LETTER TO THE EDITOR, PREMIUM TIMES NEWSPAPER:
(REJOINDER TO YOUR RECENT EDITORIAL OPINION: HOW BUHARI HELPED NIGERIA INTO RECESSION AND HOW HE CAN TAKE US OUT OF IT)
BY LAOLU AKANDE
I read your editorial on “How Buhari helped Nigeria into recession and how he can take us out of it” of September 27, with keen interest. It certainly makes for attentive reading and was written with the clarity which has become the laudable house style of Premium Times, a well regarded newspaper.
But there fundamental flaws in the logic of the editorial.
To start with, through some deft ‘footwork’ you managed to reach conclusions that are not supported by the facts that you presented. Indeed, such was the dexterity of the write-up that one almost shouted ‘abracadabra.’
Secondly, you did not acknowledge other developments that have impacted on the economy one way or the other. This is one reason why a general analysis which takes account of all factors should be favoured over partial analysis.
Finally, in providing solutions you failed to acknowledge the source of the ideas that you touted. Let me now elaborate.
If you state at the onset that Nigeria is dependent on oil (for foreign exchange and government revenues) and acknowledge quite correctly that the previous government did not save for the rainy day, it then beggars belief that you can discount the effect of such previous policy neglect on our current situation.
It is quite surprising that at a time that the global economy is stuttering and when oil prices have fallen to historic lows, you think that it is the early composition of the Federal Cabinet that by itself would have solved the problem. May I gently point to the examples of Saudi Arabia and Russia which are also dependent on oil and are also facing economic difficulties despite having Cabinets in place over the same period and much larger fiscal buffers than Nigeria.
Even the key economic actors in Nigeria in 2008 have admitted that the lack of fiscal buffers make the situation much more complicated than then when we were able to respond better to the the global economic and financial crisis.
This leads to my second point about vital things that seem to have been left out of your analysis.
For some reason, your editorial makes only a fleeting reference to the fact that in addition to a price shock, Nigeria also suffered severe shocks in oil and gas production starting in February this year due to acts of sabotage and vandalism. Instead of the 2.2m barrels per day of crude oil exports, production fell by almost 1 million barrels per day as recently as August 2016. Similarly, gas production from Joint Ventures (JVs) and NPDC assets fell from 173.8bn scf and 24.4 billion scf in January this year to as low as 139.6 billion scf and 17.7 billion scf in July respectively. These production shocks had serious implications for foreign exchange earnings, federally collected revenues, power supply and indeed industrial activity.
But your editorial had no outrage on these acts of sabotage and vandalism. In any case, a legitimate question for analysis would have then been to wonder if a recession was inevitable in the face of such foreign exchange, revenue and infrastructural shocks?
At the other end of the spectrum, you omitted to give credit to the Federal Government for its interventions that helped to keep the economy from falling deeper into recession.
These include its three interventions to help States pay workers salaries, a commitment to increasing the national investment/GDP ratio by devoting up to 30% of the 2016 budget to capital projects (over N750bn has been released thus far this year, way more than the entire capex last year) and taking the politically very difficult decision of not paying subsidies on premium motor spirit (PMS). This latter action in addition to steps taken to reduce leakages through the use of the Treasury Single Account, TSA, and increase in the use of an integrated payroll system has prevented huge funds from being stolen from government coffers including billions of Naira monthly which was erstwhile going to over 30,000 ghost workers (and counting!
Finally, you make suggestions on the way forward for the national economy including international borrowing and prudent use of the proceeds, generating more internal revenue without raising taxes and providing more support to the real sector. I should commend you for at least making some suggestions on the way forward quite unlike several other commentators.
However, a quick glance at the 2016 budget and its accompanying Strategic Implementation Plan will show that the Federal Government has had been pursuing these same ideas since the beginning of the year, even where implementation take-off has been prolonged for a variety of reasons including the delay in budget approval and revenue losses mentioned above. The point nevertheless is that rather than acknowledge the source of the suggestions that you made, you instead chose to conclude with unfair and ‘ad hominem’ attacks on the Economic Management Team, the very people who came up in the first place with the ideas that you are now also proposing.
Indeed, the Economic Management Team which has been meeting at least weekly since the beginning of the year reports regularly to the President and where required to the Federal Executive Council. At this meetings and other forums, issues are robustly debated by the team, at times with notable economic experts invited for several brainstorming and interactive sessions. In spite of official statements advising that a decision on so called ’emergency powers’ and ‘sale of national assets’ had not been taken, your editorial choose to make definitive pronouncements without having the full facts on hand. This is like chasing the wind.
Overall, your editorial reminds one of the days of Pele when football managers used to advise their players ‘if you miss the ball, don’t miss the leg’. Haba!!