Feature/OPED

Beyond Recession: Towards A Resilient Economy

Published

8 years ago

21/01/2017

Modupe Gbadeyanka

By Atedo Peterside

Distinguished Ladies and Gentlemen,

As part of their 14th Daily Trust Dialogue, the management of Daily Trust requested a presentation from me on “BEYOND RECESSION: TOWARDS A RESILIENT ECONOMY”. My focus will be on “Towards a resilient economy”, because virtually all the actions and policies that are required to help build a resilient economy are the exact same ones that will naturally take Nigeria well beyond today’s economic recession and unto a path of rapid and sustainable economic growth. If you aim for the skies you might end up at the ceiling. Likewise, if you do what is necessary to achieve rapid economic growth, then the chances are that you will at least attain modest growth, even where some plans fail.

My honest summation is that, even if we start today to embrace holistic, creative, sincere and reform-minded economic policies, the “animal spirits” that these measures unleash will harness the creative and entrepreneurial energies of our people once again and quickly place us firmly on the path of sustained rapid and inclusive growth.

The Federal Government of Nigeria (FGN) is doing some things right, such as the effort to curb overhead expenditures and to be more frugal than past administrations, but then they are also doing many things wrong. There is a reluctance to completely break from the past and embrace significant economic reforms, even when our present predicament clearly warrants same. If we do not act now or if we do not act quickly, we may find our economy needlessly mired in a hopeless situation where the citizenry might not witness an increase in income per capita (living standards) for 6 to 8 years.

The search for an economic policy direction must end now because we are facing an economic crisis. A crisis is an inflection point. It is that point when multiple outcomes become possible. When you superimpose our demanding political calendar, which requires Presidential elections in a little over two years, it becomes clear that 2017 represents the last full calendar year that this administration has within which it must embrace major economic reforms, if we expect to still attain many of the more palatable economic outcomes. It is no use arguing over who or what caused the economic recession (-2% growth) and high inflation rate (over 18.5% p.a.) that we are currently facing; far better to focus on what we need to do to get us out of this sorry state.

There are several units within the FGN that are carrying out meaningful but disparate actions that solve many fringe economic problems. Various actors appear to be working in “silos” solving fringe problems. What appears to be still missing is a bold, holistic and audacious effort to harmonize fiscal, monetary, exchange rate, trade and macro-prudential policies in a bold and concerted manner. Very few people want to take on the “big gorilla” in the room. They prefer to scratch around the fringes or work in silos, whilst almost accepting a 0.1% growth target as the achievement to celebrate because it might signify the end of a “so called technical recession”. That is why the impact of the FGN’s Economic Management Team is not being felt. A corollary of this proposition is that many people are simply minding their own business. Because they fear for their jobs, they are not interested in tackling their colleagues whose actions are negating and/or eliminating the most positive outcomes that the Government owes the electorate. Meanwhile, the populace is yearning for transformative economic changes.

I know that there are those who will criticize me for saying that the FGN’s economic policy direction remains unclear. My response to them is that the most significant economic reforms embraced so far by FGN came about rather reluctantly i.e. by FGN hanging on to an untenable position until it eventually disentangled itself or got overpowered by its own internal contradictions. We saw this with petrol prices and also the devaluation of the naira. When these “reforms” came, they arrived in the form of half-measures. Thus, we stopped short of both petrol price deregulation and opted instead for a limited price fix that was clearly unsustainable. We equally stopped short of adopting truly market-determined exchange rates and instead embraced a “fudge” that spewed widely divergent multiple exchange rates. Half measures typically bring some pain, but often fail (as in this case) to yield any lasting gain.

Determined to help force through the required soul-searching by FGN’s Economic Management Team, the rest of this paper will discuss ELEVEN major policy actions/inactions which the FGN and the ruling political party should consider. My approach is holistic. I am aware that some of these measures might require a bipartisan consensus. We must shake off the indolent mindset that leads us to believe that all Constitutional changes are taboo. Or the mindset that shirks any economic action that is out of the ordinary. Accordingly, I seek to draw attention to the following eleven items:-

1) The Central Bank of Nigeria should accept that it’s foreign exchange and demand management policies have failed. The more restrictions they have placed on forex repatriation the less likely it has become that badly needed forex inflows from portfolio investors, foreign direct investors and Nigerians will pick up. CBN has inadvertently created a siege mentality, thereby making privileged access to its forex allocations, which are reserved largely for the politically well-connected, the best investment game in town. Furthermore, the directive to banks to allocate 60% of forex to manufacturers who account for only 10% of GDP has exacerbated an already bad supply situation. 40% is much too small to accommodate the rest of the economy and so all other sectors have been crippled, including the Service sector which accounts for over 50% of GDP. This has unleashed panic thereby sending the parallel market to the high heavens. Forex inflows disappeared partly because of the uncertainty surrounding the ability to repatriate interest/dividends through an overly restrictive 40% window. There is nothing magical about 60% or 40%. It has no “scientific” basis. Meanwhile it has huge adverse distortionary implications on the supply side. The end result has been our mind-boggling and widely divergent multiple exchange rates which have spooked investors who have taken fright and also taken flight. Sadly, we have effectively “shot ourselves in the foot” by taking unsustainable actions that crippled both forex inflows and the Service sector, whilst favouring even those manufacturers who own “zombie” industries that are horribly import-dependent;

2) Linked to 1) above is the failure to reach some accommodation with Niger Delta militants. Three previous administrations (the preceding three) ended up brokering peace deals. A failure by FGN to broker a peace deal has cost the nation over $6 billion per annum. Dithering over amnesty payments promised by a previous administration was ill-advised because Government is a continuum. The FGN should urgently pursue high-powered negotiations which should be brokered by persons with a healthy track record in this activity and the ancillary pipeline protection business. In the longer term, I favour a constitutional amendment that reserves a one per cent royalty payment to immediate host communities on ALL mining and mineral producing activity (including limestone, oil, precious stones etc.). Communities will then be well incentivized to keep production activity going. This will give them some significant “skin in the game”, which is preferable to a long-term reliance on amnesty payments which constitute a moral hazard. A 13% derivation payment to a possibly “unaccountable and distant” State 14th Daily Trust Dialogue – Thursday 19th January 2017 2 Governor is not anywhere as effective as a 1% royalty payment to a host community;

3) We should simultaneously embark upon some asset sales which improve long-term efficiency and will yield foreign currency. I argued in my 01 October, 2016 published Letter to my Countrymen that the Federal Government share of the major Oil Joint Ventures (IOCs) should be sold down to 40% or no more than 49%. This would represent a replica of the highly successful Nigeria LNG (NLNG) model that provides a healthy dividend stream for the Government. If it is good for NLNG, then it should be good for the IOCs too. I envisage that the main obstacle here will be our value-destructive NNPC who might be reluctant to become a minority shareholder (40-49%). The secret behind NLNG’s success is that NNPC was “reduced” to taking a minority shareholding in this world-class investment project. Asset sales can yield $15-20 billion over the course of the next two years if planned carefully;

4) We urgently need to deregulate the entire downstream petroleum sector and also privatise NNPC’s three refineries + depots and pipelines and domestic gas;

5) Our civil/public service is still bloated, corrupt and inefficient and has become the excuse for a privileged 2% of the population to consume close to 60-70% of the annual budget via the recurrent expenditure vote. What is left over for the capital vote is insufficient to help finance social and physical infrastructure. Methinks mass redundancies are now inevitable, along with the implementation of an even bolder Orosanye Report because the nation is now stuck with a public service and legislators that we could only afford at $100 per barrel oil prices;

6) Less than 25% of our 36 States are economically viable. In the early 1960s, when Sir Ahmadu Bello wanted to build roads in the old Northern Region, he set aside salaries for a Works Minister (also a Parliamentarian) a Permanent Secretary and a lean Ministry of Works after which all the money set aside for roads was used in actually building roads. Today, overheads associated with 19 Commissioners and 19 Permanent Secretaries and their privileged workers consume virtually all the funds set aside for roads, leaving little or nothing left over for actually building State Government roads in most of the North. The obvious answer is political restructuring, as unpalatable as it may sound to some. For example, in terms of zonal overhead spending, we “expanded” the North from one regional government to 19 States and now need to “bring it down” to a more affordable 3 zones by retaining some overheads at the zonal level instead of spreading same over 19 states. We should keep an open mind towards this political restructuring argument because it is not even true that homogeneity within a State or zone necessarily guarantees peace. Somalia is homogenous and yet it is probably the closest thing there is today globally to a failed State. Conversely, there are communities, States and nations around the world which are heterogeneous, but which are living peacefully together;

7) To help overcome, the social and physical infrastructure deficit, we need to embark upon the restructuring canvassed in 5) and 6) above, whilst also embracing the private sector as the engine of growth and a capable partner/financier of infrastructural development. The Power and Transportation sectors are crying for more and not less privatisation. The logic of the power sector reforms was built around the adoption of cost-reflective tariffs, which we have since thrown out of the window. The transmission sector and gas supply difficulties are some of the other weak links in the power value chain;

8) A dysfunctional legal system is an impediment to the rapid growth of a modern economy. The Chief Justice of the Federation must “buy into” and spearhead radical reform of our legal system;

9) The anticorruption crusade will only complement the positive changes envisaged above if the Government itself respects the rule of law and obeys the Courts. We should err on the side of 14th Daily Trust Dialogue – Thursday 19th January 2017 3 extending the “benefit of the doubt” to accused persons whenever allegations are unsubstantiated or cannot be proven beyond reasonable doubt. This need not signify the end of the anticorruption crusade because there will always be enough cases which can be proven beyond reasonable doubt. It is better to let four people who might be guilty go free than to convict one innocent man. The latter drains all the energy out of the anticorruption crusade and also destroys business confidence;

10) Restoring business confidence should be the primary preoccupation guiding virtually every statement by public officers. This calls for a paradigm shift because the current preoccupation is for every Minister, Governor, Regulator or overzealous official to threaten investors with closure, bankruptcy, fines or seizure of their goods. Frightened businessmen (local or foreign) will not invest. We should be wooing investors instead of threatening them;

11) The Federal Government should immediately appoint directors to the boards of every regulatory agency. Keeping a Lone Wolf at the head of a regulatory agency is dangerous and therefore detrimental to business confidence. The important lesson from the recent Financial Reporting Council of Nigeria imbroglio is that a single rogue regulator can hold the entire system to ransom, help destroy business confidence and hamper economic growth. This only became possible because the checks and balances which our laws envisaged, through the appointment of Boards, Council members or Commissioners, were not in place.

CONCLUSION

Our economy is underperforming because, amongst other things, it is caught up in a low foreign exchange trap. Borrowing alone is not and can never be a panacea. Indeed, borrowing without instituting necessary and badly needed economic and structural reforms is akin to suicide. Those who are canvassing for more foreign debt simply because our debt/GDP ratio is low are overlooking the fact that our debt service ratios are already high. Our debt service ratios are high because our Tax/GDP ratio at 6% is exceedingly poor. It will require a few years of concerted action to move economic agents from the informal sector to the formal sector in a significant way before our tax/GDP ratio rises significantly. Relying on debt alone to get us out of the present low foreign exchange trap is therefore a high risk strategy. I consider it to be ill-advised. That is why I also emphasise 2) and 3) above. They help to improve the forex supply situation, without burdening our already high debt service ratios. If care is not taken, our deteriorating economy might take us on the “road to Venezuela or Zimbabwe”. Nigerians take pride in arguing that the Lord loves us and so he always intervenes by bringing us back from the precipice in the nick of time. I do not doubt that. What I truly believe is that the Lord intervenes through people. After the unbridled insults that were heaped on the Emir of Kano and a few others who dared to tell the Government the truth about the parlous state of our economy, the easiest path for me would have been to keep quiet or to simply blame speculators, detractors or past regimes. If I did that then the attack dogs would have won. NO, I am not about to abandon my right to free speech on account of some insincere sycophants. I speak because I want my country to improve. So help me God.

Atedo N A Peterside CON is the President & Founder of ANAP Foundation and is also the Chairman of Stanbic IBTC Holdings Plc and Cadbury Nigeria Plc Twitter @AtedoPeterside

Feature/OPED

Unlocking Full Human Potential: Growth, Diversity, and Purpose

Published

2 days ago

13/01/2025

Business Post Contributor

In Nigeria’s diverse workforce, the conversation around diversity and inclusion (DEI) extends beyond gender to address tribal diversity, socioeconomic representation, and other cultural nuances. Policies that promote inclusivity are crucial for fostering collaboration in Nigeria’s multicultural corporate environment.

“An organisation is only as good as its people. Ensuring those people perform to their best is the role of human capital. Today, the field has a range of tools to ensure real-time engagement and agile interventions for optimal job satisfaction and performance”, – Catia Teixeira, MultiChoice Africa Holdings Group Executive Head of Human Capital.

In both our professional and personal lives, we all strive for growth and development. These opportunities are deeply rewarding, supporting the kind of self-actualisation that makes life most fulfilling. In the Nigerian workplace, where career growth often intertwines with societal expectations and the drive for self-improvement, human capital plays an even more significant role. Opportunities to grow are not just fulfilling but are deeply rooted in our collective ambition for a better future.

Employee engagement is a reflection of how actualised individuals feel in their roles. Engaged employees are more likely to perform at their peak and contribute positively to the workplace. In Nigeria, where the “hustle culture” is celebrated, organizations must create environments that not only nurture growth but also recognize and reward the efforts of their people.

When employees feel enriched and their work aligns with their aspirations, the results are transformative. Growth and development are not just personal milestones—they are the foundation of a thriving organization and, by extension, a more productive society.

Identifying Growth Opportunities

In every workplace, some employees stand out from the first day, while others take time to grow into their potential. Talent management processes must cater to both. For instance, a twice-yearly organizational talent review can help Nigerian companies identify where employees excel and where they need support.

Interactions within the workplace also play a crucial role. In Nigeria’s highly networked professional landscape, creating opportunities for cross-departmental collaboration can open new doors for employees. Systematic development plans, supported by tailored training, ensure that these opportunities translate into tangible growth.

Take the MultiChoice Academy, for example, which offers over 4,000 online courses spanning finance, HR, marketing, and other fields. This mirrors the Nigerian appetite for continuous learning, especially as industries rapidly embrace digital transformation. While face-to-face training remains valuable, customized e-learning platforms are pivotal in bridging knowledge gaps and preparing employees for the future of work.

For any training program, balance is key. Organizations must align employee development with business goals while ensuring individuals feel empowered to pursue their aspirations. In Nigeria, induction programs that connect new hires with company visions and purpose are critical to building this alignment.

One of the most rewarding aspects of human capital management is witnessing success stories unfold. In a country like Nigeria, where talent is abundant, but opportunities may be unevenly distributed, developing talent internally can make a significant impact. Long-term employees bring invaluable institutional knowledge, and nurturing their growth ensures they continue to drive organizational success.

At MultiChoice, we are deeply committed to equipping our workforce with the skills and confidence needed to excel. Whether it’s training young leaders, empowering women in leadership, or developing heads of departments, every investment in our people enhances their value – as individuals and as indispensable assets to the company.

What Diversity Means

At MultiChoice, gender equity remains a key focus. Women make up 46% of our workforce, and 46% of leadership roles are held by women—a significant achievement in a society where women often juggle professional aspirations with traditional family roles. Our promotions policy is designed to push these numbers to 50%, ensuring equity across all levels of the organization.

When entering new markets, MultiChoice intentionally applies its culture of inclusion, empowering women to excel in leadership positions. This commitment extends to addressing barriers unique to Nigeria, such as access to resources and mentorship for women in underrepresented fields.

Data Drives Change

To drive meaningful change, data is indispensable. Nigerian companies often face challenges like high employee turnover and workplace inefficiencies. By leveraging data, organizations can address these issues strategically.

MultiChoice uses platforms like Office Vibe to generate insights into employee engagement, satisfaction, and work-life balance. Weekly surveys and random polls provide actionable feedback, enabling quick interventions and fostering a culture of continuous improvement.

In Nigeria, where trust in leadership significantly influences workplace morale, data can also help bridge gaps between management and employees. Regular focus groups, coupled with robust analytics, ensure employees feel heard and supported. When organizations align employee needs with business goals, the result is a workforce driven by purpose and achievement.

The Collective Goal

In Nigeria, where community and collective growth are deeply valued, human capital strategies should emphasize the power of shared purpose. By investing in people, organizations contribute to a larger vision of national development.

At MultiChoice, every success story is a testament to this philosophy. From training young leaders to empowering women in leadership, the organization demonstrates that growth is a journey best undertaken together. For Nigeria, this represents a powerful blueprint for building a future where individuals and organizations thrive in harmony.

Feature/OPED

Between Governor Bala and the Presidency

Published

2 days ago

13/01/2025

Business Post Contributor

Abba Dukawa

Although I’ve never met Governor Bala Muhammad in person, only seeing him on television, his recent outburst against the federal government’s economic policies resonates deeply with poor citizens’ view.

His concerns stem from empathy for the citizens’ going through unbearable hardships, which have worsened due to the economic situation where millions of citizens struggling with high cost of living, poverty and hardship, reflecting the reality on the ground where citizens face significant economic challenges.

His view resonated with the people in respect of political affiliations have praised Governor Bala for speaking truth to power, acknowledging that the economic policies aren’t working. But his outburst of the economic policies has sparked a heated response from presidency.

Even though President Bola Tinubu claims to have no regrets about his economic policies, aiming to strengthen the country’s economy, policies must be empathetic.

The Tax Reform Bills, in particular, have generated widespread concern, with experts warning of negative implications and advising the government to postpone the bill and engage in further consultations.

The National Economic Council, comprising 36 state governors and led by the Vice President, had expressed reservations about the bill, emphasizing the need for adequate consultation with stakeholders.

However, the Presidency swiftly rejected the NEC’s advice, stressing that the bill is crucial for supporting President Tinubu’s administration in bolstering the country’s fiscal institutions.

Governor Bala Muhammad’s expressed his concerns when hosting Sheikh Yahaya Jangir, a frontline campaigner for the Muslim-Muslim presidency, at the Bauchi Government House.

The governor urged President Tinubu to listen to Nigerians and correct his errors, stating that it’s his duty as a leader to tell the truth.

As Governor Mohammed noted, “I am sure you have heard that we are quarrelling with the president. Yes, it is true we are quarrelling because our people are suffering, and the president has refused to listen to us.”

His comments should not be seen as a critique of the president’s policies, not a personal attack. It’s essential for President Tinubu’s administration to understand the growing concern among Nigerians about the country’s economic direction and the need for effective strategies to address the current economic hardship.

The Presidency, through his Special Adviser, Sunday Dare, responded by urging Governor Mohammed to prioritize the welfare of Bauchi citizens instead of engaging in political posturing. Dare emphasized that the President’s administration is focused on national development and collaboration with state leaders.

It’s worth noting that Governor Mohammed has implemented various poverty alleviation programs, including the Kaura Economic Empowerment Programme (KEEP), to reduce the state’s high poverty rate. He has also prioritized education, with a focus on reducing the number of out-of-school children in the state.

Additionally, Governor Mohammed has taken steps to improve the state’s healthcare system, His administration’s efforts to address these challenges echo the experiences of poor citizens in Bauchi State and across Nigeria.

Overall, Governor Mohammed’s commitment to addressing the pressing issues faced by his state and its citizens resonates deeply with the experiences of poor Nigerians..

Dukawa write it from Abuja can be reached at [email protected]

Feature/OPED

Tinubu’s Titanic Wahala

Published

7 days ago

08/01/2025

Business Post Contributor

By Tony Ogunlowo

‘Titanic’ can mean something that is very big, gigantic or enormous and it was also the name of a ship that sank on its maiden voyage.

When the Titanic sank in 1912 it sank due to a number of avoidable factors: a ship deemed unsinkable that wasn’t fitted with watertight compartments, a ‘unprofessional’ seasoned captain who was apparently bullied into going at full speed through known ice-berg strewn waters, lack of common binoculars for the deck watch and the unavailability of enough life boats for all the passengers.

This all put together, as they say, was a recipe for disaster. Red flags were ignored.

Translating this to President Tinubu’s modern-day Nigeria, the avoidable factors that can sink the country are way too obvious.

Nigerians have long enjoyed the benefits of fuel subsidy. Costly as it is to maintain it’s enabled the economy to keep running by keeping the cost of things low. It’s removal, as can be seen, has created a domino effect, as the experts predicted, resulting in the prices of even the basic commodities skyrocketing as everyone passes on the additional costs.

With inflation currently at 32.7% and still rising, things are only going to keep on getting more and more expensive. As a result, the new minimum wage of N70,000 will have less purchasing power than the previous 2021 minimum wage of N30,000. If fuel subsidy removal was meant to boost the economy it has done the opposite and will stagnate any efforts to kickstart it.

The governments inability to control corruption or severely punish corrupt officials which is robbing the country’s coffers of billions and billions of Naira every year is a stumbling block for development.

If a corrupt government official who built 750 houses with stolen funds or an ex-governor accused of misappropriating N80 billion are allowed to walk around freely, supposedly on bail, without fear of eventual conviction it questions the message the government is sending out to future looters: if the culprits were in Russia or China the outcome will be totally different.

Even though an austerity economic policy may seem harsh like it was designed to rob Peter to pay Paul, it should be short, sharp hardship with green pastures in the foreseeable future – not ever! A good start will be to cut down on the number of foreign loans being obtained every year as their repayment can take a huge chunk out of the country’s annual income.

The new tax laws are long overdue and it should include that VAT earned in a state stays in that state: so, if your state doesn’t generate any VAT (- such as from the sale of alcohol products) you don’t get to share in what other states have collected.

Insecurity in the country is not something that started yesterday. Previous governments have blood on their hands for not nipping these insurrections in the bud before they grew to become monstrosities. You don’t pat yourself on the back, like the Nigerian Army likes to do believing you have the threat ‘under control’ – you eliminate the threat completely using what ever means necessary.

Unless the order (given by ‘Somebody’) is not to destroy them completely and to quote the late Sani Abacha,”…any insurgency that lasts more than 24 hours, a government official has a hand in it..”, no wonder Boko Haram continues to flourish and bandits like Turji Bello continue to taut the government. When the armed robber Lawrence Anini did something similar in 1986 he was fished out within months, tried and executed.

As I’ve written before the Nigerian Police Force is long past its sell by date and considering the ever growing population of Nigeria with its associated acts of anti-social behaviour its time to seriously consider devolving the NPF into state-run outfits. The growing popularity of state-run security outfits, such as Amotekun, proves this is feasible and effective.

Considering the fact the country is going through severe economic hardship the President, himself, should curb frivolous spending where possible: no more new Presidential yachts or planes ( – that includes the new one for the VP), a cap on ridiculous-no-real-job SA and SSA appointments and most important of all a cap on ALL politicians salaries and perks (which is to say if politicians are patriotic enough they’ll agree to a pay cut, forgo some of their benefits and pay for their own jaunts abroad).

Implementing the Steve Oronsaye Report which recommends merging and closing of ministries etc that has been passed over by every President since President Goodluck commissioned it in 2011 will cut government operating costs even further. This should not just be at Presidential level but extended to all the states: this will not just streamline the bloated and largely inefficient civil service but will also weed out ghost workers and white elephant project.

The ‘japa’ movement which the government is trying to discourage should be allowed to continue. It’s morally wrong for a government that can’t provide suitable employment for its citizens to try and prevent them from seeking opportunities abroad : ‘japa’ is not just limited to Nigerians, it’s a worldwide phenomenon.

People, British, American, Filipinos, are migrating worldwide to where ever there are opportunities for them to prosper. That’s the way the world works now: nobody is going to stay in a ‘sh*t-hole’ country if there are no opportunities for them to grow. Scr3w patriotism! It’s every man for himself! So, if a country can’t provide adequate employment opportunities people will pack their bags and ‘japa’! And if you restrict them from leaving the country what are they going to do? Get up to mischief – 419, cultism, kidnapping!

These same people send money back to their home countries all the time: Nigerians in diaspora in 2023 alone sent home more than $19.5 Billion Dollars. This is a huge injection of foreign currency for a country that desperately needs it.

So, just like the Titanic the warning signs are there and the inevitable that will happen should they be ignored. The question is which way is President Tinubu going to go. This is what I call the ‘Titanic Wahala’, ignore the obvious and the proverbial will hit the fan, sooner or later.