A review of the economic agenda of 2019 presidential aspirants
To begin with, the performance of the incumbent government compared with its campaign promises is obviously underwhelming. This is because very few politicians take time to consider the exogeneous factors that could thwart their well-meant intentions and subvert their plans for the economy.
While I sat comfortably skimming through the ideologies of presidential aspirants especially concerning their plans for improving the Nigerian economy, I found several ideas that need to be critically appraised even as electoral tensions build up. Cutting across several aspirants, I would present a critique of these ideas and their relevance in the Nigerian context.
Economic recovery and growth
Mirroring the antecedents of the incumbent, the gruesome contraction in the economy between Q2 2016 and Q2 2017 needed an urgent correction. Though the decisions of the government led to heightened debt obligations, the recovery could largely be attributed to the ceasefire by the Niger Delta militants. This means that the oil sector alone could determine the direction of the economy and unless an alternative route is found, our economy remains spellbound by it. The FG has invested in agriculture, power projects amidst other efforts.
According to an earlier report on trade by the CBN in 2018, a surplus on the Current Account of about N2 trillion was achieved due to a surge in exports of primary products. Somewhat clear is the direction of the economic agenda of the incumbent, however the politicisation of national issues could serve as a slowdown in the progress of the administration in future as more focus and will is expedient.
Interjections in Monetary Policy
On the flipside, the incumbent and other aspirants need not tamper with critical decisions of the economy in the hands of independent, regulatory and non-partisan bodies in order to achieve their ends.
For instance, the attempt to politically influence the devaluation of the Naira, the monetary policy rate and floatation of the currency in the past were threats to the autonomy of the monetary authority. This could have spelt doom for the economy had the monetary authority not taken firm positions in its decisions.
In fact, some aspirants have decided to introduce a new Nigerian currency to curb fake currency production at a time when the stock of Foreign Reserves for a whole country is no longer correlating with rising oil prices ( and below the quarterly profit of a multi-national company - Apple Inc (above $60 billion for Q1 2018).
It is practically expensive to print and issue currency. What is the guarantee that the new currency won’t be dubbed? How do you stem the inflationary impact of such a decision? What will be the reaction of the international community? All these reasons show that such an idea is not only utopic but irrelevant to Nigeria’s economic space.
Another suggestion I’ve heard is the need to urgently ease the rates to foster lending in the economy to interest rate-sensitive sectors of the economy.
Many aspirants fail to understand the Nigerian economy is highly prone to oil shocks and policies in advanced economies. No successful policy can be suggested without critical appraisal of global happenings and domestic events as excellently performed by the Monetary Policy Committee. A solid argument for politically influencing the CBN to ease the rates is the stellar profit declarations by banks in a high interest rate environment that stifles doing business in the economy.
Well, the focus should be redirected to what the government can do to ensure rates are brought down. Interest rates are set in tandem with the inflation rate and the creditworthiness of the borrower, which is indirectly affected by infrastructural deficits in the society.
Despite the decline in inflation rates, it still hovers above 10%. Without any complex analysis, it is crystal clear that setting the rates at a single digit without corresponding deceleration in the inflation rates mean creditors lose while the debtors gain. Even innovative lending platforms that have been launched to ease borrowing have set theirs at 15% minimum due to the MPR and inflation rate constraints.
Moving on, restructuring has been the newest melody in town by nationalists and politicians. As sweet as this sounds, not many recognize the intricacies of a comprehensive issue as this. Economically, restructuring as proposed by politicians implies the redistribution of revenue sources in such a way that more economic power will be given to the states and less to the Federal Government. The first question is why will the FG reduce its income sources in favour of state governments? Secondly, will the legislature support the restructuring bill? We are still aware that the 2014 Confab report is yet to be implemented and unlikely to see sunlight. The Petroleum Industry Bill is currently under pressure given the advantage this could pull for private investors. The 96-4 syndrome still holds sway in the Nigerian economy. This simply means those with 96% expenditure obligations have access to 4% of the nation’s revenue while those with 4% expenditure obligation possess 96% of the nation’s revenue.
Although the Nigerian economy is suffering from the incapability of some states to fund their expenditure obligations without receipts from the federation account, yet the economic restructuring idea may not work without clear and precise exposition on what the advocates for restructuring mean, how they will be able to convince the legislative and judicial arm and the trickle down effect on the Nigerian economy.
One of the selling points to the youths is the proposed release of funds for entrepreneurs with ideas that could generate more employment and boost growth in the economy. Such an idea is welcome in the Nigerian context, however what are the institutions that would be in place to checkmate the efforts to defraud the system? Which mechanism will be put in place to measure the transparency? As beautiful as this idea may be, a lot has to be put in place to checkmate abuse of released funds. Nigeria’s system has not been developed to the extent that such would be implemented without hitches.
Another important suggestion discovered during my research was ensuring human resources are sourced locally in building projects. Notwithstanding the contractor executing the projects, the people must feel an impact of such projects through job creation. This makes a lot of sense in economic parlance as this would help strengthen the labour force and reduce the unemployment rate. This was one of the policies instrumental to the prosperity of the Chinese economy and would benefit the development of the labour force. However, attention has to be paid on human capital development. The alarming state of the health and education sector has led to capital flight. Monies that would have been in the coffers of Nigerian hospitals are paid to foreign hospitals with higher standards of health care and greater technological innovations. This means more needs to be done to make the average Nigerian man fit for work in an economy as pregnant with potentials as Nigeria
Rather than talking the economy to work, it would be great to hear aspirants proffer policies that could subdue inflation rates below 10 percent, bold fiscal reforms that provide necessary infrastructure, reduce exposure to oil shocks and improved relevance of the currency within the Sub Saharan Africa. All these would improve demand for the naira, ensure appreciation in the exchange rates, reduced inflation as well as reduced lending rates.
In further write ups, I would analyse the economic policies of aspirants anonymously as I hear or read about them and seek to enlighten the public on holding their leaders accountable and ensuring their manifestoes make economic sense.