Zik Gbemre

Aside the recent postponement of the earlier schedule February 2015 general elections that we and many Nigerians greatly condemned, another issue that generated so much fuss and controversy in the last few weeks was the mind-boggling, thought-provoking and quite revealing article:  “Buhari vs Jonathan: Beyond the Election” written by former Central Bank of Nigeria (CBN) Governor, Prof. Charles Soludo. We were left speechless and dumbfounded by the disturbing stark revelations made by Soludo in the said article about the Nigerian economy under the current government led by President Goodluck Jonathan and most importantly; the not too bright future and prospects of the economy looking at the two Presidential Candidates Nigerians are left to choose from in the upcoming general elections.

In his personal assessment of the current government led by President Goodluck Jonathan, the former CBN Governor out rightly graded the current government as a ‘failure’ with an “F9”. And as expected, the condemnation and outburst from different authorities of the current administration that greeted Soludo justifies the usual thing we see happen whenever someone tells the government the truth. While we are not here to speak for or against or defend what Soludo wrote in his article, but we believe that whenever such critiques of the government activities are made, the authorities concerned should take it in good faith and make the necessary adjustments where necessary and ignore that which does not concern them. This is a more ‘matured approach’ towards dealing with such constructive criticisms of the government rather than always going on the ‘defensive’ or seeing the critic as being sponsored by the opposition. It is only in Nigeria that whenever one says the truth or criticizes the ruling government that one is said to being sponsored by the opposition. But the truth is, often times it is those who want to see the necessary changes taking place in the country for the general good of all that criticizes and tells the government the Truth without fear or favour.

Unfortunately, our political leaders do not like being told the truth neither do they like being criticized constructively. They prefer the ‘sing-praises’ and sycophants around them to keep smooching their egos.  Our political leaders usually bask in such euphoria of ‘pubic praises,’ especially when they ‘manage’ to execute one project or the other; making it look as if they are doing the followers a favour.  This is why we were not surprised by the number of tongues that wagged and the condemnation that followed when Soludo took a big swipe against the current government and the prospects of the elections ahead. Perhaps, they are trying to tell Soludo that by now, he ought to understand that when it comes to the ‘Nigerian situation’ you do not just say the Truth like that (like throwing a ‘bomb’) on peoples face; you have to ‘paint it’ and make the government look good even when they are doing the wrong things. Seriously, how else would one explain the sort of ‘abuses and castigations’ that was reigned on Soludo by relevant authorities of the current government over his mind-blowing article.

Aside grading the President Jonathan government with F9, the CBN governor dissected the two presidential candidates of the All Progressive Congress (APC)-Gen. Muhammadu Buhari and the Peoples Democratic Party (PDP)- President Jonathan, and raised thought-provoking questions regarding their election campaign ‘promises’ and how on earth they intend to fulfill them. Prof. Soludo noted that: “The presidential election 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 (as we witnessed in their political campaigns), 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 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.” To buttress this point further, Soludo used the example in UK and said that: “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.”

“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,” Soludo noted.

Let us reiterate here that during most of the political campaigns of the ruling party and government, they kept reminding Nigerians of the “great achievements” the present administration has been able to put in place to develop the Nigerian economy. Obviously, these so called “achievements” attained through President Jonathan’s “Transformation Agenda” were what the current government was expecting Soludo to have looked at, perhaps it would have made him not to grade the government so poorly. These include the ‘refurbished’ and new trains the government spent billions of dollars to buy, the ‘re-painted’ Airports across the country, and the fact that we used to have about 2000MW of electricity supply but now we have about 4000MW of electricity (which they consider as ‘great achievements’); whereas in Texas alone it is noted that US citizens enjoy a whopping 12000MW of electricity. These were some of the things the current administration are pointing at as what the former CBN governor ought to have used and looked at in grading them. But they failed to realize that Prof. Soludo obviously used what is globally accepted as the indices in grading other President’s performance in other parts of the world, which include: Per Capital Income, GDP, Inflation, Exchange rate, Unemployment rate, Poverty rate etc.

What we find most interesting about Soludo’s article was his use of empirical facts, figures and historical precedence to justify every point he made about the current government’s failures and the prospects of the new government that will come after the general elections. In Soludo’s words: “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 to a 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.”

The former CBN Governor went on to elaborate further that: “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!” Soludo declared.

To sum things up, Soludo noted that: “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.”

On the rebased GDP by the present government which they have not stopped reminding us has made Nigeria the largest economy in Africa, Soludo re-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.”

According to Soludo also, “We were reminded of Jonathan’s agricultural ‘revolution’ (during a shat 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.” He went on to list 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!” Soludo exclaimed in his article.

Soludo also went on to advise “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 of 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 heading 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 a 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!”

On the other side of the coin towards the Presidential race, Soludo noted that: “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 like our’s 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,” Soluded noted.

Time and space will not allow us to state in details every point that was elaborated by Prof. Charles Soludo in his article: Buhari Vs Jonathan-After The Elections. But as expected, the article was greatly criticized by those in the present government. Top on the list was the Minister of Finance and Coordinating Minister of the Economy, Mrs. Ngozi Okonjo-Iweala, who lambasted the former CBN Governor by describing his article, which according to her: “shows how an embittered looser in the Nigerian political space can be so derailed that they commit intellectual hara-kiri by deliberately misquoting economic facts and maliciously turning statistics on his head to justify a hatched job.” We must say that the opening paragraphs of that rejoinder left us wondering whether that response did actu­ally come from the Minister because of its language that appear to be an attack directed on the person of Prof. Soludo rather than the issues he raised in his article although an at­tempt was made in addressing them in the middle section of the reply. The Finance Minister also went on to list the ‘achievements’ of the Jonathan administration. Some of which include the few Trains launched recently and that “Nigeria now manufacture cars”. But the Finance Minister need to told that ‘assembling cars’ is absolutely different from ‘manufacturing cars’. Mores so, how many Nigerians can currently afford the so called Made-In-Nigerian cars?

Not surprised, the former CBN Governor Soludo replied the Finance Minister and other government authorities that criticized his write up by stating that he stands by every statement he made in the two articles viz: (1) “Buhari Vs Jonathan: Beyond the Elections”; and (2) “Ngozi Okonjo-Iweala and the Missing Trillions”. In particular, he insisted that over N30 trillion has either been stolen or unaccounted for, or grossly mismanaged over the last few years. This figure does not include the estimated $40.9 billion (N8.6 trillion at parallel market exchange rate or nearly two years’ Federal Government budget) which the African Union’s (AU) recent report claims to be “stolen” from Nigeria each year. Soludo concluded by saying that: “This is election time and it is expected that some vested interests will either choose to live in denial or attempt to politicize the issues. But from the debate so far, I am convinced that our economic management won’t be the same again. Once our managers know that the citizens will rigorously and vigorously challenge them to account, the welfare of the citizens will be better for it. Whoever wins has his job cut out for him, and to the extent that this debate has challenged the respective teams to seriously re-examine their blueprints to guarantee the security and prosperity of every Nigerian, my objective is accomplished.  I love my country Nigeria, and as I said before, I won’t keep quiet again. Once more, Nigeria must survive and prosper beyond Buhari or Jonathan!”

After all said and done, the crux of the matter is that the present government has not done enough in improving the living standard of the poor Nigerian citizenry despite the enormous available resources that the government has been enjoying all these years. The opposition party(ies) that is clamouring to take over the seat of power have also not been able to holistically detail and educate Nigerians on how they intend to address the so many problems of the country in the face dwindling external reserves and oil price and depreciating currency. Therefore, it is imperative for those seeking for political power in the upcoming general elections to ‘seat up’ and ‘get their acts together’ if they want Nigerians to take them seriously.

Zik Gbemre, JP

National Coordinator

Niger Delta Peace Coalition(NDPC)
No.28, Opi Street Ugboroke Layout, Effurun-Warri,
P.O. Box 2254, Warri, Delta State, Nigeria.
Tel:        +2348026428271
+2348061524210
+2348052106013
Website: www.ndpc-zik.org