If we discount the sinister equivalence of the emergency powers allegedly sought by the President to remove encumbrances in the challenging path out of the technical recession that threatens to further violate our individual and collective economic well-being to that of the powers wielded by the President under a political declaration of a state of emergency, the Emergency Economic Stabilisation Bill 2016, if it is truly to be introduced to the National Assembly, should be applauded
Our most recent cause for another round of abrasive comments and countermanding ripostes is this innocuously named “Emergency Economic Stabilisation Bill 2016” said to have been in the works by the National Economic Team. I thought the implied substance and purposes of the bill as titled were obvious enough until some fellows created this cacophonous wave of inciting debate over what should have ordinarily excited the nation.
Though a statement issued by the office of the Vice President seems to neuter the plan to forward the bill to the National Assembly, I, however, wished to God that the news ascribed to State house sources by some mainstream media was, indeed, true.
If we discount the sinister equivalence of the emergency powers allegedly sought by the President to remove encumbrances in the challenging path out of the technical recession that threatens to further violate our individual and collective economic well-being to that of the powers wielded by the President under a political declaration of a state of emergency, the Emergency Economic Stabilisation Bill 2016, if it is truly to be introduced to the National Assembly, should be applauded.
Basically speaking, countries declare economic emergency in times of debilitating economic crunch or financial meltdown. Political declaration of a state of emergency usually involves suspension of certain sections of the Constitution including the shutdown of parliament and the emasculation of the powers and privileges of other institutions of state and individuals. Recall the state of emergency declared by ex-President Olusegun Obasanjo in Plateau State in 2004 and Ekiti State in 2006.
The Declaration of economic emergency on the other hand, is activated in active collaboration and partnership with the parliament, to, within a given period, abridge particular laws as they affect the pace and speed of the implementation of economic policies. And thereby fast track process and procedures to achieve targeted resolutions within a certain period.
In 2009, President Barack Obama of the United States of America, in the face of the United States financial sector crises which precipitated a worldwide economic slowdown and desirous of managing the crises through unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts, he approached the U.S., Congress which passed the American Recovery and Reinvestment Act of 2009. This facilitated the adoption of palliative monetary and fiscal policies to lessen the shock to the economy and eventually saved the US and the world from what was then described as the worst recession since the great depression of 1929.
The logic that compels economic emergency is the exaction of exigency, the extra power availed the President by the National Assembly to act beyond the confines of extant laws within a given period to stabilise the economy.
The Nigerian economic situation profiles a heady trilemma; stagnating productive capacity and riling cost push inflation, these two together are what economists fearfully describe as stagflation, no country wants to come near being ascribed that term. The third of the trilemma is the desperate shortage of foreign exchange which is a major reason for all manners of constraints and unpredictability in the economy. These are the monsters that the Buhari’s government needs to confront, the aggregation of the debilitating recession that sits with us like a shadow.
Wonder how do we get out of this recession with a miserly $25 billion foreign reserve in a country that spends average $52 billion a year on importing goods and services from other countries? How do we rack up the desperately needed dollar in our foreign reserve with the brazen assaults on our oil producing assets leading to the reduction of targeted crude oil production benchmark from 2,200 million barrels per day to less than 1,500,000 barrels per day, crude oil being the major contributor (90 per cent) to our foreign exchange earnings?
Even now that the Buhari’s government had spectacularly reworked the historically low ratio in the yearly budget expenditure formula at 30 percent capital expenditure to 70 percent recurrent expenditure, yet, how would the more money, the liquidity that is expected to galvanise productive activities get into the nation’s economic orbit when our procurements laws prescribe a long route to contract procurements and implementation stated at an average of six months?
Now, there’s nothing wrong with our procurements laws as they are, they are control and checking system to curb corruption. But at times like these, when the economy needs urgent dosages of funds at the shortest possible time to provide liquidity; it may be appropriate to trust our President to lead the initiative for the given period.
Experiences in countries across the world have shown that it is a most difficult venture to exit recession; it is like trying to run in mud, held down by all levels of inhibitions. Most countries that had declined into recession have remained in that vortex of economic inertia, recent examples have added Venezuela. God forbid!
Of course, we can afford to wait out the recession by sustaining the status quo but at what cost? Already, there are troubling cries of hunger across the land and stringent calls on government to address the riveting distress in the system very quickly. This is why the option of economic emergency stabilisation is more attractive in our present circumstance.
How many times have we heard in the past about how government officials at different levels vire money meant for a budgetary head to another without recourse to the parliament? This is a breach of the appropriation law, yet it has become routine conducts in official circles, nothing exemplifies impunity than this.
Apparently, the Buhari government would be breaking ranks with historical conduct of managers of the national economy with the Economic Emergency Stabilisation law. Virement is a necessity of budget implementation reality but it has to be done within the ambit of the law. In fact, if the law is properly applied, a legislative unapproved virement is an impeachable offence. With the request by the President, through the Economic Emergency Stabilisation Bill to the National Assembly to empower him to use his discretion to vire budgetary expenditure heads from least needs to national strategic needs, we would be going back to the path of orderliness and sanity.
Now, how does a target objective of the Federal Executive to abridge the procurements laws so as to achieve a maximum four weeks processing of contract award circle translates to dictatorship as being canvassed by some?
Or how does the desire by the President to increase the mobilisation fund for Federal contracts from 15 percent to 50 percent turns him into a tyrant? One can only imagine the impact of these measures on our financial and the larger economic ecosystem. The 50 percent increment in contract mobilisation is a facilitation of liquidity in the banking system; this will help the cost of contract execution in many ways. Rather than approach money deposit banks to borrow money for contract execution at the usual high cost, it is the banks, in this new scenario that would hanker after contractors for deposits. This would incrementally lead to a surfeit of liquidity in the banking system and aggregately reduce the cost of lending. I am confident of an impressive reduction of the Monetary Policy Rate in the first four months of the economic emergency. The MPR determines the rate at which money deposit banks lend money to their customers. This mobilisation fund increase will further drive the creation of jobs in the immediate as contractors mobilise to sites or commence purchases of supply items as the case may be.
Again, I wonder what manner of dictatorship is engendered by the President pulling all the plugs to stabilise the Naira-dollar exchange rate by tapping into a potential treasure trove within the Nigerian fiscal environment that could yield up to $50billion within a year? Yes, it is very possible! The nation’s Economic Team reportedly proposed in the bill that by selling off or leasing our national assets we should be able to raise that princely sum.
Of course, one ready sector to achieve this is the oil sector, the Economic Team must be looking to dispose of Nigeria’s holdings in the Joint Venture Partnership with some upstream oil companies; another oil bid round would yield some more dollar value plus value added public bids for solid mineral fields even as the transparent disposal of telecommunications broadband would help in this regard. Perhaps of higher potential is the sell-off of the huge assets seized from corrupt government officials, especially from those of the recent past administration.
A $50 billion addition to our reserve will certainly provide a cooling effect to the current ill tempered downward drive of the value of the Naira in exchange for the dollar. We need this quantum addition to our national reserve especially in consideration of the urgent need to diversify the economy. Though this is coming more than 40 years late, at the present rate of exchange we will be diversifying at very high cost relative to what we would have achieved between 2011 and 2015. The burden of that cost of diversification will negatively impact the process and speed of diversification except we activate a creative approach to raising more dollars to fund importation of machinery, equipment and raw materials. Seriously, we need this Emergency Economic Stabilisation law!
Still talking about dictatorship related to the law, I can’t fathom the character of dictatorship that seeks to reduce the counterpart funding of the Universal Basic Education fund by State from 50 per cent to 10 per cent to enable States conveniently access the trapped fund. Understandably, so many States are financially constrained, a direct consequence of dwindling distributable federation account fund linked to falling oil price and production incapacitation as a result of the bombing of oil and gas pipelines. The inability of many States government to access the UBE’s intervention fund because of the disincentive of the 50 per cent counterpart funding has stunted the development of education in these States. School pupils and students now attend classes under trees or in morbidly dilapidated classroom blocks.
So far, it is reported that about N52 billion is locked down in the fund. I imagine what the convenient release of the fund will do to the economy of those States. Money for contractors and suppliers, more jobs plus the standardisation of education infrastructure. Good news can’t be better presented than this!
For certain, no dictatorship is implied in the expectations of reducing the turnaround time for registration of businesses by the Corporate Affairs Commission or the licensing of products by the National Agency for Food Administration and Control and the reduction in time period for the issuance of visa to foreign business people. All these aggregate to a refreshing new template of ease of doing business. This will help incentivise a higher traffic of foreign investors into the country.
I strongly believe this is a fast track strategy to getting out of the gloomy recession that threatens to retard our economy, yes; some other arguments insist these emergency powers may open the processes and procedures to abuse and corruption. This is where the trust we have in President Buhari should transcend other sentiments and considerations. This is the time to line up behind the President in the onerous task of leading us out of the looming recession.
I like to submit that even if the Economic Team or the President is not giving this Economic Emergency Stabilisation law serious consideration, it is time they do. It is also time good conscience Nigerians prevail on the President and Economic Team to gift us this law through the National Assembly as sure fire route out of our frightening economic situation.
High Chief Akinsiju is a policy analyst.
