The odds are against devaluation 2

Naira depreciation

Naira depreciation

Our youths seek overseas education mainly for security and predictability of term. Many of them do not return. This brain drain can be curbed – and forex conserved – by urgently refurbishing our higher institutions in faculty, facilities and culture, with the target of transformation to world class within five to 10 years and with an immediate end to cultism, strikes and labour unrest, whatever it takes. Various schemes of overseas collaboration in post-graduate training, particularly, in science and technology disciplines, should be accelerated, to augment the output of competent faculty by local institutions.

Youths are supposed to be the most productive human assets but ours are the most marginalised. Nothing should be spared to equip them with skills and entrepreneurship while in school and through vocational institutes and finishing schools after the National Youth Service. The small business administration schemes of other countries should be adapted to improve the access to funds and to continuous attention by designated consultants and professional bodies, for those going into self-employment. There should be programmes for bringing aspiring and practising entrepreneurs and researchers together, for the promotion and commercialisation of discoveries, inventions and patents.

True prosperity comes from production (wealth creation) and wealth creation from the addition of value to the critical mass of diverse human and natural resources, in the direction of demand and, preferably, comparative advantage, so that they can fetch more money which is the universal measure of value. It should come by the sweat of all the people, at various stations of life, in a mass movement to meet their needs. That is why full employment is an important economic index. Just imagine how strong Nigeria and the Naira would be if we processed crude oil into petrol, diesel and other petrochemical raw materials, enough for our large market – not to talk of export or of adding solid minerals and agricultural processing, among others, to it. Oil revenues, which we play insignificant part in making, can never lead to collective and inclusive prosperity, unless efficiently redirected to diversified wealth creation.

But it is not classical production to import tomato paste for canning here when we have tomatoes wasting all over the country and more can be farmed. It is not classical production for an American company, for example, to import workers and raw materials from the United States which can be found in Nigeria. It is not classical production when Nigerians do not significantly participate and own the means of production and distribution. Here is an opportunity to make the system of production more integrative and sustainable. To start with, importation of raw materials and labour, where there are local substitutes, should be actively abolished.

To attract foreign direct investment in infrastructure (especially, power and railways) crude oil processing (especially, refining and petrochemical plants) and heavy industries, the Executive and the Legislature must collaborate, as in an emergency, to quickly address the multitude of issues with the Ease of Doing Business in Nigeria, which are more important to long-term foreign investors than devaluation. The economy will remain unresponsive without this industrial foundation in which state enterprise has failed.

All the writing on the wall point to an urgent need to reconstruct the country into a true federation, to re-enact the economic success of the regions of the First Republic and to give space to the various peoples of Nigeria desiring it, to avert an implosion. At present, we are “unequally yoked” in unitary federalism and cannot race or compete. We cannot compete externally without first competing internally. And we cannot leap, economically and socially – or in any sphere – without being competitive.

The First Republic was economically successful largely because the regions had substantial fiscal, political and administrative independence as well as the critical mass of resources and, therefore, the empowerment to take their fate in their hands. The leadership of each region was compellingly Spartan and frugal, with a sense of mission and healthy competition to make the best of the region’s assets for the benefit of the people. The regions were feeding the centre and not the reverse that is now the case.

Conversely, the current concentration of political and economic controls on the Federal Government, with atomistic states as mere vassals for revenue sharing (rather than generation) has resulted in a predatory attitude to the Nigerian State and to one another by individuals and groups and, in turn, gross misappropriation of resources, dwindling domestic production and inelastic import-dependency. We are like spoilt children of a polygamous home squabbling over limited food in the kitchen instead of each mother daring the weather to the farm with her children to compete and harvest food in abundance. “The harvest is plentiful but labourers are few”, as if the Lord Jesus Christ was talking about Nigerians.

The more we delay the reconstruction, the less the chances of maximising our economic potential and the worse the social challenges might become with the passage of time. Resources are fairly distributed between the zones. The fear of fiscal autonomy by anyone is largely unfounded.
Profligate election spending is another major harbinger of our woes. Padding and misdirection of budgets are seen as deliberate loopholes for benefactors of ruling parties to recoup their ‘investments’, via ministerial departments and agencies. Offenders must be punished as a deterrent, notwithstanding whose ox is gored. But our debilitating slow judicial process is in need of reform if a satisfactory quantum of result is to be achieved. Government should never operate outside the Rule of Law.
Multi-media ‘Buy-Nigeria’ campaigns, on patriotism, austerity and other economic exigencies of the times, are needed. But our leaders – living at ease in Zion, in a world of their own, like Nero while Rome burns – must turn a new leaf to set the pace for the people to buy into it in a mass movement. In this sense, Senator Ben Murray-Bruce deserves commendation for his sustained and incisive ‘common sense’ appeals and for promoting made-in-Nigeria products among the elite.
One could go on and on about the constraints to our cashflows and the way to go. But, the summary is that we do not have what it takes to ride the tide of free-market devaluation. The political risk is too high. Moreover, free-market devaluation had never paid off in the real sense or the economy would have been diversified by now, unemployment would have declined and the Naira would have been stronger. Let us try a different approach, retake bearing and redirect the economy. Free will has failed and there is need to nudge Nigerians to discard the false sense of prosperity, look inwards and produce.

Government should realise that it is getting perceived as unco-ordinated and shallow in policy. It must quickly deploy measures that complement CBN’s. The 2016 Budget Proposals are too casual, feeble and incompatible. There are no drastic programmes in agriculture, education, healthcare, manufacturing and youth empowerment, etc, that can fastrack domestic production and import substitution. They betray our leaders’ disconnection and insensitivity of to the cashflow challenges, given the scandalous and incongruent allocations to construction of residences and offices, vehicles, foreign travel and other non-essential items with high forex content. Nevertheless, several countries have come out of similar situations as ours stronger without devaluation but with uncommon discipline and tenacity of purpose. We expect quick correction and a pleasant surprise from our leaders.

• Concluded
• Nwosu is a business, training and research consultant.



2 Comments
  • Mark Daniels

    That is the problem I have with Nigeria complicating simple issues. Buy Nigeria campaigns are a waste of time and stupid with a population of mostly poor people they will buy what they can afford and the rest will buy what they feel is the best value for money. When you keep your currency artificially high you subsidise every single import. It is economic suicide. For every gain Buhari makes against curruption he looses 1000 times that in economic mismanagement. If he wanted to run the EFCC he should have let someone else run the country.

    • Mark Daniels

      Sonyou subsidise imports and then tell people to buy Nigerian are you not a fool.

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