Vice President Osinbajo recently made a disclosure about the Nigerian economy which should scare all Nigerians irrespective of political affiliation. According to the VP, a minimum amount of N700 billion must be generated and shared monthly by the Federal Government and the states monthly just for them to discharge their obligations to pay salaries, statutory transfers and for debt servicing. Nothing else.
That figure translates to N8.4 trillion per annum or 17 per cent more revenue than this year’s total budget, which stands at N7.2 trillion and excludes any expenditure whatsoever on capital expenditure.
To start with, only in one month this year was it possible for the Federal Account Allocation Committee, FAAC, able to receive up to N700 billion for sharing – with less than five months to go in the year.
Consequently, a massive deficit has accumulated which will be difficult to close by year-end. Furthermore, with little or no provisions for capital appropriation this year, it means that only a few people – less than 5 million public servants and lenders will benefit from the expenditures this year while all the rest of 180-plus million Nigerians will receive no benefit whatsoever. Infrastructures will crumble more, schools, hospitals, power systems and hospitals will not be maintained, and housing will be abandoned. Forget Second Niger Bridge.
In short, the Federal Government of Nigeria has in effect turned our democracy into a government of public servants, by public servants and for public servants. A better definition of total slavery of fellow Nigerians will be hard to imagine. We live for them to exploit.
The VP then pointed out the imperative of finding alternative sources of income without mentioning a single one. Thus, what should have been an economic policy statement outlining some of the options under consideration and reassuring Nigerians that government means business turned out to be a mere statement of good intentions. It is obvious that the Chairman of the FG’s Economic Management Team does not realize that good intentions are never enough. In fact, if care is not taken, the road to hell is often paved with “good intentions” such as these.
FG’S CONCESSION OF AIRPORTS – HALF STEP IN THE RIGHT DIRECTION.
Few measures taken by the Buhari administration in the bid to promote rapid economic growth, recovery and development can be compared with the recent announcement by the Vice President that the Federal Government has at long last approved the concession of two airports – the Murtala Mohammed International Airport and the Nnamdi Azikiwe Airport in Abuja. The measure induces two comments at once – “better late than ever” and “half a loaf is better than none”. Nigeria remains the only major country in the world where government builds and maintains airports with its own financial resources. For over thirty years worldwide concessioning has become the global standard. That it took us so long to wake up to modern realities must be one of the great wonders of the world today.
It is even more amazing that it took so long to abandon the tried-and-failed method of managing airports given the outstanding success of the MMIA2 in Lagos – built and operated by Bi-Courtney. MMI2 is one of the best airports in Africa today. Only God knows how many trillions naira of revenue had gone down the drain while various governments managed the two airports now to be offered to the private sector.
However, our enthusiasm for this measure is tempered by the fact that by concessioning its only two profitable airports the FG is giving up assets while retaining the liabilities – Kano, Kaduna, Enugu, Ilorin, Sokoto, Calabar, Benin, Maiduguri, Yola, Jos, Portharcourt. There might be an error there. It is the “losers” which need the touch of the private sector and which should also be concessioned given any reasonable offer. Otherwise, we make money on the two and throw them away on the rest.
That said; another problem remains. Our record with the one airport concession agreement signed with Bi-Courtney has been, to say the least, disgraceful. Obasanjo’s government signed an agreement which Jonathan’s administration proceeded to repudiate with impunity – including disobeying court orders with regard to that agreement. Now, Bi-Courtney has claims of almost N160 billion against the FG as a result of lawless government. Meanwhile, the global financial community, which is a closed shop, is watching the developments. Nothing might come out of our search for private sector interests in the two airports unless there is iron-cast assurance that other investors will not suffer the same fate as Bi-Courtney. That means we need to clean the mess with respect to MMIA2 first.
LOW CAPITAL EXPENDITURE AND ITS GRIM CONSEQUENCES.
The announcement in early September this year by the Federal Minister of Finance that only N350 billion has so far been released to Ministries, Departments and Agencies, MDAs, for capital expenditure should be of concern to all Nigerians because it would have been figured into the projections for the nation’s year-end economic performance by global institutions like the World Bank, the International Monetary Fund, IMF, the African Development Bank and prospective lenders.
That amount represents just 15 per cent of the N2.36 trillion budgeted for this year with eight months gone and only four to go. By contrast, at approximately the same time last year, N770 billion had been released which was approximately 56 per cent of the year’s appropriation. It is no longer news that the economy ended in the first recession in thirty years. The reasons are obvious.
Gross Domestic Product growth is a function of Government spending, aggregate consumption and investments as well as import-export effects. But, Government spending is the prime mover; and that explains why the global financial community pays close attention to every country’s budget and employs it as the basis for forecasting the likely GDP growth – positive or negative. They also monitor actual expenditure and compare with the budget to determine actual performance.
A situation in which Nigeria is just releasing 15 per cent of its capital expenditure in September already points to low economic performance by the end of the year. More to the point, it means that expectations about improving infrastructure will be dashed and things are likely to get worse by December than they were in January of this year. Progress will be reversed and we might start 2018 worse off than in 2017; which in turn was worse than 2016 and 2015.
The way forward from here looks very murky and there appears to be nothing on the government’s economic agenda to avert another poor result for 2017. Nigerian should be asking the FG: when will positive growth start? Nothing we have seen so far suggests that it will happen soon. Economic despair is one of the worst consequences of N350 billion spent in eight months of the year on capital.
DEEPENING POVERTY IN NIGERIA AND GOVERNMENT’S LACK OF IDEAS.
When the National Bureau of Statistics, NBS, announced that the Gross Domestic Product, GDP, grew by a mere 0.55 per cent in the Second Quarter (Q2) of this year, after declining by -0.91 per cent in the First Quarter (Q1), Nigeria’s official score-keeper revealed an unpleasant fact which most of us missed and which officialdom is very happy that we did. Given a recession last year and a cumulative negative growth so far this year, combined with a population growing at still about three per cent, our per capita income has dropped further. In other words, the average Nigerian is poorer today than in 2014.
Furthermore, with no growth in the first half of 2017, the GDP growth expected when the budget was prepared has now been revised downwards officially to 1.9 per cent. But, the Federal Government is alone in expecting even that poor result. Much earlier in the year, the International Monetary Fund, IMF, had in its forecast announced 0.8 per cent for the year. PriceWaterhouse, an international accounting and auditing firm, recently revised its own estimates down to 0.7 per cent. Vanguard would be on record as forecasting 0.6 per cent at best.
However, even if we accept government’s own projections, as unlikely as they are now, the result, if achieved, will only deepen Nigerian poverty; not alleviate it. Furthermore, given the track record of the last two years, government’s proposed GDP growth for 2018 now appear very questionable. In 2016 and now 2017 the FG had failed to deliver on its major budget estimates for revenue, expenditure, exchange rate and certainly GDP growth. With the same officials in charge, there is no reason to expect a different result in 2018. Again, even if they turn out to be right, for once, Nigerians will end 2018 poorer than they are now.
As we enter 2019, our people will be more than twenty per cent worse off than they were in 2014. For a country which was once touted to become among the top economies by 2020, we would have reversed all the gains made from 2010 to 2013 inclusive when the economy grew on the average of 6.5 per cent.
The worst part of our predicament is the fact that this government has no clue regarding how to fix the economy. The Economic Recovery and Growth Programme, ERGP, launched in May with a lot of fanfare, had become nothing more than a trope of words and figures on paper and entirely useless for implementation. A look at the Medium Term Expenditure Framework, MTEF, would induce tears.
The time has come for Nigerians not in government, civil society groups, research institutes, universities, the Organised Private Sector and the financial sector to open up the debate on how to save our country from imminent economic collapse. Governments come and go; but Nigeria will remain. What remains must be the country we want; not the one they will leave us when they go — even if we have to take our destiny in our own hands.
FIX THE ECONOMY BEFORE 2018 OR FORGET IT.