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Policy flip-flops in the hunt for change

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Motorists queue at a filling station

Motorists queue at a filling station

In life, rules and guidelines dictate action, direct motion. They tell people what to do and how to do them. When such codes are lacking, chaos rules the day, leading to confusion, a state of affairs that is antithetical to progress.

In forming a government on May 29, last year, the Muhammadu Buhari-led Federal Government wanted progress — one tantalised with a scent of change. Many a Nigerian bought into this agenda, which was not unexpected, as they had contributed to the emergence of the new government.

So, when the new government set up the Ahmed Joda committee to prepare a blueprint for seamless entryinto the labyrinthine corridors of power, many welcomed it. It was envisaged that government would glean from the resultant document to fast-track and harmonise delivery of not just promises of the All Progressives Congress’ (APCs) change agenda, but also point direction to plausible policy tweaks that would revitalise the economy for disciplined progress.

However, almost a year after taking the reigns of power, policy somersaults and reversal have trailed promises and economic direction, resulting in confusion and doubt over government’s action plan.

From denials — some would say, revisions — of campaign promises, to arguments on nomenclature and dimensions of policies on unbundling, fuel subsidy, and forex, to apologies for missteps, government, it would seem, is falling over itself in getting a grasp of and plotting a direction for the economy and addressing the somewhat ‘intimidating’ task of development.

Removal of Subsidy Or Deregulation?
WHEN government hinted on the hike of fuel price from N86.50k to N145, many greeted it as the removal of the ‘thorny’ subsidy on the product, while others lauded it as the long-awaited deregulation of the industry. But feelers from government turned out deflate the two positions, pointing rather to a policy geared to fight the forex war from another front.

The Vice President, Prof. Yemi Osi­nbajo, who explained the intent of the move, said, “the real issue is not about removal of subsidy. At $40 a barrel, there isn’t much of a subsidy to remove.”

But many in the APC, particularly its National Leader, Ashiwaju Bola Tinubu, who described the move as subsidy removal, lauded the courage of President Buhari to free up the petroleum industry for honest Nigerians to do business.

Tinubu said, in reaction to the policy, “while short-term exigencies may at times call for government action to stabilize markets and prices, government’s long-term determination of such economic prices, although initiated with the finest intentions, often contorts into something ugly and callous. It tends to transmute into corruption, waste and distorted pricing signals that cost the economy more than they benefit the people.”

He added that government has finally yielded to calls to allow the forces of demand and supply determine the price of petrol, but that it had no intention to completely hands off the process as it intends to keep a close watch on how prices are determined to prevent unmerited enrichment by randy businessmen.

But the Vice President insists that the price hike is “not a subsidy removal issue but a for­eign exchange problem, in the face of dwindling earnings”.

Osinbajo said, “the Presi­dent is probably one of the most convinced pro-subsidy advo­cates.”The confusion leaves many Nigerians in doubt of the actual direction of the policy and if, in the days ahead, another move to remove ‘subsidy’ would re-surface.

Monetary policy
SINCE the beginning of this administration, the Central Bank of Nigeria (CBN) has been in the eye of the storm, and being in that position, it has provided a canvas upon which the president draws his economic designs, it would seem.

First, many argued, in the early days of the administration, that the apex bank appropriated the functions of the Ministry of Finance when it indirectly influenced fiscal policy with Forex restrictions.

Analysts said this was seemingly unavoidable with the lack, at the time, of an economic blueprint in the absence of President’s economic team.
But while the CBN weathered that storm, it was also pushing back pressure to devalue the Naira and determine the country’s Monetary Policy Rate (MPR), which is the rate at which the apex bank lends to commercial banks.

However, there has been a bit of a flip-flop by the CBN on the peg of interest rate understandably because of uncertainties in the global oil market, which is responsible for the country’s ebbing revenue profile.

In November 2015, the Monetary Policy Committee of the CBN cut the MPR from 13 to 11 percent. However, in March, the committee raised the rate back to 13 percent, to the surprise of policy and economic analyst and investors.

The same flip happened with the Cash Reserve Requirements (CRR), which also went from 25 to 20 and later back to 22.5 per cent, in what was seen as a move aimed at tightening liquidity, which the CBN blamed for the current pressure in the foreign exchange market with a strong pass-through to consumer prices.

CBN governor, Mr. Godwin Emefiele, said the move was expedient after a four-month break, as it followed the evaluation of both internal and external factors, explaining that the “balance of risks is tilted against price stability.”

He said the economy was starved of liquidity to stimulate growth and employment as against the notion that there was liquidity overhang in the financial system.

On the reason for policy shift, he said: “The committee noted the weakening macroeconomic environment, reflected particularly on foreign exchange shortages, the slowing GDP growth rate and rising inflation.

But experts say the move may not likely salvage the economy, as there is need to address challenges in the foreign exchange market so as to reduce the pressure on the economy.

Also, in the battle to wean Nigerians off the Dollar, the CBN took drastic measures in August last year to prohibit cash deposits into domiciliary accounts in the hope that the move would halt the spiraling value of the Naira and currency speculation. The move apparently achieved its objective as the Naira steadied against the Dollar in the following days.

The policy, the CBN explained, was to curtail illicit fund flows, money laundering and terrorism financing from Nigeria and around the world.
However, local and international stakeholders in the financial system criticised the action, noting that it has led to diversion of forex to neighbouring countries and was stifling small business and the economy, in general.

International financial institutions, trading partners and rating firms also cautioned Nigeria on the move.Eventually, the CBN eased the pedal on the policy, announcing in January that banks could now accept deposits in domiciliary account. The bank said it would increase vigilance to ensure that commercial banks were not used as conduits for illicit fund flows, especially, in foreign currencies.

Land Border Importation Of Rice
TO rev up government’s revenue base and cut leakages, the Federal Government through the Nigeria Customs Service (NCS) lifted restrictions on importation of rice through land borders across the country in October 2015.

The move was expected to generate revenue with duties and charges paid at the borders, as against the old practice whereby smugglers exploited the routes to cheat government of much needed revenue.

The development was greeted with enthusiasm, and many thought that the tough posture of the Comptroller-General of Customs, Col. Hammed Ali (rtd), would put fear in the heart of some duplicitous officers and smugglers alike.

However, in March, the NCS re-introduced the restriction order, noting that dwindling revenue from rice imports through the land borders did not tally with the volume of rice landing in neighboring ports.

The NCS’ Public Relations Officer, Mr. Wale Adeniyi, said though implementation of the restriction order got off to a smooth start, with a high level of compliance in October 2015, revenue started dwindling from January 2016.

He noted that importers blamed access to Forex as major impediments, adding, “during the five-month period when the importation was allowed–October 2015-March 17, 2016, a total of 24.992 metric tonnes of rice valued at N2.3b was imported through the land borders.

“During the period, total revenue generated amounted to N1.6b. This is considerably lower than the revenue projected to be generated with the removal of import restrictions.”

In the light of the fact that customs officials had interfaced with smugglers for years, it would appear that the policy was a kneejerk approach, given the short span it lasted and losses recorded.

Social Security
ONE of the major headlines of the APC’s manifesto during the electoral campaigns was the provision of a social security programme captioned as a N5000 stipend.

But in the aftermath of the elections and from comments and explanations from key actors in the party, starting from its erstwhile Publicity Secretary now Minister of Information, to Senators, the Vice President and the President, persons who would benefit from this programme have varied from unemployed graduates to vulnerable citizens.

Arguments on the plausibility of the programme tore the National Assembly along party lines when members of the opposition reminded their colleagues in the ruling party of the promise, a development that caused ripples among the youth population, who were bought over by the promise of N5,000 stipends during the elections.

While Prof. Osibanjo, said unemployed graduates would be captured in a teachers’ volunteering scheme, which is intended to engage and train them in the school system till they secure other jobs, the tune from the president was different.

Commenting on the scheme, President Buhari said he would rather prioritise provision of infrastructure and development of agriculture so as to engage youths than to dole out money to those who were idle.

According to him, “This largesse N5,000 for the unemployed, I have got a slightly different priority. I would rather do the infrastructure, the school and correct them and empower agriculture, mining so that every able bodied person can go and get work instead of giving 5,000, to those who don’t work.”

Power: Fashola And The Megawatts Confusion
THE seemingly intractable battle for megawatts to salvage Nigerians from the pangs of darkness was thrust on former Lagos State governor, Babatunde Fashola, who heads the Ministry of Power, Works and Housing.

But in meeting the mandate, there has been some sort of confusion over the amount of megawatts being projected by the current administration. While the President assured that his administration would add 2000mw this year to the existing 5000mw already attained, there appears to be discordant tuness and timeline by the vice president, who said the country would hit the additional 2000mw in 18 months.

On Fashola’s end, Buhari would have generated 10,000mw at the end of his administration in 2019. However, he is also quoted to have said that once the challenges in the power sector were fixed, Nigeria would be able to generate 12,000mw.

However, experts are of the opinion that Nigeria’s installed generating capacity is about 12,000mw, hence curious questions of whether the plan would be to fix challenges in the sector or to work on boosting the generating capacity in the sector.

According to Fashola, “There are many perspectives to do this. The country has today the capacity to generate at least 12,000mw. If we fix all what is not working in the industry, including building any new power plant, the country would be generating close to 12,000mw.”

He added that meeting that target has been difficult because out of over 140 turbines, only about half has been able to get gas to work with.
Even with all of this projections, it appears government has been practically overwhelmed by challenges in the power industry, notably due to activities of Niger Delta militants who are doing a double whammy on oil revenue and power supply with the bombing of oil and gas installations.

The gains recorded last year when generation hit 5,000mw has almost been eroded in the last few months, even as Nigerians are cry under the weigh of heavy tariff by power distribution companies, who are out to make maximum gains from buying the erstwhile government property

Fuel: Kachikwu’s Magic, Sophistry
ASIDE from Fashola, another member of Buhari’s administration that has run into trouble explaining government’s policies is the junior minister in Ministry of Petroleum, Ibe Kachikwu.

Dealing with bouts of fuel scarcity, Kachikwu ran into trouble assuring Nigerians on the availability of the product at a time it appeared the Nigeria National Petroleum Corporation (NNPC) was short of supply.

In the heat of the confusion over when fuel would be available, he gave conflicting opinions over when the queues at filling stations would end, and in one instance, out of frustration, said he was not a magician to known when the situation would normalise.

He came under heavy criticism by many, even as some hailed him for speaking without political pretence. One of his most surprising critics was Tinubu, who said the comments were ‘insulting’ to people facing hardship in getting petrol.

With critics baying at him for such careless statement, Kachikwu apologised to Nigerians for the comments, assuring that the queues would disappear in April, a promise that was still difficult to meet.
Even with that, the country still grapples to surmount challenges in fuel supply, which culminated in the recent hike of the pump price to N145, in a last ditch effort to salvage the situation.

Unbundling Or Restructuring?
ANOTHER major policy tussle for Kachikwu was the restructuring of the NNPC, which pitched him against unions in the national oil company.In announcing the development, he said the NNPC had been unbundled, which he explained meant that the company had been reorganized.

But a groundswell of criticism followed the announcement, which included his summon by the National Assembly, who wondered where he got powers to undertake the move without recourse to the Act setting up the NNPC.

The move was considered expedient as the NNPC was considered a behemoth that was seemingly bigger than Nigeria, and had become a law unto itself, as it had been accused of not remitting revenues to government in recent times.

Kachikwu was later to clarify that, contrary to reports, the Federal Government didn’t unbundled the NNPC.
He said: “We have not unbundled NNPC. We had a press conference where I explained this. What we have simply done is reorganisation. We have five business entities focused on business – Upstream, Downstream, Refineries, Gas and Power – that are there before.

“There is also Ventures that captures all our little companies that were not having proper stewardship. They are run by individuals who report to the group managing director (GMD).

“The NNPC is still a whole. There is nothing new that has happened. I have tried to explain this and I am sure the NNPC workers are members of the family; they will understand. We are going to have a meeting, and they will be made to understand. Perhaps the engagement has not been good enough.”

He had listed the seven new entities to include the Upstream, Downstream, Refineries, Gas and Power, Ventures, Corporate Services and Finance and Accounts Divisions, all of which would have 20 subset companies.

Sack of Vice Chancellors
IN the education sector, the Federal Government committed what many in the academia saw, as a ‘huge error’ with the sacking of governing councils and University vice Chancellors by what looked like a military fiat.

Universities affected included those established by the immediate past administration and the National Open University of Nigeria (NOUN), for whom new vice chancellors were appointed.

The move to sack vice chancellors, for instance, many argued, ran counter to FGN/ASUU agreements, which granted universities autonomy to run their affairs and the governing council powers to appoint new vice chancellors.

Eventually, government apologised for the move, noting that it erred in sacking the governing councils and VCs without recourse to extant laws.

The president had told his party members that government “gave a blanket order which we had to rescind when we said all boards are suspended or dissolved. We had to go back and lick our vomit in terms of universities’ councils because we found out that according to their laws, they cannot choose vice chancellors unless the councils sit and interview candidates who want to be VCs. So, there is nothing wrong in saying sorry and going back on your decision. So, we said sorry and allow all the universities to continue with their councils. So, please, try to bear with us as we reflect on where we found ourselves.”

But the apology was still not clear to many, as it was seen as an affront to struggle of university staff who had fought tooth and nail with government for several years to secure their autonomy from governments’ interference. Moreover, no one knew whether the boards still stood or if the sacked VCs were still to vacate their posts.

Government, thereafter, clarified its position on the apology through the Senior Special Assistant to the Minister of Education, Dauda Abdulramid, who explained that the president’s apology does not connote reinstating the sacked vice chancellors given that government’s earlier position was no longer reversible.

Notwithstanding Buhari’s apology, Abdulramid said recalling the sacked vice chancellors couldn’t rescind the decision by government.Also, another image-maker in the ministry this time at the National University Commission (NUC), Ibrahim Yakassi, said, “the situation is misunderstood; the president was speaking in past tense, go back and read what he said.

“He made reference to the dissolution of all boards in this country. It has nothing to do with the 13 vice chancellors that were recently disengaged. It has no relation to that. The president when he dissolved all boards in this country included all the councils of federal universities then. But he rescinded that decision as he said because the councils needed to be in place to appoint vice chancellors.”
The brashness of the policy sent waves across board over the soundness of advice provided by handlers of the President, and curiously, tells of the finality of a fiat.

The China Trip: Where’s the Yuan?
THOUGH President Buhari has made several foreign trips in the last one year, one of the most celebrated and widely reported was the one to China, notably because of currency swap deal that was expected to ease Nigeria’s forex challenges.

True to form, announcement of the deal saw the Naira gaining against the Dollar, a development that many said was a sign of better things to come in Nigeria’s hunt for alternatives to shore up the value of its currency.

During the visit to Beijing, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and the CBN signed a deal an on Yuan transaction, which was described by CBN Governor, Godwin Emefiele, as a currency swap deal.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, Director General of the African Affairs Department of China’s foreign ministry, said.

But Nigerians were to learn later that the deal wasn’t as Emefiele had described it.Minister of Foreign, Affairs Geoffrey Onyeama, was to later explain that what was signed was an agreement for Nigeria to benefit from the internationalisation of the Yuan. However, since the explanations and counter explanations, Nigerians are still in the dark over the true state of the deal.

Curiously, president of the Association of Bureau de Change Operators recently said that his members have been getting requests from businessmen on how to access the benefit of the deal.


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