Sometimes, the government feels it is pushing out information that could make Nigerians smile when actually such information could elicit tears. In the first week of April 2023, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced with glee that Nigeria had secured a $800m loan to cushion the negative effects of removal of petroleum subsidy by June 2023. The minister felt that distribution of palliative would be good news to Nigerians but when she realised that it was not, she gave another thought-to-be mouth-watering information. The loan is long term, cheap, as it attracts a maximum commitment charge rate of one-half of one per cent per annum and will take repayment period of 25 years! What a long period of relief? What a concessionary credit you would say! We are weary of loans madam.
I don’t know whether the minister realised that she was telling us that we are borrowing money or obtaining credits to be able to consume today but push the repayment to future generations who would not even know what we consumed or what they are paying for. We did not borrow for production but consumption! What an economy of happiness!
And, what do we consume? Another information answered that question. Central Bank of Nigeria findings according to The PUNCH showed that Nigerians imported N18tn worth of food and other basic needs in seven years or over N2tn worth of consumable imports in a year! This implies that $800m being provided by the World Bank will enable us to import products produced in Europe, United States and Asia to keep the industries in those countries alive and at the expense of our domestic industries!
Increased consumption is a good indicator of an improving economy. When there is recession and consumer spending starts improving, economic managers are quick to point out that such an economy is getting out of recession. According to a British economist, John Keynes, effective demand is a necessary condition for reducing unemployment rate and possible economic recovery. Consumption aids production which leads to improved output and consequently employment of human and non-human resources. But that consumption must be related to locally produced goods and services, not imported goods. If a country imports over two trillion consumer goods in a year, then what does it produce?
Let us agree that we are for free trade despite the disadvantages to our economy. Let us also agree that we have the market to attract local and particularly foreign sellers of goods and services in terms of population, not income because of our low-income level. Do we have economic policies to attract producers of goods and services? Government must be worried not just about the magnitude of the hard earned (is it really hard?) foreign exchange spent on importation but also the structure of imports.
For long, we have been referring to Nigeria as an import dependent economy and one would think in terms of importation of raw materials and machines. It is becoming increasingly clear that we are more dependent on imported food and other consumer goods. The goods whose raw materials abound locally! So, those who want to sell these products must be attracted to invest locally and use the raw materials here. If there is the need to ban importation of such products in the short run and in the interest of the nation, let us do so. But you cannot force foreign companies to invest in your country when the macroeconomic policies are unstable and unfriendly.
The unplanned twin policy of naira redesign and forced cashless economy with resultant cash crunch is a case in point. No matter how big a company earns in local currency, it becomes peanuts when the profit is being converted to foreign currency for repatriation. So the manipulation in the foreign exchange market through insider trading and mismanagement has to be addressed. The issue of low income or no income for workers also needs to be corrected, not through the dubious policy of increasing workers’ salaries by 40 per cent but by truly promoting revenue generating and income-enhancing policies.
We are aware that some state governments have been owing workers salaries for many months and many of them, including some private sector enterprises, have not been paying the minimum wage of N30,000 per month. So what informed salary increase by 40 per cent and for which categories of workers? What is the proportion of such workers to the total population? On which products are they going to spend the money: locally produced or foreign. Is it being done to enhance severance pay of political actors going out with the present government?
Where is that money coming from? More borrowing from the CBN or the $800m loan? The Minister of Labour, Chris Ngige, mentioned the increase almost two years ago and nothing happened. It is just another way of creating problems for the public as the announcement effects would make rents and prices of other basic needs to increase gradually. It may also be part of making governance difficult for the incoming government which is likely going to meet not just empty purse but humongous debts documents. That brings us to the issue of debt.
Sometimes when watching football as usual and my team is receiving bashing, I always pray for time to fast forward to foreclose further goals. Unfortunately, no one can hurry the hands of the clock! I just hope that May 29, 2023 arrives tomorrow. The future may be uncertain but the present economic policies are choking. Despite the fact that the country is clearly in debt trap, the present economic managers are still shopping around for more loans. They are unconcerned that over 80 per cent of revenue is committed to servicing debts and no money to meet other basic obligations without resorting to the CBN for salary advance.
The new government should be concerned about where to start from given the magnitude of government indebtedness to local and international communities, including the unholy debt alliance with the CBN. We can say that is their headache, as the citizens are already depressed by the socio-economic and security situations. Of course, it is the same political party and there should not be any bulk passing. But, trust me, Nigerians are prayer warriors. We are already praying for them to succeed even before taking off. Believe me, money flows into this country every day but disappears into private pockets every second. What is required is monitoring and evaluation. As an auditor, the president-elect must know what to do.
I tremble any time I remember Ibrahim Babangida in 1986 when the Structural Adjustment Programme was introduced and he told us to bear with the government on the short-term hardship the policy would bring. Many governments have succeeded him but the pains continue. The story remains the same despite their promises. We introduce or adopt economic policies without understanding the underlying theoretical assumptions and basis. One government official recently said that members of the Nigerian Economic Society are imbued with economic theories not the practical that is required to run an economy. God help him.
Overall, what do we do? I understand that God told Adam that he would eat from the sweat of his labour which to me implies that he must work, work and work. So, prayer should be seen as a supporting instrument not a major factor in running our lives. Nigeria must return to production for consumption. We must produce locally, the food we eat, through mechanised agriculture and resuscitation of the river basins; the fuel we use through investment in new refineries not refurbishment; the vehicles we drive; the clothes we wear; generate the electricity we need and produce the water we drink. We have to produce what we consume and consume what we produce. We must standardise our exports and repatriate the revenues generated rather than keeping the same in accounts abroad.
We must gradually but forcefully reduce the number of children out of school and improve education and health sectors generally. Education and good health enhance productivity. There is the need to empower the private sector with the right economic policies to be vibrant and independent of the public sector. We need to restructure the debt payments through moratorium and be watchful that no official is taking advantage of the economy through unbridled borrowing. But these can happen only after May 29, 2023.
