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The opening line allegedly was made by General Yakubu Gowon in the height of the first oil boom of... (0) Comment

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Nigeria; Gone full circle or cycle?
Author: Wakdok,Samuel Stephen | October 06, 2015

The opening line allegedly was made by General Yakubu Gowon in the height of the first oil boom of the 1970s. He said that Nigeria's problem was not money but how to spend it. Nigeria was awash with petro dollar, the economic policy of that regime was the indigenization decree of 1973 which sought to increase the ownership of Nigerians in businesses.

When Gowon was overthrown in 1975, the Murtala/Obasanjo regime which swept into power opened the borders and a spiral import spree began which will come to define Nigeria as an importer of all sorts including rice, sugar, sardine, wheat etc. Moreover, the Naira's appreciation due to increased oil export earnings led to undesired negative effects in traditional export industries as they lose competitiveness on the world market (this is called the Dutch Disease).

“The great tragedy is that the Murtala-Obasanjo administration, which replaced the overthrown Gowon administration, effectively abandoned the 1975 to 80 plan with its great promise of creating the basis for economic diversification and industrialisation and also abandoned indeed, the principle and discipline of planning,” Philip Asiodu, a retired civil servant explained.

He went further to say “The traumatic massive purge of about 10,000 officials countrywide over a period of four months had destroyed the competent, professional, bold, non-partisan, fearless, prestigious and merit-driven civil service inherited from the British colonial administration which might have been able to influence the new administration to keep to the plan and its constraining discipline.

After Murtala was assassinated and Obasanjo took the full reins of power, Nigeria hosted the second world Festival of African Culture popularly referred to as FESTAC 77, with attendant huge cost to the nation. Obasanjo Nationalised the assets of foreign owned companies chiefly among them was British Petroleum BP which became African Petroleum.

The external dependency and mono cultural nature of the Nigerian economy rendered the economy susceptible to the crisis caused from the global markets. As Olushoki wrote in 1990, “the immediate trigger for the Nigerian economic crisis was the oil shocks of 1977 in which the price of oil in the global markets collapsed.”

The Obasanjo Government proclaimed an austerity bundle in the middle of a balance of payment catastrophe and introduced the Operation Feed the Nation to stem food imports. He took a 2 billion dollars loan in 1978 to solve the disproportion in the external payment sector.

Thankfully, the oil revenue bounced back and he was able to hand over an external reserve of about 3 billion dollars in 1979 to Alhaji Shehu Shagari. President Shehu Shagari was deceived by the second oil boom of 1980 and took Nigeria on a spending spree again.

By the time the oil boom busted again in 1981, the economy practically stood still. The oversupply in global oil led to a dire fall in the price of oil and Nigeria's foreign reserve could barely pay for one month of her imports. Nigeria resorted to short term trade credits to meet her import needs till it got to a situation that nations were not willing to extend any more credit line.

When the Buhari/Idiagbon swept into power on New Year's Eve of 1984, Nigeria did not know her total external debt stock. The new regime attempted to sanitize the economic rot but apparently the economy had also gone into deflation. Producers stopped producing, and sellers stopped selling. The danger of deflation over inflation is that with your money, you may not be able to buy. Goods were hoarded and locked up in stalls because there was a persistent fall in the general price level.

 The government introduced the war against indiscipline to bring sanity to the polity. Soldiers were ordered to break shops and distribute the wares to the populace. The new junta could not meet up the conditionality of the IMF. By the time Babangida overthrew the Buhari/Idiagbon regime in August 1985, the economy was as good as on a standstill as all our foreign credit lines were frozen. General Ibrahim Babangida replaced Buhari's war against indiscipline with Mass Mobilization for Self Reliance, Social Justice, and Economic Recovery.

IBB introduced the home grown Structural Adjustment Program known as SAP. Nigerians were introduced to deregulation and privatization with liberalization of interest rates and some key sectors of the economy like banks and airlines.

SAP's main objective was to diversify and restructure the economy but it also deregulated and urbanized poverty. Employments were lost at the speed of sound which gave rise to shanties, as urban dwellers or rural –urban drifters who lost their jobs or couldn't find jobs in urban areas could not afford to pay rents or get houses to rent.

The first gulf war of 1990-91 brought with it an oil windfall which still remains a subject of debate till date. The expensive political transition program of IBB ended up only in the annulment of the June 12 1993 election. The Interim National Government of Ernest Shonekan was faced with both a battle of legitimacy and that of survival that it could not dare to address the worsening economic crisis staring the nation.

When General Sani Abacha came on board in November 1993, he attempted to re-regulate some hitherto deregulated sectors, introduced the Petroleum Trust Fund and introduced the war against indiscipline and corruption this time around. Oil Prices were low and the increase in consumption of domestic refined products revealed sharply the inadequacies of our local refining capacity.

Coupled with international sanctions and isolation, Abacha turned to Libya for huge importation of refined products to bridge the supply gap. Gradually, the challenges of electricity supply came to the fore and became a national crisis. General Sani Abacha assembled a team led by Shonekan, who came up with an economic blue print named the Vision 2010. The sudden demise of General Sani Abacha threw up General Abdulsalam Abubakar who began a guided deregulation. Abubakar increased the poor minimum wage of workers to N6, 900 only to reduce it to N3, 000 when he realized that dwindling oil revenue will not make it feasible, but it was a huge pay rise.

Handing over power to a democratically elected government after 16 years of military rule despite insinuation that the country's external reserves were massively depleted under his watch. Nigerians appreciated him for the successful transition and no official inquiry was launched.

On arrival, Chief Obasanjo who once was a follower of nationalization pursued the market oriented policies. He deregulated the economy; privatized state owned corporations, commercialized schools and hospitals, and liberalized the telecommunication sector. A typical example is the African Petroleum nationalized from British Petroleum, now privatized as Forte Oil.

Obasanjo, who started the debt run in the 1970s, is credited with getting a debt relief of 18 Billion dollars for the country in 2005 from the Paris club or creditors. His Economic Adviser came up with the National Economic Empowerment and Development Strategy (NEEDS), and as CBN Governor, Charles Soludo consolidated the banking industry raising capital base of banks from N2 billion to N25 billion. Obasanjo grew the external reserves and attempted albeit unsuccessfully to run for a third term in office.He at various times reduced subsidy on fuel known as PMS which increased the cost of PMS while fully removing subsidy on diesel and Kerosene. He sold the nations' refineries on the eve of his departure from power.

Umaru Musa Yar'Adua, Obasanjo's chosen successor immediately reversed the sale of the Nation's refineries, and introduced a special sale of Kerosene at N50 to cushion the effect on the lower class of Nigerians. The effectiveness of this is in doubt till date but it showed that his government had a human face. His 7 points agenda and the Vision 20:20:20 were the hall mark of his economic policies. Again death struck and Goodluck Jonathan replaced his principal.

He rode on the campaign of Fresh Air with millions hoping that a generational change has finally come to power. Jonathan did not continue with the 7 points agenda but held fast to the rhetoric of vision 20:20:20 on the premise of his transformation agenda. His government attempted to fully deregulate the importation of fuel without complete success, a part of the subsidy will be reinvested in programs at the federal and state levels to cushion the effect of the deregulation through Sure-P.

He succeeded at last in unbundling the public power company. During his first four years in office, the international price of crude oil was at an all-time high and this provided a life line for corruption in high places. The terrorism in the North East spread and cost the nation dearly in terms of lives and resources, trillions were budgeted for defence expenditure all to no avail as the country lost ground to the Islamic Insurgents until last minute push saw the military regaining most of the lands.

The 2015 election contested and came with a defeat for the erstwhile ruling party, ushering in a former military Head of state as an executive President. President Buhari who rode on the popular mantra of change and anti-corruption gained an unprecedented goodwill as Nigerians were indeed fed up with 16 years of the PDP. While PDP campaigned on the mantra of transformation, APC did on change.

The change Nigerians yearned for still remains to be seen, the President's strength lies in his anti-corruption campaign and strategies to win the war against the insurgency. However his greatest concern should be the economy. While war against corruption is in his control, the economy isn't in anyone's control. Since the Murtala Regime came to power in 1975, every Nigerian government has fought or unveiled plans to fight corruption. Also since the structural adjustment of IBB in 1986, every regime has preached economic diversification.

The closing statement in this commentary as also held by President Muhammadu Buhari in 2015 is that Nigeria is broke. Nigeria has come full circle from the problem of how to spend money to the problem of having no money and must cycle out of the current conundrum.

Though President Buhari has every right to be worried, he should be consoled that we are not at our worst like in the 80s when we couldn't pay for our imports and no country was willing to lend us more. Nigeria's economy has a more developed service sector than it did thirty years ago.

Nigeria's external reserve can pay for a minimum of 3-6 months of imports. Our economy only needs to leapfrog after decades of lagging. What President Buhari should fear are two main concerns: inconsistent government policies and change. Almost all the governments in Nigeria's history have abandoned their predecessors' policies whether good or bad.

There have been countless policy summersaults and policy reversals which have made it difficult for cohesion and effective planning, execution and success. The world has changed and is still changing; today's world is far different from the world in which he ruled 30 years ago. Globalization and the ICT revolution have changed the world in every sphere you can think of.

Today's President should be loved and respected not feared, in today's world it is not the big that eat the small; it is the fast that eat the slow. In this new world, there is the economics and speed of trust. The President cannot be suspicious of everyone else and expect to make progress.

The country must experience not only growth but inclusive growth and sustainable development if we want to make progress. The excuse of taking 6 months to form a cabinet, economic team and therefore unveil an economic blue print is not tenable to any logical or rational mind. Calls from the government apologists that Nigerians are impatient are uncharitable. No one knows the economic policy of the administration 6 months down the line. The government cannot afford to keep blaming the previous governments 6 months into their tenure.

Time runs even when the clock is not ticking. Nigerian has come full circle .The APC government of the day should get down to business and cycle Nigeria to greatness.

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