At long last, the Federal Government acknowledged what’s been obvious with us even before the 2015 elections. The country, it was announced, is in state of economic recession. Ever since, there had been panic, anxiety and wild suggestions including the sale of some public assets.
For me there should be no cause for panic because recession is cyclical in nature-part of an economic life of society. In looking for solutions we should think beyond the present ordeal . Here the sale of public assets is not the best approach.
Signs of economic recession had been with us for long now. Generally the economy has been on persistent decline characterized by high unemployment rate, falling external earning, failing industrial out-put, low purchasing power of the average consumer, scarcity of funds in circulation, widespread corruption, insecurity, mass poverty, huge infrastructural deficit, etc.
Economic downturn was in fact a great part of the reason citizens voted out the PDP in favour of the APC. So recent pronouncement by government was only official acknowledgement of what has been with us for so long a time.
It is good to show due concern, but bad to panic as suggestion to sell out public assets seems to demonstrate. There are talks about getting over recession quickly. Desirable as this might be, it should not be the main objective. The goal should be to lay a sound and lasting benefit for all citizens. I do not care much about quick fix, but I seek after laying solid foundation for the meaningful development of our country for the good of all citizen rather than few.
While it has been reassuring to hear the Ministers say that the recession would be over soon, it should however be observed that it is not how short or long that matters but how well the economy has been addressed. In other words, it is not the length that matters but the measures put in place for consistent and sustainable development.
This requires making the right move based on appropriate ideology of development. Each policy has its gestation period, like rice production. This means we must preach patience, and demonstrate commitment to rescue mission and patriotism. We must look beyond current season of recession and take steps to correct past mistakes and solve the problems that hindered progress over time.
As an economic feature, recession understood as a ‘significant decline in economic activities across the country’ is not new. It is normal part of societal experience. There are useful lessons to learn from history. One of those lessons is that recession reflects poor management of the economy, and the approach to its management has not been same across the world.
For instance, while some have concentrated on monetary approach, others have adopted Keynesian method. However there is a common front. Every approach has tended to pump more funds into the economy to stimulate growth, development and recovery.
The crisis at hand is largely due to misgovernance and wrong prioritization over time. Here economic monoculture, squandering of resources, corruption, greed, mistrust, inefficiency, lack of vision, lack of correct ideological orientation, conviction and courage to do the needful, undue influence of external forces, over riding selfish interest of the ruling elite, shortage of skilled hands, etc. have been identified for attention.
Thus solution would be found more in the political and administrative realm than economic sphere. Better resource management, effective implementation, honest dealings, patriotism, fair play, justice, moral conscience, rule of law etc will be called into play.
National development is a far more encompassing activity than Economic.
Prevalence of negative values accounts more for why some industries shifted base to other countries. A leading investor in the aviation industry – Virgin Nigeria – once said that it left Nigeria because of high corruption and vowed never to do business in the country again for same reason.
If this is a pointer to where greater effort should be concentred, it should be stressed that Nigeria has been a victim of perverse value especially since the 1980s when Structural Adjustment Program (SAP) was introduced with privatization as one of its planks. It is time to refine and reset our values of development without which the current effort will slip into recession
The economic atmosphere looks cloudy. It will therefore be helpful to make some clarification at this point. First, National development/government is a continuous business. Barack Obama became president of the U.S. at a time of deep financial crisis and increased rate of unemployment. He quickly responded by bailing out the financial institutions.
Governments are formed to solve problems and move society forward. Second, Nigeria is a big country with a large economy to accommodate both the private and public investors. Both must work together as partners.
Third, in the fight against recession, the state must show able leadership and also carry the private sector along.
Fourth, there is the need to promote citizenry participation to win their support for the economic battle. It is the state’s responsibility to provide employment, reduce poverty, build infrastructure and create enabling environment for businesses to grow and flourish and check profane values such as corruption, insecurity. Efforts should be made to remove all structures that frustrate state and individual participation in economic and social life of the country.
Though government response to the recession today that focuses on agriculture, solid mineral, infrastructure will work if diligently pursued, yet reflationary action came late in the life of the government. Besides, we know better that poor implementation of plan has been the bane of development in Nigeria. While there is the need to have capable hands for implementation, the poor attitude of the Nigerian political elite to nation building would be a great hindering factor.
The Nigerian political elite have a tendency to shirk developmental responsibility. They often gloss over identified problems affecting the development and unity of the country. Thus problems remain unsolved. More often than not, we seem to know what is wrong but lack the skill and courage to implement plans to correct them. For instance, there are factors which hindered the progress of the country over time that deserve due attention today. Some of them include over dependence on imports, excessive love of the dollar,etc.
The 2015 budget captured many of these problems but the move to reflate the economy was late in coming. The political elite were not immediately ready to make due sacrifice in the national interest due to greed and to lay foundations for effective citizenry participation.
While some of the early appointments disappointed popular expectation and discouraged support, there were no populist programmes to motivate people, spark patriotism, deepen faith in governance and ensure effective mass participation in the development process. The attempts to curb unnecessary imports and to control the foreign exchange were stoutly resisted by the Nigerian political and economic elite who cried for the dollar like babies do for candies. They won’t just let the Dollar go for a moment.
The local governments were not spirited with burst of developmental activities to empower the citizens. So far moves to fight and check corruption had been nearly frustrated by lawyers’ deliberate traps set on the road to justice.
Efforts to protect the Naira from falling and to toe an independent course had been deflated by elite’s greed for the Dollar and the intervening influence of some international bodies such as the IMF which preferred devaluation, privatization, removal of subsidy and liberalization of foreign exchange for ideological reasons.
All these constraints heightened our economic woes of today. In other words, we are with recession today because we failed to do the right thing at the right time. And the fear is that prolonged failure to remove these constraints would lead the economy into official state of economic depression .
Based on identified problems before the elections, many Development Experts had expected a quicker response to the challenge of national development than was witnessed. More investment both by the state and individual investors was anticipated. We saw quick action on insecurity, some knocks on corruption but nothing much on unemployment and poverty especially the enhancement of the purchasing power of the consumer or internal debt settlement. A case for reflation was obvious.
The observed economic difficulties of the time informed one of my articles soon after the elections entitled ‘Time To Reflate The Economy…’ ,which among other things called for the reflation of the national economy to enhance the purchasing power of the consumer and stimulate productivity as a result of effective demand.
It would be recalled that by the time of those elections in 2015, economic activities were low and fast receding, the pocket of the average consumer was lean and so could not make effective demand.
Signs of recession were everywhere. To recall: there was little or no much money in circulation outside the circle of the political elite. Purchasing power of the average person was weak.For instance the mechanic workshops were fast drying up because many car owners could not afford to maintain their vehicles, patronage at the restaurants (buka) was low, hunger was in the air, unemployment was soaring high, industrial production extremely low, oil prices falling, scarcity of goods and services widespread, poverty flooded the street, corruption very high, debt profile high with domestic debt frighteningly high- about $43.185bn. In short, everything was negative and indicative of a looming recession.
The situation called for developmental imagination, creative thinking and pragmatic action.
My hunch was that even the mere settlement of domestic debt by the CBN which stood then at about $43.185bn would have had great salutary effect on the economy. It was the time to act directly and not indirectly on the crippling development issues of the season. Mark you, the problem was general shortage of supplies and weak purchasing power due to non-circulation of money in the system. There was high demand for goods and services but items were not available and the money was not in the citizens’ pocket to back up demand.
Earliest sign of the crisis was the fuel scarcity which led to abysmal increase of price of petrol. The season called for more investment and greater production of a variety of goods and services for the vast domestic external markets. It does not call for divestment.
In a word, demand for goods and services was high but low supply and purchasing power of the average person was extremely weak.There was obvious need for huge investment especially in the development of infrastructure and to work hard on the supply side of the economy say through increased productivity and diversification of sources of income especially foreign exchange.
Unfortunately, ideologues waded in to kick against direct action by the state preferring instead a market based approach. The Naira was devalued with zigzag effect on the economy. Just imagine for instance the much good it would have done to our economy today, if we had settled the domestic debt and persuaded those paid to invest in the national interest of promoting employment .., if there had been burst of infrastructural development activities at the federal, state and local government levels since July 2015?
Further imagine the great positive impact it would have made on the economy if we were producing and refining our oil at home to even meet domestic demand, a national airline established and over half of the presidential jets were released for commercial purposes, and there were many more profitable organizations such as the NLNG today? And imagine also the great impact investment in agriculture, air and sea transportation , solid minerals, tourism, sports, music and other cultural activities would have made on by now on the economy especially in reducing unemployment if necessary actions were taken much earlier.
Even taking some populist measures such as the establishment of cottage industries, marketing board to ensure good markets for agricultural produce, encouragement of the formation of cooperatives etc would have made a big difference just as the successful prosecution of some cases of corruption would have sent the right signals across that we are capable of sanitizing the environment for growth , development and prosperity.
For sure, recession would have been short-changed or held in abeyance. We have emphasised these points here because they are largely still the measures needed to revive the economy today from recession.
And it is highly advisable that we them seriously in our efforts to move the nation forward.Sound policy measure matters, and proactive steps and effective management are of essence here. This was why Nigeria did not suffer much from the global financial crisis of 2008 because much earlier, the CBN under Soludo had taken some measure to stabilize the financial sector against some shocks. I shall not be tired of advocating for more state participation in economic activities. It is our greatest source of strength for our development.
The fixing of an economy is a multi- functional activity that should have a place for all that is willing and able to participate. Unfortunately, there has been strong value preference at the policy level that frowns at state participation in economic activities. As the suggestion for the sale of public assets such as the NLNG points, jaded values still influence policy making as has been the case almost since the 1980s when SAP was introduced with privatization as a major plank.
We must change current attitude that sees nothing good in state participation. The state is a better fighter of recession than the market.The idea that development is an exclusive function of either the state or market is alien to reason and ahistorical. Both the state and the market must be made intelligently to work to complement each other.
While we must create an an enabling environment for the private sector to thrive, there is nothing wrong with state investment. For instance if there was no investment in the gas industry, we would not be having something to suggest for sale today. However, pragmatism is of essence – what works best for the country should be adopted.
Dr. Abhuere, FNIM, Oven of Ebelle, is the founder of Centre for ChildCare and Youth Development, Lugbe, Abuja.