That President’s Inaugural Address
By Boniface Chizea
Our brand new President inaugural address as should be rightly expected has elicited a spate of reactions. I have since then received a number of requests from my media friends for my comments and it’s my resolve to oblige them, hence this discourse. Incidentally whilst the speech was being made, I was with TV Station LN247 promoted by Christ Embassy to discuss the swearing in itself and issues pertaining thereto. My overall opinion on the speech is that our brand new President has simply kept fidelity with his responsibility. But the most important aspect of that speech is the observation that there is no budget for subsidy in Budget 2023 and therefore the removal of subsidy stands. And that rather the money saved from subsidy removal would be channelled to the social sectors of health and education. This observation elicited spontaneous applause from the dignitaries present at the inauguration ceremony as must be expected!
This announcement must be popular particularly amongst the elites but what are the implications to the marginalised and downtrodden? It is going to be severe and life will be tough if not unbearable. We must be wary of pushing ordinary folks to the wall otherwise we risk a violent push back as it has happened in other jurisdictions. For shouting out loud governance main concern must be the welfare and well-being of a generality of the population which is currently not the case in Nigeria.
I recently made a presentation where I argued that the incoming Administration will quickly dissipate its goodwill if it debuts with such a policy thrust. Already the filling stations have shut their doors waiting further instructions and it has been reported in the social media that in some locations that pump price has been hiked up to 350 Naira from the extant price of 184 Naira a litre. And we wait with berthed breath for the reactions of organised Labour Unions whose core mandate is the protection of the welfare of their membership.
Realistically, I thought that if Dangote Refinery will commence production in June that we could have tarried a while to avoid the inevitable overheat of the polity which the nascent government can hardly afford. Those who argued that Dangote Refinery will not impact the price levels have not factored in the entire scenario. If we source from Dangote we would stop importation with the related add on costs such as demand pressure on foreign exchange supply, freight costs and insurance plus demurrage and handling costs and other associated leakages. Those who shout that Dangote will sell at the going market rates forget that we have not bought below market rates before. If there is any relevant consideration in this respect, it is the fact that given half a chance, those involved would be on the lookout searching for opportunities to feather their nests at our collective expense.
Whilst we are discussing Refinery matters, I am one with Senator Ben Bruce (who always simply wants to make common sense), that Nigerians deserve an apology from those in government for failing over the years to deliver what has just been delivered singlehandedly by an individual. So, what are we doing with the four refineries in the land? They are not adding any value and yet the country bears humongous costs on overhead expenses. My take is that it is time to privatise all of them. Government going forward must wean itself of involvement in the promotion of business venture but concentrate in the provision of an enabling environment for businesses to make Nigeria an attractive destination for investments particularly coming from outside of the country.
The new government targets GDP growth rate of 6 per cent in one year. There is everything to recommend the setting of targets; for one thing it focuses the mind in a manner that leads to improved performance. And usually targets are missed and therefore there is not much to worry about in the event of that apriori expectation being the reality. With a population growth rate of approximately 3 per cent, there is the imperative to grow above this rate for any meaningful development. But 6 per cent target is on the high side considering the fact that average growth rates is below three per cent. But this target is achievable if we are intentional about it to focus on current growth sectors particularly the digital economy and the entertainment industry. And if we rein in insecurity to improve yields from farms.
On the monetary policy side the usual sound bites of pursuit of unified exchange rates, reduction in interest rates, and there was a word about the recent currency redesign which unleashed harrowing experience and must have consequential negative impact on the growth prospects of the economy. The President promised to revisit the currency redesign with a view to possible cancellation. A reversal will do incalculable damage as well as result in a colossal waste to an economy already haemorrhaging.
You will only achieve one exchange rate in a market driven environment. It is not possible with a managed float strategy. Once demand is not met within the official window, the prominent distinguishing feature is that supply must be met at a premium. There is an urgent need for reorientation of the economy from consumption to production. Ones the economy is productive, things will begin to fall in place. There is no magic wand anywhere I know of that can deliver low interest and exchange rates. The first order of business is to bring down the rate of inflation which is now spiralling away to as high as 23%; an eight year unprecedented unsustainable rate. Inflation penalises those on the margin as it further deepens the poverty index.
The insecurity to life and property in the land is alarming and has undermined agricultural yields leading to the prevalent food insecurity with its accompanying food inflation. The President has promised to beef up the security architecture through enhanced budgetary allocations as well as target addition of more personnel. But for the country to make any meaningful progress on this respect there is the need to leverage on the improved scenario as a result of the change in leadership.
President Buhari was obviously constrained because of kindred affiliation with the bandits which resulted in hand in gloves treatment. And that this inhibition has been removed, the bandits must be chased off our shores. All arsenals must be embraced to achieve this urgent and eminently desired goal including the willingness to accept foreign help. For instance, it has been reported that the American President Joe Biden has promised some help in this regard. We must not let that opportunity go begging.
Not sure I saw any mention with regard to the debt overhang. The level of the nation’s debt stock is worrisome and must receive focused attention. We must seek debt relief like we did when Okonjo-Iweala was the Minister of Finance when humongous 12 billion dollars of debt was forgiven and the country rallied to pay the balance. There is the need for such attention grabbing, time consuming efforts otherwise the country will start defaulting which adds a notch to the lack of attractiveness of the nation and makes us pay higher interest rates as is consistent with our credit rating. The challenge of debt repayment underscores the urgent need to augment revenue flows. The nation’s tax to GDP ratio is about the lowest in the sub region. We must eschew multiple taxation which is not business friendly but we might not resort to hiking the tax rate. There is the urgent need to leverage on technology to remove human interventions and block leakages. I am impressed with the monitoring system which Lagos State installed which penalises offenders automatically and debit note is sent and payment made electronically. You could not influence anyone to avoid payment. I know for sure because I am a recent victim. That is the pathway to manage future tax payments and it comes well recommended. There is also the need to think outside the box and be creative with the identification of new tax revenue sources particularly within the informal sectors of the economy.
The elephant in the room is corruption. We are pleased that the President committed to giving it a bloody nose. The stigma of corruption is bad for the image of the country for shouting out loud. There might be the need to revisit the calibre of personnel with the corruption fighting agencies to expel those of questionable character.
The Zamfara State immediate past Governor Matawalle is on record to have fingered the EFFC Chairman to have asked for two million dollars bribe. And we read that he was involved in similar heist during his time in Port Harcourt. Why then was he appointed if he had such tainted record? This is the nature of impunity which has done so much damage to our fortunes. When individuals believe they are above the law. We must embrace the culture of consequences for malfeasance which sends the correct message to would be future offenders.
We hope the court cases will be quickly concluded and justice served so that attention and energy is not divided so to focus on the urgent task of growing and developing the Nigerian economy. Without prejudice to the outcome of court case, we wish the President and Nigerians well and God’s speed as we pursue the urgent task of salvaging the Nigerian economy.
Dr Chizea, a renowned Economist, wrote in from Lagos
