Thursday, 9 June 2016

Again on Greece and Nigeria - OSINBAJO BELIEVES NIGERIA IS NOT GOING INTO A RECESSION


I had for years watched with diminishing disbelief the Greek economy tank. That was long before the last major crisis hit the headlines a little over a year ago. In early 2015, I wrote an article titled Greece and Nigeria: Passing off Insolvency as Illiquidity (BusinessDay -http://businessdayonline.com/2015/02/greece-and-nigeria-passing-off-insolvency-as-illiquidity/ ).
On that occasion, I was far less interested in sounding off on the serial missteps by the rulers and citizens of Greece, (compulsive strikers and tax dodgers all, in the fashion of the French), than in drawing urgent attention to the predicament and looming crisis in Nigeria. Was I a prophet or what? No. The signs were all over the place.
I recall that as the US was ramping up its oil and gas production from new and enhanced recovery processes, (of which fracking is just one), our people in the NNPC and Ministries of Finance and National Planning continued with their unsolicited refrain that everything was going to be just fine. The question remained. How? The facts on the ground belied their unwarranted confidence which was soon dashed as US imports from Nigeria continued on the downward trajectory to near zero. The full significance of this development was obviously lost on our government until the global oil price hit rock bottom. And China, the new great knight from the east, also started cutting back too. By then it was too late to do anything in the short run.
As a failed manufacturer, I know for a fact that the current ballyhoo on diversifying the economy, is just talk. It is almost too late. It is hard enough trying to develop within a reasonable time frame and run a successful science and technology based venture with all the finance available, but however with the usual downside of having to compete  with the US, UK, Germany, Japan and finally China, not to mention Brazil and India. As it is, it is well nigh impossible to succeed now with almost no sources of funds, a confused government heckling as opposed to encouraging you, and the chorusline of the EU proposed EPA insisting that our borders be thrown open to all manner of imports.
It is against this background that I find myself aghast at the recent deal announced during the recent federal executive Council meeting by finance minister, Kemi Adeosun, which will see the government get a foreign denominated bond that will “give each state at least a billion naira monthly but only on meeting certain conditions like cleaning their payroll, cutting recurrent expenditure, using Treasure Single Account, among others.” It is strange that these conditionalities were not immediately handed out to Gov Aregbesola and his Osun State a year ago. My reaction then was one of incredulity. These would have applied to any other state government, and there were many, profligate enough to fall into the same situation. The mess has since snowballed to the point where we now have to borrow in dollars to pay salaries in naira. This is not sustainable.
Meanwhile, I find it most disturbing that our Vice  President, Prof Yemi Osinbajo speaking for his boss, shared his  belief with the public that the Nigerian economy cannot get any worse than this. That is a very dangerous assumption. He should please ask those who are more knowledgeable. Italy, Argentina and Brazil, much more advanced and established economies, with relatively strong institutions in place, are examples worthy of serious study.
It is unacceptable that one full year down the road, an administration that had supposedly been planning a rescue mission a full two years before it won the election, could still be dwelling on "the fall of the price of oil" or indeed "Jonathan" as a reason for failing to deliver on its campaign promises. Olusegun Adeniyi has written at length on the immense value and feelgood advantages for the government to quickly determine things that are readily achievable and proceeding to do them. Enough of the whining.
I had restrained myself from wrapping up this commentary when I realised that President Buhari would in a matter of hours address the nation on the occasion of his first anniversary. Giving him the benefit of doubt, I looked forward to a new tack in the way he would be speaking to us. I was sorely disappointed to note that Buhari, in leading his administration, would continue to blame all manner of external factors for our stalled and receeding economy. Blame everybody else except ourselves, meaning the leadership. Hear him:
"On the economic front, all oil dependent countries, Nigeria included, have been struggling since the drop in prices. Many oil rich states have had to take tough decisions similar to what we are doing. The world, Nigeria included has been dealing with the effects of three significant and simultaneous global shocks starting in 2014:
A 70% drop in oil prices. 
Global growth slowdown.
Normalization of monetary policy by the United States federal reserve.

The president's analogy of the farmer reaping three bags as opposed to the previous ten bags of grain, is most pedestrian and not exactly correct. He could and should have elevated his discourse. Where on earth are his speech writers, if he has any?
Quoting Azuka Onwuka, (I think), our president and his team clearly need help.

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