Look Beyond G7, Foreign Aid, Experts Tell Buhari
DESPITE inheriting debts running into billions of naira and fall in revenue from oil, the President Muhammadu Buhari-led administration may still be able to garner funds for the business of governance, if the advice of experts is implemented.
Shortly before the new government was inaugurated, the then Vice President-elect Prof. Yemi Osinbajo, had raised an alarm saying the incoming administration would inherit foreign and domestic debts amounting to a staggering $60bn.
“We are concerned that our economy is currently in perhaps its worst moment in history. Local and international debt stands at $60 billion. Our debt-servicing bill for 2015 is N953.6 billion, about 21 per cent of our budget. On account of severely dwindled resources, over two-thirds of the states in Nigeria owe salaries. Federal institutions are not in much better shape. Today, the nation borrows to fund recurrent expenditure,” Osinbajo had lamented.
The first thing to do is reduce leakages, said Professor of Political Economy, Pat Utomi, in an interview with The Guardian.
“They (leakages) are so huge that everywhere you look, Nigeria is a basket, leaking money everywhere. Sometimes, we call it corruption or bureaucratic failure. If you can just block the leakages, you will immediately save millions. Then cost of governance: so many people being paid for doing nothing. Everybody wants to have 30 special assistants, and all sorts. We need to make sure that we use people productively; we need to create jobs, but not jobs where we do nothing in the name of politics,” said Utomi.
Advocating trimming of cost of governance without compromising effectiveness, Utomi said: “We need to stop one man from having 10 cars, because he is called a public official. We need to prevent people from running around in all these motorcades. The President of South Africa goes out with just two cars – the one he sits in with one security aide, and another car in front of him. In Nigeria, it has to be 50 cars. Anytime the British Prime Minister is going out of the country, he goes to charter British Airways aircraft. Nigeria’s presidential fleet is bigger than most Nigerian airlines.”
Traditional methods of financing would not suffice, said Utomi who maintained that the gap to be bridged in order to get the economy out of the woods is huge. Accordingly, he called for a revisit of the Nigeria Integrated Infrastructure Master Plan (NIIMP).
He said: “We need to revisit the plan and find partners, who could work with us, using several models of public private partnership. We need private capital from outside of our shores to help develop these. It could be on bilateral basis. It could be the Chinese, Koreans, Japanese or Australian banks, which are particularly good at infrastructure finance.
“There is need to finance certain infrastructure on a long-term arrangement. Look at Ethiopia. If you’ve been there, lately, you will see the amazing turn around of infrastructure, in terms of deals that they have done with the Chinese. So, we must find those kinds of creative finance methods to bridge the financing gap in the country, generally. What we need is to show that our country has come of age; in terms of respecting property rights and good legal framework for investors to know their investments are guaranteed.”
Economist and Associate Professor at the University of Lagos, Dr. Femi Shuaib is of the view that riding on the wings of people’s expectations and willingness to make sacrifices for change, the new government could set in motion deft policies that would beef up its coffers.
Shuaib said: “I think there is something good for the current government, if wrong steps are not taken from the beginning. People believe so much in it, and are ready to make sacrifices. Two or three weeks before the inauguration, when we were buying fuel at N800 per litre, we didn’t see demonstrations anywhere. People have hoped that this government will make a change. That is a big capital; an asset that the present government should leverage on. We are going through austerity measure, and things have to go down. If people believe their leader is going through the same thing, they will endure more.
“The current government must ensure that the systems and institutions are working. If for instance, I pay tax, and I know the tax I paid will not be used to buy my father’s property, but will rather be used to develop infrastructure for my family, I will continue to pay.
“What I’m saying is that the current government has to work on its integrity so as to tackle institutional failure. I always say corruption is not the cause of anything; it is a symptom. It is like you have headache. If you don’t cure malaria, the headache won’t go. If everybody knows the judiciary will work very well, the police too will do their job very well, and the law will be enforced. Nobody will ask or take a bribe. Automatically, corruption will end.
“We don’t need laws for corruption; we just need to make the laws, so that corruption finds its way out of the system. These days, the police are friendlier, even when they want to ask you for your licence, unlike before. They just realised that the tone from the top has changed to civility and democratic system. The current government has to ensure that the system works and the institutions are made to be institutions; I mean the rule of law enforcement. They also have to lead by example.
“Government has to look for other sources of finance. It has to reduce its expenditure, especially, the recurrent ones. One of the things government can do is match expectation with revenue. If the government says, ‘pay us this tax, and we will do this’, and the people see that it is done, that will build confidence and they will be ready to pay another day.
“Government also has to block loopholes in revenue generation. And then, all these effort of settling people just to win political scores should be discontinued to allow the rule of law reign. When everybody knows they have to play by the rules, they will adjust gradually.”
On whether fuel subsidy should be scrapped, Shuaib said: “If you listen to Buhari, when a cable network interviewed him, he argued that when he was there before, they hardly imported fuel. All they did was swap – also called Counter Trade. They ask a refinery to refine crude oil and the refinery was paid in crude oil equivalent of the required payment. In that case, you don’t need to pay subsidy again. Those are the mechanisms of reducing wastage and corruption. We can still survive if we can ensure accountability and transparency in our system. The swap system will relieve the government of paying someone for work that has not been done.”
“Existing instruments can still be strengthened to get more. Look at the subsidy scandal; if they can monitor that very well, and ensure that we get all we have from fuel, automatically, even at $40 per barrel, we can sufficiently finance our budget. If you look at the report on NNPC that was published, you can see how the mess was done. If you sum all those money together, it is more than the national budget in a year. I think the problem is basically that of institutions. They should be strengthened,” Shuaib added.
Mr. Yunusa Ya’u, the Executive Director of the Centre for Information Technology and Development (CITAD), explained: “More than 70 per cent of the budget goes to servicing government at various levels,” stressing “We need to cut down on this cost by reducing the number of political appointees and slashing the salaries and emoluments of the presidency, legislature, governors and other political appointees.
He said: “Less than 30 per cent goes to capital budget in actual expenditure. This in itself is not good. Government must reverse this in favour of capital budget. But even the little that gets appropriated for capital projects, more than 90 per cent of it is siphoned into private pockets through corrupt practices and deals. This is the reason why there is no decent infrastructure in every sector of the country; ending corruption will, therefore, release huge resource for the financing development projects. Add to this the fact that in the last couple of years there has been massive corruption on a scale never known before. Government can get back substantial amounts of these looted funds by launching a bring back our money campaign, by diligently investigating and prosecuting all those found to have corruptly enriched themselves. That must be a front burner of the corruption agenda of the regime.
“Thirdly, the government needs to diversify the economy. You cannot run a modern economy on the basis of only extractives. There are many things that it can focus on in this direction. For example, it can initiate a massive outsourcing programme. The country has the potential to be the desired destination of global outsourcing and we know that the market in trillions is huge. India’s economy is largely fuelled by outsource and software exports. Nigeria can do the same. We can also turn the brain drain through reversal into the foundation of competitive education and health sectors, which will allow us to leverage our endowment and export education and health services, tapping into the framework of the General Agreement on Trade in Services (GATS).”