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Sick Economy And Jonathan’s Insufficient Alibi

December 2, 2010

For one reason alone, Nigerians should pardon the Minister of Finance, Dr Olusegun Aganga for his statement: “Let me correct this again… the economy is too technical for some people to understand” (ThisDay, November 25, 2010). The minister spent most of his life abroad mainly in the UK where he was shielded from the reality at home.

For one reason alone, Nigerians should pardon the Minister of Finance, Dr Olusegun Aganga for his statement: “Let me correct this again… the economy is too technical for some people to understand” (ThisDay, November 25, 2010). The minister spent most of his life abroad mainly in the UK where he was shielded from the reality at home.

Had the Minister made efforts to understand the country and its people since his returned, he would have understood and appreciated that Nigerians are not people to be shut up or intimidated from discussing matters that concern them.

The truth is that you do not need to be an economist to notice the growing line of unemployed graduates, the rocketing prices of basic food stuff, the deteriorating environment for business and the collapse of our infrastructure.

The Jonathan’s highly technical minister of finance should tell Nigerians why  only 30 percent of the capital vote for the 2010 budget has been released to Ministries while the recurrent expenditures has already gone beyond 100 percent because additional unbudgeted N200 billion Naira was released for the striking staff of Power Holding Company of Nigeria (PHCN).

Many non- economists, including secondary school students, know that capital expenditures, rather than recurrent expenditures drive economic and infrastructure developments. In fact, in what would perhaps be a subtle rebuke of the Minister’s peculiar brand of economics, the Vanguard of November 25, 2010 reported that the IMF urged the Nigerian government to “reallocate resources away from recurrent expenditure to capital expenditure to support economic growth.”

Who can deny that our foreign reserve and excess crude accounts have not gone down?  Who can deny that budgets are not being effectively implemented? Who can deny that Nigeria has gone back to the old habits of foreign borrowing and that the President submitted repeated requests to the National Assembly to incur more debts on Nigeria?

The truth is that this government is leading us into a dangerous path of another debt over-hang. Ehigie Uzamere, chairman senate committee on local and foreign debts in fact said at the opening of the public hearing on the Debt Management Office (DMO) re-enactment bill held in Abuja on November 8, 2010 that Nigeria's total debt portfolio may have hit an all-time high of N4.875 trillion ($32.5 billion), “Presently, our external debt stands at $4.5 billion; Domestic debt is valued at over $28 billion and is rising. National and sub-national governments are going to the capital market to borrow for development projects and finance budget deficits,” Mr Uzamere said.

In May 2010, the Managing Director of Power Holding Company of Nigeria was reported by the Daily Independent of May 17 2010 as saying that electricity generation and transmission in Nigeria would peak at 4,000 mega watts by June 2010. We will all recall that this was about the time Goodluck Jonathan was sworn in as President and he had chosen to be in charge of the power sector. Six months later, electricity generation has actually fallen below what it was at the onset of the regime!

To put the situation of  electricity poverty afflicting us in perspective, South Africa with a population of 60 million people generates over 48000 mega watts of electricity (and is aggressively increasing its generating capacity) while Egypt with a population of about 50 million people generates some 50,000 mega watts. It is estimated that Nigeria needs to generate about 100,000 mega watts of electricity to meet and satisfy demand – yet it currently produces less than 1,800 mega watts – despite all the grand talks. Does the Finance Minister have any cogent explanation for this? Or is this issue of electricity generation and distribution too technical for Nigerians to understand?

As was rightly said by political analysts, the economy is central to the popularity or fall of any democratic government. It is therefore, strange to deny opposition politicians the right to have a say in the way the county’s economy is run. Do we solve the country’s problems by pretending that issues such as dangerously depleted foreign reserve and excess crude accounts epileptic power supply, roads with trenches instead of gallops do not exist?

Apart from Atiku Abubakar, other eminent Nigerians who have warned about the country’s growing indebtedness include World Bank Managing Director Dr Ngozi Iweala, Professor Pat Utomi, former Governor of the Central Bank, Professor Chukwuma Soludo, and former Finance Minister Mukthar Mansur. And these internationally-acclaimed Nigerian experts were merely dismissed as agents of opposition politicians. Too bad!

How can anybody convince Nigerians that the unreflective opening up of the nation’s economy to the dumping of all sorts of imported goods, including tooth picks, is the best way to check smuggling and increase the revenue accruable to the federal government?

The Finance Minister, who had claimed that “the economy is too technical for some Nigerians to understand” seems, by this move, to be contradicting the objectives of earlier government policies.

It is curious that the same government which in June 2010 approved the release
of N24 billion for the resuscitation of the ailing textile industries in Kaduna
and also approved N15 billion for the Kaduna Independent Power Project (IPP)
could initiate a policy in negation of that initiative.

One would think that the objective of the government’s support in June was to
resuscitate these textile mills and nurture them to health and maturity. Now the
Minister has opened the doors for massive importation of textiles without considering the possible impact of this on the government’s plan to resuscitate the local textile industry.

The impression is given that the Minister is only myopically concerned about the activities of smugglers and improving the revenues accruable to the government
through import duties and levies without considering the broader impact of this

What about the impact of such liberalisation on pressures on foreign currencies to finance these imports? Has the Minister considered that plugging areas of leakages in the economy could be a more viable way of shoring up the government’s revenue?

It is obvious that the Jonathan administration has run out of ideas on the management of the economy, which is a vindication of earlier alarms raised by several prominent concerned Nigerians.

Senior Fyneface: Elelewon Street, GRA II, Port Harcourt ([email protected])

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