Economic Crisis: Buhari Needs To Drop Pride And Court The Private Sector...

Economic Crisis: Buhari Needs To Drop Pride And Court The Private Sector [MUST READ]

By Shaka Momodu on August 26, 2016
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Nigeria's President Muhammadu Buhari
Nigerian President Muhammadu Buhari addresses reporters before working lunch with Secretary Kerry With U.S. Secretary of State John Kerry at the U.S. Department of State in Washington, D.C., on July 21, 2015. | State Department Photo

A time like this when the country is enmeshed in a myriad of economic and political challenges can transform leaders from mere mortals into extraordinary human beings in the hearts and minds of the people. Their exploits in the service of their people become idolised in nation-building folklore. But leaders who when faced with challenges like we have resort to lamentations day and night and consistently blame others even when they are at fault never rise to the level of great men or statesmen. Instead, they earn derision, scorn and the wrath of the people.

It is no longer news that Nigeria’s economy is in a precarious situation – and is growing worse by the day. It is also no longer news that this government is practically clueless on how to manage this unenviable situation and prevent the country from sinking even deeper into recession. Granted, the economy was not in the best of shape when this government took over power 15 months ago but revitalising it was a major campaign plank of the All Progressives Congress (APC). The truth is this government by its actions and inactions has accelerated the slide of the economy into recession and made a not-so-bad situation far worse.

It appears its only strategy for getting the economy back on track was to hope and pray that oil prices would bounce back pretty quickly from months of progressive decline so that the country will once again be awash with the green back. All the talk about diversifying the economy will once again fade from their lips. So far, there is hardly any blueprint in place to achieving the much-talked about diversification of the economy.

Lee Kuan Yew, Singapore’s first prime minister and by all accounts one of the greatest visionaries who ever walked on this earth, supervised the transformation of his once poor and backward Third-World country to a First-World country. Singapore is today clearly one of the most successful countries on the planet. The once very poor colony has become one of the wealthiest in the commonwealth. A commentator once said: “Singapore has achieved an astonishing degree of prosperity, social cohesion, and comity. It is almost certainly the most successful welfare state on the planet: able to protect the poor and the middle class while keeping taxes low, all run by one of the world’s most famously efficient technocracies.

While Singapore’s strategic location in the midst of the world’s most important shipping lane clearly aided its success, there is also no one who doubts that most of its prosperity is due to the amazing, difference-making work of Lee and his governing agenda. There are dozens of former colonies with great inherent assets, but only one Singapore.” Now, many forget how poor and backward this country once was.

Sheikh Mohammed bin Rashid Al Maktoum became the prime minister and the vice-president of the United Arab Emirates in 2006, and is responsible for Dubai’s meteoric rise and transformation into a lavish business destination with infrastructure many Western countries are struggling to match. That is what visionary leaders do. Malaysia is another perfect example where leaders with a vision have made the difference and lifted their people out of poverty into prosperity. Firmly and proudly, they repositioned their countries in the global arena for good. Rather than lament and whine endlessly, they rolled up their sleeves and went to work.

Our dear country has not been nearly fortunate to have “men of timber and calibre” at the helm of affairs; men with a pan-Nigerian vision who when faced with challenges, stared them down with grit, guts and gumption to steer new pathways to lift it from adversity to prosperity.

I have watched this government fiddling about with the economy in a manner that has left many in utter bewilderment. Certain economic decisions requiring rigour, thoughtfulness and impact assessment have been taken with brash military alacrity thereby causing more damage than good to the economy.

The recent pronouncement by President Muhammadu Buhari that he is adverse to private sector inclusion in his economic team underscores the narrow premise of the vision of this government on how to revamp the economy. It is a premise that has been re-echoed by the vice-president, Professor Yemi Osinbanjo, who should be eternally grateful to his godfather for making him the vice-president, no matter how uninfluential he may be (I doubt if he commands any respect within the power circle). He is always more than happy to align with his boss’ position no matter its futility.

In the face of strong adverse criticism that his administration lacked an economic team, Buhari disdainfully responded: “What do they mean by team? The vice-president heads our Economic Management Team. You have the finance minister, the budget and planning minister; the minister of trade, industry and investment; the governor of the Central Bank of Nigeria, the national economic adviser and others and yet some people still ask for a team. We will listen to everybody but we are averse to economic teams whose private sector members frequently steer government policy to suit their own narrow interests rather than the overall national interest.” He may have a point but I beg to disagree. The overall national interest is served in terms of job opportunities and contributions to the nation’s GDP by such companies.

Reacting to this development, Chief Dr. Bassey Edem, National President, NACCIMA, noted:

“It is a shame that Nigeria is said to have an Economic Management Team with no representative from the Organised Private Sector (OPS). We in NACCIMA sent a memo to President Buhari when the team was being constituted but there was no response. I even raised the issue during the Economic Summit Round Table session with the Vice-President Osinbajo in attendance, yet no action.”

Continuing, he stated thus: “The economic team is for Nigeria as a whole and not just for the public sector. It is still not too late to co-opt the organised private sector into it, especially NACCIMA which is the ‘Voice of Nigerian Businesses to balance it up”. The president of Sapele Chambers of Commerce, Industry, Mines and Agriculture, Prince David Iweta, also said that he was surprised that the current economic team of the federal government didn’t encompass the private sector. As for me, I have resolved to no longer attend seminars called by the government because they end up as paper–tigers. Who are the ones to diversify the economy? Is it the ministers in Abuja; is it the directors of CBN or the foreign speakers? The answer is no. It is those who are already involved in agriculture, mining and manufacturing as private sector that will diversify the economy.”
Only recently, the Manufacturers Association of Nigeria (MAN) decried the continued decline in capacity utilisation, warning that the situation posed a major threat to the already ailing real sector of the economy which has resulted in massive job losses.

The association explained that the manufacturing sector recorded a 20 per-cent drop in capacity utilisation at the end of the second quarter of 2016, stressing that the sector currently operates below 20 per cent of its capacity. It blamed the decline primarily on the scarcity of foreign exchange for raw materials’ replenishment and the declining purchasing power of consumers in the country. According to a recent report quoting MAN, 272 companies have shut down in the last one year and 180,000 jobs have been lost to the closures.

In the last 16 years, the country’s economy grew exponentially to become Africa’s biggest economy with a GDP of $574 billion contrary to the narrative out there that has been disingenuously christened “The 16 years of waste” by a crooked party, the APC. In just one year of Buhari in office, that GDP has dropped to $296 billion. Is this progress or retrogression? The truth is this government has practically crippled the private sector which is the engine room of economic growth.

Beginning from the Olusegun Obasanjo administration, the federal government got serious and began to take steps towards import substitution. The managers of the nation’s economy at the time started taking one commodity after the other, with a view to implementing policies that would encourage dealers in such commodities to transform from simply importing and trading in them, into fully integrated local manufacturers.

Obasanjo’s effort resulted in a lot of investments in soft drink manufacturing, leading to the rise of brands like 5Alive, Funman fruit juices, Chivita, etc. It also resulted in the development of the packaged-water manufacturing industry. But it was when the Goodluck Jonathan administration took office that this policy became the underpinning principle for the transformation of the economy.

What was different in the Jonathan government approach to import substitution was that it was developed into two broad economic programmes with various components called the Nigerian Industrial Revolution Plan (NIRP) and the Agricultural Transformation Agenda (ATA)/Growth Enhancement Scheme (GES). While the NIRP was being implemented by the Federal Ministry of Industry, Trade and Investment, under the leadership of Olusegun Aganga, an expert poached from Goldman sachs, the ATA/GES was anchored by a first-class agricultural economist and now the president of the African Development Bank (AfDB), Dr. Akinwumi Adesina, who were then ministers of Industry and Agriculture respectively.

These two policy frameworks, which were inextricably linked at many points, were being implemented in an orderly manner with backward integration strategies, leading to massive investments in cement production which invariably transformed Nigeria from a net importer of cement with less than 5 million tonnes per annum capacity, to a substantial net exporter with over 50 million tonnes per annum production capacity, after nearly $20 billion had been injected into the sector by private individuals with strong government support through waivers and tax exemptions.

The same programme was being implemented for the fertiliser industry, automobile industry, downstream petroleum industry, petrochemical industry, sugar industry, rice production, cassava flour in place of wheat and aquaculture industry, among others. This plan, although not entirely perfect, provided a clear vision and direction that seemed to lead the nation away from its dangerous dependence on other nations for its essential commodities.

Also, it made progress quite rapidly because of the robust and coordinated economic team which had a coordinator in the person of the then minister of finance, Dr. Ngozi Okonjo-Iweala, working in conjunction with other ministers and private sector heavyweights to ensure a smooth implementation of the plan. Entrepreneurs like Aliko Dangote, Abdulsamad Rabiu, Tony Elumelu, and others were given waivers and tax exemptions as incentives to invest massively in cement production and various other sectors of the economy that significantly contributed to lifting the economy to Africa’s premier status.

Wait a moment – imagine that people like Dangote, Samad, and co. didn’t invest massively in cement production, and we were still importing this all-important building material with the present forex problems attendant upon importation of goods into the country. What would have been the fate of the construction industry? Today, the nation is waiting patiently for the Dangote refinery with an installed capacity that surpasses that of the nation’s four refineries put together to come on stream so that the country can finally be able to meet the local demand for fuel and put the ghost of importation behind it thereby conserving foreign reserves. This same Dangote alongside Femi Otedola with their Bluestar company, it should be recalled, acquired the obsolete Port Harcourt and Warri refineries from government in 2007 for about $750 million, but was reversed by the Umaru Musa Yar’Adua administration following public outcry. Today, those refineries are worth far less than that amount. Sadly, they have continued to be a drain on government coffers with hundreds of millions of dollars spent on Turn Around Maintenance (TAM) with absolutely nothing to show for it except further enriching contractors and conniving government officials.

It is a shame that Buhari thinks including some members of the private sector in his government’s economic team is not a good idea. For the avoidance of doubt, there is nothing wrong with the OPS trying to influence government policy in furtherance of growth of local companies; it is for the ultimate benefit of the economy. All the government needs to do is to strengthen regulation, weigh and balance the quest for private benefits with the national economic interest to take informed policy decisions.

Interestingly, and perhaps sadly, whenever Buhari travels abroad ostensibly to woo foreign investors, he doesn’t travel with private sector operators. Instead, his trips are usually packed full with all sorts of strange nomenclature of naive government officials while the entrepreneurs who can network and form business alliances are left out in the cold all because according to the narrative, he doesn’t want businessmen to hijack his government.

Ironically, the investors he is wooing from abroad are not government officials of those countries, or are they? Those investors are private sector operators who have attained global acclaim due to the right policies and enabling environments created by their home governments.

From Buhari’s disdain for capitalism and contempt for entrepreneurs whom since his emergence, he has consciously kept at arm’s length, it is quite easy to second-guess him on the economy had he been in power for eight of the last 16 years. His attitude to businesses and his lack of full appreciation of the fierce urgency required to unsentimentally tackle immediate challenges are responsible for where the economy has found itself today. Also worrying and baffling is the insensitivity about some rash decisions like the rushed implementation of the Treasury Single Account (TSA) which has led to the loss of thousands of jobs and put the financial system in a precarious situation.

Just look at the decision to order nine banks to remit over $2 billion to the TSA within 24 hours. How can any sensitive government do that when even the CBN doesn’t have enough dollars to fulfil its financial obligations? Why not allow the banks to gradually remit the money to the TSA within an established timeframe? The immediate result of that decision is the fall in the value of the naira. Without a doubt, such a brash military-style approach only further compounds the economic crisis in the land.

Now, what has happened to all those laudable programmes inherited, expanded and implemented by the Jonathan administration earlier referred to? The truth is that in the mad frenzy to denigrate everything done by Jonathan, Buhari forgot that he would be judged not on Jonathan’s record but on his own performance. Everything done by the last government no matter how noble or well intentioned became fair game and in the twinkling of an eye was reduced to rubble in a brutal campaign that entertained the mob but unfortunately, has not put food on their table.

Clearly, this government and its crooked supporters including false prophets and clerics have mastered the art of approbation and reprobation. It’s little wonder that the Bible warns us against such “men of God”, that they will perform miracles in God’s name, and will lead many astray. I think these masters of doublespeak have been going about doing just that in a desperate attempt to exonerate Buhari of blame for the economic crisis in the land. Instead, Jonathan is now the fall guy as if the problems of Nigeria started with his administration.

Even though Buhari is not the root cause of the economic crisis in the country, the blame for the worsening situation most certainly rest squarely on his shoulders. So far, he has totally mismanaged the economy and the fault lines thereby exacerbating the poverty level and ethnic tensions in the country.

By the way, what does Buhari need emergency powers on the economy for? If he had not been so lethargic in decision-making on the economy, we won’t be where we are now. Where are all those who hailed and urged him on to take his time before constituting a cabinet? They have all kept quiet. He took his time and landed the country in a morass.

Well, all he needs to do is to free the economy from his command-and-control management, shake off lethargy, aggressively court the private sector operators, co-opt experts of great renown into his management team and galvanise them into action. As a corollary to that, he should embrace fresh ideas and new thinking in a globalised economy. Otherwise, no amount of emergency powers will change anything; things are only going to get worse.

Shaka Momodu is a columnist with ThisDay where this article was first published. He can be reached by email HERE

The opinions expressed in this article are solely those of the author.



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