The 2015 elections are barely weeks away and yet, not even close followers of events in the political space can satisfactorily articulate distinctive differences in the ideology of the two major political parties. Instead, Nigerians have been fêted to a reality edition of an otherwise Nollywood dramatisation of a “rofo rofo fight” between two wives in a polygamous setting. Ironically, the protagonists expect the favoured husband to make the louder and less civil combatant his favourite! However, since both wives also carry the same excess baggage of an uncomplimentary heritage, the choice of a favourite wife, who would judiciously manage the family resources for the next four years, for the greater good, has become a monumental challenge for the poor electorate.
Evidently, judicious management of resources positively transforms those nations where adopted economic and political systems induce competitive entrepreneurial spirit and also encourage self-reliance. For example, the imposition of a “unitary federalism”, has obviously failed to serve as an engine of inclusive economic growth. Instructively, despite the lean resources available before the advent of dictatorship in 1966, the strident economic progress and keenly competitive enterprise of existing regional governments have clearly become unachievable despite the huge leap in revenue under the present arrangement of “unitary federalism”.
Our stunted federalism will ultimately sink the motley patched ship of state to bring untold anguish to millions of our countrymen. Nonetheless, any movement towards political equity with federating states would clearly reduce the fatal attraction to control the resource rich centre and will ultimately enthrone an enduring political structure that would bring out the best in us, as in the glorious years of regional autonomy. However, such a positive transformation will not serve the interest of the current political class who derive stupendous benefits from the skewed prevailing social contract.
Furthermore, the 36/7-state political structure is clearly a great disservice to Nigerians. This misguided contraption has supported incredible duplication of functions and wastage of scarce resources, such that there is a need to increasingly borrow to supplement basic consumption expenses, that now account for over 80 per cent of total projected federal spending in 2015.
Regrettably, none of the major parties is in any hurry to tell us how they intend to redress expenditure in favour of infrastructure and human capacity building, and no one is demanding to know those specific areas which would suffer revenue cuts from such fiscal discipline. Sadly, in spite of over 100 million Nigerians living in abject poverty, the basic salary of our lawmakers is reported to be the highest worldwide and over 100 times our national minimum wage. Nonetheless, politicians of all hues whether in the PDP or the APC will certainly reject any attempt to realign their gross emoluments with our austere realities, even if such alignment will provide economic succour to those impoverished electorate who voted them into office.
Furthermore, the accumulated debts politicians incurred during the extended campaign trail have to be repaid, with a handsome profit, while successful political officeholders have barely four years to enrich themselves for life. Neither the ruling nor the main opposition party probably has a clear grasp of how an economy works. Consequently, they do not care much about the critical significance of the impact of excessive naira supply in an economy. Indeed, with the untamed systemic bloated disequilibrium in money supply, any hope or talk of industrial growth, increasing employment opportunities and consumer demand, reduced debt burden, fuel subsidy abolition and new refineries or indeed any promise to diversify the economy would remain just hot air, as already faithfully demonstrated by serial failed attempts by successive administrations to bring about these socially and economically supportive outcomes.
Invariably, the success or failure of any economy clearly rests on the best practice management of money supply, such that inflation would remain below three per cent to protect mass social welfare and sustain consumer demand which drives industrial growth. Similarly, discipline in the management of naira surplus will modulate interest rates in line with the aspirations of an economy, but, clearly no economy can achieve distinctive growth or economic diversification if, in addition to the burden of oppressive energy costs, industrialists, commercialists and other stakeholders in the small and medium enterprise subsector have to also borrow at over 20 per cent to fund their operations.
Consequently, the APC and the PDP should educate the electorate on how, in the face of, the challenge of excess money supply, they would bring down inflation to below three per cent or how, they expect interest rates to fall below three per cent across the board to liberalise cheap funding (as opposed to selective preferential sectoral “wavers”) so serious business people can increase production and create more jobs.
It is foolhardy to continue to accumulate national debt in the belief that the current debt to the GDP ratio is within tolerable limits. Inexplicably, the high cost of funds instigated by the Central Bank of Nigeria’s 13 per cent policy rate (in place of less than two per cent in successful economies) makes it inevitable that government’s domestic borrowings will also attract abnormally high double digit interest rates, which are clearly inappropriate for such sovereign risk free loans.
Nigeria’s total domestic debt is currently reported to be about $40bn (excluding over $20bn AMCON debt), while external debt is about $10bn. Indeed, the PDP or the APC leaders may not actually understand how these escalating debts evolved; nonetheless, future generations will continue to bear the burden of debt service with over 20 per cent of current annual budget (about $5bn) for decades to come. Conversely, if government drastically reduces the cost of borrowing and the rate of debt accumulation, this would most likely work against the interest of the cabal and oligarchs that currently control the commanding heights of our economy as well as international portfolio investors. Both the PDP and the APC certainly enjoy support from the beneficiaries of government profligacy and financial recklessness and it may be self-destructive, therefore, to promote any transformation that would ultimately jeopardise the interest of major financiers of any ruling party.
Similarly, political party finances are handsomely supplemented from the substantial fiscal leakages that fund corruption from the deliberate mismanagement of public funds, with slap on the wrist punishment on discovery. The fraudulent opportunities for corrupt enrichment in the fuel/kerosene subsidy scheme, for example, currently siphons about N1000bn from the nation’s treasury annually. Ironically, such leakages invariably sustain and reinforce party strength and solidarity, and so any attempt at fiscal discipline may be akin to political parties cutting their nose to spite their face. Similarly, despite the distortion and the socially oppressive impact caused by naira depreciation, the attendant opportunity for increased rent seeking will prevent any serious attempt to save the naira.
Furthermore, neither the PDP nor the APC seems to recognise that naira depreciation also creates serious challenges for competitive industrial production cost and conducive electricity tariff. Consequently, private and industrial users of power will continue to stressfully absorb the increasing cost of generators and diesel oil for much longer.
Therefore, both the PDP and the APC can but, may regrettably, lack the will to rescue the economy if this process will hurt the interests of domestic trans-party oligarchs/rent seekers as well as our self-seeking expatriate minders.
