ECONOMIC POLICY IMPERATIVES FOR BUHARI

President Muhammadu Buhari

I published the below piece exactly one year ago. It is still relevant today, hence it is being reposted for your reading pleasure. Enjoy it. 

ECONOMIC POLICY IMPERATIVES FOR BUHARI

With the 2015 Nigeria’s Presidential election won and lost, and the attendant celebrations now done with, attention of the victors – General Muhammadu Buhari (rtd) and his party, the All Progressives Congress (APC) – should now shift to policy imperatives that would, to all intents and purposes, determine the success or failure of the incoming regime. Beyond the “change” mantra of the APC however, it should be clear to any discerning fellow that governance in Nigeria should no longer be business as usual. An entirely new approach founded on leadership transparency, discipline, accountability and integrity is now a must if the Muhammadu Buhari regime can have any hope of pulling Nigeria out of the woods. It is instructive that Nigerians elected the retired but obviously not tired army general on those planks on March 28 2015. His victory at the polls, against all odds, clearly shows Nigerians are tired of business as usual.

No doubt, expectations are high that Buhari and APC will provide an antidote to the country’s most daunting problems of epileptic power supply, poverty, corruption and unemployment. Nigeria’s poverty cannot be blamed on shortage of natural resources, or the wherewithal to execute people-oriented programs; rather it is purely man-made, arising from insincerity in budget formulation and implementation over the years.

With the first ever change of federal government from the ruling party to opposition party, I opine that we should begin to seriously consider May 29 to May 28 as Nigeria’s fiscal year in order to align with our established election time table and also prevent politically induced budget truncation halfway into the year, on the advent of a new leadership after elections. But this is for the future. For now, every attention should be focused on improving power supply in the country, reducing corruption in governance, and reducing poverty and unemployment. Buhari’s economic team must therefore hit the ground running.

POWER SECTOR REFORM
The abysmal performance of the power sector is no doubt a consequence of corruption which has over the years been the common denominator in governance in Nigeria. The power sector has gulped billions upon billions of dollars over the years without anything to show for it. Stable electricity supply remains elusive even as Nigerians are compelled to pay huge electricity tariffs for services not enjoyed. The sector has gone through one rejigging or the other, all to no avail.

Specifically, I opine that Buhari should consider taking a closer look at how Nigerians were left with over N400bn debt after the privatization of the Power Holding Company of Nigeria distribution network. It is equally curious that more than two years after privatization, government continues to breastfeed the power distribution companies with selective interest waivers, which have regrettably not resulted in low tariffs or improved performance. In view of cost implications therefore, Buhari’s administration should as a matter of urgency fast-track the adoption of gas for generating power, as gas is considerably cheaper at below $3 per cubic metre and remains a much cleaner form of energy. Besides, Nigeria’s gas reserves are a thousand times in excess of her crude oil reserves, therefore it may be necessary to fashion out an institutional legal framework in which power and energy sectors are converged so as to facilitate transportation of gas to the power section. This will bring about efficiency and coordination

CORRUPTION
Most Nigerians are of the opinion that with corruption being endemic in Nigeria with the massive looting of public funds, profligate spending of public office holders, over-invoicing and kindred other corrupt practices, the incoming government must of necessity take bold and courageous steps in tackling corruption – as against President Jonathan’s acquiescence disposition towards it – if it is to make any meaningful impact in the lives of Nigerians. How does one, for instance, explain a situation where about $20 billion was unremitted to the nation’s treasury by NNPC under Diezani Alison-Madueke’s watch, yet the oil czar remains on the throne while the whistle blower, former CBN governor Sanusi Lamido Sanusi, was shoved off the seat? What about the police pension fund fraud, $10 billion spree on charter flights by the same petroleum empress, Diezani Allison Madueke; $6.8 billion fuel subsidy scam also under Alison-Madueke’s watch; or a Nigerian Presidency that boasts of more than five Presidential aircrafts at a time the country cannot boast of a national airline? These are some examples of corruption in high places which Buhari must have the political will to address. Luckily, the retired army general himself has a pedigree of prudence, fiscal discipline and an aversion for corruption.

One sure way of tackling corruption in a democratic dispensation is to have strong institutions as opposed to strong personalities. Under President Jonathan, Nigeria’s two foremost anti-corruption institutions – the Independent Corrupt Practices Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) – were deliberately crippled by starving them of funds. Both institutions became moribund as no one, absolutely no one, came under their searchlight even in the face of massive looting by anyone privileged enough to wield little authority under President Jonathan’s government. Buhari’s government must therefore show commitment to building, strengthening and sustaining the independence of these anti-graft agencies as well as the Judiciary.

UNEMPLOYMENT
A President Buhari will do well to adopt a modified John Meynard Keynes model of macro- economic management as a way of tackling unemployment. This model advocates massive government intervention to help overcome the lack of aggregate demand in order to reduce unemployment and increase growth. In adopting this model however Buhari administration should be creative in such a way as to increase government spending on infrastructural development while keeping it low on recurrent expenditure. Efforts to keep recurrent expenditure low must necessarily involve the cost of running government. The current federal bureaucracy is needlessly over-bloated. Clearly, the cost of running democratic governance in Nigeria has become too expensive as to be unsustainable. For an economy that produces virtually nothing and relies only on oil revenue, Nigeria’s political office holders are the most highly remunerated in the world. A senator, for instance, receives an average of N30 million per month. Nigeria has 109 senators and 360 Members of the House of Representatives. Each member of the House of Reps receives about N23 million per month. This is aside their severance when they leave office. General Buhari’s government must look into this in collaboration with the National Assembly with a view to reducing it.

President Jonathan’s government was abysmally low in its allocation to capital expenditure in the 2015 federal budget. Of the N4.357 trillion budgeted for the fiscal year 2015, only a paltry N627 billion (14.4%) was allocated to capital projects while a whopping N2.6 trillion (60%) was allocated to recurrent expenditure. This clearly shows a lack of seriousness in the so-called transformation agenda of the Jonathan government. A Buhari government will therefore do well to reverse this trend by budgeting a greater percentage to capital projects all through the duration of his administration. But it is not all about budgeting; it must also implement the budget to the letter. With infrastructural development at the fore-front of government expenditure, jobs would be created thus leading to increase in aggregate demand. An increase in the general level of demand for goods and services will invariably result in increase in economic activities as new vistas open up for small and medium scale enterprises. This, in turn, will result in increased employment opportunities.

Furthermore, the nation’s agricultural sector is a veritable avenue for poverty eradication, job and wealth creation. It is also the most important sector to be considered in eradicating hunger and meeting the basic human need for food. Although many people agree that President Jonathan’s government recorded some improvement in the agricultural sector, not much however has been achieved as the nation’s farming population continues to suffer from lack of access to modern farming technology, agricultural facilities, land and loan facilities, poor seeds, corruption, an aging farming population without the younger generation replacing them, illiteracy, and several other setbacks. In the words of the National President, All Farmers Association of Nigeria (AFAN,) Architect Kabiru Ibrahim, “the performance of the outgoing government is more rhetoric than action because the system only accentuated subsistence farming and was not well coordinated to target all farmers irrespective of political affiliation, religions and sex.”

In light of above therefore, it is recommended that Buhari government should allocate at least 20% of the total budget to developing agriculture. Buhari’s approach to agriculture however should not be the usual approach of throwing money to the sector, an approach which usually results in the hijack of the money by powerful elements who are not directly involved in the sector. Rather the approach should emphasize agric-based institutional frameworks that would see to the establishment of rural community-based agricultural banks through which loans can be channeled to rural farmers – with conditions of course – at single digit interest rate. This framework should also include establishment of Agricultural Processing Zones as processing harvested products guarantees good value on the farmers produce.

Although several loan facilities exist through the Bank of Agriculture (BOA) and Bank of Industry (BOI) respectively, these are limited to urban areas and, most of the time, bogged down by excess bureaucracy such that these loans are disbursed to needy farmers late in the year. Even then, rural farmers are hardly aware of these facilities.

Buhari’s government will also have to revitalize the manufacturing sector. It is one sector that can generate the desired employment. Some countries such as Hong Kong, Malaysia, Singapore, South Korea, Brazil, Russia, India, China, and South Africa were at par with Nigeria in the 1970s but today have all left Nigeria behind because they paid serious attention to rapid industrialization while we paid lip service to it. Nigeria’s recent attempt to smuggle the country into the BRINCS group (Brazil, Russia, India, China and South Africa), the world’s next industrial power houses, through implementation of Vision 20:20:20 has also fallen flat judging from current economic realities. How can it not when the country cannot even boast of a well-integrated Industrial Policy? Buhari’s government must pay attention to this area and revisit Vision 20:20:20 with a view to fashioning out a National Development Plan that will focus on 2035 or even 2040 as 2020 has become unrealistic. To ensure that this policy is pursued by governments after Buhari, it should be supported with an Act of the National Assembly, as well as involve inputs from states and local governments, organized private sector, and other stake holders. In short, a commission should be established to oversee its implementation. The policy should of course not exclude provision for the environment.

EDUCATION
During his presidential campaigns, General Buhari at different times promised to restore the past glory of education in Nigeria and instill discipline in all schools. As desirable as this is, it will be interesting to see how he intends to go about this. One thing for sure though is that our once highly-ranked educational system has now fallen to an all-time low such that it is now adjudged as one of the worst in Africa. Despite the huge resources committed to education over the years by successive governments, very little has been achieved. The licensing of more universities has not helped much in improving the standard of education, nor has it helped in reducing the army of those seeking tertiary education. Students seeking tertiary education are subjected to all sorts of obstacles as JAMB is always in a jam and post UTME examinations have become a tool for favouritism. There is in fact no basis for the post UTME to remain as its purpose in the first place, which was to subject intending students to stringent screening in order to curb cultism, has not been achieved. Even when these intending students are lucky to gain admission, all sorts of obstacles are thrown on their way in the course of their academic pursuit. Little wonder they cut corners to facilitate their admission and graduation, sometimes tacitly supported by their parents/guardians, hence the quality of graduates produced by our tertiary institutions has become abysmally low. Many of the graduates are not employable because they lack the basic skills their vocations demand. In addition to all these, there is hardly enough grant for academics to undertake research.

It is expected therefore that Buhari government would undertake a surgical operation of the education sector in order to cure it of the debilitating malaise that has troubled it over the years, moreso as education remains the bedrock of a nation’s economy. One sure way to start is to examine the existing education policy and align it with the industrial policy proposed above. A review of the entire curriculum is also desirable. The 6-3-3-4 education system, while desirable, should be re-examined, rejigged and refocused as it has lost one of its principal purpose of providing for those who could not secure admission into higher institutions. The way things are now, there is a wide skill gap arising from a total absence of career path for this category of Nigerians. In the absence of a workable policy framework to take care of this category of Nigerians, crime, prostitution and other social vice easily become attractive to them.

SECURITY
All of the above would achieve nothing if Nigeria continues to face security challenges. No serious foreign investment would come into country in the face of the security challenges currently facing the country. Luckily, the issue of security falls directly under the President-elect’s purview as a retired army general. The on-going Boko Haram insurgency must be brought to an end in the shortest time possible, and decisively too, at whatever cost. Ditto kidnapping, armed robbery, militancy and other kindred undesirable activities which constitute threats to our national economy, and which our security agencies have been unable to curb. Politicization of our security agencies is something of great worry. As a matter of urgency, The Buhari government must introduce serious reforms to restore the prestige of our security agencies.

From the above, it can be seen that the challenges facing the in-coming government are just five – electricity, corruption, unemployment, education and security. In fact, the challenges can rightfully be reduced to just one, that is corruption, because all the ills in the other sectors are directly or indirectly traceable to corruption. In light of this, it is my view that the President-elect should not waste time articulating some nebulous 1001-point agenda but to focus more on tackling corruption vis-a-viz the issues raised above. If President-elect, Muhammadu Buhari, can succeed in reducing corruption in public governance to the barest minimum he would have recorded a landmark achievement, while also laying a solid foundation for whoever will succeed him to look at the other areas of need.