What I Did On May Day " By Kayode Olagesin"

On May Day by a stroke of luck I stumbled on the live transmission of The Platform and I spent the rest of the afternoon watching. It was time well spent. This long post is from the notes I took as I watched and my commentary will focus on the areas where there were synergies in the presentation of the four speakers I listened to.

Peter Obi and Kemi Adeosun both lamented the fact that we didn't save because our story would have been different if we did. Peter Obi hit the nail on the head when he attributed this to a constitutional gap as our constitution specifically states that all monies generated must be shared. This clause was used by the Governors to ensure that all that was saved was shared and mostly wasted or misappropriated across all levels of government. Peter Obi proffered a good solution that we amend our laws to provide for compulsory not discretionary savings. He further suggested that about $30b Governors are already salivating to share should be saved now towards a foreign reserve that can grow to $100b by 2030. This will save our economy from periodic shocks caused by global fluctuations. He made the example of the SWF which was started with $1b and has grown to $2.5b in a few years.

Peter Obi also spoke on the need to invest in education and turn our country into a knowledge economy. He said we need to get at least 20m Nigerian children back to school immediately. Citing the example of Apple whose first quarter performance is bigger than the entire 2017 budget of FGN and the states to highlight what a knowledge economy can do for us.

Roman Oseghale's data driven presentation provided the substantiation to Peter Obi's proposal. He highlighted the importance of Education and Health to improve productivity which drives GDP growth. Africa is blessed with mineral resources but has the poorest per capital income. For instance Africa is the main exporter of Cocoa but accounts for 2% of the global Cocoa market. Netherlands which does not produce has 13% and Europe and Russia 38% so adding value is key. Nigeria was ahead of many Asian countries in terms of GDP up to 1981 but as they increased their spending in education, ours declined. They recognized that the people are the wealth of a nation and invested in human capital investment. Giving example of several countries he showed that whilst Nigeria spent a paltry $48b on education in 44 years with a significant increase in population, these countries expenditure on education grew significantly several folds with an attendant increase in productivity and GDP to show for it.

Whereas the United Nations recommended spend for education is 5% of GDP or 26% of budget, Nigeria has been spending less than 1% of GDP which is abysmally low. So our problem is clear. One interesting data he also shared is that Africa accounts for 1% of patents in America whereas the top 20 economies of the world account for 98%. This buttresses Peter Obi's Apple example earlier. The solution to our problem is clear. We need to develop rapidly towards a knowledge economy. We have the brains for it. The UN recommendation is not new but we don't follow it. Hopefully, we will see an improvement. Investing in our children's education and health is the way to go for a more prosperous Nigeria.

Economy: Past and Present
Kemi Adeosun, Finance Minister, stated that our problem is that we have been acting like an oil economy which is not a productive economy as we even add no value to the crude. So every month, commissioners from across the states gather in Abuja to share money with 90% of expenditure being recurrent and a mere 10% on capital projects. So most of our money was either wasted or stolen whilst we all kept quiet. (Or were in fact active collaborators. The biggest waste of Nigeria's resources was on fuel subsidy which Nigerians endorsed in 2012 leading to an unprecedented rape of our resources - my comment). According to her, everyone is to blame. So going forward, prevention is better than cure. This is one of the reason for the Whistleblower policy with a 5% is cost of recovery which is very good as it also serves as a deterrent to would be looters of our commonwealth.

She highlighted what the government was doing to broaden the tax base to boost revenue. Oil is only 10% of our economy but contributes 90% of revenue whilst our tax to GDP ratio is 6% which is abysmally low. It is a shame that in a country that boasts so many billionaires and millionaires only 214 tax payers pay above tax N20m per annum. So government is looking to expand the tax net. They are also looking to improve Customs revenue generation capacity by buying new container scanners. So technology is being used to block leakages. Also to reduce corruption. 40% of government spending is on salary and technology is being used to detect ghost workers and very soon the first convictions on ghost workers and pension fraud will be recorded. They are are also reducing overheads and one big area of waste was on food for meetings which has now been pegged N1,500 per head.

Government is also working on the debt profile. Government is the biggest borrower and in the short term we must borrow to fund infrastructure even as we try and save. So $87m was paid into the Excess Crude Account and $500m paid into the SWF that has increased to $2.5b today from the initial investment of $1b by the last administration. They have also increased capital expenditure from 10% to 30% and also introduced a number of new incentives or reviewed inherited ones to boost SME growth as they are 50% of our economy. Government is providing additional incentives to investors to support SMEs and also helping to improve entrepreneurial knowledge to boost success rates.

But it is important to note Peter Obi's observation
that government accounts for 80% of businesses that collapse in Nigeria due to non payment for services rendered. He stated that Government does not really create jobs they just provide an environment for the private sector to create jobs and the SME's have a greater ability to create more jobs. Which is why the drive to improve Ease of doing business in Nigeria as highlighted by the Minister is very important. Unfortunately a signal loss presented me from listening to the rest of her presentation but thankfully the Vice President provided more meat to her skeletal presentation.

Light at the end of the tunnel
The Vice President gave a master class presentation and quickly won the crowd over with an emphatic statement that Nigerian Jollof is way better than Ghana and Senegal. He went further to highlight achievements of Nigerians in different fields including comedy where we have many outstanding talents in both the professional and amateur categories. His rendition of "Ajekun Iya ni o je' had the audience in stitches and having gotten their undivided attention, he got down to serious business.

Professor Osibajo highlighted the Economic recovery and growth plan of the government which has four components
1. Stability of micro economic environment - the alignment of fiscal and monetary policies which has been a major challenge. The review of the 41 items restricted from the official forex window so those that are vital to the economy at this time are included. He explained why it was important to support the states to pay salaries at this time, that the intervention is systematic and there were clear preconditions for support. Corruption is systemic in Nigeria and we must have a systemic fight against corruption (Hallelujah! The point many of us have been making since) Corruption is not just stealing money it involves a lot more. It is a major issue to deal with corruption as it is an existential challenge for Nigeria. We either kill it or it kills us. We need to drive industrialization and attract private capital. He highlighted the need for more domestic investment even as investment in Oil and gas is also improving as the issue of cash calls have been resolved. They are also focusing on the ease of doing business which focuses on these areas: Starting, construction approvals, getting power, paying taxes, exporting goods out of Nigeria and going in and out at entry points. The performance is being tracked to ensure improvement. Right now we have just one form to fill for company registration and a name search can be conducted online now with MainOne engaged to provide the Internet bandwidth required.

2. Agric and food security : Under agriculture he reeled out different food and cash crops that Nigeria is a major global key producer and various initiatives to boost production and processing. One of this is the CBN Anchor Borrowers Programme which has provided finance to over 200,000 rural farmers. We have seen a sharp reduction in rice importation from 580,000 tons to about 58 tons as local production is scaled up. We hope to be able to produce all of our own rice by end of 2018 by improving rice seedlings and farming practices. We are also going to be producing fertilisers locally that are tailored to the different type of soils we have in Nigeria. He urged Nigerians to take advantage and get into the agricultural space today giving the example of coconut oil which he said sells for N7.000 per liter compared to petrol that sell at N145 per liter. I am delighted that the gains of previous years is being built upon. As a rural farmer myself, I am waiting for my own loan and inputs.

3. Power : He said the major challenge is that many of the companies don't have the resources to continue to invest in distribution and metering. Government is also owning them and there is still a pricing challenge. He was very frank in stating there must be a cost effective tariff as well as improved liquidity in the value chain for us to begin to see some gains. (Thank you sir for this. I recollect a whole day of debate on this subject with some of my friends where I stated exactly this based on an interview given by Fashola in the Guardian - MBHS '83 Set note. See you at the next meeting) The government is addressing this challenge by offering a payment guarantee backed by the World Bank to address the liquidity challenge. (I am confident that we will see improvement as we address this bottleneck as well as contain restiveness in the Niger Delta through dialogue and not force as the VP is personally driving. So we can inch closer to getting power from the 12,500 of installed generating capacity). They are also bringing private capital into refineries with the Dangote Refinery hopefully coming on stream by 2018. They are also working on an initiative to have co-location of refineries of private with government refineries which I think this is a brilliant move.
4. Transportation : Did not listen to this
5. Social investment programme: Did not listen to this

In all I have absolute confidence that if we continue to focus on the economy and minimize politically induced policies we will gradually come out of recession and position the economy for growth. My grouse was based on our talking of long term solutions of diversification without addressing the short term challenges. We will get there if we remain focused. One thing I observed was that the presentations were mostly forward looking and not playing Lot's wife. It is good. Let us continue to match forward which is why I pray that the President gets better and completes his term. We do not need any political distractions now. As Oshiomole and Ngige and Dogora found out in Abuja during the May Day rally at Eagle square, a hungry man is an angry man. The economy comes first

Kayode Olagesin

May 2, 2017
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