Nigerian politics. It is, sadly, now playing an increasingly critical role in determining who gets elected and who the beneficiaries of such governments are as political financing makes economic elites powerful and the main beneficiaries of government, in the case of a military government; political elites play this position. Presently in Nigeria, political parties’ formation and financing create room for economic elites to hijack government for their benefits.

The argument is be reducing the role money plays in politics, but making politics work for the electorate regardless of such role. Money is an essential part of political processes globally, and even more so in many developing nations. Howbeit,  money continues to take a back seat in the discourse on creating incentives to drive better governance; a governance that works for the benefit of the majority.The role that money plays in politics by all accounts creates an uneven playing field and an unequal access to the office.

The implication of this is that in the longer term; it bred a huge threat to Nigeria’s democracy. Upon closer inspection, Nigeria’s political structure disempowers the electorates and makes it impossible for the government to be held accountable to the citizens.

Expert explanations about bad governance, poverty and inequality in emerging nations such as Nigeria is often the disregard for key factors such as but not limited to the lack of long-term planning. In Nigeria, this is even more so the case.

Such reasoning often fall for the fallacy of a single cause; “Nigeria is poor because of oil curse and falling prices” or more popularly, “Nigeria is poor because of corruption”, yes these points are valid but are merely created by the vacuum left by poor governance and lack of tangible planning for development. For example, in 2016 forward-thinking China launched their 13th five-year education plan; The plan encourages the cultivation of students’ entrepreneurship and innovation capabilities and practical skills. It also emphasises the need to strengthen exam and recruitment reforms, promote higher education, develop internet plus education, and promote and regulate private education.

In terms of the economy, the self-induced recession via a scarcity of foreign exchange (FX) is a recipe for disaster in an import-dependent economy.  Also, the Nigerian Central Banks policy to restrict Nigeria debit and credit cards from trading outside of Nigeria in other to boost the “buy Nigeria” campaign makes no economic sense, because, in reality, the cost of manufacturing and producing “made-in-Nigeria” does not make the pricing competitive and affordable.

This single account has killed many Nigerian small businesses who depend on foreign goods or services to run their businesses. For example, two years ago, a Nigerian small business could purchase items online from China to run their businesses at a much cheaper rate, today, many other those businesses do not exist. The logic behind this policy is to control illicit funds, dismantle the black-market and combat corruption but the technicalities of what makes such policies efficient are lacking greatly, thus, causing more harm than the intended outcomes. If Nigerian banks have a scarcity of FX, it still leads Nigerians back to the black-market it was trying to dismantle; allowing the black-market so much power in setting the FX rates. While the blockage of Nigerian credit and debit cards isolates Nigeria from the global market from Nigeria and vice versa.

Recently, the acting president of Nigeria VP Yemi Osinbajo launched a 60 days national action plan to improve and create business friend environments in Nigeria. The main focus is on the entry and exit of goods and the entry and exit of the person into Nigeria to be improved,  as well as improving transparency and efficiency of the government parastatal. While this is a great idea, it is largely built on the assumptions that administrative challenges are the reasons why doing business in Nigeria are difficult. While this is true, technicalities such as lack of electricity, the reconciliation of state and federal taxation policies, custom high charges, bribery, bureaucratic processes and middlemen in the process of getting a license or business registration are much more urgent necessities.

The government needs to focus more on implementing the existing practical laws and policies that make doing businesses easier and cheaper. In Rwanda, a business registration can be done online without lawyers and other middlemen and gotten in less than a week. Making Nigeria work for the benefits of the poor majority requires the following;

Making Nigeria work for the benefits of the poor majority requires but not limited to the following;

  1. Free Markets: There is much more uncertainty now than there was two years ago and I think one of the main downsides of this dreadful financial slump is that it has raised the level of uncertainty that cannot be intervened by international recommendations but practical-context specifics with will only be discovered after many trials and errors. It is important that policy makers understand the Nigerian context and the market fundamentals in allowing market forces to work out the optimal scenario. Some economist argues that there are justifiable reasons for Nigeria to abandon the free markets mantra, however, I believe that as bad as things are, free markets is a reasonable way to jump-start a way forward.  Efforts as little as, moving away from trying to control and direct the paths of growth and a standard formula for such growth will make a huge difference.
  2. Good Politics/Good Governance; In 2015, Nigeria had a change in power when the fairly new All Progressive Congress (APC) unseated the People’s Democratic Party (PDP) that had previously governed the nation for 16 years. Two years later, the initial hope for change has vanished, leaving much disappointment and a certain level of hopelessness. There was a change in leadership but not a change in politics. The failures of government in Nigeria, as is in most emerging nations, is generally attributed to the primary assumption that the hindrances to better governance are predominantly economical, administrative and technical. Consequently, advancement can be made through improved or enhanced policies, capacity building, and civic participation and decentralised governance. The situation of the last two years in Nigeria challenges this assumption. What this narrative fails to address is that politics determines the capacity of the government to decentralize governance; politics determines the roles the electorate gets to play in the good governance process, but the electorate must take the bull by the horn and play their role in choosing better leaders and then holding those leaders accountable.

Nothing replaces planning for growth and development and following through; Nigeria’s population is estimated to be 200 million by 2019. What is the government’s ten-year plan for education, jobs, healthcare, food, water and housing? Nigeria’s population is often referred to as an advantage, but it is only an advantage for businesses as the population power drives demand, however, the government is not using such advantage to the nation’s interest, as there is no preparation to accommodate growth. In terms of inter-African trade and economic penetration, Africa has 31 francophone nations, how is Nigeria preparing to penetrate the francophone economies? Why is French not made a compulsory subject in Nigerian educational curriculum? What is the government’s plan to for trans-continent trade with other African nations? Nigeria needs a unified development plan that is tied to a ten-year plan across all the states in Nigeria, upon which policies can be developed and projects implemented in line with those plans and strategies.

In conclusion, the political economy of Nigeria requires a proper restructuring, one that enables active citizenship participation as the role that citizens play in good governance cannot be overstated. Further, citizens must move away from the passive role used only for campaigning and “winning” elections as assigned to them by political elites in governance processes and begin to see themselves as relevant participants in driving good governance in Nigeria. Secondly,  must be flexible with economic policies and be willing to try every and anything until something that works comes along. The free markets have its advantages and disadvantages but for this static economic stage Nigeria has found itself, it seems a viable trial option. Thirdly, making Nigeria business and tourism friendly should be viewed from a longer term perspective that goes beyond getting a visa in 48 hours but more in terms of making Nigeria as a country function, because getting a visa a business license quicker does not negate the challenges paying state and federal taxes and bribes in some cases to run a business, nor does affect the cost of running a generator. Nigeria’s rapidly growing population should be of utmost emergency to the government, the government cannot afford to carry on like this ticking time bomb will sort itself out and nothing will replace planning for this. Right now the unemployment rate is at a record high, schools are barely able to accommodate student due to lack of space and facility. And lastly,  as the giant of Africa, Nigeria needs to position itself to penetrate not just the English-speaking African nations but the francophone ones as well, and what better way to do so than making French a compulsory subject in the education curriculum.

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Is Nigeria Still in A Recession? Versus Reality

The economy contracted 1.5% consistently quarterly in 2016, based on the latest economic revision, Nigeria is no longer recessing, and is actually on the way to recovery and growth. However, as we know, a number of temporary factors including the CBN’s manual intervention of the FX have seen the Naira gain againt the dollar, in the last five weeks. The question of whether or not such intervention is a good idea or sustainable is a completely different subject.

With FX unavailability concerns somewhat out of the way, many leading indicators are signalling that Nigeria is out of recession and on the way to progressive growth as it were just before the recession.

Anecdotal shreds of evidence support the assumptions that consumer spending is rising, projects previously put on hold are picking up and Foreign Direct Investment (FDI) slowly recovering from a decline of  $4.5bn in 2016.

First, these assumptions do not take inflation into account. They are also not adjusted for population growth, unemployment rate and the number of businesses downsizing daily. Finally, and perhaps most importantly, the wealth gap in Nigeria is also near record levels of high, perhaps this is the most important factor; as steep inequality often bears the appearances of never-ending recession.

The wealth gap presents a very real danger moving forward. It makes moving up the income ladder more difficult, and it reduces the operational flow of the economy since the wealthy shield most of their income from taxes, while, those at the lower end of the spectrum can barely afford ongoing living expenses.

In my experience, the severe wealth gap underpins a critical misinterpretation of the Nigerian economy. On the one hand, it can misconstrue the reality of growth and expansion, on the other hand, it negates the fact that such growth is failing to carry the majority along.

I hear many economic experts claim that Nigeria is still in a recession, while indicators reflect the opposition; a recovery and on the way to growth. An individual’s view of the economy is primarily driven by their own unique circumstances, wealth, and prosperity, and that of their family and close friends. We generally take the microcosm of our own lives and deduce this out to the condition of the broader economy. It’s completely natural for many who are earning low wages or still contemplating reentering the workforce to believe the economy is in recession. I understand this and have harboured similar feelings at times.

However, from an economic and economic activities perspective, it’s very difficult for me to substantiate this assumption. Howbeit, in the next couple of weeks when the new window trades a bit and stability, is observed for a while, more concrete evidence will emerge based on the type of liquidity and pricing observed.

I believe that if we look at the data, the cause of the plight of many Nigerians is not the result of an economy in recession, but of the tremendous wealth gap, inequality and the fact that all government projects and investments are not geared towards the poor and “vulnerable middle class“.

 It is basic economics that in an economic recession, the middle class and poor are the most vulnerable, hence, should be the major beneficiaries of government interventions in restructuring the economy. The reversed is the case in Nigeria’s current economic recovery plans and interventions.

There is tremendous wealth in Nigeria, it’s just held by a select few, and not productively distributed across the population and there is no evidence pointing to the government’s plans to reduce inequality and make growth more visible in the lives of the majority. This is a very different problem, with very different solutions than having an economy that’s in recession.

If an individual doesn’t personally benefit from economic growth, such an individual is likely to think that economic growth doesn’t exist, especially if they are not in-tune with ongoing economic performances and growth indicators.

Nigeria’s economy has problems, lots of them. But are we still in a recession? The answer is NO. The unfortunate reality is that for many, this period of mild economic expansion feels very much like a period of economic contraction because they are not participating in meaningful employment, still struggling to gain employment or participate in the wealth creation.

Rising income inequality can also be detrimental to overall economic growth. The OECD suggested that “High and often growing inequality raises major economic concerns, not just for the low earners themselves but for the wider health and sustainability of economies. In other words, “rising inequality is bad for long-term growth”

Nigerian economic team and experts must become better at distinguishing what plagues our economy and differentiating the impacts of these challenges on various groups. For example, it is important to understand how the economic contraction of 2015/16- first quarter in 2017 affected and continues to affect small business owners, working high/low income middle-class and the very poor.   These challenges should not be grouped together and treated as the same thing, as that is the reason why out-of-recession indicators are failing to reflect the realities of the majority in Nigeria. To mistake the symptoms of a serious wealth gap for economic recession is to misallocate our frustration, energy and solutions.

These challenges should not be grouped together and treated as the same thing, as that is the reason why out-of-recession indicators are failing to reflect the realities of the majority in Nigeria. To mistake the symptoms of a serious wealth gap for economic recession is to misallocate our frustration, energy and most likely leads to inappropriate solutions.

I don’t know what the answer to sustainable growth and redistribution for Nigeria is right now, but what I know for sure is that a better widespread understanding of the situation is the first step in the right direction.

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Obession With Fighting Corruption Is Where Buhari is Getting It Wrong

The Buhari led-administration campaigned and won election purely on the basis of fighting and or setting the precedence on reducing corruption in Nigeria.

The challenges with Buhari’s understanding of tackling corruption is the assumption that corruption is a tangible that can be held and beaten down to a stand-still. Fighting Corruption is important but it is not as important as economic growth. Addressing the bogus-ness and wastage of resources by Nigerian public office officials, selective persecution of APC’s economic enemies and the lack of transparency and accountability of president Buhari’s administration; makes President Buhari’s quest a futile and vindictive exercise to uproot APC’s political and economic enemies and make Nigeria a one party state.

There’s absolutely no disputing the fact that if you compare advanced countries, which have achieved development and you look at their levels of corruption and you compare them with poorer countries like Nigeria who is neck-deep in the struggle with corruption and are poverty-stricken and so on, there is a huge difference in corruption between them. But there is a huge disparity in comparing how they made things better to how Buhari is doing it in Nigeria. If fighting corruption means killing the economy, increasing unemployment, reducing foreign investments, then Buhari is doing it wrong.

The challenge the economic team and the ministry of finance of an oil-dependent economy that produces nothing and depends heavily on FX  such as Nigeria, remains, pointing to specifics of what the preconditions for getting from poverty to prosperity as a result of focusing on corruption are.

Further, President Buhari upon resuming office should have done everything he did but leave the most powerful economy in Africa void of a finance minister and into the hands of a CBN governor whose only role should be regulating banks and supporting the finance ministry. At the time Buhari appointed a finance minister, the power-drunk-busy-body CBN governor had done such damages that that left the finance minister in a huge and complicated mess. This is really what the disconnect in Nigeria’s economic policy issue is really all about.

Recently, in the midst of the heated attention the Nigeria was getting as the president left the country on a sick leave indefinitely and is still yet to address the country, amidst hard times created by this government, the EFCC disclosed the recovery of $9.8M loot from former NNPC group Managing Director Andrew Yakubu and Nigerians are celebrating it.

A ploy which many see as a damage control to draw attention aware from the New Yorks Times’s article on the case of a missing president. But going by the way the current government is spending, such recovery does and means nothing to the benefit of the average Nigerian. But rather would be used to fund the padded budget and government’s excessive spending.

President Buhari is not necessarily doing anything to fight corruption but rather recycling the loots from one hand to new sets of hands. Former CBN governor Sanusi Lamido Sanusi referred to it as “creating a new system of corruption”.

There are vital differences in some aspects of corruption, there are other much more important political-economy differences which President Buhari has failed to consider, which can only identify things that are considered in perspectives of our historical process of transition and how simpler countries who have been being Nigeria’s reality now had to pass through. This process cannot be skipped and where there is convergence we need to find out why such convergence exists. Nigeria needs to understand these processes of tackling corruption in a broader context that goes beyond loot recovery.

The big historical picture is a reason why China is developing and parts of India are developing and Korea developed before that is not just that their leaders were slightly less kleptocratic. How you measure kleptocracy is itself is important to the conclusion you can draw.

The Chinese or South Korean government in absolute amounts made more money than any African leader can ever imagine. They understood what Buhari does not today; fighting corruption should not kill the economy. The thing is they generated these by actually developing their economies and not by focusing on fighting corruption. Corruption has no tangibility to it. It is not a thing you can hold and fight. If you want to fight corruption, fight the things that enable corruption from a top-down approach, but focus on developing the economy to benefit from a bottom-up approach.

Perhaps, President Buhari should broadly consider why elites in Nigeria make their money by destroying the economies and comparing it to the reversal cases of developing and functional developing economies such as Rwanda or as it is in Botswana.

The problem is that Buhari is not looking at successful transitional economies who reduced corruption. History is repeating itself and Buhari is doing exactly what he did in 1984 as the head of state that created the exact economic mess Nigeria is going through right now.

 

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Nigeria’s Lack of Economic Recovery Plan

Nigeria’s bid to secure international bailout loans to fund the 2017 budget deficit has hit a deadlock because the economic team is yet to submit the economic recovery plan as requested by the World Bank and African Development Bank.

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The government has been in loan bidding and negotiation with the World Bank for over a year. The government had promised potential lenders that it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December.

 

The reason for the plan submission delay by the government remains unclear. The finance minister Kemi Adeosun has reportedly refused to comment on this.

 

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This has serious implications and the possibility to cast a huge doubt on the claim that the 2017 budget is predicated on “intent to revived the economy” and the  much-needed infrastructure projects planned for this year, including new roads and improvements to power infrastructure.  Failure to secure these loans, and to present a reform program, could also deter some investors from Nigeria’s planned $1 billion Eurobonds sale in March

This could also deter foreign investments from Nigeria’s planned $1 billion Eurobonds sale in March.

Presently, Nigeria requires assistant in funding a budget deficit of 2.2 trillion Naira ($7 billion) for 2016 and to help fund a record budget of 7.3 trillion Naira for 2017 which is aimed at stimulating the economy.

Nigeria has also been in talks with China and other international banks and funding agencies to borrow more funds but apart from a $1 billion loan from the African Development Bank, at a rate of 1.2 percent. The figure of the amount Nigeria is seeking to borrow from the World Bank is not yet known; as no figure has been made public so far.

The African development bank has indicated it will not release the second half of Nigeria’s $1billion approved loan until the economic recovery plan is ready and presented. $600 million of the $1billion was remitted to Nigeria in November 2016.

The Central Bank of Nigeria as supported by President Muhammadu Buhari is adamant about its flexibility to allow a free fall of the Naira and bent on keeping the Naira rate to the dollar at 40 percent above the unofficial – or parallel – market rate, which has boasted the scarcity of the dollar on official channels. This action has placed the power to navigate the situation into the hands of the black-market; making a few benefit from the sufferings of the majority while shutting down the whole economy.

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This has also made investors reluctant to commit to new projects as they expect the central bank will have to devalue the Naira eventually as oil production has been hit by an insurgency in the Niger Delta oil hub.

The central bank has also imposed hard currency curbs making impossible the import of almost 700 goods, which has many plants and factories to close down. Just this week, the Dangote tomato factory was shut down due to a lack of FX availability.

There is no tangible evidence proving that the government is serious and making any effort to salvage the economy from plunging further downwards. Businesses continue to struggle to cope, organisations are continuing the massive worker layoff.  It is still unclear what the government hopes to achieve with it strict FX policies when things are already so bad.

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A look at the 2017 budget shows that president Buhari and his economic team are creating a new set of corruption for Nigeria.

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The budget is extremely bogus, lacks any reflections of the stated intent of restructuring the economy for recession recovery. The 2017 budget makes absolutely no sense.

A budget is a projection plan that is based on a strategic framework were the inputs has a direct correlation with the outputs to achieve an intended goal. This 2017 budget shows a clear mismatch between the inputs and outputs, thus, creating a lack of confidence that this government can achieve any positive outcome in the economy.  If the budget is ready and waiting for international loan approvals, yet the economic recovery plan which the budget was supposed to be predicated on is not ready, on what basis was this budget developed? img_6830

 

 

 

 

 

The only thing apparent in this situation is that Nigeria is acquiring loans to fund a bogus running cost of government and to continue the culture of looting.

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