Nigeria’s economic and political stability

Nigeria’s economic and political stability.  over the years , one may ask if the ‘Amalgamation of the northern and southern protectorates in 1914’ was a mistake.  The feedback was that judging by the present state of events in Nigeria, the step taken by Lord Lugard, though helpful to Britain, was not in the best interest of the country. the Nigeria’s economic and political stability today is nothing to write home about.

In fact, the political situation  suffered a terrible stroke in the Nigerian civil war of 1967-70.  That war could be attributable to the intransigence of old politicians and the inability of the military to agree on the principle of justice, fairplay and equity that was needed at that time.

Many argued that instead of one politically unstable country, it would have been possible to have three or more independent countries – strong, reliable and in a competitive relationship with one another.   Others believe that it was not the amalgamation that was faulty but the inability of past and present leaderships to maintain political unity and evolve economic prosperity.they belive that this is the cause of the  Nigeria’s economic and political stability problem.

It would appear that the problems of the country are deep rooted and thus, could not be blamed on the present President of Nigeria, Goodluck Jonathan.  The President  recently in a speech in Enugu called for the evaluation of events since 1914 and also assessment of events since independence in 1960.

There should be no more grand illusion of political unity, religious tolerance and ethnic co-existence.  There should be a need for dialogue to support the continuous existence of Nigeria as a strong and happy nation.  The other day, the Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala said that Nigeria was not broke as being imagined by many soothsayers  just because of recent delays in salary payments and a day postponement of the meeting of the Federal Account Allocation Committee (FAAC).

“With a GDP (Gross Domestic Product) growth rate of over 7 percent and foreign exchange reserves of $38.6bn ($38.72bn on May 17).  The economy has been doing quite well,” the Minister was quoted as saying.  The Minister is quite correct judging by the available statistical figure showing actual total revenue to be about N500bn more than the projected figure.

The latest statements of the amiable Coordinating Minister  seems reassuring as against her earlier statement some weeks ago that the amount of $3.6 billion in the depleted Excess Crude Account would not be enough to sustain Nigeria for any period of time.

The Minister held the state governors for the slow growth of the Sovereign Wealth Fund (SWF) by adhering strictly to the principle of ‘true federalism‘ as opposed to the economic advantages of the Fund as protection against future turbulence.

However, the main argument of the state governors is that in true federalism, you cannot withhold any part of their allocation without their consent, or spend it without their express approval.  This argument raises the problem of the concept of federal and unitary type of government operated in this country. There should be a re definition of the type of federalism operated in Nigeria.

At the time the argument on allocation of resources to all levels of government is being debated, the Central Bank of Nigeria,CBN, in its latest statement said that Nigeria‘s economic growth is at great risk.

This is based on observable decrease in the growth of crude oil productions, (2.3 percent); non oil sector and agriculture in the first quarter of 2012 compared with the same period last year.  The overall economic growth in 2012 is estimated at about 6.5 per cent, a little below that of over 7 per cent in the year 2011.

Over the years the Nigerian economy has grown at an average of about 7 per cent, but it has been paper growth
without favorable impact on the level of unemployment which is estimated to be about 29 percent of the working population – 3 per cent unemployment is the accepted norm in developed countries.

It is a deep sense of relief that the CBN has now publicly admitted that its belief that tightening monetary policy is wrong as a pre condition for macroeconomic stability. We agree with the CBN that, ‘Monetary Policy on its own has limitations with respect to inducing growth without fiscal and structural measures relating to petroleum, power and infrastructure sectors‘.  It is believed that no economic transformation will be feasible without heavy concentration of efforts on provision and supply of electric power.

The ruling party has continued to monopolize wisdom and proper vision for development in the power sector. Not enough investments have been made in solar power and coal exploitations.  Sadly too, efforts by some states on power projects for their citizens have been diverted to the national grid, to the detriments of the indigines of the states concerned, e.g. Lagos and Rivers State.

It may be pertinent to note that as at the time our Finance Minister was advocating for a foreign loan to fix our economic infrastructures, the oil money which should be the engine of growth, was lavishly distributed to states and local government.

The sum of N563.089bn was reported to have been distributed to all tiers of government after an apology for a delay of a day or two.  Some apologists of true federalism would frown at a system which allows a Big Brother in Abuja to be distributing funds to its fiefs on such regular basis.  True federalism ensures that each state would develop all its resources and manage its funds to the best of its ability for the good of its people.

If the minerals in each state are allowed to be developed by the state, and not wait for federal authority‘s blessings, the better it would be for the economy of that state and general development of the country.

In many developed nations, all explorations, productions and sales are left in private hands through companies owned by share holders.  All incomes derivable from their operations go directly to the shareholders after payments of due taxes to their host and home governments.

Government might participate merely as shareholders like others.   If the federal government is the sole contributor to the Joint Ventures operations, (unless the contrary is the case), it stands to reason that the total income from oil belongs to the sole funder of the operations-Federal Government.   I have advocated in this column several times for a more realistic approach to this problem of oil money allocation.

The NNPC should be converted into a public organization owned by the Federal Government (30%), Oil Producing States (50%) and other States (20%).

The owners would subscribe to oil and gas production costs in relation to their holdings and share income accordingly in the proportion of their share holding.  Surely, the convenient marriage of common sense economics with sensible politics would promote political stability and economic prosperity.
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