I was overjoyed when President Goodluck Jonathan introduced his transformational agenda upon taking office. I thought someone finally got it right. Nature transformed the country from an agricultural economy to an oil-dependent economy, and someone was trying to take us from there to an industrial revolution, which is a kind of transformation even if the foundation is based on oil. . It is what Justin Lin called comparative advantage following a development strategy. That is, your production is mainly based on domestic donations. I was wrong. Someone must have pitched the word change to the president without revealing his intentions. As it turned out, Jonathan was to change the lives of some Nigerians from “no flip flops” to “high heels" or from no land to owning a skyscraper.
Fortunately, resources were in flux at the time, and crude oil was selling for more than $100 per barrel most of the time. That was in addition to the huge foreign exchange reserves and sovereign wealth fund he inherited from Mr. Obasanjo and Mr. Yar’Adua. For him, achieving the desired human-centered transformation was easy. A new crop of corrupt politicians emerged with brazen impudence and more sophisticated tastes. The older generation of marauders were jealous and struggled to bring them back into the fold. Some of them were eventually contained. By the time Jonathan was defeated in the 2014 elections due to a public conflict between PDP bigwigs over how to divide the campaign money, the country’s finances and economy had become a pen robbery for unsuspecting Nigerians. It was clear that it was in the hands of It was an infamous era for modern Nigeria.
The economic reforms of the Obasanjo era gave rise to a development strategy to strengthen the national economy. This was a reform supported by the World Bank, IMF, and United Nations Development Programme. The economy grew not because of reforms, but because of continued improvements in oil production and international prices. It was a period characterized by increasing unemployment. In fact, this reform was aimed at finding ways to promote employment through agriculture and small and medium-sized enterprises. NEEDS came a little later and was a medium-term growth program disguised as neoclassical economic theory and capitalism. It is not equipped for development that requires long-term or sustainable programs.
President Umar Musa Yardua introduced a seven-point agenda tagged as reforms. It had the same framework as Obasanjo’s NEEDS and also included food security, transport, power and energy. It was meant to form the basis of his VISION 20:2020, and he did not live to see its conclusion. Of course, rather than continuing the Seven Points agenda, Jonathan introduced his own transformation agenda. He authorized the conclusion of Vision 2020 and shelved the document to either continue his transformation agenda or reform Yaldua’s agenda. By the end of President Jonathan’s term in 2014, he had exhausted about 92 trillion naira of oil money, racked up new foreign debt, and transferred billions of naira to the PDP party leadership for elections and ancillary expenses. I shared it. The economy fell into recession due to mismanagement and unprecedented levels of corruption, leaving his successor with no choice but to further economic reform.
President Muhammadu Buhari’s All Progressives Congress government took office confused about what to do with the power entrusted to it by Nigerians, as it took about six months under pressure to appoint ministers. This delayed economic reforms needed to pull the country out of recession. The coronavirus disease (COVID-19), which rocked the global economy in 2020, has exacerbated Nigeria’s economic woes with incompetent managers at the helm.
Subsequently, multiple reforms were introduced with support from the World Bank and IMF, but without success. Those responsible for monetary and fiscal policy worked independently of each other, and as a result, policy was ineffective. The economy depended on borrowed funds from within and outside the country for the payment of wages and salaries and for government consumption. It was the most unproductive, highly indebted, highly corrupt, and highly deceptive economy. The president, who was voted in on the basis of eradicating corruption, left the stage with a monster mafia of various shades with the head of Hydra. The main source of income was mortgaged in what the Yoruba call paro, or barter, or in more sophisticated terms. counter trade. The government left the economy to change rather than be fixed by reforms.
When President Bola Tinubu announced at his inauguration ceremony on May 29, 2023 that “subsidy will go away”, I thought the economic transformation had begun. It felt like the fight against corruption and the oil industry mafia had begun. When I later learned that there were no prepared policies to counter the expected shock from subsidy removal, I concluded that this statement was nothing more than a statement of illusion. A few months later, when the second major policy was decided on, the harmonization of foreign exchange markets, it became clear that there was a return to free market principles. A laissez-faire economy based on neoclassical economic principles, usually imposed by the World Bank and IMF, with a series of economic reforms in developing countries whose economic structures do not support free market mechanisms. This is the same doctrine that we have pursued under various political regimes.
What Nigeria needs is economic transformation, not economic reform. Economic managers should focus on production rather than a rental economy, where revenue is generated through taxes and levies. The focus of production must shift from the extractive sector to the industrial sector. In this case, the output from the mining sector will be a source of supply to the industrial sector. The economy needs to transform from being a primary product producer to a value-added producer. In this transformation, producers and consumers should be recognized as deserving of financial support in the form of indirect financial subsidies.
Let me explain. Transforming the economy from an agricultural to an industrial economy requires small and medium-sized industries to convert refinery byproducts into multiple end products such as liquid motor oil, service oil, and asphalt. Small and medium-sized enterprises should be provided with start-up funds through industrial banks at preferential interest rates with a tax-free period of three to five years. Similar policies should be applied to small and medium-sized enterprises that convert agricultural products into industrial products.
Existing large companies should also be given some tax rebates if they can expand and meet certain minimum standards. While it is unnecessary to give tax breaks to oil companies like Dangote, it is best to allow such companies to buy crude oil in naira at certain concessional prices. Asking local industries to buy domestically produced raw materials is like killing the local currency with pressure for naira to be exchanged for foreign currency.
The practice of taxing exports inhibits export activities and needs to be reviewed to avoid extinction. This is not the way to encourage exports, unless a country wants to block the export of raw materials, but it should create a market for the added value of these products. An announcement that the government wants to block the export of raw materials must be supported by promoting the existence of value-added private industries or public-private partnership industries.
How the management of Dangote Refinery was able to meet the production and marketing schedule of the product shows that NNPCL is led by an incompetent management team. Promises to start production at the Port Harcourt refinery have failed more than three times. It is clear that a company that has been further privatized through a public offering of shares in order to operate as a true public company deserves a complete change in management and replacement with more capable personnel. The current management team must be held accountable for all the funds spent on repairs to the idle refinery. Similarly, a company’s accounts should be audited by a reliable auditor.
Finally, it must be recognized that consumption or effective demand drives production, which always leads to job creation. In order to increase workers’ take-home pay and improve their consumption of products, workers’ tax rates need to be lowered. High levels of inflation resulting from rising prices for transportation, energy, and other basic needs erode income from the minimum wage and negatively impact consumption. What the economy needs is a transformation of production, not endless reforms.
