How Nigeria Should Navigate Economic Uncertainties

IMG_1652When an economy is distressed, exchange rates become volatile and countries rush to stem potential risk. What risks should countries in this scenario mitigate —and how?

The reduction in oil price has brought exchange-rate risk back to the forefront in Nigeria; creating foreign exchange instability which has seen the nation, an import-dependent economy continually spending more while generating little foreign exchange income. This has left the economy in a vulnerable state.  More often than not, nominal exchange rates tend to draw major attention the less most risks, which when touched, has the potential to create major vulnerability in an economy.

In theory, when commodity prices are falling as local currency values were rising, purchasing power would stabilise due to cash inflows, and there would be no real foreign exchange risk. However, in Nigeria’s case, the crash in oil price and the little generation of earnings in foreign currency has created a huge imbalance. Nigeria spending more foreign currency on importations and earning less foreign currency; creating a deficit. Along with this deficits are obvious risk but tend to be misleading factors, demanding immediate interventions, which creates a chain reaction of more erratic risks.

Many developing nations, when faced with this challenges tend to rush to managing the visible risks immediately. For example, micro-managing FX transactions, pegging the Naira, currency swaps, trying to control currency futures and options. Such tactics often negate longer term views as they act as temporary solutions to underlining severe and more permanent issues . These kinds of risk mitigation would down the line see Nigeria face greater exposure to the less obvious risk that is more challenging to manage and these risk may in the nearest future become unmanageable.  For example, trying to manage a risk which stems from a mismatch between cost and investments in one currency and revenues in another will create risks which are initially difficult to forecast.

Understanding where and how foreign exchange fluctuations affect the nation’s cash flow is not a straightforward case and no amount of research can accurately prevent risk likely to arise. Various factors from macroeconomic trends to internal competition within market segments determines how foreign exchange rates affects the economy. While economist use mathematical risk-management tools in analyzing risk, development economists lean more towards understanding where and how exchange rates can drive or derail the economy. Each of these arising risks will influence cash flows and value in various ways, thus, requires context-specific approach in risk mitigation.

Presently, Nigeria has already made some economically unintelligent decisions by rushing to manage immediate risks that were apparent as soon as the shift in commodity pricing occurred. There are no easy ways to undo these decisions, so the only viable option is to ensure that things don’t get out of hand. Here is how;

Take a holistic perspective

Foreign exchange risk should not be managed in isolation of intense policy research, as doing so could trigger more hazardous risk. For example, if Nigeria is borrowing and signing a loan $6bn deal with the IMF today for 2017, it should consider buying the loan required today and enter a forward contract for a fixed rate whereby, changes in exchange rates does not affect repayment rate. Understanding where and how foreign exchange risk triggers one another in a vulnerable economy is crucial for effective mitigation of these risk.

Focus on cash flow, not earnings

Often times, the country’s accounting report fails to draw attention to the most important aspect of currency risk; cash flow. For example, the nation’s reserve contains information on FX gains and cumulative adjustments from translating foreign currency- designated assets and liabilities without separating assets from liability in the final analysis; when the focus is placed on earnings it negates cash flow activities, and cash flow is the truest reflection of reality.

Additionally, it is common for economist to look at just numbers in financial report,  the most vital effects of changes in currency rate comes from structural risk analysis. As a matter of fact, standard financial reports often lead analysis to misleading conclusions about a nation’s reserves by overstating the accounting impact on incomes earned as opposed to the real effect of cash flows.  The finance ministry should focus on the potential risk created by spending more than what is going into the reserves.

Secondly, it is common for commodity-dependent nations to struggle whenever there is a negative shift in commodity price, however, it is wise for a government in such scenarios to avoid the temptation of try mitigating all of the risks that are induced by shocks in commodity prices.

Furthermore, the main reason why mitigating obvious risk in this scenarios is a given is such risks are initially very obvious creating a panic that requires immediate actions. However, mitigating the risk more often than not create a chain reaction of more harmful risks that were initially less obvious. For instance, price fixing, currency pegging and control are ideal when oil price makes a free fall from $89 to $37 per barrel, what is not considered in such decisions making process is the chain reactions it is likely to create in the macro economy that will overflow negatively into the entire economy.

Fourthly, the current economic condition of price fixing and FX irregularities shows that the Central Bank of Nigeria(CBN) is the main driving force in economic policy making and this should not be so. Central banks are banks regulatory body and because they are market driven, being that a market-driven approach to managing an economy is more often that not shallow and is hardly based on real research on longer-term development goals, a Central Bank should under normal circumstances only act as a support to the finance ministry and not the other way round.

In conclusion, Nigeria should be able to stabilize and possibly grow the economy if the finance ministry with the appropriate support of the CBN takes a holistic approach that focuses on the effects of cash flows than on earnings and be fully adverse with the limitations of financial instruments and how to use them to the nation’s advantage. Both the finance ministry and the Central Bank of Nigeria should be transparent with each other about the risk they face and strategies developed to hedge these risk.

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Harnessing the Informal Sector for growth in Nigeria

Lately, many African nations have experienced the Africa rising revival, however, it has not necessarily created decent jobs to accommodate the nation’s growing population. Deepening unemployment crisis remains a huge plague African government are caught up with trying to mediate through various interventions, that is yielding insufficient impact. What this could mean perhaps, is that a government should not be trying to create jobs but rather, focus on enabling freer markets, creating and implementing better policies and providing infrastructure to support the process of job creations.

Interestingly, African countries pay very minimal attention to the role the informal sector plays in fostering growth ─ creating new alternative industries that brings stability for young people who would have otherwise been unemployed, to create earn a living and create jobs. For example, the sudden growth in the Nigerian entertainment and technology industry has given birth to new crops of “informal entrepreneurs” in the social entrepreneur and tech-prenuership sector.

The power of those who earn a daily or informal income cannot be undermined as, as African Development Bank in 2013, reported that 55% of Sub-Saharan Africa’s GDP and 80% of the labour force is informal sector driven. Nine in ten city and rural dwellers including those in the formal sector have an informal job as a means of support to earn a living or supplement the formal earnings; in Nigeria, it is called a “side-hustle” and majority of this sector’s employees are young people and women demographic.

The growth of the informal sector in Nigeria like in most African countries stems from government failures and the hidden opportunities that become available when governments fail. Although the informal sector is an avenue to create a reasonable source of livelihood for many, it has a lot of challenges and often faces opposition from monopolized vested interest and sometimes government agencies. It is also without income security and other benefits that are inclusive in the formal employment framework.

In Nigeria, 80% of the formal sector’s employee particularly, of the banking and telecommunication sector is temporary staff. As such, they do not enjoy the perks of income security, health and other social benefits available. These informalities more often than not overlap poverty in both formal and informal sector employees in Nigeria.

Factors explaining the informal sector growth in Nigeria

The proliferation of the informal section is often associated with the growing poverty rate and weakness of economic conditions to create jobs. According to African Development Bank, advance and middle-income economies have smaller informal sector opportunities because things already function as they should.
Citing that the vast opportunities are available in poorer countries and there is a need for informal sector development, as the lack of an organised system would mean that there are opportunities to create jobs and more income as opportunities were laying around in the challenges needing solutions.

Employers of labour in the informal sector have an advantage in some in a way, because of cost reduction related to permanent wages, retirement pensions and other social benefits of formal employment. For example, for a non-profit, hiring, a small and independent consultant to handle its project structures and fundraising strategy for a period of time, seems a better alternative than a permanent candidate for the position.

Besides, poverty and social security, the growing increase of informal sector activities are closely related to a society characterized by weakness in three main institutional scopes; taxation, regulation and private property rights.

Taxation bureaucracies and the complicated fiscal process are preventing the informal sector operation from transiting from informal to formal activities. Which also means the government is losing a lot of money it would have otherwise generated in tax revenues. The lack of structure, support and the complicated requirements associated with business legalization is also a huge barrier facing such transition.

Further, limited or no access to capital is a vital constraint for people working in the informal sector. The fact that informal sector activities are more often than not, a means to an end and not a choice, makes this challenge even more grievous.
Therefore, the sector participants often lack necessary skills, education and training which could become major impediments to growing these sorts of businesses to a more formal structure.

Other factors such as limited access to technology, lack of power and all round poor general infrastructure makes the informal sector operation a huge challenge. Due to its contributions to the economies and its potentials, informal sector development plans should be inclusive in all African nations’ development agendas.

Harnessing Nigeria’s Informal Economy

Recognizing, supporting and organizing the informal has a vital role to play in job creation and economic growth. As the profitable activity create a lot of stability and maintains sanity in the labour market. With the current economic state in Nigeria, proper informal sector regulation, development and support, could be beneficial to the economy.
This could be done by raising government awareness, fostering the availability of information on the sector and the removal of the bureaucratic processes that impairs growth and expansion of this sector.

Government Awareness: Going by the statistics, the Nigerian government is losing a lot of money in taxation in the informal sector. Government and policy-makers should recognize the importance of the informal sector and the role it plays in the economy.

Associating the sector to illegal endeavours or as something that should be destroyed in an attempt to building mega-cities will not create the amount of jobs needed to absorb the growing unemployment population.

There is a need for policies to be coordinated and for strategies to be implemented to render support to the sector in the process of formalizing the sector to be organised, better regulated and taxed.

Further, effective regulatory framework, better governance, better services, improved business environment and improving access to finance, power, technology and infrastructural development will be essential to easing the process of such transition.

This will also require promotion of social protection and support to small to medium size businesses, which accounts for a large percentage of the country’s informal sector. However, the government and policy-makers must be aware of and sensitive to the heterogenic nature of this sector.

A recent study on West African economies suggested that government in dealing with the informal sector should differentiate between the various (small, medium, large) classes informal firms, as implications of policies affect them differently.

The large informal sector organisations play a more significant role in the economy, in comparison to the small and medium ones. As such, specific policies should be adopted that brings informal firms into formal regulation by creating systematic approaches which will determine and monitor what class of the informal sector begins paying taxes and when it should transition to the formal sector.

Access to Financing: Limited or no access to financing facilities is one of the major factors responsible for the impediment of this sector. Facilitating access to better credit and financing channels such as low interest and less complicated application process of micro-credit is a necessary step to encouraging informal activities to transition to the formal economy.

Access to Information: Because the informal sector has been neglected and ignored by the government for so long, this has meant that there is little or no knowledge or information available for this sector. For example, the activities in this sector are often invisible and untraceable in official statistics.

For the better analysis of the sector and its contribution to economic growth and its impact, it is important that data is gathered and maintained for analysis and to better understand the working conditions, economic and employment impact of the informal sector.

In conclusion, the informal sector activities should not be seen as an obstacle to overcome in the process of economic growth, but rather, an integral part of the solution to Nigeria and Africa’s economic drought, particularly now.

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Nigeria needs to hands-off Macroeconomic Policies

The current complicated nature of macroeconomic conditions in Nigeria is putting a lot of pressure on Nigeria’s growth prospects. Granting, the oil price decline is largely beyond Nigeria’s control,  governance, and management crisis are deepening with the 2016 budget fiasco, the frequent Central Bank of Nigeria regulatory changes and the policy directions uncertainty.

These domestic “wrong moves” are avoidable. However, irrational and haphazard policy decisions are leaving foreign investors confused, and businesses struggling to survive in a volatile economic environment.

In times of economic vulnerabilities, it is normal that citizens are expecting their government to intervene with measurable and practical interventions ─ as the ability to maintain market stability becomes one of the things beyond government control in turbulent times. If there is anything economic uncertainties does not require is stringent interventions and market control.  Notwithstanding, the current economic realities shows exactly the opposite is true in Nigeria. The government has become irrational, unreasonable and erratic with its monetary policy and stubborn of trying to control the inevitable; Naira devaluation.

To stabilize and avoid further mishap,  policy-makers should be put under scrutiny as drastic experimentation with policy conundrum will carry a high risk for the rest of the year, with negative impact towards stabilization and further growth.

This is clearly displayed in the Central Bank of Nigeria’s daily experiment with FX restrictions, bans-unbans and bank charges. Inflation has persistently been on a soaring increase since October 2015. This has triggered stagnation and in most cases a collapse of small businesses, even multinationals companies are struggling to cope.

Despite having assumed office in May of 2015, President Muhammadu Buhari took over six months to appoint a cabinet, leaving the most important ministry in the country; finance ministry without a minister and opening doors for the CBN to assume using economic policies for trial and error re-runs. In October, President Buhari on the realization that the CBN was directionless and the Naira was left to its own device decides to do exact what he did as a military head of state over thirty years ago; controlling monetary policies and the market.

History is repeating itself; President Buhari has again gone back to what didn’t work; in turn lead to Naira overvaluation, job cuts, lower imports a and weakening economic growth. These uncertainties are seeing many foreign investors on the defense by becoming risk averse; sitting on the sidelines awaiting majors changes and clarity on policy directions.

Inducing artificially support to the Naira has attracted harsh criticism by two former CBN governors Charles Soludo and Sanusi Lamido Sanusi. Soludo noted in his interview on the subject matter that “for the better part of last year the external shocks to the economy had been complicated by the “tried and failed” command and control policy regime: a de facto fixed exchange rate; crude capital controls; veiled forms of import bans through a long list of “ineligible for foreign exchange” items; and the de facto scrapping of domiciliary accounts established by law”.

President Buhari’s priority on the war against corruption had sparked investor’s confidence earlier. However, when JP Morgan removed Nigeria from the emerging-market bond index, the inevitable became the obvious. Foreign investor’s perception of Nigeria has been negatively affected by policy makers, economic managements and Buhari’s lack of progressive economic reforms ─ interest rates reduction in an uprising inflation and the missing 2016 budget makes the situation worse. The MTN versus the Nigerian Communication Commission has increased global attention to the overall risk and volatility of the Nigerian business environment.

In the case of MTN, while such practices are globally defendable, the current conditions of a functional government in Nigeria have seen the abuse of penalties of the alleged wrongdoing. As the issue is as a result of a lacking uniformed agreement between various regulators. But in this crisis period, the government cannot afford to distract itself from real issues by focusing on fines and creating hostility in the Nigerian business environment. Perhaps, Nigeria is following the path towed by China since the Chinese stock market crash in July last year which wiped 30% off the Shanghai index.

As Nigeria is currently doing, the Chinese policy makers responded to the market shocks with drastic measures for market intervention. Such actions,  however, inspired no tangible confidence but rather, had direct opposite effect by prompting a wave of shattering of local and foreign investors and panic selling. To create resistance to the current realities, policy makers should limit policy flexibility while paying attention to the external shocks already threatening stability and growth outlook.

Nigeria’s growth future is still very hopeful, if the president can hands-off economic policy and policy makers are independent enough to reduce avoidable mishaps. As economic tough times more often than not, require less policy tweaking and control and more of free markets practices, precision and support.

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Looming Crisis as JP Morgan Chase Kicks Nigeria Out

On September 8th 2015, JP Morgan Chase(JPM) released a press statement stating that they had begun the process of discharging Nigeria from its Emerging Market Bond Index from this month, and that by the end of October 2015, Nigeria will be completely off the index.  The statement identified the Nigeria’s restrictions on FOREX transactions and the stringent accompanying policies as a major reason for its actions.

Earlier in the year, JPM had served Nigeria a notice of warning citing investor’s interest among other things in it.  The notice of removal press statement further cited this and the nation’s liquidity crisis as a reason for the removal. The idea of a high-risk economy such as Nigeria being kicked out of a $200 billion fund index is a major cause for concern; indicating a looming financial crisis. Below are the most obvious reasons why;

  • Unfortunately, President Buhari has inherited harder economic times which were looming ahead from his predecessor president Jonathon. Howbeit, the present administration is setting the grounds to blame the past administration for everything that is going wrong and will continue to go wrong until stability which could take up to two years sets in. In turn, Nigerians will blame President Buhari for failing to appoint the single most important minister, a vulnerable economy must never do without; a finance minister.  Considering the fact that JPM served the country a notice of displeasure and the threat to remove Nigeria from the index 9 months ago, president Buhari should have held unto Ngozi Okonjo Iweala (NOI) until things stabilized or at least appointed a new chief economist the day he assumed office. Although, retaining NOI would have been the intelligent thing to do, in the given scenario.  The lack of a finance minister has seen the CBN governor put the Nigerian economy at risk with drastic policies lacking holistic economic direction. The year 2015 has not been a good year economically for Nigeria and Nigerians. Although there were projections of hope post-May 29th, the lack of actions and inactions has created financial tensions, with no glimpse of hope in the nearest future.
  • This will also mean going forward, Nigerian government acquire foreign debt at a premium as the initial 10% interest will increase to 14.5% or more. As a result, negatively impact internal corporate lending between Nigerian government, banks and local organisation. It will also make refinancing existing loans expensive as yields are on increasing.
  • Thirdly, this removal will mean that there is little or no foreign demand from foreign investors. Already, since the warning issued by JPM 9 months ago, the Nigerian bond declined from a peak of $11 billion in 2013/14 to $3 billion at present. The current state of the economy suggests further decline for the Nigerian bond. What this means is that, as a volatile economy, foreign investment will decline as well. Also at risk are SME that depend on banks for small loans such as overdrafts, local purchase orders, letters of credit etc. They may also see their lending rates increase, meaning businesses will struggle, and companies will be focused to downsize and send more people back to the already overpopulated unemployment/job-market. Individuals with consumer loans should expect letters of notification from bank indicating higher interest rate on existing loans.
  • Further, although Nigerian business environment is not problem-free, investors have tolerated it because of Nigeria’s strategic position in Africa. This removal will see investors moving to more conducive environments such as Ghana, Kenya and South Africa. In turn, Nigeria’s position as the largest economy in Africa will be threatened.
  • By all indication, further devaluation of the Naira is imminent. As this will  be prompted by frustrated investors who are bound to jump on the bandwagon of JPM decision to remove Nigeria from the index and the Nigeria’s lack of economic shocks will pave the way for the two factors that are investor’s worse nightmare; pressure and uncertainty.
  • Lastly, by all indication, what the CBN has done to the Naira and the restrictive FOREX policy, is really “throwing away the baby with the bath water”. Proper observation suggests that the CBN had good intentions; however, such move is usually a slow process, originated by and based on the federal government’s long-term growth and development agenda as guided by the chief economist of the federation and healthy economic policies, CBN usually only in this case should act as a support system and not the originated of such moves. But the reverse has been the case here.

A central bank has no business taking such laws into its hands and putting the entire economy and country at risk of financial crisis.  Nigeria already struggles with redistribution and high inequality rates, this singular act, spells harder times for the already vulnerable economy, the struggling Nigerian middle-class and the country’s poor and most vulnerable.

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Right policies to boost growth in Africa; beyond 2015

In Africa, economic growth is continuously failing to create jobs and lift a significant number of Africans out of poverty. Subsequently, predictions of economic growth acceleration have so far failed to substantially identify practical factors that could make such growth more tangible. In what is becoming a usual pattern, Africa’s Economic Outlook forecasts a growth at 5% for 2016 but acknowledges the shocks, global economic uncertainties and plunging oil prices serve as a challenge to current growth.  While growth trajectory varies across African states, the hindrance to growth follows a similar pattern, affecting not just the vulnerable states, but the giant economies which initially demonstrated strong resilience against global financial crisis.

From low generated electricity, to security issues and steep inequality, the common pattern demonstrated in the last decade is framing for a continuous cycle of inequality and high poverty coexisting in the midst of economic growth. Over time, this could become a deeper, longer-term hindrance to growth. This constant coexistence of growth in the midst of highly unequal society and poverty is prompting increased concerns for the future stagnation and harder times in Africa.

As such, Africa’s growth sustainability has been central focus of policy debates and agenda. Of recent, economist and development experts have been making a hard case for the need to align policies along with practical agendas to boost and sustain Africa’s growth.  As a result, estimation of existing and potential growth have been lowered. Potential growth is difficult to estimate, many of the recent analyses, including by the IMF, all show a huge decline in potential output growth for 2015 to 2016 from 5.8% and 6.0% to 4.9% and 5.2% consecutively.

Citing the reason for such decline for the two biggest economies; Nigeria and South Africa, the reason for decline in estimation has been associated to lowered oil and commodity prices shocks. South Africa’s growth projection has been adjusted from 2.3% to 2.1% for 2015 and from 2.8% to 2.5% for 2016. For Africa’s biggest economy and the biggest oil exporter, Nigeria, growth has been slashed from the initial 7.3% projection to 4.8% in 2015 and to 5.2% from 7.2% for 2016.

What this means for Africa is

There is a need for government and policy makers to understand that more has to be done to support economic growth for sustainability and lifting more people out of poverty. This can be achieved by building on and strengthening growth strategies for redistribution and taking a more human development approach. In context, the challenge remains identifying and agreeing on what additional measures are required. Some experts have focused on scarcity of demand, identifying the need for a more macroeconomic approach to boost demand, advocating for increased use of fiscal policy to induce demand alongside monetary policies. From this perspective, the challenge lays in unbalance equilibrium in favor of supply side of reforms, some expert arguments present a case for the contractionary impact of demand on supply,  for  example, demand for skilled human capital against a deficit.

Secondly, the slashing of initial projected growth points to a need for structural reforms and calls for strategies in addressing underlying challenges that hinder foreign investment, employment, small enterprise operations, informal sector and productivity. Structural reforms could act as support system to boost demand and harness internal supply.

Further, direct policies are necessary but vary across all the African states. Overall, the aim is to boost support systems for growth in a way that it can produce tangible result that is accepted as reality for common man in Africa; as opposed to viewing it from the macro versus structural agenda, but from a broader angle of both macroeconomic and structural policies supporting growth to be more developmental in nature.

Removal of these barriers could enhance economic growth’s impact on macroeconomic policies. Subsequently, boosting investment through governance improvement and service delivery should be key on Africa’s sustainability plans, as it illustrates the interplay between driving more investment and a conducive business environment. With the commodity price decline, weak investment opportunities could undermine potential sustainability and future growth in Africa.

Globally, investment is approximated to have fallen, as such, a good way for Africa like other emerging economies to stay afloat is by creating investment enabling environments to boost public investment. That means better security, improved governance and infrastructure – while taking advantage of the current low cost of interest rates on lending. Lack of infrastructure in most African states lies huge potentials for employability; for example, in poor road networks in Nigeria lies immense opportunities. As harnessing public investment by itself will not be sufficient; private investment is necessary to create the balance and create more jobs.

A relative interplay of macroeconomic and structural elements typify the agenda to boost employment through labor market participation and productivity growth, as together with tangible investment could drive and sustain growth.

Presently, the high unemployment rates in Nigeria and the rest of Africa is driving negative impacts in high crime rates and terrorism. As such, underscores the priority of action to generate more jobs. Thus agenda spans both actions to boost demand and structural reforms to advance functionality of educational institutions, skills acquisition, and informal skills to correlate with labor market requirement.  In advanced nations, structural reforms plays a vital role in rearranging the declining trends in the overall factor-productivity-growth in developed nations as it stimulates innovation, and evidently, could be what Africa needs right now.

In conclusion, the fragile and unstable outlook of Africa’s growth projection calls for specific formulation and implementation of concrete and balanced set of macroeconomic and structural policies to support growth. The current state of unemployment, low infrastructure, informal sector, entertainment industry, human capital and the untapped potentials in Agriculture provides a vital opportunity to do so.

 

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Why President Jonathan Lost the Election to Buhari

The world is still in amazement over ex-military ruler Muhammadu Buhari’s wide margin victory against President Jonathan. This is a significant event for Nigeria’s democracy- and a huge win for the continent at large. Goodluck Jonathan’s quick congratulatory phone call to his successor and acceptance of his defeat is a noble and honorable gesture. This action is significant because, it calmed the looming tension that pre-existed the elections and most importantly sent a signal to anyone who wanted to seize the opportunity of his loss to cause unrest.

Is he a hero for this action? No. I believe he did the right thing, more rapidly than we would have normally expected of him. Nelson Mandela is a hero, president Jonathan did the right thing at the most appropriate time.

Despite the earlier postponement of the election, the tension leading up to the event, and the delay in result collation, things eventually panned out in a manner that was unexpected–peacefully. Nigeria in this instance acted as the big- brother of Africa by setting a standard for the rest of Africa and appears to be on the right path to a progressive democracy.

In less than two months, Goodluck Jonathan will be saying to his successor: good luck to you Mr. President. It is uncertain that Nigeria will ever have another president who will have the grace, support and goodwill Nigerians gave Jonathan. The accidental or “goodluck” president as referred to by many, had every reason to succeed, but let down many who had rallied round and made his victory in 2011 possible.

Here are six reasons why I believe President Goodluck Jonathan lost this election.

  1. The missing Chibok girls: Up until the disappearance of the kidnapped Chibok school girls, I never would have considered the idea of a president Buhari, particularly, with the horrific crimes against humanity he allegedly committed in his time as head of state. It didn’tCBcCkbXXEAARYkd CBek6a5UIAAL_QoCBdIyBzWUAAhGDLCBVeLA6UIAETZph09pu5anN_normal140504153602-nigeria-missing-schoolgirls-story-topOne Day The Poor Will Have Nothing Left To Eat But THe Richwpid-IMG-20120109-00013.jpg make sense to vote for him. But when little girls who are Nigerian citizens went missing and the president failed to acknowledge the situation and actions were not taken immediately to salvage the situation, it became obvious, that even we who supported Jonathan for whatever reason were ourselves not safe. Nigerians took to the streets and heavy social media campaigns started in an attempt to draw global attention, as our president failed to pay us any attention on this issue.

There were reports of the Nigerian police and army arresting and intimidating protesters for the bring-back-our-girls campaign. Jonathan quickly forgot that it was the same freedom to protest that ensured he became acting president when President Yar’Adua died in 2010. Such attempts were harmful to our growing democracy, seeking to oppress the very factor that demanded his constitutional right.

Let’s assume for a second that, as alleged, the bring-back-our-girls campaign was a scam, the idea of it was deserving of sympathy, but our president, failed those girls, failed their families and raised doubt in the minds of we who are still alive that he didn’t care about us and that he cannot be trusted.

  1. The Petroleum Minister’s bogus expenditure budget: In 2014, the petroleum minister Diezani-Allison Madueke was accused of running an expenditure of 500,000 euros (₦130 million) monthly on a personal private jet hire for the minister and her family. Although the Nigerian National Petroleum Commission rose to her defense saying that it was common practice and she had a right to do so, never in Nigeria’s history had this ever happened and publicly defended. These allegations got a lot of attention from the public; still the president deemed it unnecessary to respond to Nigerians. The president, made it seem like Nigerians didn’t have a right to question these things and he couldn’t be bothered to address such concerns.
  1. Boko Haram and the disregard of victims: Unfortunately for Jonathan, he inherited a security crisis plaguing the country. When Boko haram began, it was an uprising of the poor, neglected unemployed youths fueled by religion that picked up arms against their government. Eventually, boko haram became an “organized crime” group that government by neglecting, allowed to grow, eventually becoming untameable. Jonathan’s method of handling this crisis was cold, inactive and simply not enough. Hundred thousands of Nigerians died like their lives meant nothing and the government is still yet to have a tangible plan to accommodate and integrate the internally displaced Nigerians back into the system. The attempt to postpone the election in order for the government to tackle boko haram was four years too late and somewhat suspicious. If Jonathan could stand back in indifference and watch this happen, then to many supporters and undecided voters, he couldn’t be trusted with their lives.
  1. The Allegedly missing $20B: Allison Diezani Madueke and the alleged Missing 20 Billion dollars; In March 2014, a midst an accusation by the former CBN governor, Sanusi Lamido Sanusi that 20 billion dollars was unaccounted for and missing from the federal account, Sahara reporters allegedly uncovered a plot by the president and the petroleum minister to hand over the country’s oil asset to themselves and their group of friends. Still, the president was quick to dismiss this issue and the finance minister Ngozi Okonjo Iweala discredited Sanusi’s claim, placing the unaccounted figure at $10.8B. In an attempt to exonerate itself, the federal government presented a Price Water Coopers audit of the federal account covering the alleged period. This report vaguely explained the situation, raising a lot of unanswered questions, but the case has since been overlooked in the usual Nigerian manner.
  1. Insensitivity of the First Lady: Our diversity makes tribalism a common thing that often goes unnoticed as it’s never publicly displayed. Never in Nigeria’s history has any government incited tribes against tribes and religion against religion as Goodluck’s administration did. On several occasions as implied by their speeches during the campaign period, both the president and first lady, set Nigerians against each other, disrespected other tribes, and even mocked the Almajiri children in the north. The first lady on an occasion said “our men (south-south men) don’t have numerous children deserted to roam the streets”. Such a statement is disrespectful and indicates ethnic superiority.
  1. Fueling Corruption: Majority of the actions taken by president was leading Nigeria down the path of heavy injustice and illegal practices. More recently, sahara reporters released an audio alleging that the president ordered senator Obanikoro to rig the governorship election in Ekiti state in favor of the PDP candidate. Although, the senate voted against this case making it to court, the president has since nominated senator Obanikoro for ministerial appointment, ignoring the audio recording evidence indicting Obanikoro of committing a crime. Such actions reinforces that Nigeria was slowly falling into lawlessness and anarchy under Goodluck Jonathan’s leadership.

By all indications, Jonathan’s administration ticked all the boxes for factors that drive conflicts, feeds corruption and could ultimately stifle economic growth in a complex complicated nation such as Nigeria. Poor governances, marginalization, lack of voice, and lack of government accountability support the notion that this administration fuels corruption and lawlessness.  The moral of this being it’s no longer business as usual, therefore, African leaders must stop taking their citizens for granted.

Buhari’s victory in some Christian dominated northern states such as Kaduna and Benue state reinforced the idea that Nigerians were aggrieved and willing to look beyond the alleged brutality of an ex-military leader. President elect Muhammadu Buhari in his post victory interview with CNN’s Christiane Amanpour on the issue said “I was a military leader and I have since learnt a lot and become a converted democrat”.

Nigerians are hopeful and graceful, willing to give Buhari a second chance; it is now up to Buhari to prove to us that we made the right choice.

 

 

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My Comments on: Parking charges could boost Nigeria’s income by $10bn

VENTURES AFRICA – Currently, the Nigerian government is running low on revenue due to the steep decline in oil prices to less than 50 dollars a barrel. This has led many analysts to question how the national and state governments are going to fund their development when 90 percent of their revenue is derived from oil exports. Many have called for a diversification of exports, which is indeed a major issue, since 70 percent of Nigeria’s export revenue comes from crude oil. Looking beyond a diversification of exports, since 90 percent of government revenue still comes from oil revenue, the real issue is that public officials and lawmakers throughout the country have failed to develop alternate ways the state can increase revenue and diversify its funding structure so that they rely far less on oil revenue. Even the ministry of finance with all their claims of efforts was only able to increase tax revenue by half a billion dollars in taxes. (real full article on Venture Africa) . 

My thoughts;

My understanding of diversification in development term is that it is a process, which begins with the government, providing more and improving lifestyle before seeking to implement strategies for returns, a more recent example, in Africa, being Rwanda.

As is common, the usual manner of Nigerian- quick-wins solutions, David Karanga’s suggestions starts from the middle rather than the beginning, which in this case would be tangible government intervention to strengthen and improve livelihood, to give the poor more and strengthen the middle class; causing a chain reaction in poverty reduction. Rather, David’s suggestions, focuses on what the struggling citizens should sacrifice to assist the government in this tough time.

As Lagos is case study in David’s article, fails to consider the challenges facing the average Lagosian. I wonder how and why anyone would think this is a good idea! Where are citizens supposed to get the money to pay for this parking fee to help a desperate government who provide nothing for the people raise revenue?

How much is minimum wage? In a country with no social goods whatsoever, where citizens pay electricity bills yet never see electricity, but rather keep buying fuel and diesel for power supply and David believes this make sense?

Since the poor are never considered in policy implication, let’s look at the middle class. How much does the so-called average middle class earn? Can they afford anything? What can they afford? Does this matter and what are the implications for David’s suggestions?

With the falling Naira rate putting immense pressure on the middle class, howbeit, for proper perspective, the term middle class in Nigeria is merely a statistic income group who are economically living a lie, as they spend everything they earn on a month to month basis, sometimes, in advance.

Can this demographic afford a car or to rent decent housing without financial assistant from their support systems? What are the implications of older citizens who should be considering retirement plan, still supporting their young adult children who are mostly unemployed or earning incomes barely enough to survive?

Yet, as implied by David Karanga, this is a common practice and should be considered to raise revenue, as bad as things are; the Naira is being buried daily.

Further, since January 2015, the labor market has been under allot of pressure; laying people off to join the growing poll of unemployment in the country due to oil price decline and also, there are projections for more job loss after the election, and this makes sense?

What is obvious here is a desperate government that does NOTHING for its people trying to sacrifice its citizens to raise revenue in desperate times and expect the people to trust that such sacrifice is for the greater good, yet the citizens are still asking the government for a tangible explanation for the mysterious disappearance for $20B.

 

 

 

Posted in #Unemployment, Africa, Development, Development and Economic growth, Economic Growth, Governance, Politics, Poverty | Tagged , , , , , , | 2 Comments