Wednesday, February 26, 2014

Why Nigerians are Poor!!! (3)

We have agreed that the evidence is irrefutable that Nigeria’s immense endowments have not benefited the vast majority of its people- approximately 70% of the population is poor; about 30% are unemployed; 40% of the youths have no jobs; 30% of our people remain illiterate; life expectancy is just 52years; and the country exhibits poor human development with HDI of 0.471. I have identified six major reasons for this unhappy phenomenon. First, defective economic structure subdivided into four deficiencies with GDP structure, budget structure, public sector dominance of energy provision- oil and gas, refineries and until recently power, and deficiencies in the structure of the financial sector which renders it incapable or unwilling to lend to MSMEs and support housing and mortgages. Secondly, our prebendal government/political structure which encourages distribution rather than production and undermines rational economic competition, and the associated cost of governance and waste inherent in running an expensive presidential system of government with unwieldy and inefficient federal administration, two houses of the National Assembly, 36 States Governments and 774 Local Governments. Thirdly low industrialization caused by a debilitating deficit in electricity supply, decrepit transport infrastructure, high interest rate and inflation, poor public services including security, water, postal, ports, immigration and customs, a high effective tax burden due to multiplicity of taxes, dues, and charges, low industry incentives, regulatory overkill and a generally poor investment climate. Forth, corruption denies us the infrastructure and services for development and transfers public resources into relatively unproductive private loot. Fifth, gross sub-optimalities in education, health and social systems constrain human capital. Sixth, significant policy and execution failures have translated into inability to leverage our resources and advantages to create a robust, diversified, equitable and prosperous economy and society. So what are the solutions? It is obvious that our critical economic challenge is to diversify our economy away from rents from oil, into a productive economy based on manufacturing, transportation, mining, agriculture and construction, amongst others. Nigeria is well-placed to achieve this with our large labour endowment and markets, natural location as a transportation hub, abundant solid mineral deposits and large, fertile land mass. The required investment in infrastructure and housing if made, guarantee a booming construction sector into the long term. These sectors and activities will produce domestic jobs in large numbers and redress poverty. I believe we also need to resolve the issue of downstream petroleum sector deregulation. It is also evident that we need budgetary reforms to focus government spending on capital expenditure. I indeed advocate an amendment to the Fiscal Responsibility Act to mandate a 60:40 capital/ recurrent ratio within the next two years; and a 70:30 ratio within the next six years! This will require drastic public sector reforms (the Oronsanye Report maybe a useful input) to reduce the size of the public sector. I also support and commend the power sector reforms under the administration’s power sector roadmap and urge completion of NIPP privatization to fully liberate the electricity sector. This must be accompanied by gas sector reforms especially pricing adjustments to make investment in local gas attractive. The other supportive decision which I hope politicians, bureaucrats, and labour will allow government to take is privatisation of all the refineries. The legal and regulatory infrastructure for take-off of solid minerals is already in place- the Mines and Minerals Act 2007 and the institutions created there under. All that is missing and that should now be manifest is the political will, sector stability and global marketing to attract international investments into the sector. Mining, we must recognise, also creates jobs in large numbers. I believe we need legal and constitutional reforms to enthrone fiscal federalism, devolution of power to sub-national entities, increase revenue allocation to States and LGs, and create a truly federal or confederal, competitive and productive economy. There are also policy actions which we have to take- investment climate reforms to improve business and economic competitiveness, focus on developing MSMEs, deepening long term savings through pensions, insurance and sovereign savings, land reform to eliminate constraints in time and cost around land transactions (including a review of the governor’s consent requirement), and actions to reduce inflation, interest rates and business operating costs. I strongly believe we also need a robust competition law and policy regime to prevent monopolies and anti-trust practices which increase prices, prevent economic efficiency and subvert the free enterprise and democratic system!In our current conditions, we require aggressive social policy- it should be clear that the primary role of government is to help the poor and vulnerable. We need public education reforms, investments in public health, and creation of sustainable financing structures for both health and education. Government must also consider the provision of unemployment support. Finally, we must tackle corruption. I prefer structural rather than emotional responses to the malaise- privatisation to reduce the space for public sector corruption; deregulation to minimise official discretion and procurement transparency and freedom of information. But there must also be stronger enforcement. We must re-define the nation’s primary national security imperative as the abolition of corruption, which in any event, is what our constitution stipulates. Our leaders must find the political will to fight corruption. By: Opeyemi Agbaje

Wednesday, February 19, 2014

Why Nigerians are Poor!! (2)

Thus far, we have seen some, though not all reasons accounting for high rates of poverty, unemployment, inequality and social exclusion afflicting our nation. I have often wondered what kind of elite hopes for “peace and security” in a nation in which there are one hundred million people living in poverty? It is highly unlikely, indeed probably impossible for Nigeria to enjoy sustainable peace or law and order until we address the lop-sided economic growth that creates billionaires in units and poverty and destitution in hundreds of millions! Another cause of endemic poverty and desperation in Nigeria is our low industrialization. Economic history suggests that nations (especially those with large populations such as ours) are unlikely to create jobs and a large middle class without industrialization-those sectors that create jobs in significant numbers (manufacturing, mining, modernized agriculture, agro-processing and agro-allied industry, construction) are all dependent on a strong industrial and technology base. There are many reasons why we haven’t been able to create sustainable industrialization with the most notorious been the abject shortfall in electricity supply. Compare Nigeria’s 4,000 MW power supply with Algeria’s 11,000MW; Egypt’s 24,000MW; South Africa’s 40,000MW; the UK’s 80,000MW; Brazil’s 100,000MW; and Germany’s 120,000MW! Nigeria’s Vision 2020 target of 40,000MW is South Africa, our main regional competitor’s current power output. According to government’s power sector road map, Nigeria’s per capita power consumption is 7% of Brazil and 3% of South Africa-while Brazil generates 100,000MW for 201million people and SouthAfrica generates 40,000MW for a third of our population, Nigeria generates 4,000MW for 160million people! There are other factors behind impaired industrialization besides power-poor transport infrastructure (road, rail, ports and air transport); constraints around money, credit and finance (especially high interest rates and high inflation); very weak public services-security, water, postal, ports, immigration, customs etc. all of which in addition to the cost of alternative power generation raise the cost of operations for our businesses and render them globally uncompetitive. Of course every expense devoted to these otherwise unnecessary spending is one taken away from what may have been deployed towards employing one additional worker, and only surviving and successful businesses can employ workers. There are also multiple taxes, charges, rates and dues, costs of regulatory overkill, absence of appropriate incentives for industrial enterprises, other costs associated with surviving a harsh investment climateand the costs of servicing corrupt officials! Corruption has been a particularly destructive force for poverty in Nigeria and other African nations. In our case, the long term trend of rising oil prices since 1998, briefly interrupted in 2008-2009 due to global recession meant that the nation earned N60.9trillion ($380billion) from oil sales from 1999 to the second quarter of 2013. In terms of spending, the federal government expended N35.2trillion ($220billion) over the same period, with the equivalent figures for states and local governments being N25.4trillion ($158.8billion) and N10.5trillion ($65.9billion), thus the governments of Nigeria collectively spent N71.2trillion ($442billion) between 1999 and June 2013-the question is (even after discounting the sub-optimality of prevalent recurrent spending which we have already discussed) whether there is sufficient evidence of this expenditure in terms of infrastructure and services? Let’s turn to how deficiencies in education, health and (lack of) social services have contributed towards impoverishing Nigerians! Our education system places insufficient emphasis on quality, skills and competences(often emphasizing quantity and zero costs ignoring the fact that worthless education may as well be free!); it is weak in science and technology education often mass producing ill-educated or barely literate graduates in arts and humanities; ignores the critical role of economics, management and entrepreneurship education in the context of developing nations; destroys innovation and creativity through outdated teaching methods instead of focusing on fostering the student’s own independent learning and creative thinking; and is insufficiently focused on adult, vocational and technical education. The critical issue in both education and health sectors remain unanswered questions about sustainable financing structures to guarantee both access and quality. And then we have a huge vacuum in social policy in terms of rural under-development, unemployment and disability benefits and care of senior citizens. In Northern Nigeria, the wilful exclusion of millions of young people from modern education and skills is a guarantee of large scale poverty and is now a threat to national security! Finally we have recorded significant policy and implementation failures that have translated to massive poverty in the land-failure to leverage oil and gas resources to create a robust, diversified economy; failure to modernize agriculture; failure to formulate and execute a successful industrial policy; and (deliberate?) neglect of social investments and human capital especially through our treatment of education, health, rural development, urban mass transit and housing. I end this segment as I did the first-objective readers will notice some efforts to redress some of the problems-power sector privatizationpromises to address in the medium and long term our chronic electricity deficit; modest investments in road and aviation infrastructure may be occurring; agriculture reform is likely to improve the outlook for sector modernization; inflation has declined to single digits; and a recently launched Nigerian Industrial Revolution Plan (NIRP) and National Enterprise Development Programme (NEDEP) is an attempt to remedy gaps in industrial policy and MSME development,but big problems remain unaddressed-corruption; education, health and social sector reform; effective policy formulation and execution in the public sector; and huge constraints in infrastructure and public services. By: Opeyemi Agbaje

Wednesday, February 12, 2014

Why Nigerians are Poor! (1)

There can be no controversy about the hypothesis implied in this topic-the Nigerian economy is not working for the vast majority of our people! And most Nigerians are Poor!!! The economy is not working for the poor; the rural dweller; the young and vulnerable; the senior citizens; the unemployed. Research from the strategy, business, economy and policy consultancy company I head, RTC Advisory Services Ltd based on NBS data shows that poverty rose from just 27.2% in 1980 to 46.3% by 1985, just five years later; 60% by 1995 and has progressively risen to 69% in 2010, and 71.5% in 2011! Over the same time period, 1980 to 2012, unemployment rose from just 6.4% to 27.4% in spite of consistent GDP growth rate averaging more than 7.5%; Human Development Index (HDI) has barely risen between 1990 (0.411) and 2012 (0.471); and average life expectancy in spite of our enormous resources remains stuck at 52.3years in 2012 while the equivalent figure in the developed world averages over 70 years. Why is this so and what can be done to ameliorate this situation? First there are four critical problems with the structure of our economy-the dominance of GDP by only three sectors-agriculture, wholesale and retail trade and crude petroleum and natural gas; the dominance of government spending on recurrent expenses of a public service which employs only a small percentage of Nigerians; the dominance of our oil and gas sector (and until recently power) by an inefficient and corrupt public sector; and the structure of our financial sector which excludes Small, Medium and Micro Enterprises from financing and has been unable to provide mortgages and housing for the middle class. By end 2012, the three sectors I referred to above made up 73% of Nigeria’s GDP-agriculture almost 40%; wholesale and retail trade about 20% and crude oil and gas about 13%. Certain problems with the structure of the three-agriculture is sub-modern, dominated by small holders and insufficiently linked with domestic processing, agro-allied and manufacturing; wholesale and retail trade is largely in imported products; and the oil export is of crude, unprocessed oil without a local refining sector and no domestic value-added (meaning no domestic jobs and productivity!) The implication is that the three have severely limited domestic linkages and minimally affect poverty and unemployment!!! In addition, any one conversant with our GDP sectoral growth rates will notice the pattern in which sectors with a potential for huge employment (manufacturing, solid minerals, building and construction, real estate etc.) are either very small in size or have very low growth rates, while sectors like telecommunications which are fast growing do not employ large numbers (though on the positive side with multiple domestic linkages). The structure of government consistently spending between 60-75% of its expenditure on salaries, emoluments, pensions and overheads of about 3 million Nigerians engaged in the public sector at federal, state and local governments including political appointees, is compounded by the fact that the limited sums appropriated for capital projects and social services are subject to rampant corruption which severely diminishes the value received by ordinary Nigerians from government expenditure. This structural deficiency of what government spends its resources on and who are the real beneficiaries thereof, is worsened by another structural problem-the structure of Nigeria’s pseudo-federation with one overwhelmingly large and not surprisingly wasteful and inefficient federal governments; 36 handicapped states; and 774 utterly useless local governments which are now de facto area offices of the handicapped states and therefore doubly-disabled and dysfunctional. Nigeria has moved between independence in 1960 and today from three, later four strong and viable regions to a prebendal system of handouts from a federal government (which in the first place forcefully stole resources from the regions/states and now purports to handout pittances therefrom) to its now dependent states. The consequence is a shift in focus from production and development though competition to distribution and stagnation through prebendalism. The other consequence, as we have seen is the multiplication of recurrent costs of governance as resources which should otherwise have been channeled into areas of public need are expended paying and maintaining civil servants and political office holders. As an illustration, the Nigerian nation budgeted only N7billion for the capital and recurrent costs of maintaining the National Assembly in 1999 when we returned to civil rule. While the number of Senators and Members of the House of Representatives has stayed the same, their annual budget is now around N150billion!!! So far I have identified problems with our economic structure which perpetuate poverty, unemployment, inequality and social exclusion in Nigeria-with the pattern of domestic production (otherwise called GDP), government spending, exclusion of MSMEs from financial sector lending and dominance of oil of gas by the public sector through an un-restructured NNPC. The careful and observant reader will note some positive trends which (in the interest of fair analysis) suggest some awareness (though I will argue yet insufficient emphasis) by policy makers of the problems-agricultural reform is attempting to improve domestic value-added and productivity; the inauguration off the Nigerian Mortgage Refinancing Corporation may improve the outlook for mortgage and housing; power privatisation reduces the stranglehold of the public sector on the critical energy sector (leaving oil and gas as deserving of reforms); some trade reforms (automobiles, cement, rice, wheat etc.) seek to encourage local production vis-à-vis imported consumption. On the other hand the aborted Oronsanye Committee’s and so far failed attempts to reduce recurrent expenditure mean our collective wealth and taxes are spent on only a few. By: Opeyemi Agbaje

Wednesday, February 5, 2014

Strong Delusion

“And for this cause, God shall send them strong delusion, that they should believe a lie”. There is a vast difference between faith and delusion, by literal or linguistic meaning and scriptural implication, even though the concepts may be scientifically proximate being both phenomenon that involve belief and occur in the minds and souls of men. My pocket Webster’s Dictionary defines faith as “belief without evidence, confidence; trust, belief in God, the Bible etc, a specific religion, anything given adherence or credence…allegiance; faithfulness” and delusion as “the act of deluding or the state of being deluded, a false, irrational and persistent belief” (to delude being “to mislead the mind or judgment of; deceive”). According to the Vine’s Concise Dictionary of the Bible, the basic meaning of faith or “pistis” is primarily “firm persuasion” in relation to “faith in the (invisible) God or Christ or things spiritual” as distinct from “faith” in man. The word implies trust, trustworthiness, fidelity and assurance, with its elements being firm conviction of truth; personal surrender; and conduct inspired by such surrender. On the other hand, delude or delusion is defined as “to reason amiss”, wrong opinion and/or error in religion or morals. The meeting point of faith and delusion may thus be that where faith is unfounded, erroneous, false or even contrived, it may be actually delusional! The other point as may be discernible from my initial quote is that God himself may “send them” delusions! When Paul (with Silas and Timothy) wrote the second epistle to the Thessalonians, they started with thanksgiving and prayer for the Thessalonians growing faith and love, and the suffering and persecution they were enduring for the faith. Paul declared that “God is just: He will pay back trouble to those who trouble you and give relief to you who are troubled” and then warned them against some false teachers who had come to deceive the Church with wrong theology concerning the coming of our Lord, Jesus Christ, before providing an explanation for the conduct of the deceiving preachers and those they were successfully deceiving-because they refused to love the truth, “God sends them a powerful delusion so that they will believe the lie”!!! I suspect that many today live in delusion (and captivity and oppression) rather than faith! I may of course add the clarification that I refer only to faith in the invisible God rather than in men, mammon or religion!!! In Biblical times, when God’s children had serious reproach in their lives, they put on sackcloth and wailed in the temple before God, and he always answered them. Today many utter empty words-“it is well”, “God is good”, “I am blessed” even as it is evident that they are not confronting their real issues before the true God. A brother or sister may be afflicted with poverty and lack, but instead of asking God for a fundamental intervention in his condition and changing his behavior, he develops a theology of poverty (just as prosperity is not necessarily a sign of God’s blessings, poverty is not necessarily evidence of righteousness!) and engages in “holy” begging. A sister is unmarried and over 40-there is something wrong-spiritually and with her character and behavior, but instead of making required adjustments, she is the loudest in Church and an evangelist on social media. Many are denied the fruit of the womb and instead of following the examples of valiant and faithful women like Hannah, Elisabeth, Sarah, Rebekah, Rachel, etc whom God answered and removed their reproach, they invent an alternative theology and rationalize their oppression and denial. Many’s dreams are frustrated and they attend Churches wondering when their problems will be resolved, but instead their problems are multiplied, while their Pastors boast to them daily of the blessings of God in their own lives. And the sorrowful child of God waits and waits… Someone told me of a conversation that was a classic example of gross delusion, three “brothers” engaged in “holy” gossip about someone whose marriage they alleged was in trouble. Knowing the three, I wondered about their locus standi-one in his second marriage after divorce; another’s marriage was childless after over two decades, a medical case of confirmed impotence and depression; the third also in a second marriage, after widowhood, and in the habit of boasting how God took away his deceased first wife with his permission!!! The three regularly speak excellent “Christianese” and continue in their delusions! God’s truth is evident and clear in the scriptures-when people refuse to believe those simple, unchanging truths, God allows them to believe in lies! According to Prophet Isaiah, God says “Just as they have chosen their own ways …so will I choose their delusions, and bring their fears on them; Because, when I called, no one answered”. There are examples concerning idolatry and homosexuality-Paul wrote to the Romans disparaging those who refused to glorify God instead worshipping images of men, birds, animals and reptiles “Wherefore God also gave them up to uncleanness” and allowed them to worship and serve “the creature rather than the Creator”; and those who “God gave them up unto vile affections” whereupon men lusted after men, and women after women! For those of us who are neither idolaters nor homosexuals, we may of course note that down the passage, other categories of reprobation were mentioned-wickedness, evil, greed, depravity, envy, murder, strife, deceit, malice, gossips, slanderers, God-haters, insolent, arrogant, boastful, inventors of evil things, disobedient to parents, senseless, faithless, heartless, ruthless…may God have mercy on us all!!!

Tuesday, February 4, 2014

Divine Healing

I have usually written on faith and spirituality around Christmas and Easter (and other times) but the last two Wednesdays of 2013 fell on Christmas and New Year days, public holidays on which this newspaper does not publish. This piece was deferred from then. From the earliest of times, God had proclaimed himself as healer-“…for I am the LORD that healeth thee”; David sang in in the Psalms of a God “Who forgiveth all thine iniquities; who healeth all thy diseases”; and Prophet Isaiah wrote “Moreover the light of the moon shall be as the light of the sun, and the light of the sun shall be sevenfold, as the light of seven days, in the day that the LORD bindeth up the breach of his people, and healeth the stroke of their wound”. When Jehovah sent Isaiah to inform Hezekiah to set his house in order in preparation for death, when he prayed and wept before the Lord, God healed him and added 15 years to his life. God closed up all the wombs of the house of Abimelech, because of Sarah Abraham’s wife, but when Abraham prayed, God healed Abimelech, and his wife, and his maidservants; and they bare children. Jeremiah the Old Testament Prophet acknowledged God’s healing power when he wrote “Heal me, Oh Lord, and I shall be healed; save me, and I shall be saved; for thou art my praise” One of the earliest descriptions of Jesus Christ’s ministry was one of teaching, preaching and healing-“And Jesus went about all Galilee, teaching in their synagogues, preaching the gospel of the kingdom, and healing all manner of sickness and all manner of disease among the people. And his fame went throughout all Syria: and they brought unto him all sick people that were taken with divers diseases and torments, and those which were possessed with devils, and those which were lunatic, and those that had the palsy; and he healed them.” At this time, Jesus had only called four out of the twelve disciples. He then called another four and resumed his healing mission-“And he went about all Galilee, teaching in their synagogues and preaching the good news (Gospel) of the kingdom, and healing every disease and every weakness and infirmity among the people” So he healed the leper; the Centurion’s servant; Peter’s mother-in-law; the man with palsy (paralytic); the ruler’s daughter, the sick multitude; the woman with the issue of blood; the daughter of the Canaanite woman; the two blind men; and many others recorded and unrecorded. Why was healing so important to the Trinity? Because “Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth” for while evil (which Jesus characterized as thieves) come to steal, kill and destroy, he seeks to restore and heal-“The thief cometh not, but for to steal, and to kill, and to destroy: I am come that they might have life, and that they might have it more abundantly”. The New Webster’s Dictionary of the English Language defines “life” as “the state of an organism characterized by certain processes or abilities that include metabolism, growth, reproduction and response”-the implication being that where these processes and abilities are lacking or constrained as tends to happen in a state of ill-health, life is circumscribed! The same dictionary links “abundance” with “richness, plenty” and “abundant” with “plentiful, copious”-evidently it is not likely that someone in poor health can have abundant life in the sense in which God and Jesus Christ intends that we should. And so when Jesus saw people suffering ill-health and therefore lacking the abundant life God wishes for his children, he had compassion on them and healed them. It was that compassion that drove Christ’s healing ministry. The scriptures confirm in numerous instances how Jesus Christ’s healing was motivated by compassion-“And Jesus went forth, and saw a great multitude, and was moved with compassion toward them, and he healed their sick…” (Mathew 14:14); Jesus himself proclaimed “…I have compassion on the multitude” (Mathew 15: 32); and when he encountered two blind men in Mathew 20: 29-34, the Bible records that “So Jesus had compassion on them, and touched their eyes: and immediately their eyes received sight, and they followed him…” Apart from the compassion which Jesus had for the sick and vulnerable (today’s Church seems to have stronger compassion for the rich, strong and powerful!), there was usually another element often present anytime Jesus healed, this time in the recipient of healing-faith. So the leper declared “Lord, if thou wilt, thou canst make me clean”; the Centurion asked Jesus to “speak the word only, and my servant shall be healed”; in relation to the healing of the paralytic, “…and Jesus seeing their faith, said unto the sick of the palsy; son be of good cheer”; the ruler who sought healing for his daughter declared “my daughter is even now dead: but come and lay thy hand upon her, and she shall live”; the woman with the issue of blood said, “If I may but touch his garment, I shall be whole”; and speaking to the Canaanite woman, Jesus himself proclaimed “…O woman, great is thy faith: be it unto thee even as thou wilt. And her daughter was made whole from that very hour” Compassion seems often lacking in conventional Nigerian healthcare-when doctors proceed seemingly whimsically on strike; when hospitals refuse treatment to accident or gunshot victims without police reports; or when the sick (and dying) are turned away, for lack of money.