‘Towards the economic liberation of Nigeria: Bala Usman’s enduring relevance’ (2)
CONTINUED FROM MONDAY 21/12/15
The first order of business is fiscal in nature. Do we continue to peg our naira expenditures to our dollar intake or do we affix our domestic expenditure to a measure more apt to grow the economy?
To continue to link the government’s naira expenditure to dollar intake is to allow the decisions of foreign actors to hold undue influence over our fiscal policy. There is no logical necessity that foreigners’ taste for oil must determine our fiscal expenditures.
While no economy is completely independent, this linkage amounts to servitude so restrictive that it is as if the colonial tether was never severed.
Some will say the dollar linkage is fiscal prudent or they defend the practice by asserting this is the way we have always done it. But haven’t we also always fallen short?
This is not prudence. It is the strange vocation of being pennywise yet pound foolish. Perpetuating this linkage will confine us to the single-commodity economic model in such a manner making us further delude ourselves that we must adhere to this linkage even more. All the while, our national privation will become our main growth industry.
The second order of business has to do with the extent to which government helps direct and encourage private sectors activity. Do we allow ourselves to be slaves to the forces of the market even though we know that the market itself is not free?
Or do we engage in some level of national industrial, infrastructure and employment planning, as has every large and important nation that has ever achieved prosperity – from England, to the United States to China?
Regarding fiscal policy, I advocate the close dollar linkage be explicitly broken. The last I looked, Nigeria operates a Naira-based economy, not a dollar-based one.
The last I looked, the federal government has the sole power and sovereign right to issue naira or financial guarantees based thereon. It does not need the approval of the American Federal Reserve, the Bank of England or of the host of global oil buyers.
There is no innate legal or moral restriction strictly limiting the amount of Naira or the value of Naira-denominated guarantees placed in the system to spawn employment to match the amount of dollars collected via oil sales.
Oil is a passive asset in the ground. When cash-strapped yet in need of more revenue presently, a nation should also consider issuing guarantees on the future oil shipments on a price certain paid now; or selling a portion of its equity in the joint ventures.
Some may call this a variant of an oil futures. Whatever it is called, it should be considered particularly as a measure to improve our foreign currency position.
Not to explore more creative approaches is to effectively trap the Naira and thus our fiscal policy in an implicit “dollar standard” at a time when such a custom is harmful and ill-advised because of our diminished dollar intake.
The world jettisoned the gold standard in 1971 because it proved unworkable, reducing the policy space in which governments could pursue fiscal programmes promoting full employment and social welfare. We should likewise reject this implicit dollar standard on our nation’s fiscal operation.
Because we operate a sovereign fiat currency that the federal government issues at its sole discretion, the federal government can never be rendered insolvent in Naira.
The position I espouse sounds heretical and some of you will say it is a recipe for runaway inflation. At this, I say listen very carefully for I am aware of the ravages of excessive inflation. I am also opposed to anything that will bring it about.
The outer boundaries of our fiscal policy should neither be our dollar intake or some unfounded fear of naira insolvency. It actually may be a better trade-off to live with a bit more inflation at this recessionary time. Instead, that boundary should be that we never ever allow fiscal expansion to the extent that it prompts damaging inflation rates. But we can live with and manage a notch of it.
The correct perspective is not to mechanistically restrict Naira expenditure to dollar intake. Continuing this peg is tantamount to donning economic blinders then praying that somehow we avoid the pitfall set before us. It points to deflation, recession and worse.
14. The second pillar is the need to engage in some level of efficient economic planning in order to position the private sector to thrive.
I commend the Buhari Administration for its economic policy coherence by merging government’s budget and planning operations in one ministry. We hear talk of free trade but the reality is different.
In their formative stages, the English, American and Chinese economies were highly protectionist. America was known as the most protectionist of the western nations during the century when it emerged from a second-rate economy to become the largest in history.
The Chinese economy – the world’s second largest – remains a den of protection. If this is the way of the most successful nations, we should do as they did but not do as they say we should do.
The industries and manufacturing activities essential to our national maturation and development, we must protect. This may not be textbook economics. But we do not reside in textbooks and neither do our challenges. This is the way of the real world. We would be wise to adhere to it.
Thus, we must identify those industries strategic to the nation we seek to build and provide incentives such as tax relief and help in the form of effective tariffs to insulate them, allowing them to grow in productivity and competitiveness in a conducive atmosphere.
The important thing is that we grow our industrial base so that we lessen our import dependence and provide jobs for a growing urban population.
One of the critical paths to Nigeria’s economic liberation lies with employment for the youth. The nation’s economic engineers should focus primarily on allocating value and opportunity to our under-utilised labour force and our idle, yet potentially productive capital in ways promoting wealth creation and expansion of aggregate demand.
And we should do this without bending to the wishes of the IMF, WTO and the league of global money masters who would keep us low.
It is sustained aggregate demand that empowers the nation to rescue itself from the whirlpool of economic contraction.
15. I must add a thought about the fuel subsidy. It was once a good idea that has been perverted into its opposite. Created to aid the common man, it is now a device used by the crooked to produce a windfall for which they are not entitled.
In a perfect world, I wish we could sanitize the subsidy regime and thus continue it.
However, I have reached the conclusion that there are too many demons in the system for this hell to be converted into good earth let alone heaven.
Better that we remove it, not for the austere purpose of saving money but to use the money more wisely that we might aid then very poor people. Better to spend the money to save the people instead of expend the people to save the money.
I would choose to remove the subside and use the money to help people – let us feed our school children, with our local produce promote agriculture, create jobs and start erecting a social safety net for the vulnerable among us in true need. I am one of those enjoying or benefitting from the cheap pump price per litre, but I don’t need it. I rather pay for the availability and let the needy benefit more from higher pump prices.
Let us begin a process of a thoughtful but decisive subsidy phase-out. While this is occurring, we should simultaneously phase in social programs benefiting the poorest, most vulnerable among us.
Programs such as transportation subsidies, school feeding, improved basic medical care and coverage for the poor, and potable water projects are some of the things that can be done with the funds.
This way we can undertake expenditures confident that the fruits will go to the hungry, not the already well fed. End the fuel subsidy. Subsidize the people instead – Subsidize the people indeed!
Bala Usman would have wanted us to do this and do it now. Bold endeavour. We must do what we must to build railways and roads and bring light to those who have languished without it in darkness.
Put tax incentives in place to spur new refineries. End the queues at the fuel pump. The tax we would forfeit is but reshaped to become an investment in a better Nigeria.
On the continental level, Africa has reached the point where it can no longer allow extant trade outside the region to preclude the need to expand and deepen trade and investment among ourselves.
We must collaborate so that we no longer just sell what we extract from the precious soil.
But that we deploy our ingenuity to shape and process these things into manufactured goods.
With his enviable international stature and the respect he commands, President Buhari is one to lead this Pan Africanist cause. Africa must use it God given resources to greater opportunities among the countries of the continent. We achieve this by creativity, collaboration and determination to help our own people
I know talks in this regard should be ongoing between three nations leading the way.
Nigeria with its oil and gas and other resources, its vast population and commercial infrastructure can add much to any economic cooperation. Niger has uranium for energy and other uses as well as other valuable mineral deposits. Guinea has bauxite and iron ore of the highest quality and of plenteous supply. Both of these minerals are vital to industrial development. Guinea also has other rare earth minerals. Its hydroelectric capacity is large and can be harnessed for the good of the region.
I foresee these three forging organic partnerships that will amend investment, commerce and manufacturing for their mutual benefit.
I mention this because what three can do, the entire continent can do even more, if we have the mind for it.
History commands it because Africa is where the next great economic step will be taken. The question is whether that step will be taken on our soil by our own foot or by a foreign one.
16.In conclusion, Bala Usman could have combined his royal lineage with his academic erudition to enjoy the high and easy life.
He could have been part of any government or ruling clique that suckled itself on toil, blood and patience of the people. Bala chose to side with the masses. It is our duty now to side with him.
Bala Usman was a pathfinder whose analyses and ideas were more than brilliant. They were true.
He warned we must claim our identity by forging the institutions and political economic processes that promote our interests and ensure our future. The reality of our economic situation does not mock his words. It reveals their utter prescience.
We must emulate Bala Usman. This requires that we shirk conventional wisdom to reform our political economy. If we continue the current path, we will remain as we are.
It is a mere walking in place while more aggressive nations change the world to fit their image.
As we meet, powerful nations entertain unprecedented treaties forming large commercial and financial blocs and combines that will make it more difficult for nations like Nigeria to realize the dream of industrialization.
If we cast our fate to the wind by saying that we shall be subservient to the free market, that market will be free to enchain us.
We would have flung aside our ability to shape our destiny.
The well-being of Nigeria will be given to others to determine. We will be a sovereign nation on the map but not in economic function.
Bala Usman seemed to know this day would come. He sought to prepare us for it. For a better Nigeria, I dedicate myself to the same fight. That is why I outlined two imminent decisions that must be had now –
1. Do we choose the good of the people over the rationale of austerity?
2. Do we better plan and guide our economy or allow happen-stance or the strategies of others to rule us?
I know how Bala Usman would answer these questions. I join in his response. I ask that you join him as well. What I have said here is more than talk. It is a call to action.
• Asiwaju Tinubu is a former Governor of Lagos State and a chieftain of the All Progressives Congress (APC)