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Author Name: Omotayo, J. A.
Number of articles: 211
During my time too, there were scholaships, grants and busary awards to students. Some of my friends... (0) Comment


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Debunking The Fallacies In “Vision for Sustained Prosperity in Nigeria” - Part 1
Author: Omotayo, J. A. | January 12, 2015



I read online www.247ureports.com on Octpber 12, 2014 the above captioned speech delivered at “The Atlantic Council” on October 8, 2014 by the Minister of Finance and Coordinating Minister of the Economy, Mrs. Ngozi Okonjo-Iweala. I commented briefly using the same website that day. The brief comment, is in my opinion, not enough. Why? Nigerians and the international community need to have the details over which they should ponder to ascertain the true situation of things in Nigeria. This is the reason for this write-up. Before delving into the details, we must note that both Mrs. Okonjo-Iweala and Mr. Goodluck Ebele Jonathan, the President of the Federal Republic of Nigeria who appointed her into position of service to the country, are Christians. As Christians, they know too well the story of Ananias (the husband) and Sapphira (his wife) written in Acts 5: 1-10 of the Holy Bible. The couple sold their landed property and conspired to keep a portion back while delivering the remaining to Peter the Apsotle. Ananias was the first to arrive. After telling his lie, Peter was angry that Ananias had deceived the Holy Spirit. The Holy Spirit struck him dead instantly. He was taken away and buried. The wife came later and the same scenerio played itself out again. Please note that they died niether because they stole from others nor partook in the looting of the community treasury. Rather they merely withheld a part of what they realised from the sale of their own property. That shows the extent to which the early Christians frowned at lying. Perhaps, the late Mr. Othman Dan Fodio captioned this well when he stated that “Conscience is an open wound, only truth can heal it” (Please look into the front page of The Guardian Newspapers issue to find this quotation in the exact words of the late Mr. Othman Dan Fodio). Under the sub-heading titled “Nigeria's Bright Future and Challenges” Note No. 12 (because that is the new style of writing where parapgraphs are numbered) of the speech, Mrs. Okonjo-Iweala stated the economy grows at 6.5% and one of the fastest in the world, fiscal deficit predicted at 1.03% of GDP, inflation in single digit (figure not given, perhaps she forgot), strong external reserve at about $40 billion inclusive of $4 billion from Excess Crude Account. How did we get there? The price of crude has hovered around $100/barrel and production around 2.5 million barrels/day. Price of refined petroleum products have been Kerosine at N65/litre, Petrol at N97/litre and diesel at N140/litre. But during Abacha era, we had about $7 billion in external reserve in 1998 even when the price of crude fluctuated between $12/barrel and $18/barrel with production limited to 1.3 – 1.5 million barrels/day. Also, during Abacha's era, the prices of refined petroleum products were limited to Kerosine at N9/litre, Diesel at N10/litre and Petrol at N11/litre. The differences are for crude oil price at least $82/barrel with additional production 1.0 million barrels/day. Working on the expected revenue from the differences in price of crude and current production alone between May 29, 2011 and September 30, 2014 gives $246.923 billions ($82x365x3.3x2,500,000) approximately. If our external reserve today stands at merely $40 billion, should we not ask her what happened to the rest of the money, almost $200 billions, just as Peter asked Ananias and Sapphira? In Note 14, she stated that Nigeria faced a lot of infrastructure challenges requiring about $14.2 billion per year to bridge the gap but that only about $5.9 billion (N914.5 billion approx. at N155 : $1.00) is currently being spent. How much does a kilometer of road cost, approx. N5 million, I guess. The said current spending should then construct approx. 182,900 km of road per year. For dual carriageways, let us divide by 4 (2 lanes each way). This would give 45,725km of roads per year. Do we have up to that length of fedral roads in Nigeria? No. The import is that all road can be fixed within a year. Yet a large proportion of the federal roads are unmotorable today. Lagos – Ibadan which would normally take about 1 – 1.5 hrs now takes 2 – 4 hrs. Ibadan – Ofoku (Benin) which should be about 3 hrs now take over 5hrs. Ipele junction to Kabba is now abandoned. Benin – Ore – Shagamu which should take 2.5hrs now take more than 6hrs on average. A colleague, Ebuka, left Lagos at 7.00am and arrived Abuja at 10.50pm on August 20, 2014. Lagos – Abuja used to be 8 hrs but he spent almost 16hrs. What happens in the road sector can be re-applied to water, power, etc sector. The import is that we have enough budget expenditure to fix all the so-called infrastructure deficits within the time frame of May 29, 2011 and today if this present government is not only wasteful but confused. She went ahead to state that poor electricity supply added 16% more cost in Nigeria compared to 2% in South Africa, 5% in China and 10% in India. Are Nigerian locally produced products, if any, just 16% higher in price compared to other products in the international market? I think otherwise. With the full privatisation of Nigeria's electricity, do we still need to fund the power supply sector? Under her sub-title “The Way Forward” Note 33, she stated that about $2 billion in revenue was generated with the full privatisation of the power sector. If this amount is taken from the $40 billion in external reserve because we can no longer re-sell the power sector, then the actual reserve from oil and all other sectors is $38 billion. Later she added under Note 34 that the government raised a $1 billion Eurobond to capitalise NBET (Nigeria Bulk Electricity Trader). Does that make any sense? We had $2 billion from the sale of power sector only to borrow $1.0 billion for the same sector. Does that sound as something coming from an economist and a good manager? I think otherwise. Do consumers not pay for the services they get from the power companies? But the truth came out during the just concluded 23rd COREN Assembly (COREN = Council for the Regulation of Engineering in Nigeria). A technical paper on the power sector reform was presented by a highly placed government official showing the success of the full privatisation policy. The presenter went ahead to inform the audience that Nigeria was the first country to have successfully tried such an approach. But when the technically minded Engineers started to review the paper and the challenges of power supply in today's Nigeria, the presented bowed his head in shame. It was revealed that funding was a problem to the former PHCN (Power Holding Company of Nigeria) and it is still a problem after privatisation. The so-called investors have not been able to bring the needed cash injection. Shortage of gas supply was a problem to PHCN and still remains the same today. Increase in power production without adequate means of distribution was a problem to PHCN and it is still the same today. And many more. In Note 15, she stressed that 70% of government revenue comes from oil and gas sector, and this account for 90% of foreign exchange earning. What effort has she put in place to improve on this earning? None. Kenya had no oil (one has recently been discovered) but has a functional refinery that refines for both local consumption as well as supply to neighbouring countries. In the process, foreign exchange is earned. Nigeria has no functional refinery to meet even domestic demand of refined petroleum products – kerosine, petrol, diesel and bitumen just to save foreign exchange required for imports and boost our external reserve at the same time. Malaysia imports crude oil and refines for exports thereby earning foreign exchange. A new refinery can be completed within 3 years. Yet we have not done so. Does it not appear that this economist knows the problem but not the solution? In Note 16, she admited that the Gini Coefficient used to measure disparity in income distribution increased from 42.9% in 2004 to 48.8% in 2010. During the period, we noted that there was increase in federally generated revenue arising principally from increases in crude oil prices and production (as previously indicated). But is it the norm that when government revenue increases, then disparity in income distribution increases? If yes, then America should hold the largest number of the poorest, poverty-stricken and underprivilege people in the world. But that is not so. Why? The Constitution provides for the needs of the unemployed, the aged, the weak (children, nursing mothers and the sick), and the disabled. Do we not have similar provisions in the Nigerian Constitution that is in operation today? We have. Should we not ask why such provisions have not been followed to the letter? During my last visit to Belgium, we raised the issue of social security. I was made to understand that if any person loses his (not gender sensitive) employment, he would be entitled to 70% of his total pay for the first year and about 50% thereafter. If you lose your job in Nigeria, you are on your own. Can we not ask if the Nigerian style is part of the promising future?In Note 17, she stated that Nigeria turns out about 1.8 million new unemployed every year. But she forgot or refused to state how many employment is created to absorb this high number every month or year. Perhaps as a way of dogging the issue, she went to Note 26 under another sub-title “The Way Forward” to state that with the hurriedly packaged SURE-P (Subsidy Reinvestment Program) 11,500 youths were recruited from Borno (4000), Adamawa (3500) and Yobe (4000) States. The distribution was about 4,000 youth per State. If we take the FCT as a State, a total of 148,000 (4,000x37) or 8.22% would have been employed out of 1.8 million job seekers in 2014. What about the bulge from 2010 when Mr. Jonathan came to power till now? That is the irony of our way forward into the bright future. Must we not tell ourselves the truth always? When the US had the financial meltdown of the 2007 – 2008 era, the jobless rate was noted. All measures put in place to mitigate the trend were put in public domain. Also, all jobs created were put in public domain. Today, we know that the joblessness rate in America is less than 6% even though it went as high as 12% at a time. Even when about 140,000 jobs or 250,000 were created in a month, the statistic was published. Where is our own monthly statistics on job creation, missing? That is another way to identify who is a liar. She went further that Nigeria would have the third largest population in the world by 2050. What provisions are there for the future? None but rheoterics.

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NGEX welcomes and encourages reader comments. Permission to post reader comments is assumed, and we reserve the right to excerpt or edit for clarity any comments that are posted. We won't be able to publish all comments. And we can't vouch for the accuracy of posts from readers. Nickname or Name will be used to identify your post.
OMOTAYO, J. A.    Eldoret, KENYA    January 13, 2015
Dear Ibidun, pls provide your own statistical details for readers to compare. That was what I did. Let the reading public judge us.
God save Nigeria.
Ibidun    Lagos, Nigeria    January 12, 2015
These arguments are baseless and do not represent the true position of things
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