Hope, In A Time Of Despair, By Tope Fasau
The news made the rounds a couple of days back, that Vice President, Yemi Osinbajo was booed on his visit to Kano, even though the videos I watched of that visit showed something else. What I saw were ecstatic crowds who were happy to see their Number 2 man in their abode. But that is not to say that people don’t have cause to complain about the signs of the time. Listening to the Vice President as he made the rounds during the week, one saw the blossoming of an articulate and energetic technocrat whom we would want to see more of. From Kano to Forcados in the Niger Delta, the VP engaged the citizens, soothed frayed nerves, assessed projects, gave advice, told about the plans of the government, and encouraged all of us about the future of our great country. For me, as someone who has had my fair share of moments of anxiety, it was quite assuring.
On the foreign front, President Mohammadu Buhari was in China for an intensive visit. From videos around that trip, we saw Geoffrey Onyema assure us of the fact that some of the concessions and commitments secured by Nigeria would simply have been impossible but for the presence of President Buhari, who has since returned to the country after that harrowing journey. The man is not allowing himself a minute to breathe. But we trust that his constitution will hold up. He is one of the lucky few who can flog their bodies at such an advanced age.
On what do I anchor this hope? We shall consider some of the recent events that show how the government is doing its assiduous best to turn the economy around and make life easier for the average Nigerian. But it is important to first define the context of what we are going through.
THE SKY IS FALLING
Any sound economist with a global perspective will agree that the economic sky is falling and it seems that the extant economic ideologies and systems, seem to be failing. Given that Nigeria has been through debilitating decades of rape and corruption, all the drain to our finances happened within a context of a global collapse and confusion. I have just viewed a short clip of Fareed Zakaria’s CNN show, wherein 4 living FED Chairs – Volcker, Greespan, Bernanke and Yellen, were interviewed with a view to getting their perspective on what exactly is going on with the US and global economy. Surprisingly, they all seemed to agree that monetary policy had come to its tether’s end and it was time for governments to get responsible and consider the use of Fiscal policies, even if we all had to go back to Maynard Keynes’ recommendations.
Greenspan echoed something I have always said was central to Nigeria’s salvation. He said in his view, it was productivity that has collapsed, growing in the USA at 1% for the past two decades. This means that the US economy is not doing anything particularly new, and its workers are merely being recycled to create an impression of activity. This also points to the possibility that the global population is ageing. We may be confused once in a while by global phenomena, and one-off successes like Google, which has developed paws long enough and ubiquitous enough to reach into everybody’s pockets all around the world, but how many of those can we have? So what went wrong with the world is partly that the Neo-Liberal idea that expects everyone to compete and that emphasizes pure capitalism, is near expiry. The world has to go back to consider how to make the space more level for everybody.
In Nigeria, this is even more so. Corruption over the decades has done serious damage by depriving Nigerians of infrastructure that could make life more meaningful. It has also deprived young Nigerians from having an enabling environment for innovations and inventions. The older generation simply sucked away the opportunities of the young. Yet the emancipation lies with the youth. It was shocking hearing Dr Mrs Okonjo-Iwealla, speak at a World Bank meet in Washington, of the importance of the youth, and how succeeding governments in Nigeria has neglected them. I was shocked because I don’t think she acted that out while she had the opportunity.
So the world economy is broken, and in between the hypocrisy has emerged a picture of global despair. It seems tougher to get jobs all over the world. Opportunities are shrinking. Productivity is on the way down as a result of these reduced opportunities. Global happiness has taken a tumble. Mismanaged and underdeveloped economies bear the brunt. Developed countries have managed to achieve a certain minimum standard of living for most of their people. They have made transportation cheap. Food is getting cheaper through biotechnology. Shelter is fairly assured through government-owned flats. The vulnerable (physically challenged), have been prioritized. Those governments have shown what is called Administrative Capability – a critical measure by which socioeconomic development is determined.
Nigeria could not be said to have been well-governed in the past, to put it mildly. And so, we are in one of the worst situations, requiring a combination of surgery and chemotherapy, to excise the many social cancers that afflict us. This, I believe, is the critical assignment that this administration has embarked upon. It will not be funny or easy. But it must be done.
The President has just returned from convincing China to commit to $6billion worth of investments. Thankfully, we’ve been told they are not mere loans. Whereas Nigeria will have to pay back these investments, it is important that this bold move represents a diversification of our source of finance, just as we also desire a diversification of our internal revenue source. We shall not play politics or be involved in any currency wars. We are strictly playing the economic game.
The swap deal signed by the Central Bank of Nigeria and the Industrial and Commercial Banking Corporation (ICBC) – the world’s largest bank by balance sheet – is also significant. By that deal, the Nigerian government has recognized the reality that a majority of its imports are from China (just as it is for many other countries), and we would rather transact from Naira into Yuen directly, thereby saving our people from the extra financial burden of converting through dollars. This saves us a kings ransom in transaction costs, and reduces the pressure from the hunt for dollars. It has its own risks though, which must be mitigated. A swap deal would usually be for a specified period of time – three times this year – after which the exact amount exchanged must be returned by both parties. Nigeria will have to pay interest to the ICBC after the tenure, in this very instance.
Then there is the interesting exchange between our Finance Minister and the IMF. At a recent meeting, Nigeria’s economy was taken apart by the IMF people, who criticized our foreign exchange regime and wondered why we hadn’t come to borrow from them. Again, the usual one-track approach to development which has never helped us, was at play. The IMF guys always ask us to come and borrow. Their idea of development for African nations is one in which we borrow our ways out of misery. The only problem is that it has never happened that way. African countries always borrow, and remain debtors, with lenders taking political advantage of their vulnerable position afterwards. And this is what Kemi Adeosun, a Londoner, who certainly has an ear to recognize subtle insult when she hears one, as different from most Nigerians, and who has hopefully not been bought over like some who came in the past, had to say in response to insinuations that Nigeria is ‘sick’;
“Nigeria is not sick and even if we are, we have our own local remedy,” the Minister said, in an apparent response to a question on why the government has refused to apply for IMF loans… “We have resolved to build resilience into the country’s economy to hedge against future oil shocks. This is because dependence on oil brings about vulnerability and laziness. So we are doing a combination of things to diversify our economy, with revenue mobilisation to enable sufficient investment in developing the non-oil sectors… We have a great opportunity to reset the Nigerian economy and ensure that as we go forward, growth will be in a sustainable manner so that we won’t be vulnerable to oil price fluctuations, and with a truly diversified economy we would have enabled opportunities for wealth creation that would have trickled down to every Nigerian… The compelling business case in Nigeria is that the fundamentals remain very strong, a teaming, young growing population, rich in resources and with a government determined to finally get it right. The great thing is that long term investors recognize this and understand the difference between short term and long term issues and the case for Nigeria persuades one to plan for the longer term opportunities.”
I am hopeful that this team of leaders are ready to do the right thing, at great risk, to reposition our circumstances for the better in this country. Hopefully, the townhall meetings proposed for the Vice President will soon start. And that will be important because giving an explanation to the masses is of priceless value. Inflation has edged up to 12%, and unemployment is still a serious issue – especially youth unemployment. Some of us have recommended some approaches.
In the meantime, we should see the salutary effects of the Chinese deals on our Naira – if nothing else – very shortly. A lot depends on information. If well-managed, and well-spun, the spread between CBN and black market rate should reduce, and over time the CBN may decide to revalue the Naira if that falls within its priorities. We expect the combination of these approaches and the apparent enthusiasm and energy on the part of our leaders, to culminate in increased economic activities like never before, in a short while. No matter how unlikely it may sound, Nigeria may as yet turn the corner.
Economist and Policy Analyst