Last week, I wrote on the Â three problems that are immediately emerging following the continued weakness in oil prices. Weak government revenue, weak trade balance and inflation will be here to stay for a while if oil price does not improve very quickly. Because these are symptoms of macroeconomic instability, with severe implications for investment and growth, I encouraged government to go after the World Bank for loans if the low oil price regime persists..
But whether the Federal Government decides to approach the World Bank for a loan or not, there is keen interest in the way that policy measures will be conducted this year to navigate what is generally considered a potentially precarious situation. In the context of the programmes that the president has indicated he wants to pursue, there is no doubt that he may begin to think he has chosen the wrong time to notch up his performance.
Indeed, I have read a few articles that have responded to the Yar’ adua’s New Year message that promises a reinvigoration of his presidency. The writers reached hopeful conclusions. Based on the poor performance of the president and his team in the last 18 months, it was generally agreed that it will be beneficial for Nigerians if he was able to improve on his performance and that of his team for the remainder of the two years of his administration.Â
I think so too, but I am very doubtful if much can be achieved for the remainder of the President’s term. In the last 18 months, key mistakes have been made, and the president will be focused and preoccupied with salvaging the Nigerian economy from uncertain oil price prospects this year. The goal remains the pursuit of investment and growth. And the secondary goal remains sustainable high investment and growth.
This goal has been affected in the last 18 months by lack of momentum. The momentum that the economy gathered between 2004 and 2007 has been lost. The momentum was lost to the presidentâ€™s indecisiveness and hesitancy. While it is debatable whether the president now chooses to be different, it is not debatable that the circumstances are now different, and the Nigerian economy is facing an economic problem of huge proportions not witnessed in a decade.
Perhaps due to lack of preparation or that the president needs to be thoroughly convinced on reforms (and I am tilted to the latter), there was a paucity of understanding of the present requirements of the Nigerian economy, at least from a macroeconomic perspective. There is an inadequate understanding of the delay in doing those things that are generally agreed needed to be done.
Now, economic transformation has become more complicated than it was last year. The preoccupation last year was how fast we could swim. The preoccupation now is how we can prevent drowning. In this case, the economic decisions made in 2009 are the most critical of any this decade. The decisions we make this year will be as important as the ones made in 1980. Then, it is arguable that they got most things wrong, but it is also arguable that they got it wrong because they waited. While we have waited for declining economic fortune to take some key decisions, it is my hope that we have not waited too long.
My preferred set of economic decisions will broadly be like the following. That in 2009, come rain or shine, the government goes ahead with the planned measures for improving the electricity generation and distribution in the country. Of course, there is no guarantee that spending billions of US dollars will do it, so in essence, come rain or shine, government must deliver on power. Also in 2009, the government should be able to push through the reforms of the Nigerian National Petroleum Company (NNPC). The evidence of this will be that NNPC becomes a separate and independent energy company. The icing on the cake will be the dual listing of the company on the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE). If you are wondering why LSE, ask Transcorp shareholders.
These are already public knowledge, but it is extremely doubtful whether the president can deliver the reforms needed in the petroleum sector. Perhaps if the government thinks of the fact that about five energy companies in the UK made profit averaging $6 billion US dollars from sources imported from Nigeria and other energy export countries, it means we have the right and should expect that energy companies here have the potential to make such profits. But such profits cannot come from the way NNPC does things.”
Indeed, sustainable investment and growth cannot come from tweaks here and there. The requirements are very fundamental, which is the reason I sincerely believe the president cannot deliver even if he starts another term today. To deliver, you have to ask questions about the relevance of the Ministries of Communication, Information, aviation, women affairs and police affairs. Economic growth and development are not rocket science, but in Nigeria, we have consistently failed to learn how others did it. In the coming months, recent statements that are made in hush hush tones may become very loud. Perhaps we made mistakes in 2007, and we are beginning to wonder if another candidate is willing and ready in 2011. At least, Ghana has just proved that we have to take our destiny in our hands.