Nigerian voters were compelled to choose between clueless leadership and a return to unbridled looting. They opted for the lesser evil of cluelessness. The next four years would determine the viability of that option. Nigeria’s economy is in a very bad shape. Ironically no one in the current administration can boast of a viable plan for getting Nigeria out of its persistent economic despondency.
Nigeria’s economy has never been well managed. Between 2008 and 2014, the economy was growing at the rate of seven per cent annually. Ironically it pushed 114 million Nigerians below poverty line and left infrastructure in decay.
The economy was growing at seven per cent per annum not because of the ingenuity of its managers, but because oil price stood at $105 per barrel and production hovered around two million barrels per day.
Today, plummeting oil price and low production has worsened a bad situation.
Nothing has been really done about restructuring the economy from the shameful dependence on oil.
The standard of living of the average Nigerian is plummeting precipitously. Nigeria now has the highest number of extremely poor people in the world. With 91.3 million people living in extreme poverty and a total of 157 million toiling below poverty line, Nigeria has become something of a giant in deep slumber.
In the last 30 years Nigeria’s four refineries have become a colossal waste. The federal government wastes Nigeria’s lean resources from both ends by spending stupidly on refined petroleum product imports and on mysterious turnaround maintenance (TAM) of refineries that have persistently failed to work.
Now that the mandate of the current administration has been renewed, there are fears that the dogmatic statist posture of the administration might keep the four refineries gulping down hundreds of billions of naira and adding practically nothing in terms of refined petroleum products.
The way out of the quagmire is to sell the refineries and deregulate the downstream sector of the oil industry. The federal government had over the years run away from taking that hard decision because the pump price of petrol has remained as inflammable as petrol itself.
An increase in the pump price of petrol in the closing days of 2011 almost brought down the administration of former President Goodluck Jonathan.
After Jonathan’s precarious brinkmanship, President Muhammadu Buhari ordered phenomenal hike in petrol pump price in 2016 and effectively abolished subsidy. Buhari was riding on his initial high popularity rating. A few months after the epoch-making decision, the Central Bank of Nigeria (CBN) rolled out the flexible exchange rate policy and devalued the naira from N197 to N305 to the dollar.
That single act pushed the open market pump price of petrol perilously close to N200 per litre. By this time Buhari’s popularity rating was plummeting and he could not order another fuel price hike.
Fuel subsidy was smuggled in through the back door. Now NNPC is fleecing Nigeria through dubious petrol consumption figures that exaggerate subsidy bills.
Nigeria is shooting itself on the foot by subsidizing consumption and allowing farmers and manufacturers to face a highly competitive global market with bare hands. Consumption subsidy must end if the economy has to grow at a rate that could provide jobs for the 21 million jobless hands strewn across the country.
Government must reform the downstream sector of the oil industry and the power sector. While the coming on stream in 2020 of the Dangote Refinery in Lagos might effectively end petrol subsidy controversy by halting imports, the power sector requires concerted efforts to end the epileptic power supply that is largely responsible for the lack-luster performance of the economy.
The privatisation of the power sector has failed to end Nigeria’s eternal darkness because the generation and distribution arms of the defunct Power Holding Company of Nigeria (PHCN) were sold to inexperienced and cash-strapped firms.
Besides, the problem of the power sector is a factor of the low tariff imposed on the system by government’s reluctance to allow tariff hike.
Nigerians would only enjoy regular power supply when they are willing to pay the market price of electricity.
Agriculture is another sector that requires drastic reforms to engender self-sufficiency in food and cash crop production. Cotton farming must be mechanized to empower the country’s moribund textile sector and create jobs for hundreds of thousands of idle hands.
The federal government’s rice revolution is commendable even if the production figures are grossly exaggerated.
However, the bad news about the boom in rice production is from the method of farming, ownership structure of most of the seemingly successful rice farms and the source of funding agriculture.
Most of the big rice farms are owned and operated by state governments. Very few in the private sector are involved in big time rice farming.
The danger with government ownership of the rice farms is that government is a very bad business man. We are therefore preparing the ground for a replay of the bureaucratic bottleneck and kleptocracy that crippled Nigeria’s four refineries.
The ultimate is for the private sector to be in charge of the massive food production process.
Nigeria’s food insecurity could only be tackled when the private sector is empowered to embark upon massive mechanised farming. That should be the main target of this administration during its second coming.
