Chukwuma Charles Soludo’s Article-‘Buhari vs Jonathan, Beyond the Elections’

January 27, 2015 3:05 pm

An article written by former Governor of Central Bank of , Charles Soludo titled ‘Buhari vs Jonathan, Beyond the Elections’ is currently making waves on social media and online.
The very lengthy article x-rayed the chances of Gen Buhari and President
Jonathan in next month’s general elections, the mistakes of the past,
and most importantly the challenges that lie ahead.
After the cut is a summary of article, pointing out 20 important points he raised.

1) Neither president Jonathan nor his major
challenger, Gen. Muhammedu Buhari, has a well-thought programme to
tackle the different challenges in the country, despite the promises
made

“Let me admit that the two main parties talk around the major
development challenges—corruption, insecurity, economy
(unemployment/poverty, power, infrastructure, etc) health, education,
etc. However, it is my considered view that none of them has any
credible agenda to deal with the issues, especially within the context
of the evolving global economy and Nigeria’s broken public finance,” he
said.
2) ‘Both parties (PDP and APC) are missing the golden opportunity to
sensitize the citizenry about the enormous challenges ahead and hence
mobilize them for the inevitable sacrifices they would be called upon to
make soon. Each is promising an El-Dorado (after elections)’



3)’They (PDP and APC) are not telling us how much each of their
promises will cost and where they will get the money. None talks about
the broken or near bankrupt public finance and the strategy to fix it.’



4)He also accused the presidential candidates of APC and President
Jonathan of promising Nigerians what they cannot deliver because of the
reduction in the revenue accruing to the country as a result of the fall
in oil price.

‘I heard one of the politicians say that the problem of Nigeria was not
money but the management of resources. This is half-truth. The problem
is both. No matter how efficient a father (with a monthly salary of
N50,000) is at managing the family resources, I cannot see how he could
deliver on a promise to buy a brand new Peugeot 406 for each of his
three children in a year. Even with all the loopholes and waste closed,
with increased efficiency per dollar spent, there is still a binding
budget constraint.’

5) ‘I have tried to cost some of the promises by both the APC and the
PDP, given alternative scenarios for public finance and the numbers
don’t add up. Nigerians would be glad to know how both parties would
fund their programmes. Do they intend to accentuate the huge public
debt, or raise taxes on the soon to-be-beleaguered private businesses,
or massively devalue the naira to rake in baskets of naira from the
dwindling oil revenue, or embark on huge fiscal retrenchment with the
sack of labour and abandonment of projects, and which areas of waste do
they intend to close and how much do they estimate to rake in from them,
etc?’

6) What Nigeria is going through now is a consequence of our deliberate wrong choices.

‘We have always known that the unprecedented oil boom (in both price and
quantity—despite oil theft) of the last six years is temporary but the
government chose to treat it as a permanent shock.’
‘ I assumed office as Governor of CBN, the stock of foreign reserves was
$10 billion. The average monthly oil price during my 60 months in
office was $59, but foreign reserve reached the all-time peak of $62
billion (and despite paying $12 billion for external debt, and losing
over $15 billion during the unprecedented global financial and economic
crisis) I left behind $45 billion.

Recall also that our exchange rate continuously appreciated during this
period and was at N117 to the dollar before the global crisis and we
deliberately allowed it to depreciate in order to preserve our reserves.
My calculation is that if the economy was better managed, our foreign
reserves should have been between $102 –$118 billion and exchange rate
around N112 before the fall in oil prices. As of now, the reserves
should be around $90 billion and exchange rate no higher than N125 per
dollar’

“As I write, the Naira exchange rate to the dollar is N210 at the
parallel market. What a historic performance! Please save your breathe
and save us the embarrassment.”

‘So far, the Government’s response to the self-inflicted crisis is, at
best, laughable. They blame external shocks as if we did not expect them
and say nothing about the terrible policy choices they made’

7) This is the only government in our history where rapidly
increasing government expenditure was associated with increasing
poverty.

‘The poverty incidence and unemployment are at all-time high levels.
According to the NBS, poverty incidence grew to 69% in 2010 and
projected to be 71% in 2011, with unemployment at 24%.
This is the worst record in Nigeria’s history, and the paradox is that this happened during the unprecedented oil boom.’

‘No other president earned up to 50% of the amount of resources the
current government earned from oil and yet with very little outcomes; no
other president had the rate of borrowing; none had significant forex
earnings and yet did not add one penny to foreign reserves but losing
international reserves at a time of boom; no other president had a
depreciating exchange rate at a time of export boom; at no time in
Nigeria’s history has poverty reached 71% (even under Abacha, it was 67
-70%); and under no other president did unemployment reach 24%.’

8) Jonathan’s record on the economy is a clear ‘F’ grade.

‘My advice to President Jonathan and his handlers is to stop wasting
their time trying to campaign on his job record. Those who have decided
to vote for him will not do so because he has taken Nigeria to the moon’

‘As one reviews the laundry list of micro interventions the government
calls its achievements, one wonders whether such list is all that the
government could deliver with an unprecedented oil boom and an
unprecedented public debt accumulation’

‘If we appropriately adjust for oil income and debt, then this
government is the worst in our history on the economy. All statistics
are from the National Bureau of Statistics.’

‘Despite presiding over the biggest oil boom in our history, it has not
added one percentage point to the growth rate of GDP compared to the
Obasanjo regime especially the 2003- 07 period. Obasanjo met GDP growth
rate at 2% but averaged 7% within 2003- 07. The current government has
been stuck at 6% despite an unprecedented oil boom.’

9) The government’s economic team is very weak, dominated by
self-interested and self-conflicted group of traders and businessmen,
and so-called economic team meetings have been nothing but showbiz time.

10) My thesis is that the Nigerian economy, if properly managed,
should have been growing at an annual rate of about 12% given the oil
boom, and poverty and unemployment should have fallen dramatically over
the last five years.



11) Private businesses will come under a heavy crunch soon. Having
put economics on its head during the boom time, the Government now
proposes to increase taxes during a prospective downturn and impose
austerity measures.

‘If oil prices remain between 40- 60 dollars over the next two years,
the current policy regime guarantees that foreign reserves will continue
the precipitous depletion with the attendant exchange rate
depreciation, as well as a probable unsustainable escalation in debt
accumulation, fiscal retrenchment or taxing the private sector with
vengeance’

12) The poor choices made by the current government have mortgaged
the future, and the next government would have little room to manoeuvre
and would inevitably undertake drastic but painful structural
adjustments.

I worry about regime stability in the coming months, and I do not envy the next team.

13) The seeming crisis is not destiny; it is self-imposed

14) We expected that the next government after Obasanjo would take
the economy to the next level. So far, we have had two great slogans:
the 7-point agenda and currently, the transformation agenda. They remain
empty slogans without content or direction.





15) Neither the APC nor the PDP has a credible programme for employment and poverty reduction.

‘The APC promises to create 20,000 jobs per state in the first year,
totalling a mere 720,000 jobs. This sounds like a quota system and for a
country where the new entrants into the labour market per annum exceed
two million. If it was intended as a joke, APC must please get serious.
On the other hand, President Jonathan targets two million jobs per annum
but his strategy for doing so is a Job Board— another committee of
sort. Sorry, Mr. President, a Job Board is not a strategy. The principal
job Nigerians hired you to do for them is to create jobs for them too.
You cannot outsource that job, Sir. Creating 3 million jobs per annum
under the unfolding crisis would task our creativity and audacity to the
limits.’

16) I heard one politician argue that once we fix power, private
sector would create jobs. Not necessarily! Well, this government claims
to have added 1,700MW to the national grid and yet unemployment soars.
Ask Greece, Spain, etc with power and infrastructure and yet with high
unemployment.

‘it is estimated that more than 60% of graduates of our educational
system are unemployable. You can understand why many of us are amused
when the government celebrates that it has established twelve more
glorified secondary schools as universities’

17) None of the parties/candidates has any grand vision about African economic integration, led by Nigeria

‘There is no programme on how to make the naira the de facto currency of
ECOWAS or the international financial centre that can attract more than
$100 billion per annum. Where is the strategy for orchestrating the
revolutionary finance to power the economy during this downturn? For
President Jonathan’

18) If Buhari wins, the honeymoon will be brief and the pressure will be immense to magically deliver a ‘new Nigeria’

‘If he wins (Buhari), the honeymoon will be brief and the pressure will
be immense to magically deliver a ‘new Nigeria’ with no corruption, no
boko haram or insecurity, jobs for everyone, no poverty, infrastructure
and power in abundance, etc. As a first point, Buhari and his team must
realize that they do not yet have a coherent, credible agenda that is
consistent with the fundamentals of the economy currently. The APC
manifesto contains some good principles and wish-lists, but as a blue
print for Nigeria’s security and prosperity, it is largely hollow. The
numbers do not add up.

Thus, his first job is to present a credible development agenda to Nigerians.

19) If Jonathan wins, then God must have been magnanimous to give him a second chance to redeem himself

‘Most people I know who support Jonathan do so either out of
self-interest or fear of the unknown. As a friend summed it: the devil
you know is better than the angel you do not know. One person assured me
that we would see a ‘different Jonathan’ if he wins as he has been
rattled by the harsh judgment of history on his presidency so far. I
just pray that he is right’

20) Advice to president Jonathan if he wins.

‘President Jonathan must know that it (transformation agenda) remains an
empty slogan. His greatest challenge is how to save himself from the
stranglehold of his largely provincial palace jesters who tell him he
has done better than God, and seek out ‘enemies’ and friends who can
help him write his name in history.’

‘I take liberty to tell you this brutal truth: if you are not
re-elected, there is little to remember your regime after the next few
years.’

Full article below: 
 former Governor of Central Bank of Nigeria, Charles Soludo

Buhari vs Jonathan, Beyond the Elections

I need to preface this article with a few clarifications. I have taken a
long sabbatical leave from partisan politics, and it is real fun
watching the drama from the balcony. Having had my own share of public
service (I do not need a job from government), I now devote my time and
energy in pursuit of other passions, especially abroad.

A few days ago, I read an article in Thisday entitled “Where is Charles
Soludo?”, and my answer is that I am still there, only that I have been
too busy with extensive international travels to participate in or
comment on our national politics and economy. But I occasionally follow
events at home. Since the survival and prosperity of Nigeria are at
stake, the least some of us (albeit, non-partisan) must do is to engage
in public debate. As the elections approach, I owe a duty to share some
of my concerns.

In September 2010, I wrote a piece entitled “2011 Elections: Let the
Real Debate Begin” and published by Thisday. I understand the Federal
Executive Council discussed it, and the Minister of Information rained
personal attacks on me during the press briefing. I noted more than six
newspaper editorials in support of the issues we raised.

Beside other issues we raised, our main thesis was that the macro
economy was dangerously adrift, with little self-insurance mechanisms
(and a prediction that if oil prices fell below $40, many state
governments would not be able to pay salaries). I gave a subtle hint at
easy money and exchange rate depreciations because I did not want to
panic the market with a strong statement. Sadly, on the eve of the next
elections, literally everything we hinted at has happened. Part of my
motivation for this article is that five years after, the real debate is
still not happening.

The presidential election next month will be won by either Buhari or
Jonathan. For either, it is likely to be a pyrrhic victory. None of them
will be able to deliver on the fantastic promises being made on the
economy, and if oil prices remain below $60, I see very difficult months
ahead, with possible heady collisions with labour, civil society, and
indeed the citizenry. To be sure, the presidential election will not be
decided by the quality of ‘issues’ or promises canvassed by the
candidates.

The debates won’t also change much (except if there is a major gaffe by
either candidate like Tofa did in the debate with Abiola). My take is
that more than 95% of the likely voters have pretty much made up their
minds based largely on other considerations. A few of us remain
undecided.

During my brief visit to Nigeria, I watched some of the campaign rallies
on television. The tragedy of the current electioneering campaigns is
that both parties are missing the golden opportunity to sensitize the
citizenry about the enormous challenges ahead and hence mobilize them
for the inevitable sacrifices they would be called upon to make soon.
Each is promising an El-Dorado.

Let me admit that the two main parties talk around the major development
challenges—corruption, insecurity, economy (unemployment/poverty,
power, infrastructure, etc) health, education, etc. However, it is my
considered view that none of them has any credible agenda to deal with
the issues, especially within the context of the evolving global economy
and Nigeria’s broken public finance.

The UK Conservative Party’s manifesto for the last election proudly
announced that all its programmes were fully costed and were therefore
implementable. Neither APC nor PDP can make a similar claim. A plan
without the dollar or Naira signs to it is nothing but a wish-list. They
are not telling us how much each of their promises will cost and where
they will get the money. None talks about the broken or near bankrupt
public finance and the strategy to fix it.

Goodluck-Jonathan-new
In response to the question of where the money will come from, I heard
one of the politicians say that the problem of Nigeria was not money but
the management of resources. This is half-truth. The problem is both.
No matter how efficient a father (with a monthly salary of N50,000) is
at managing the family resources, I cannot see how he could deliver on a
promise to buy a brand new Peugeot 406 for each of his three children
in a year.

Even with all the loopholes and waste closed, with increased efficiency
per dollar spent, there is still a binding budget constraint. To deliver
an efficient national transport infrastructure alone will still cost
tens of billions of dollars per annum even by corruption-free,
cost-effective means. Did I hear that APC promises a welfare system
that will pay between N5,000 and N10,000 per month to the poorest 25
million Nigerians? Just this programme alone will cost between N1.5 and
N3 trillion per annum.

Add to this the cost of free primary education plus free meal (to be
funded by the federal budget or would it force non-APC state governments
to implement the same?), plus some millions of public housing, etc. I
have tried to cost some of the promises by both the APC and the PDP,
given alternative scenarios for public finance and the numbers don’t add
up. Nigerians would be glad to know how both parties would fund their
programmes.

Do they intend to accentuate the huge public debt, or raise taxes on the
soon to-be-beleaguered private businesses, or massively devalue the
naira to rake in baskets of naira from the dwindling oil revenue, or
embark on huge fiscal retrenchment with the sack of labour and
abandonment of projects, and which areas of waste do they intend to
close and how much do they estimate to rake in from them, etc?

I remember that Chief Obafemi Awolowo was asked similar questions in
1978 and 1979 about his promises of free education and free medical
services. Even as a teenager, I was impressed by how he reeled out
figures about the amounts he would save from various ‘waste’ including
the tea/coffee served in government offices. The point is that at least
he did his homework and had his numbers and I give credit to his team.

Some 36 years later, the quality of political debate and discourse seems
to border on the pedestrian. From the quality of its team, I did not
expect much from the current government, but I must confess that I
expected APC as a party aspiring to take over from PDP to come up with a
knock-out punch. Evidently, from what we have read from the various
versions of its manifesto as well as the depth of promises being made,
it does not seem that it has a better offer.

Let me digress a bit to refresh our memory on where we are, and thus
provide the context in which to evaluate the promises being made to us.
Recall that the key word of the 2015 budget is ‘austerity’. Austerity?
This is just within a few months of the fall in oil prices. History
repeats itself in a very cruel way, as this was exactly what happened
under the Shehu Shagari administration.

Under the Shagari government, oil price reached its highest in 1980/81.
During the same period, Nigeria ratcheted up its consumption and all
tiers of government were in competition as to which would out-borrow the
other. Huge public debt was the consequence. When oil prices crashed in
early 1982, the National Assembly then passed the Economic
Stabilization (Austerity Measures) Act in one day— going through the
first, second, and third readings the same day.

The austerity measures included the rationing of ‘essential commodities’
and most states owed salary arrears. Corruption was said to be
pervasive, and as Sani Abacha said in that famous coup speech,
‘unemployment has reached unacceptable proportions and our hospitals
have become mere consulting clinics’.

General Muhammadu Buhari/Tunde Idiagbon regime made the fight against
corruption and restoration of discipline the cardinal point of their
administration which lasted for 20 months. I am not sure they had a
credible plan to get the economy out of the doldrums (although it must
be admitted that poverty incidence in Nigeria as of 1985 when they left
office was a just46%— according to the Federal Office of Statistics).

We have come full circle. If the experience under Shagari could be
excused as an unexpected shock, what Nigeria is going through now is a
consequence of our deliberate wrong choices. We have always known that
the unprecedented oil boom (in both price and quantity—despite oil
theft) of the last six years is temporary but the government chose to
treat it as a permanent shock. The parallels with the Shagari regime are
troubling.

First, at the time of oil boom, Nigeria again went on a consumption
spree such that the budgets of the last five years can best be described
as ‘consumption budgets’, with new borrowing by the federal government
exceeding the actual expenditure on critical infrastructure. Second, not
one penny was added to the stock of foreign reserves at a period
Nigeria earned hundreds of billions from oil.

For comparisons, President Obasanjo met about $5 billion in foreign
reserves, and the average monthly oil price for the 72 months he was in
office was $38, and yet he left $43 billion in foreign reserves after
paying $12 billion to write-off Nigeria’s external debt. In the last
five years, the average monthly oil price has been over $100, and the
quantity also higher but our foreign reserves have been declining and
exchange rate depreciating.

I note that when I assumed office as Governor of CBN, the stock of
foreign reserves was $10 billion. The average monthly oil price during
my 60 months in office was $59, but foreign reserve reached the all-time
peak of $62 billion (and despite paying $12 billion for external debt,
and losing over $15 billion during the unprecedented global financial
and economic crisis) I left behind $45 billion.

Recall also that our exchange rate continuously appreciated during this
period and was at N117 to the dollar before the global crisis and we
deliberately allowed it to depreciate in order to preserve our reserves.
My calculation is that if the economy was better managed, our foreign
reserves should have been between $102 –$118 billion and exchange rate
around N112 before the fall in oil prices. As of now, the reserves
should be around $90 billion and exchange rate no higher than N125 per
dollar.

Third, the rate of public debt accumulation at a time of unprecedented
boom had no parallel in the world. While the Obasanjo administration
bought and enlarged the policy space for Nigeria, the current government
has sold and constricted it. What debt relief did for Nigeria was to
liberate Nigerian policymakers from the intrusive conditionalities of
the creditors and thereby truly allowing Nigeria independence in its
public policy.

How have we used the independence? Through our own choices, we have yet
again tied the hands of future policymakers. This time, the debt is not
necessarily to foreign creditor institutions/governments which are
organized under the Paris club but largely to private agents which is
even more volatile. We call it domestic debt. But if one carefully
unpacks the bond portfolio, what percentage of it is held by foreign
private agents? And I understand the Government had removed the speed
bumps we kept to slow the speed of capital flight, and someone is
sweating to explain the gyrations in foreign reserves. I am just
smiling!

In sum, the mismanagement of our economy has brought us once more to the
brink. Government officials rely on the artificial construct of debt to
GDP ratio to tell us we can borrow as much as we want. That is
nonsense, especially for an economy with a mono but highly volatile
source of revenue and forex earnings. The chicken will soon come home to
roost.

Today, the combined domestic and external debt of the Federal Government
is in excess of $40 billion. Add to this the fact that abandoned
capital projects littered all over the country amount to over $50
billion. No word yet on other huge contingent liabilities. If oil
prices continue to fall, I bet that Nigeria will soon have a heavy debt
burden even with low debt to GDP ratio.

Furthermore, given the current and capital account regime, it is evident
that Nigeria does not have enough foreign reserves to adequately cover
for imports plus short term liabilities. In essence, we are approaching
the classic of what the Shagari government faced, and no wonder the
hasty introduction of ‘austerity measures’ again.

Fourth, poverty incidence and unemployment are also simultaneously at
all-time high levels. According to the NBS, poverty incidence grew to
69% in 2010 and projected to be 71% in 2011, with unemployment at 24%.
This is the worst record in Nigeria’s history, and the paradox is that
this happened during the unprecedented oil boom.

One theme I picked up listening to the campaign rallies as well as to
some of the propagandists is the confusion about measuring government
“performance”. Most people seem to confuse ‘inputs’, or ‘processes’ with
output. Earlier this month, I had a dinner with a group of friends (14
of us) and we were chit-chatting about Nigeria. One of us, an associate
of President Jonathan veered off to repeat a propaganda mantra that
Jonathan had outperformed his predecessors.

He also reminded us that Jonathan re-based the GDP and that Nigeria is
now the biggest economy in Africa; etc. It was fun listening to the
response by others. In sum, the group agreed that the President had
‘outperformed’ his predecessors except that it is in reverse order.

First, my friend was educated that re-basing the GDP is no achievement:
it is a routine statistical exercise, and depending on the base year
that you choose, you get a different GDP figure. Re-basing the GDP has
nothing to do with government policy. Besides, as naira-dollar exchange
rate continues to depreciate, the GDP in current dollars will also
shrink considerably soon.

We were reminded of Jonathan’s agricultural ‘revolution’. But someone
cut in and noted that for all the propaganda, the growth rate of the
agricultural sector in the last five years still remains far below the
performance under Obasanjo. One of us reminded him that no other
president had presided over the slaughter of about 15,000 people by
insurgents in a peacetime; no other president earned up to 50% of the
amount of resources the current government earned from oil and yet with
very little outcomes; no other president had the rate of borrowing; none
had significant forex earnings and yet did not add one penny to foreign
reserves but losing international reserves at a time of boom; no other
president had a depreciating exchange rate at a time of export boom; at
no time in Nigeria’s history has poverty reached 71% (even under Abacha,
it was 67 -70%); and under no other president did unemployment reach
24%. Surely, these are unprecedented records and he surely
‘outperformed’ his predecessors! What a satire!

One of those present took the satire to some level by comparing Jonathan
to the ‘performance’ of the former Governor of Anambra, Peter Obi. He
noted that while Obi gloated about ‘savings’, there is no signature
project to remember his regime except that his regime took the first
position among all states in Nigeria in the democratization of poverty—-
mass impoverishment of the people of Anambra. According to the National
Bureau of Statistics, poverty rose under his watch in Anambra from 20%
in 2004 (lowest in Nigeria then) to 68% in 2010 (a 238% deterioration!).

Our friend likened it to a father who had no idea of what to do with his
resources and was celebrating his fat bank account while his children
were dying of kwashiorkor. He pointed out that since it is the likes of
Peter Obi who are the advisers to Jonathan on how to manage the economy
(thereby confusing micromanagement which you do as a trader with macro
governance) it is little wonder that poverty is fast becoming another
name for Nigeria. It was a very hilarious evening.

My advice to President Jonathan and his handlers is to stop wasting
their time trying to campaign on his job record. Those who have decided
to vote for him will not do so because he has taken Nigeria to the moon.
His record on the economy is a clear ‘F’ grade. As one reviews the
laundry list of micro interventions the government calls its
achievements, one wonders whether such list is all that the government
could deliver with an unprecedented oil boom and an unprecedented public
debt accumulation.

I can clearly see why reasonable people are worried. Everywhere else in
the world, government performance on the economy is measured by some
outcome variables such as: income (GDP growth rate), stability of prices
(inflation and exchange rate), unemployment rate, poverty rate, etc. On
all these scores, this government has performed worse than its
immediate predecessor— Obasanjo regime. If we appropriately adjust for
oil income and debt, then this government is the worst in our history on
the economy. All statistics are from the National Bureau of Statistics.

Despite presiding over the biggest oil boom in our history, it has not
added one percentage point to the growth rate of GDP compared to the
Obasanjo regime especially the 2003- 07 period. Obasanjo met GDP growth
rate at 2% but averaged 7% within 2003- 07. The current government has
been stuck at 6% despite an unprecedented oil boom. Income (GDP) growth
has actually performed worse, and poverty escalated.

This is the only government in our history where rapidly increasing
government expenditure was associated with increasing poverty. The
director general of NBS stated in his written press conference address
in 2011 that about 112 million Nigerians were living in poverty. Is this
the record to defend? Obama had a tough time in his re-election in
2012 because unemployment reached 8%. Here, unemployment is at a record
24% and poverty at an all-time 71% but people are prancing around,
gloating about ‘performance’.

As I write, the Naira exchange rate to the dollar is $210 at the
parallel market. What a historic performance! Please save your breathe
and save us the embarrassment. The President promised Nigeria nothing in
the last election and we did not get value for money. He should this
time around present us with his plan for the future, and focus on how he
would redeem himself in the second term—if he wins!

Sadly the government’s economic team is very weak, dominated by
self-interested and self-conflicted group of traders and businessmen,
and so-called economic team meetings have been nothing but showbiz time.
The very people government exists to regulate have seized the levers of
government as policymakers and most government institutions have
largely been “privatized” to them.

Mention any major government department or agency and someone will tell
you whom it has been ‘allocated’ to, and the person subsequently
nominates his minion to occupy the seat. What do you then expect? The
economy seems to be on auto pilot, with confusion as to who is in
charge, and government largely as a constraint. There are no big ideas,
and it is difficult to see where economic policy is headed to.

My thesis is that the Nigerian economy, if properly managed, should have
been growing at an annual rate of about 12% given the oil boom, and
poverty and unemployment should have fallen dramatically over the last
five years. This is topic for another day.

So far, the Government’s response to the self-inflicted crisis is, at
best, laughable. They blame external shocks as if we did not expect them
and say nothing about the terrible policy choices they made. The
National Assembly had described the 2015 budget as unrealistic. The
fiscal adjustments proposed in the 2015 budget simply play to the
gallery and just to pander to our emotions.

For a $540 billion economy, the so-called luxury tax amounts to zero per
cent of GDP. If the current trend continues, private businesses will
come under a heavy crunch soon. Having put economics on its head during
the boom time, the Government now proposes to increase taxes during a
prospective downturn and impose austerity measures. Unbelievable!

Fortuitously, just as he succeeded Shagari when Nigeria faced similar
situations, Buhari is once more seeking to lead Nigeria. But times have
changed, and Nigeria is largely different. First, this is a democracy
and dealing with corruption must happen within the ambit of the rule of
law and due process. Getting things done in a democracy requires
complicated bargaining, especially where the legislature, labour, the
media, and civil society have become strong and entrenched.

Second, the size, structure and institutions of the economy have
fundamentally altered. The market economy, especially the capital market
and foreign exchange market, impose binding constraints and discipline
on any regime. Third, dealing with most of the other issues—
insecurity, unemployment/poverty, infrastructure, health, education,
etc, require increased, smarter, and more efficient spending. Increased
spending when the economy is on the reverse gear?

If oil prices remain between 40- 60 dollars over the next two years, the
current policy regime guarantees that foreign reserves will continue
the precipitous depletion with the attendant exchange rate depreciation,
as well as a probable unsustainable escalation in debt accumulation,
fiscal retrenchment or taxing the private sector with vengeance. The
scenario does not look pretty.

The poor choices made by the current government have mortgaged the
future, and the next government would have little room to manoeuvre and
would inevitably undertake drastic but painful structural adjustments.
Nigerians loathe the term ‘structural adjustment’. With falling real
wages and depreciating currency, I can see any belated attempt by the
government to deal with the bloated public sector pitching it against a
feisty labour. I worry about regime stability in the coming months, and
I do not envy the next team.

The seeming crisis is not destiny; it is self-imposed. However, we must
see it as an opportunity to be seized to fundamentally restructure
Nigeria’s political economy, including its fiscal federalism and mineral
rights. The current system guarantees cycles of consumption loop and I
cannot see sustainable long term prosperity without major systemic
overhaul. The proposals at the national conference merely tinker at the
margins.

In totality, the outcome of the national conference is to do more of the
same, with minor amendments on the system of sharing and consumption
rather than a fundamental overhaul of the system for productivity and
prosperity. President Jonathan promises to implement the report of the
national conference if he wins. I commend him for at least offering
‘something’, albeit, marginal in my view. I have not heard anything from
the APC or Buhari regarding the national conference report or what kind
of federalism they envisage for Nigeria.

In Nigeria’s recent history, two examples under the military and
civilian governments demonstrate that where the political will exists,
Nigeria has the capacity to overcome severe challenges. The first was
under President Babangida. Not many Nigerians appreciate that given the
near bankrupt state of Nigeria’s finances and requirements for debt
resolution under the Paris Club, the country had little choice but to
undertake the painful structural adjustment programme (SAP).

I want to state for the record that the foundation for the current
market economy we operate in Nigeria was laid by that regime
(liberalization of markets including market determined exchange rate,
private sector-led economy including licensing of private banks and
insurance, de-regulation, privatization of public enterprises under
TCPC, etc). Just abolishing the import licensing regime was a
fundamental policy revolution. Despite the criticisms, these policy
thrusts have remained the pillars of our deepening market economy, and
the economy recovered from almost negative growth rate to average 5.5%
during the regime and poverty incidence at 42% in 1992.

Under our democratic experience, President Obasanjo inherited a bankrupt
economy (with the lost decade of the 1990’s GDP growth rate of 2.2% and
hence zero per capita income growth for the decade). His regime
consolidated and deepened the market economy structures (consolidation
of the banking system which is powering the emergence of a new but truly
private sector-led economy and simultaneously led to a new awareness
and boom in the capital market;

telecommunications revolution; new pension regime; debt relief which won
for Nigeria policy independence from the World Bank and Paris Club;
deepening of de-regulation and privatization including the unbundling
of NEPA under PHCN for privatization; agricultural revolution that saw
yearly growth rate of over 6% and remains unsurpassed ever since;

sound monetary and fiscal policy and growing foreign reserves that gave
confidence to investors; establishment of the Africa Finance Corporation
which is leading infrastructure finance in Africa; backward integration
policy that saw the establishment and growth of Dangote cement and
others; established ICPC and EFCC to fight corruption, etc).

The economy roared to average yearly growth of 7% between 2003 and 2007
(although average monthly oil price under his regime was $38), and
poverty dropped from estimated 70% in1999 to 54% in 2004. Obasanjo was
his own coordinating minister of the economy and chairman of the
economic management team— which he chaired for 90 minutes every week. I
met with him daily. In other words, he did not outsource economic
management.

We expected that the next government after Obasanjo would take the
economy to the next level. So far, we have had two great slogans: the
7-point agenda and currently, the transformation agenda. They remain
empty slogans without content or direction.

Let me suggest that the fundamental challenge for the next government on
the economy can be framed around the goal of creating twelve million
jobs over the next four years to have a dent on unemployment and
poverty. The challenge is to craft a development agenda to deliver this
within the context of broken public finance, and an economy in which
painful structural adjustments will be inevitable if current trends in
oil prices continue. Most other programmes on corruption, security,
power, infrastructure, etc, are expected to be instruments to achieve
this objective.

So far, neither the APC nor the PDP has a credible programme for
employment and poverty reduction. The APC promises to create 20,000 jobs
per state in the first year, totalling a mere 720,000 jobs. This
sounds like a quota system and for a country where the new entrants into
the labour market per annum exceed two million.

If it was intended as a joke, APC must please get serious. On the other
hand, President Jonathan targets two million jobs per annum but his
strategy for doing so is a Job Board— another committee of sort. Sorry,
Mr. President, a Job Board is not a strategy. The principal job
Nigerians hired you to do for them is to create jobs for them too. You
cannot outsource that job, Sir. Creating 3 million jobs per annum under
the unfolding crisis would task our creativity and audacity to the
limits.

I heard one politician argue that once we fix power, private sector
would create jobs. Not necessarily! Well, this government claims to have
added 1,700MW to the national grid and yet unemployment soars. Ask
Greece, Spain, etc with power and infrastructure and yet with high
unemployment. Structural dislocations play a key role. For example,
currently in Nigeria, it is estimated that more than 60% of graduates of
our educational system are unemployable.

You can understand why many of us are amused when the government
celebrates that it has established twelve more glorified secondary
schools as universities. I thought they would have told us how many
Nigerian universities made it in the league of the best 200 universities
in the world. That would have been an achievement. Surely, creating
millions of jobs in this economy would, among other things, require ‘new
money’ and extraordinary system of coordination among the three tiers
of government plus the private sector.

Unfortunately, from what I read, the CBN is largely likely to be asleep
at this time the country needs the most revolutionary finance. This is a
topic for another day. Only the President can lead this effort.
Moreover, we are waiting for the two parties/candidates to spell out HOW
they will create jobs, whether it is the 20,000 jobs per state by APC
or 2 million per annum by President Jonathan. Let us know how you
arrived at the figures. Whichever of the two that is declared winner
will have his job cut out for him, and I expect him to declare a
national emergency on job creation.

Surprisingly, none of the parties/candidates has any grand vision about
African economic integration, led by Nigeria. There is no programme on
how to make the naira the de facto currency of ECOWAS or the
international financial centre that can attract more than $100 billion
per annum.

Where is the strategy for orchestrating the revolutionary finance to
power the economy during this downturn? For President Jonathan, I find
it shocking that the most important initiative of his government to
secure the future of the economy by Nigeria refusing to sign the ruinous
Economic Partnership Agreement (EPA) with the European Union is not
even being mentioned. President Obasanjo saved Nigeria from the
potential ruin of an ECOWAS single currency while to his credit Jonathan
safeguarded our industrial sector/economy by refusing to sign the EPA.
Or does the government not understand the import of that? It will be
interesting to know the APC’s strategy for exploiting strategic
alliances within Africa, China, and the world for Nigeria’s prosperity.

If Buhari wins, he will ride on the populist wind for “change”. Most
people I have spoken to who have decided to vote for Buhari do not
necessarily know the specifics of what he would offer or how Nigeria
would be different under him. I asked my driver, Usman, whom he would
vote for President.

He responded: “If they no rig the election, na Buhari everybody go vote
for”. I asked him why, and his next response sums it: “The man dey
honest. In short, people just want to see another face for that villa”.
But if he wins, the honeymoon will be brief and the pressure will be
immense to magically deliver a ‘new Nigeria’ with no corruption, no boko
haram or insecurity, jobs for everyone, no poverty, infrastructure and
power in abundance, etc.

As a first point, Buhari and his team must realize that they do not yet
have a coherent, credible agenda that is consistent with the
fundamentals of the economy currently. The APC manifesto contains some
good principles and wish-lists, but as a blue print for Nigeria’s
security and prosperity, it is largely hollow. The numbers do not add
up. Thus, his first job is to present a credible development agenda to
Nigerians.

The second key challenge for Buhari and his team will be to transit and
transform from a group of what I largely refer to as aggrieved people’s
congregation to build a true political party with a soul from the
patchwork of political associations. It is surely easier to oppose than
to govern. This should not worry us much. After all, even the PDP which
has been in power for 16 years is still an assembly of people held
together by what I refer to as dining table politics.

I am not sure how many members can tell you what their party stands for
or its mission and vision for Nigeria. The third but more difficult
agenda is cobbling together a truly ‘progressive team’ that will begin
to pick the pieces. The lesson of history is that the best leaders have
been the ones who went beyond their narrow provincial enclaves to
recruit talents and mobilize capacities for national transformation.

In Nigeria’s history, the two presidents who made the most fundamental
transformation of the economy, Babangida and Obasanjo, were exceptional
in the quality of the teams they put together. I therefore pray that
Buhari will be magnanimous in victory – if he wins—to put together a
‘team Nigeria’ for the rescue mission.

If Jonathan wins, then God must have been magnanimous to give him a
second chance to redeem himself. Most people I know who support Jonathan
do so either out of self-interest or fear of the unknown. As a friend
summed it: the devil you know is better than the angel you do not know.
One person assured me that we would see a ‘different Jonathan’ if he
wins as he has been rattled by the harsh judgment of history on his
presidency so far. I just pray that he is right. In that case, I would
just draw the President’s attention to two issues:

First, beside the coterie of clowns who literally make a living with the
sing-song of transformation agenda, President Jonathan must know that
it remains an empty slogan. His greatest challenge is how to save
himself from the stranglehold of his largely provincial palace jesters
who tell him he has done better than God, and seek out ‘enemies’ and
friends who can help him write his name in history. Propaganda won’t do
it.

Second, Jonathan must claw back his powers as President of Nigeria. He
largely outsourced them, and must now roll his sleeves for a new
beginning. I take liberty to tell you this brutal truth: if you are not
re-elected, there is little to remember your regime after the next few
years.

On 7th January 2004, I made a special presentation to an expanded
economic management team to set agenda for the new year (as chief
economic adviser). The focus of my presentation was for us to identify
seven iroko trees that would be the flagship markers for the
administration as well as how to finance them. I use the same framework
to evaluate your administration.

What I say to you, Mr. President, is that your record of performance so
far is like a farmland filled with grasses. Yes, they are many but there
is no tree, let alone any iroko tree, that stands out. Think about
this. The beginning of wisdom for every President in his second term is
to admit that he is racing against time to cement his legacy. So far,
your report card is not looking great. You need a team of big and bold
thinkers, as well as with excellent execution capacity. So far, it is
not working!

Under the executive presidential system, Nigerians elected you to manage
their economy. You cannot outsource that job. Our constitution
envisages a federal coordination of the economy, and that function is
performed by the National Economic Council (NEC) with Vice-President as
chairman. Indeed, the constitution and other laws of Nigeria envisage
the office of the VP as the coordinator on the economy.

All major economic institutions of the federal government are, by law,
chaired by the Vice-President including the national planning (see
functions of the national planning commission as coordinator of federal
government economic and development programmes), debt management office,
National Council on Privatization, etc. As chairman of National
Planning (with Ministers of Finance, Agriculture, CBN governor, etc as
members), the VP oversees the federal planning and coordination.

Then the Constitution mandates the VP as representative of the federal
government to chair the NEC, with only CBN governor and state governors
as members—to coordinate national economy between federal and states. No
minister is a member of NEC. Many people do not understand the logic of
the design of our constitution and the role of the VP. Of course, the
buck stops on the desk of Mr. President. Only the President and VP have
our mandate to govern us.

Every other person is an adviser/assistant. I bet that you will only
appreciate this article AFTER you leave office. Now that you are in
power, truth will only hurt! Be assured that those of us who are
prepared to die for Nigeria will never spare you or anyone else this
bitter truth.

Nigeria must survive and prosper beyond Buhari or Jonathan!

, CFR, was former CBN Governor.


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