By Adefolarin A. Olamilekan
The history and development of the Nigerian State and its economy has been greatly affected by fundamental factors. And it obvious that we need to understand it in order to proffer soluble packages of intervention, that is relevant, practical and sustainable. For instance, the situation across the developing world, particularly in sub Saharan Africa economies have been marked by significant vulnerabilities in the last two decades, courtesy of price shock and uncertainties in commodity prices, as well as consequent fiscal deficits.
This has compelled most of these sub Saharan African countries in recent times to resort to fiscal stimulus to sustain macroeconomic stability, development and economic growth. Conversely, the condition of the uncertainties and the accumulation of deficits and national debt have impaired the usefulness of fiscal stimuli and palliatives measures. Indeed, this has formed a greater part of the ongoing narrative around the woeful economy indices in Nigeria and the cost push inflations of about 18 per cent, 33.4 % unemployment and accumulated public debt of $32.9 billion today.
However, as the title of this piece quote on the argument and counter argument from Governor Obaseki, Minister of Finance Zainab Ahmed and the Central Bank of Nigeria on the printed N60billion to support FAAC Allocation to state and Federal Government in March, 2021. The response of the Finance Minister to Governor Obaseki assertion that “N60billion was printed to augment the short fall in revenues sharing for the month of March” underpinned the dissection of this piece perspective, most especially from the angle of the obtrusiveness of our economy. She responded thus. “What we distribute at FAAC is revenue that is generated and in fact distribution revenue is public information. We publish revenue generated by FIRS, the customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true,” she said. The import of her a statement is tied to prolonged debate over the state of our revenue generation, even with the recent upward rise of oil price that is the biggest source of our economy stay.
It is interesting at this juncture to say that the hydrocarbon of oil and gas economy which has come to dominate foreign exchange earnings and accounts for much of what is called the federation account money provides the funding for emoluments and overhead costs of the public sector and finances the capital projects that are implemented mainly by contractors. This is the money that is appropriated and expended by the President, Ministers, Federal Agencies and Departments, the National Assembly, Governors, Commissioners, State Assemblies, Local Government Chairmen, and Councilors as well as sundry government contractors (who inflate contracts) consultants and others.
However, in Nigeria there is strong violation of the rules of optimal allocation of resources. Over time the federal, state and local government of Nigeria has been engaged in wasteful spending on projects that has no bearing in the economic development of the country. This mis-appropriation and mis-allocation of the limited resources is responsible for the slow pace of the economy development.
One imperative metric to ponder on is the obtrusive economy situation in the country that relates to cost push inflations prices of household items. Nigerians and traders alike across the country are lamenting the sustained foods price and decline in patronage. The persistent increase in the price of food items continues to hit harder on consumers. For instance, local and foreign rice, tomatoes, pepper, flour, meat, spaghetti, amongst others, recorded significant surges in their prices.
The rising cost of living and deplorable standard of living amongst Nigerians point to the fact of inept government and governance policy failures. And the concern is that things could go ‘deep south’. Although, the government put out various policy of palliative to cushion it effect and other economy challenge. These notwithstanding, contraction in economic activities, resulted in plunging production, reduced capital inflows, and reduced government revenue.
One sad tale to this is the government penchant to borrowing. Off which the Buhari administration in 6 years borrowed via multilateral, development, bilateral and commercial loans (Eurobonds and Diaspora bonds). In a recent statement by the DMO on scorecard on the country’s rising debts situation, state that “from October to December, the public debt profile from N32.2 trillion to N32.9 trillion, showing a moderate rise of N0.7 trillion in the figure.” Consequently, the top-up may have worsened the fiscal imbalance, but the cost of the liability is deeper.
This is scary, disruptive and heart breaking from a nation with abundance of both human and material resources. Meanwhile in countering critics, the government claims, it had no choice, seeing its “oil revenues and others fail to meet up with target and unable to fund Nigeria’s huge infrastructural deficit required to propel economic growth”. In fact many critics and heterodox political economist are not happy about the debt service commitment of about $1.5 billion at the current debt levels.
Arguably, Nigeria could have done better but it seems to have missed it. And this was caused by past and present crop of political leaders that cumulatively and conjointly corrupted the nation and robbed it of sustainable development and well being for citizens. Some of the present crops of political leaders in Nigeria are probably not helping matters.
In moving forward, there are three approaches at solution: One, Nigeria must push towards a citizens centred economic and political system; Two citizens themselves regardless of clan, ethnicity, religion, section, zone or region must rise up to enthrone a leadership that is people centred in economic policies substantially and punishes corruption and crime severely. Three, it clarion call on the government at all level to see reason to be critical on making sure Nigerians get value for money, especially from the FAAC allocation. Poignantly, borrowing should be for sustainable project not for odious necessity.
Adefolarin A. Olamilekan
Political Economist & Development Researcher
Email:adefolarin77@gmail.com
Tel: 08073814436, 0810740787
