Nigerian economy: Who is in charge?

Hello, hello, is the President around?

Yes, for now, but he is being prepared for the United States.

Which plane will he use?

Oh! The new plane. The latest.

Do you mean the Tokunbo plane?

Yes. The grade 1 Tokunbo.

Toks is Toks. Which one is grade 1? Nigeria is now a full-fledged Tokunbo country; since the Presidency can buy Tokunbo, the President prefers to fly a Tokunbo plane to ‘tear rubber’. Ok. ol boy, are they planning to sell some of the old planes?

I’m not sure. Why should we?

So, we will be spending money to maintain all those planes, including the latest one? Ha!

We have the money. What’s your problem?

Are they using Dangote fuel or does the Nigerian National Petroleum Company Ltd import the aviation fuel being used for the Tokunbo plane?

Of course, NNPCL, we don’t believe in Dangote.

Ya! Buying from Dangote won’t involve a transfer of forex to various nostro accounts.

Is that your business? Excuse me, my attention is required in the office.

Dire au revoir! I wish the President a safe journey.

Don’t accuse me of eavesdropping but that is a conversation I heard between two Nigerians, one in the corridors of power and the other aspiring to be there without success because of his stance on government policies.

Do you wonder why the President is always on the road? Check his predecessors. They were always on the road too, courtesy of the civil servants in the protocol section who make their money through estacode. That is one of the ways they fritter our foreign reserves. Whenever the foreign reserves increase, it is shared between debt payment and travels. When the Central Bank of Nigeria Governor, and the Minister of Finance and Coordinating Minister of the Economy were jubilating over marginal growth in GDP or the revenue therefrom after many quarters of slump, I knew it was announced to make us hopeful that the tomorrow we are expecting is around the corner; the money was already spent.

The minister did not tell us that we still have one of the highest inflation or cost of living and debts in the world. We have the highest lending rates that kill small, medium and big businesses, one of the highest unemployment levels in the world, and one of the largest bureaucracies in the world gulping a large chunk of the annual budget. The economy has moved from number one to number four in Africa within a short period of three years. Nigeria remains in the pit of poverty in the world, though its leaders are living in supposed affluence. False life!

At the just concluded Annual Conference of the Nigerian Economic Society in Abuja, a participant listening to the comments by erudite economists at one of the plenary sessions on the opening day predicted that he expected the various newspaper headlines to scream “Nigerian Economists are Angry.” I am not sure I saw such a headline. There were more important economic events or activities nationally than to carry news about the comments of economists on the economy.

In 2019, Godwin Emefiele, he needs no introduction, told the members of the economic society after the conferment of the Fellowship of the society on him, that they should carry on with their theorising while they, the government functionaries, know what to do as the practical people. We have seen the results of practical without theoretical foundation. More appropriately, we live in the era of political arrogance where political expediency always overrides sound economic judgment. It is not true that the Nigerian economy defies economic solutions but that the policies were hardly derived directly from an economic foundation.

The President often says, “I feel your pains.” Does he? If he does, he would not be imposing more pain. The way the economy is run, and the actions of the President and his team make me feel that “I feel your pains” was an incomplete statement, and therefore hastened to add “you ain’t seen anything yet.” That is what we are experiencing now.

Over the last 15 months, the Nigerian economy has witnessed more internal economic shocks than external resulting in serious macroeconomic instability which created problems for the private sector planning and operations. The policies promoting the instability revolve around the initial twin problems of subsidy removal and foreign exchange market determination. Both directly caused massive currency depreciation and running inflation, but indirectly caused a fall in production and consumption, reduction in output, rising unemployment, and ultimately the entrenchment of poverty trap for a greater proportion of Nigerians.

The recent happenings in the economic policy and implementation give one the impression that some people are lord unto themselves. We don’t know in whose hand the Nigerian economy is. Is it the market, the NNPC Ltd, the Vice President who technically is in charge of the economy, or the President who is the overall boss politically and economically? The oil sector controls the economy. Any improvement in production and income in the oil sector translates into a significant improvement in the whole economy. The NNPC Ltd management seems to realise this importance and has been using the power to the detriment of the Nigerian polity.

The NNPC seems to have taken control of the economy and for worse. The inefficiency of the company is very glaring. For a long time it was unable to produce or mobilise enough crude oil to meet the OPEC quota; neither has it been able to make one of the refineries work to produce fuel for domestic use and income generation. Fuel shortage is now a predictable occurrence, and the public must suffer for the inefficiency by paying more and regularly sleeping at fuel stations.

NNPC Ltd has been creating a blockade for domestic oil businesses to produce fuel for domestic supply just as it tried to monopolise supply by being the only importer of refined fuel. The management, particularly the head, has become so powerful that he can take the whole country by the jugular vein. The NNPC, which we are told is a private company, has turned itself into the regulatory authority for the oil sector. The Minister of Petroleum (the President) and the Minister of State for Petroleum are operating under the NNPC Ltd Managing Director!

The Dangote refinery, a private company, has to take directives from the NNPC, another private company. What a messy affair! The company must determine the price of petrol, and possibly gas, in the market, irrespective of the cost of production. The Dangote price cannot be as high as announced by the NNPC because the issues of insurance, shipping, landing cost, exchange rates, et cetera, which go into pricing with imported fuel, are not part of the cost of domestic production. But the NNPC agenda of using price to destabilise the economy seems to be in tandem with that of the government which believes in making revenue from taxes and levies, rather than improved production and sales. That is why the government does not see what is wrong with the company’s current policy. The NNPC was accusing Dangote of monopolistic tendencies but now wearing the garb of a monopolist.

The #EndBadGovernance protest was based on the consequences of bad monetary and fiscal policies introduced by the government since its inauguration in 2023. The cost and availability of power were major factors that have run down many micro, small and medium businesses causing a fall in productive capacity even in big industries; a complete shutdown of nascent businesses and rising unemployment with concomitant poverty and hardship. The government, through NNPC, is now unleashing a new wave of inflationary pressure after celebrating one month or a quarter of fall in food prices!

Indonesia was, for a short while, in the same problem we have. What did the government do? It developed a national economic plan for ordered development. Today, it is described as “a market-based economy in which the government plays a significant role, including administering prices for some goods such as fuel, rice and electricity.” It is a mixed economy “with dirigiste characteristics, and one of the emerging market economies in the world and the largest in South-East Asia.”  The country knows the major prices it should manage to micro-manage other prices and maintain price stability which is good for economic growth and development. Let the government give its governance some human face and avoid regular protests. The President and his team must be in charge of the economy, not NNPC Ltd or the World Bank/IMF.