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Tinubu, declare economic emergency (I)

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Nigeria is on a dire straits; even people in the corridors (and bedrooms) of power know it but they will not openly say so. The President Bola Tinubu’s administration thinks it can wish away the poor state of the economy by embarking on tokenisms. No where is a bandage prescribed for the cure for cancer; which is what the government seems to be trying to do to heal the economy. It is almost certain that some of the government actors are hoping that they will somehow stumble on luck and things begin to improve, not because of their actions but in-spite of them.

The other day, I asked one of President Tinubu’s diehard supporters, who during the electioneering campaigns thought the man had the magic wand to turn things around, what the economic policy of this government was. Unsurprisingly, he said he didn’t know; nor does anyone in this government can articulate one. At best you would hear the parroting of the Renewed Hope agenda; whatever that means.

To put it more graphically, Nigeria’s dying economy is in a dysfunctional Intensive Care Unit. Except life is breathed in to the ICU, we may soon lose both the facility and the patient! That would be a disaster of immeasurable proportion. What is required is to bury hubris and fear; take your mind and focus off the next election (as is usually the practice of politicians), take the bull by the horns and deal with the situation squarely. To put it simply: President Tinubu needs to summon the courage and political will to do the heavy lifting of the economy; it is within the realms of possibility for the President to do so if he so wills.

This article (the first of two parts) is not about regurgitating the facts that things are in the most horrible shape and the reasons behind them. The intention is to focus on the solutions side of the argument. First, a disclaimer: I am not an economist. But, sincerely, history has taught us time and again that you do not necessarily need an economist to turn around the economies of nations, even though economists will of necessity be part of the mix of the midwives of great economies. One of the recent United States’ Chairman of the Federal Reserve Board (Nigeria’s Central Bank Governor’s equivalence) Jerome Powell did not study economics! I remember, as the head of the corporate affairs department of the defunct Universal Trust Bank, I would occasionally provide professional advice to the Chief Executive Officer, Mr. Kris (that’s how he preferred his name Chris to be spelled!) Nwosu. He would sometimes say to me “Akan (or was it Esiere he used to call me!), I respect your professional advice but my gut feeling says we should do it this way.” On certain occasions, he was right.

Back to the work of fixing our battered economy. President Tinubu must urgently declare a state of National Economic Emergency, if he wants the economy to come out of the ICU alive! This declaration must be backed up with very drastic and far reaching measures to rescue the economy from total collapse; including seeking repels of some laws and signing of Executive Orders. The consequences of a collapsed Nigerian economy are far too severe to contemplate. The effects would reverberate across the entire Central and West African subcontinents.

Enough preambles! I want to hazard some steps and measures the government can take upon the declaration of the state of economic emergency to rev up the economy:

1. Drastically reduce the cost of governance at the federal level by:

A. The President should not leave the country for any official matter unless it becomes absolutely necessary to do so. Throughout the period of the economic emergency, he should stay at home and lead from the front. The flimsy excuses of going out to attract foreign investments with a retinue of aides and friends of aides will not apply under the economic emergency plan because previous efforts had not yielded much success. No responsible person borrows money to embark on a foreign vacation when his or her children’s school fees have not been paid! Should a foreign trip becomes very important, the foreign affairs minister or a relevant minister can represent the President.

B. The President should not be going to states to commission governors’ borehole and drainage projects! I am not saying the President should not visit states, but he must only do so for very important reasons. Nigerians need to know that it costs billions of Naira to host our President in any state. The sheer security apparatus of moving the President from Aso Rock to any state and back is humongous and always an overkill. So, this should be done very sparingly. This idea of spending more money to commission political projects should be discouraged greatly.

C. Because the President does not have the constitutional authority to force governors to do the same at the state level, he should engage them in a moral suasion to align with the federal compass of reducing the cost of governance. As reckless and profligate as they are, Nigerian governors will cut down on their spending provided they see sincerity at the federal level.

D. Look at very many areas of wastages in government and reduce same drastically. There are always two critical questions to ask: a) do we need to do it; b) if it was my money, how much would I spend to do it? The message here is that government must behave in a way that clearly communicates that there is paucity of money in the system and austere behavior should be instilled in governance. We still see government officials spending money as if we were a buoyant economy. We are not; even our federal budget says so…and much of that is boosted by debts and loans.

2. Sell our moribund assets.

Nigeria’s landscape is littered with hundreds, perhaps thousands, of dying commercial projects. Chief among them is the dead and never breathed behemoth called the Ajaokuta Steel Company. A few years back, Pastor Poju Oyemade, the Senior Pastor of the Covenant Nation and convener of the Platform had a teaching series on the abundance of resources available in the lives of the poor. One of the lessons was that if the poor took a look at some of the idle stuff they have, these could be sold to raise capital for investment. The same philosophy applies to communities, companies and nations. So, the federal government should take an inventory of its idle assets and sell them off to raise funds to revamp the economy. Apart from the steel complex, we have the steel rolling mills built in the 1970s and ‘80s; the paper mills at Iwopin and Oku Iboku, the Aluminum Smelting Plant at Ikot Abasi; the four federal oil refineries in Rivers, Delta and Kaduna States; the wasting away federal secretariat at Ikoyi.

Interestingly, it was President Tinubu as governor of Lagos State who frustrated the then President Olusegun Obasanjo from selling the secretariat to Bi-Courtney due to the usually myopic political reasons. Bi-Courtney, the developer and operator of the better managed MMA2 local airport terminal in Lagos, intended to convert the secretariat complexes to luxury apartments but the Tinubu’s Lagos State Government sued the Obasanjo’s Federal Government for wanting to sell the property said to have been built by the federal government on a land donated by the state government. Twenty or so years after, the sprawling high-rise complexes lie waste, and as a comfortable home to reptiles and criminals. There are several other such properties and projects in virtually all the states of the federation. Government should within two years identify all such assets and sell them 100 percent to private investors. Trillions of Naira would be generated through such sales and the money injected into the economy.

3. Take the Nigerian National Petroleum Company Limited to the capital market.

Sell 10 percent of NNPCL shares to the investing public. My estimation is that the company is valued somewhere around N50 Trillion. Assuming my estimation is correct, a ten percent stake sale will give the government N5Trillion cash, enough extra money to play around with for at least two years. Following the successful completion of the conversion of NNPC from a public corporation to a limited liability company, its group chief executive officer, the likable Mele Kyari, had said that the company would be listed on the Nigerian bourse before the end of this year. We have not seen much traction in this regard. Government needs to make haste to sell a piece of the company to the public and invest the money in the economy. There are many Nigerians with the resources to grab the shares of the company if taken to the market. If one bears in mind that nearly four quoted companies on Nigeria’s stock exchange are worth a minimum of N5 Trillion each (Dangote Cement N11.2T; Airtel N7.88 Trillion; Bua Foods N6.84 Trillion; Bua Cement N4.85 Trillion), getting deep pocket Nigerians to buy N5 Trillion worth of NNPCL’s shares would be a piece of cake!

4. Embark on massive public works across the country: build roads and bridges; build rails and tracks; construct dams and power stations; revamp federal educational and health facilities.

Invest at least N4Trillion from the sale of the NNPCL assets in infrastructure development across the country. This will have multiplier effects in different areas (short-to-medium term employment of several thousands of idle youths, crime rate reduction, increased taxes, increased production in the building and construction sectors, increased ease of doing business, reduced costs of production; improved infrastructure, and increase in the size of the economy. At the June 2024 edition of the bi-monthly forum of finance correspondents association of Nigeria (as a financial journalist in the 1990s, I was a member of this body!), Adetilewa Adebajo, an economist, stated rightly that the economy could be grown to a $5 trillion economy within a short time if its potentials are properly harnessed. That is just a little more than the economy of the state of California in the United States!

5. Reduce taxes and widen the tax collection base

Since this is economic emergency, businesses will need some urgent breather to cope. One way is to reduce Company Income Tax from 30 percent to 20 percent over a three year period or so. In the same vein, bring down Value Added Tax from 7.5 percent to 5 percent over a five year period in order to ginger consumption and at the same time boost economic growth (as manufacturers will have to increase output to meet demand; and employ more hands). It is a known fact that money Nigerians do not pay tax. Rather than increase taxes for those who are currently paying, incentivize them by reducing the tax burden and go after defaulters. With technology and the political will, government can easily track the dodgers and bring them into the tax net. This would not only send the direct message that it is not business as usual; but also provide more funds for the government to invest in infrastructure and social projects.

Postscript

Part 2 of this article will be published on Monday, 15 July 2024.

More importantly, I wanted to apologise for not publishing REFLECTIONS! on Saturday 15 June 2024. I was engaged with a nobler assignment, and couldn’t find the time to pen an article. My sincere apology.

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