“Hypocrisy is the homage paid by vice to virtue. “
De La Rochefoucauld, 1613-1680. VANGUARD BOOK OF QUOTATIONS.
Virtually all the national newspapers carried the news. Buhari called a meeting with the Governors apparently just to announce to them that the economy is in bad shape. Wonders never cease. Most of never thought that we will live to see the day that the Nigerian leader would admit a fact already known to every man, woman and child in the country outside the corridors of power – at Federal and State levels. To be candid, bad is a serious understatement of the economic situation now and the prospects for the future. A more accurate description might be disastrous. Furthermore, the government he heads apparently has no clue regarding how to get the country moving again. A recent report is an indication of the calamity facing us as a people.
The most hardworking Minister in the government, Udoma Udo Udoma, in charge of Budget and National Planning, told a global congregation of doubters that the FG expects the economy to grow by 3 per cent in 2019. Listeners smiled politely, instead of laughing at our Minister the way Mrs May of Great Britain was dismissed with scorn in the Parliament two weeks ago. Most people know when a government official says what he himself might not fully believe to be true because he has nothing else to say.
In order to make 3 per cent Gross Domestic Product, GDP, growth appear re-assuring, the FG first of all reduced the population growth rate to 2 per cent. That made it possible for them to claim that the economy will grow faster than population and our descent into crippling poverty will be arrested. Even at face value, the entire submission smacks of “working to the answer”. Unfortunately, no answer has been provided; it has been more evasion of reality. The country’s economic track record in the last three years offers no cause for optimism that we can grow at 3 per cent next year.
Quickly, we can review that dismal record. In 2015, operating largely a Jonathan budget, the GDP grew at adjusted 2.7 per cent. This was followed by a recession in 2016 which ended with minus growth. The recession continued until the second quarter of 2017, and we ended that year with 0.8 per cent growth. Here we are in 2018 and the World Bank, the International Monetary Fund and other global economic watchers are predicting less than 2 per cent growth as the year comes to an end in a few days. Yet, the FG is insisting that despite not having increased by up to 2 per cent in the first three quarters, we will somehow manage to get 2 per cent for the year. The French Emperor Napoleon Bonaparte, 1769-1821 reportedly said the word “impossible” does not or should not exist, he himself discovered that some things are impossible when he tried conquering Russia. It is almost impossible for the Nigerian economy to grow so fast in the fourth quarter. And one cardinal reason our economy is in shambles is playing out right now.
December is almost gone; and the 2019 Budget documents just reached the National Assembly, NASS. It has not even been officially presented. That will take some more days because the President and most of his Ministers are out campaigning. Surprisingly, it has not occurred to the President and his Economic Management Team, headed by Vice President Osinbajo, that there is a strong correlation between the prompt presentation and passage of a national budget and economic performance. Late passage delays hundreds of thousands of investments needed for rapid progress. Companies whose businesses are heavily dependent on government patronage cannot make investment decisions until the budget is passed.
This year’s budget was not signed until mid-June – meaning half the year was gone by the time investors could move. Given the track record and the focus on elections, it will amount to a minor miracle if the 2019 sees the light of day until July. How can acceleration result from that?
Governor Yari, who briefed journalists, reported that Buhari exhorted his listeners to ensure we tighten our belts. If that is the best the FG can do, then Buhari has spoken in vain for two reasons. Each and every time those in government had wasted our crude oil bonanza on wasteful projects and corrupt practices they turn and ask the masses to “tighten” their belts. Yet, there has been no single instance in economic history to support the view that austerity measures imposed on the masses led to rapid advance. On the contrary, the long term destruction of the Nigerian Middle Class and impoverishment of the lower income group is the cause of our predicament. Two examples will again assist to help readers understand the point.
Assents Management Company of Nigeria, AMCON, established after the global banking crisis of 2008 to assume toxic loans granted by Nigerian banks to wealthy Nigerians was expected to recover the loans and return the funds for lending to everybody especially small and medium scale enterprises. Till today, AMCON has recovered less than five per cent of our money. Why? Because the deadbeats are well-connected individuals who make huge donations to political parties – in and out of government. They are “untouchable”. And as long as they are, the economy will never have the funds for growth.
Furthermore, less than one per cent of Nigerians are responsible for close to ninety per cent of all non-performing loans inhibiting lending by banks. Some people are on both the AMCON and non-performing loans lists. Only recently, the Central Bank announced it will soon make it mandatory for banks to report such customers who run from one bank to another — leaving trails of woe as they go. I worked temporarily in Shawmut Bank in the Boston area in 1969. That credit check system was already in operation. Why has it taken the CBN almost forty years to adopt it? More to the point, will we allow it to work?
The Middle and low income classes have no belt to tighten; most don’t even have belts anymore. If governments, FG and States, want to drive this economy, they should go and collect the taxes that are due to them from the wealthy and rich; they should introduce toll gates so that those who use the roads and damage them pay for their repairs and maintenance.
Finally, we should return to the Parliamentary system and make being a member of parliament a part-time job. Dr Muiz Banire used a term I like; he called it “those who have alternative address” – meaning people who have other means of revenue apart from government. Now, people are picked literally from the gutter, given important appointments and within months are building mansions. They thereafter never want to leave government. They go from Commissioner to Governor to Senate to Minister and party Chairman. We cannot grow our way out of poverty as long as we encourage “wealth without work.”
LAST LINE: Vice President Osinbajo, the Chairman of the Economic Management Team of Buhari’s administration. Under him, Nigerians have become poorer. He had spent the last three and a half years playing the blame game. Yet, at the meeting, he was reported to have asked the governors to stop playing the blame game. That is hypocrisy and it is one of the principal reason we were unable to grow up to 2 per cent since 2015. He should draw up a plan of action leading to rapid progress or step aside.