By Salihu Moh. Lukman
High Uncertain Declining
Economy
Official accounts as contained
in annual budgets presented to National Assembly reported that the Federal
Government of Nigeria earned N3,890 and N3,731 billion respectively in 2013 and
2014. Aggregate expenditure was respectively N4,987 and N4,725 billion.
In 2015, FGN revenue is
projected at N3,602 billion and expenditure estimated at N4,358 billion,
implying projected deficit of N756 billion.
Between 2011 and 2014, the
Federal Government earned N14,608 billion. Corresponding aggregate expenditure
was N19,073 billion, producing cumulative deficit of about N4,465 billion.
Partly on account of rising budget deficit, the nation’s foreign reserve was
drawn to $34.51 billion in January 2015 from $44.6 billion in January 2013.
With oil prices in the international market currently on the decline, Nigeria’s
2015 revenue and expenditure projections as presented to the National Assembly
are no longer tenable. The fact that the 2015 budget was based on $65 per
barrel oil benchmark, with daily production of 2.28 million barrels is the
confirmation. Currently, OPEC price of Nigerian crude is $55.77 per barrel. The
House of Representatives, while debating the 2015 Medium Term Expenditure
Framework (MTEF) on March 3, 2015 adopted $54 per barrel.
Assuming the price of $54 per
barrel is upheld and stabilized in the international market throughout 2015,
what does this mean for the nation’s 2015 budget? First, it translates to about
16.9% reduction in projected oil price for 2015. Assuming for instance, net
impact of the emerging reality is 10% reduction in federal government revenue,
this may mean projected revenue drops to about N3,242 billion. If Nigeria is to
retain proposed expenditure of N4,358 billion, it may also mean potential
increase in budget deficit of over N1,000 billion.
How can the federal government
fund this potentially high deficit? Choices to be considered include; loan
facility, reduced public expenditure and drawing down the nation’s foreign
reserve. What is the potential for a loan and at what cost? In other words,
what will be the terms for the loan and how much will the federal government be
borrowing to sustain projected expenditure levels? Already, the Debt Management
Office (DMO) estimates the nation’s debt (exclusive of states domestic debt) at
$56.76 billion as at December 2014. What is the implication of higher debt
profile given high rising revenue uncertainty?
If rationality and objectivity
is to guide decisions of the Nigerian federal public authorities, the second
option of reduced public expenditure may be a natural course of action. This
will conform to the logic of living within the nation’s means. In other words,
ensuring that we don’t live above our earnings.
What will that mean in
practical terms? Is a likelihood of reduced public expenditure going to affect
capital or recurrent components of the 2015 federal government budget or both?
What will be the distribution of reduced public expenditure across the
different sectors and agencies of government?
Necessities and Possibilities:
Political Exigencies
Perhaps, it needs to be
acknowledged that it is possible for the federal government to earn the same
level of revenue as proposed in the2015 budget against the background of
declining oil revenue. This will mean substantial increase in non-oil revenue.
With the oil sector contributing over 60% of federal government revenue, what
is the possibility of expecting substantially increased non-oil revenue to
offset declining oil revenue? Are existing conditions in the country favorable?
For the purpose of analysis,
let us assume this is possible and conditions in the country are favorable,
what does this mean? It simply means increased taxation, which presupposes
increased incomes in the country. With poverty levels of about 70% and
unemployment rate of 23.9%, can we really assume increased incomes to support
correspondingly increased taxation?
Whichever way one looks at it,
the federal government is confronted with hard choices in 2015. For many
optimists, it can be argued that necessity is the mother of invention, based on
which we can postulate wonderful economic models, matrices and equilibriums
that produce wonderful public accounts consistent with the notion of the
biggest economy in Africa. It doesn’t matter even if such models, matrices and
equilibriums produce negative economic indices of high inflation, unemployment,
and poverty rates so long as the outcomes generate the desired revenue gap.
Unfortunately, 2015 is also
election year, which means certain levels of public expenditure must remain
high. As a result, government will be weak in reducing public expenditure.
Besides, increased taxation may also produce high negative public ratings of
the government and with the current President seeking re-election; the choice
of increased taxation may not be attractive. At another level, if reduced
public expenditure is to affect recurrent budget resulting in possible
retrenchment of public sector work force, in an election year, it may mean high
political risk for the ruling party.
With oil prices hovering at
$55.77 per barrel and a possible benchmark of not more than $54 per barrel,
sustaining current public expenditure become very challenging. Existing high
public expenditure engender a flamboyant public account with expenditure
consistently more than revenue. With budgetary oil price benchmark much lower
than actual prices, since the mid 2000s, it helped nourish the nation’s Excess
Crude Account with all the legal and political contestation around it, at the
same time providing a huge financial buffer to the federal government.
With foreign reserve of $34.51
billion, all things considered therefore, the possibility of convenient
political option of heavily drawing down the nation’s foreign reserve is very
likely. The question will be by what magnitude? Considering that between 2013
and 2014, the nation’s foreign reserve was drawn by at least $10 billion, with
the level of current decline in international oil price, to sustain current
expenditure levels as proposed in the 2015 federal government budget proposal,
our nation’s foreign reserve risks being drawn by more than $15 billion by the
end of 2015.
High Public Expenditure Embed
Corruption
National reality of financial
recklessness fuelled more by the federal government defines the Nigerian
economy. Allegations of mismanagement and corruption against public
functionaries have become frequent and reduced to public noise without any
consequence. For instance, in 2012,following the January national protest
against increases in the prices of petroleum products, there were allegations
of oil subsidy fraud, with the House of Representative eventually setting up
the Hon. Farouk Lawal Ad-hoc Committee to verify the actual subsidy
requirements of the country.
At the end of the
investigation, the Committee reported that “contrary to official figure of
subsidy payment of N1.3 Trillion, the Accountant-General of the Federation put
forward a figure of N1.6 Trillion, the CBN N1.7 Trillion, while the Committee
established subsidy payment of N2.587 Trillion as at December 2011, amounting to
more than 900% over the appropriated sum of N245 Billion. This figure ofN2.587
Trillion is based on the CBN figure of N844.944 billion paid to NNPC, in
addition to another figure of N847.942 billion reflected as withdrawals by NNPC
from the excess crude naira account, as well as the sum of N894.201 billionpaid
as subsidy to Marketers. The figure of N847.942 billion quoted above strongly
suggests that NNPC might have been withdrawing from two sources especially when
double withdrawals were also reflected both in 2009 and 2010.”
The report of the 2012 subsidy
probe threw up issues of accountability especially by NNPC with the strong
charge that “NNPC feasted on the Federation Account to bloat the subsidy
payable, some of the marketers were involved in claiming subsidy on products not
supplied.” In particular, the report also indicted the
Accountant-General of the Federation that served in 2009 for making payments in
equal installments of N999 Million for 128 times, totaling N127.872 billion.
Following the release of the
House of Representatives subsidy investigation report, the Chairman of the
Ad-hoc Committee, Hon. Farouk Lawal enmeshed himself in $3 million bribe
scandal reportedly demanded from Mr. Femi Otedola, a major oil marketer, to
clear him from allegations of subsidy fraud.
Since the House of
Representatives subsidy investigation, the nation has continued to witness
claims and counter claims of missing oil revenue. In October 2013 for instance,
former CBN Governor, Mallam Sanusi Lamido Sanusi alleged that $49.8 billion
from the sales of crude oil between January 2012 – July 2013 was missing from
NNPC accounts. Following series of audits and reconciliation meetings involving
NNPC, CBN and Ministry of Finance, the former CBN Governor reported the missing
amount to be $20 billion while the Minister of Finance, Mrs. Ngozi
Okonjo-Iweala reported $10.8 billion. On February 20, 2014, President Goodluck
Jonathan suspended Mallam Sanusi from office on charges of financial misconduct.
With the suspension of Mallam
Sanusi, allegations of missing oil revenue from NNPC accounts took backseat. So
also were issues of subsidy fraud. However, public flashes of allegations of
corruption against public officers continue. In 2012, there was the case of
Police Pension Task Force resulting in Senate investigation. Some of the
revelations include withdrawal of N24 billion for payment of pension that
required about N3.5 billion. The Chairman of the Pension Review Task Team, Alh.
Abdulrasheed Maina, informed the Senate Committee of two accounts in Lagos
where police pension funds was lodged, each amounting to N21 and N24 billion.
Alh. Maina reported daily withdrawals of various sums of money from these
accounts ranging from N200 to N300 million. Total sum of N273.9 billion was reported
by the Senate Committee to have been looted in 6 years.
Other flashes of corruption
charges against public officials include the recurring case of $180 million
Halliburton; $1.1 billion Malabu Oil; Princess Stella Oduah N255 million
Aviation Ministry bulletproof cars; N10 billion jet scam involving the
Petroleum Minister, Mrs. Dizieni Alison Madueke; House of Representatives
Capital Market probe; N360 billion service wide scam; and the recent Soludo’s
allegation of missing N30 trillion.
What these suggest is that
substantial component of public expenditure services shady activities of public
officers and their collaborators. Unfortunately, inconclusive investigations
both cover the size of the proportion of public expenditure that is lost to corruption
and as well as encourages and entrenches the incidence of corruption in our
national life.
Politics – Corruption Drive
High Public Expenditure
On Saturday, December 20, 2014,
the People's Democratic Party (PDP) organized fund raising dinner ostensibly for
President Goodluck Jonathan 2015 re-elections. The dinner, which held at the
Old Banquet Hall, Presidential Villa, Abuja, was reported to have raised N21 billion.
Players in the nation’s Oil and Gas sector donated N5 billion; Friends and
Associates of Prof. Jerry Gana in the Power Sector, N5 billion; Real Estate and
Building, N4 billion; Transport and Aviation, N1 billion; Food and Agriculture,
N500 million; Power, N500 million; Construction, N310 million; Road
Construction, N250 million; National Association, N450 million; and Shelter
Development Association, N250 million. Flagging off the donations, Mr. Tunde
Ayeni, Chairman of Skye Bank donated N2 billion.
Although owing to public
criticisms, and of course legal implications, the PDP subsequently argued that
the fund raising dinner was not to support President Jonathan re-election
campaign, the question needs to be asked; why this generous support coming from
virtually all the leading sectors of the Nigerian economy? Do altruistically
ideological or business investment considerations or both inform these
contributions? If the consideration is altruistically ideological, what does
that mean? If business investment decision, what are the expected returns?
Underpinning this extravagant
donations is certainly the expectations to access business opportunities by way
of contracts and consultancies to the magnitude of these contributions. Ethical
and legal considerations are hardly regarded and this may have accounted for
situations where federal government makes subsidy payments for fuel products
that are never supplied.
It also account for why N24 billion payment will be
made for pension that required just about N3.5 billion and daily withdrawals of
N200 to N300 million can be made from pension accounts without any internal
audit system reporting it. Total payments of N127.872 billion in equal
installments of N999 Million for 128 times can be audaciously made without any
query. And with Accountant-General, NNPC, CBN and Ministry of Finance having
different public account returns, everything goes!
If all these have happened, how
can anyone then dismiss the recent APC Presidential Campaign allegation of
President Jonathan awarding contract of N24 billion to a car wash company
surreptitiously for railway rehabilitation? With probes only producing archival
materials in the names of reports, the beneficiaries are brazen and therefore
could publicly announce donations for election campaigns of billions even when
the law clearly limits it to N1 million per individual.
Entrenched Interests and the
2015 Elections
Certainly, high political
investments produce entrenched interests. With PDP being the ruling party since
1999 and elections merely rituals of producing so-called results of votes, it
is “rational” to be over-confident and therefore proceed to mobilize N21
billion for the re-election of President Jonathan.
Perhaps, again for the purpose
of analysis, it can be assumed that many of the actors really don’t have
options. If not for anything, with many possible allegations and in some cases
indicting investigation reports, to protect themselves from the law, they have
to support President Jonathan. Supporting Gen. Muhammadu Buhari whose agenda is
to fight corruption will be suicidal. Not even the pledge of not looking at
issues before May 29, 2015 can assuage them. Because in real terms, what does
this mean? Will it allow them to get paid for products and services not
rendered? Will it permit huge withdrawals from public accounts on daily basis
for clandestine pension payments that required minimum of monthly withdrawals?
With Gen. Buhari as the
potential winner of the 2015 elections, other bigger questions may include what
will really happen to all the pending probe reports? Will they, in the spirit
of looking at issues from May 30, 2015, be left to the archives? Or given that
they are pending, and with the pledge not to interfere with the work of the
judiciary, are these probe reports going to be given judicial life?
These questions can be endless
and any answer other than victory for PDP and President Jonathan will mobilize
those benefiting from all the high incidences of corruption against the 2015
elections. What is it that is possible in the circumstance? Are we going to
just watch how the PDP, President Jonathan and the formidable interests around
them subvert our democratic rights, return by all means President Jonathan in
whatever guise to continue to rule Nigeria post May 29, 2015 and unguardedly
deplete our national resources and assets without let or hindrance? Or, can
Nigerians rise up to the challenge of depending our democratic rights to
support the defeat of PDP and President Jonathan?
Mobilizing for the Defeat of
PDP and President Jonathan
For most Nigerians, especially
outside PDP, what will the defeat of PDP and President Jonathan translate to,
both with respect to national governance and citizens’ welfare? Issues of
national economic management are at the heart of the campaigns for the 2015
elections. From the narrative, so far, it is clear why and where the source of
support for the PDP and President Jonathan originates.
The source of support
for APC and Gen. Buhari would appear to be organic but yet to crystalize into
support from the nation’s organized groups. What are these groups? Do they
exist? Do they have the capacity needed to mobilize for the defeat of PDP and
President Jonathan? Assuming they do, under what conditions will they want to
support the defeat of PDP and President Jonathan? Specifically, are these
organized groups insulated from the pervasive corruption that characterizes our
national life?
Many would readily cite
organizations such as the trade unions, students movement, professional bodies,
civil society organizations, notably women, youths and human rights
organization, faith based groups, etc. Specifically, Nigeria Labour Congress
(NLC) and its affiliates, Trade Union Congress (TUC) and its affiliates,
National Association of Nigerian Students (NANS), etc. will readily come to
mind. Records of pro-democracy struggles against military dictatorship in the
1990s and more recently against Yar’Adua cabal could be cited.
Some reality check would
however be necessary so that we don’t chase shadows and end up defeated. The
hard truth is that most of our organizations are either weak, compromised or
both. They are weak to the extent that they are mostly alienated from their
membership with very little services, if any. They hardly convene meetings of
structures of these organizations and when meetings are convened, leaders hardly
submit themselves to members’ scrutiny. As a result most of our organized
groups reflect our corrupt national realities.
By far, the source of major
concern is that public officials clandestinely heavily fund most leaders of
these non-governmental organizations, probably on account of lack of sources of
independent funding. In fact, many were sponsored by government officials to
emerge leaders of their organizations. Having therefore been sponsored by
federal government, some are embarrassingly and openly campaigning for PDP and
President Jonathan even when for instance they claim to be “not for profit and
not political”.
A good example is the case of the President of TUC, Mr. Bobboi
Kaigama who openly campaigned for President Jonathan during the opening session
of the February 8 disrupted NLC Delegates’ Conference. Even the NLC is riddled
with many allegations of underhand deals with some contestants for many NLC
offices being funded by the federal government.
Going by reports in the media,
there are daily allegations indicting some of our civil society leaders too.
With all these, what is the prospect of mobilizing these organizations to work
for the defeat of PDP and President Jonathan? Given that many are already
compromised, will the defeat of President Jonathan enable them to at the
minimum sustain current privileges? In other words, what will facilitate the
relationship between political forces opposed to PDP and President Jonathan?
Historical Experiences
Spontaneity would appear to be
the savior and often come to the rescue of societies and nations in period of
great national challenges.This is largely because our formal leaders are hardly
prepared to lead at periods of adversities, which required great sacrifices.
Some of our formal non-governmental leaders, are far more entrenched and
compromised and in the circumstance get themselves deeply entangled with the
leaders of government in power.
Look at our experiences under
military with the challenges thrown up by the annulment of June 12, 1993
elections. Our recent experience of fighting the Yar’Adua cabal between 2009
and 2010 bear the same attributes. And looking at unfolding political events,
we are almost replaying 1993 scenario, scene after scene. The only different is
that in the case of 1993, the election held before Gen. Babangida came up with
those infamous allegations of voters being coerced, huge array of electoral
malpractices, lack of decorum and fairness on the part of electoral umpire
(Prof. Humphrey Nwosu’s National Electoral Commission), charges of money and
other forms of inducement, conflict in the process of authentication and
clearing of credentials of the presidential candidate, contradictory decisions
and conflict of interest between government and candidates, etc.
The reasons cited by Gen.
Babangida for cancelling the June 12, 1993 elections bear strong resemblance
with reasons being advanced today for postponing the 2015 elections. The only
one element that may have been new is the factor of insurgency. And just like
in 1993, long before the elections and its annulment, there were calls for
stopping the elections, including legal cases, so also is the case of
postponing the elections today. There are all sorts of media campaigns and
protests calling for the postponement of the 2015 elections just as there are
uncountable court cases.
It is clear that given the
entrenched interests around President Jonathan, the struggle for 2015 elections
will continue even after the elections. Depending on how the APC and Gen. Buhari
are able to use the period of transition (between now and May 29, 2015) to
develop relationships with sympathetic leaders of organized interests, the risk
of emerging as a government that is highly polluted by the same interests that
have benefitted immensely from PDP’s inglorious corrupt era are very high.
June 12, 1993 Experience
What is it that can therefore
be done? Again, learning from history of June 12 struggles, APC and Gen. Buhari
need not to be bothered too much about perfect situations. The key strategy
should be to open up to be able access all groups on regular basis. Process of
relationship building between APC and Gen. Buhari, on the one hand, and the
nation’s organized groups, on other, should be mapped out such that daily and
weekly engagements and consultations hold.
Most of the times, we dismiss
these suggestions but once we reach levels of emergency thresholds, we return
to them. Typical example, in 1993, the attention of SDP and Chief MKO Abiola
was more on organizations like Nigeria Union of Teachers because of their roles
during elections. Attention on trade unions was limited to the top leadership
of NLC under Comrade Pascal Bafyau. By the time of the annulment, with the NLC
President very reluctant on account of being connected to the regime of Gen.
Babangida and also not picked as the running mate to MKO, capacity to mobilize
national resistance against the annulment was hardly predictable.
The only saving grace was that
in 1993, the nation still had some remnants of vibrant organizations with some
individual leaders such as Chief Alao Aka Bashorun, Dr. Beko Ransome Kuti and
Chief Gani Fawehinmi. These leaders, long before the annulment of June 12
started the process of campaign for an end to military rule in the country
under Campaign for Democracy (CD). The effort to form CD started around July
1990 with the attempt by Chief Alao Bashorun to lead the convocation of a
Sovereign National Conference, which was blocked by the Babangida
administration. Eventually, it was the CD, under Dr. Beko’s leadership, that
spearhead the campaign against the annulment of June 12 elections.
The Save Nigeria Group (SNG)
Experience
Unlike the 1993 June 12
annulment, no one expected the 2009/2010 Yar’Adua experience to threaten
our democracy. Largely because the Yar’Adua government was a product of
democracy, it was inconceivable that functionaries of the Yar’Adua
administration would seek to subvert the constitution in order to hang on to
power. Perhaps, like today’s formidable interests, interests around the
Yar’Adua administration wanted to hang onto power in order to continue to
access public resources.
By the time Yar’Adua was taken
out of the country for medical treatment in Saudi Arabia in December 2009,
concerned Nigerians (about 54) came together to issue a statement. This gave
rise to some media campaigns, advocacy, consultation meetings that produced the
Pastor Tunde Bakare-led SNG and eventually started organizing rallies in Abuja
and Lagos calling for respect for constitutionalism and upholding provisions of
section 145 of the 1999 Nigerian Constitution that require handing over the
mantle of the nation’s leadership to Dr. Goodluck Jonathan as Acting President.
Struggles of SNG, in no small measure helped to mobilize Nigerians leading to the
“doctrine of necessity”, which led to the swearing in of Dr. Jonathan as Acting
President. Instructively, throughout the struggles of SNG, leaders of trade
unions and some of the renowned civil society took backseat.
Contemporary Reality
The truth is that the state of
our organizations today are far worse that the reality in 2010. Today the
nation is in short supply of patriotic Nigerians such as Chief Alao Aka
Bashorun, Chief Gani Fawehinmi and Dr. Beko Ransome Kuti. Of course, we still have
the Pastor Tunde Bakares, Mr. Femi Falanas and their likes. Unfortunately, we
can hardly talk about CD and SNG largely because somehow we have failed in so
many respects to build these organizations.
The CD collapsed as far back as
1994 and organizations like NADECO sustained the struggle for June 12 more as a
regional campaign. In the case of SNG, inability to open up and allow members
to take control of the post Yar’Adua emerging reality contributed substantially
in extinguishing organizational life out of the young SNG.
With CD and SNG practically
non-existent, is it possible to produce similar organizational frameworks,
especially in the event that the formidable interests around President Jonathan
today succeeds in creating constitutional crisis in the country? Must we have
such interventions to be able to resolve constitutional crisis?
Necessities of Peoples Movement
to Resolve Potential Constitutional Crisis
There is in existence strong
possibility that in the coming days and weeks, the nation may be confronted
with constitutional crisis. The simple reason being high probability that PDP
and President Jonathan will be defeated in the Presidential elections. The
stronger public rankings suggest that President Jonathan will be defeated in
the 2015 elections, the more desperate will be the PDP, President Jonathan and
the interests that mobilized N21 billion (and more) to seek to undermine the
1999 Constitution.
What is needed at this point is
some constant reminders of J. Stiglitz message in his 2002 book Globalization
and its Discontent that democracy “is more
than just periodic elections; it entails ensuring that voices are heard, and
that there is a deliberate process.” Given
our national reality, it is not enough to assume that opposition to the naked
looting of public resources are loud enough and they will translate into
electoral votes. We need far stronger national processes to continue to amplify
the voices and consolidate them into national processes that destroy our economy
through looting.
The good thing is that there is
strong currency of independent actions aimed at mobilizing Nigerians to support
Gen. Buhari and the APC. What is needed at this point is to consolidate all
these independent processes to stronger relationship both with the party, APC,
and the candidate, Gen. Buhari. The relationship needs to be founded around the
goal, for instance, of policy advocacy, including interfacing with individual
leaders of non-governmental organizations.
Small
as this would appear, it would help to lay foundation for a stronger national
campaign both in the event of a likely constitutional crisis and smooth
transition to a Gen. Buhari Presidency following a victory at the March 28,2015
elections.
Conclusion:
Setting Agenda for a Peoples Driven Governance and Economic Management
It
needs to be emphasised that the option of building a peoples' movement is almost
inevitable especially if, as a nation and opposition, we want to actualize the
defeat of President Jonathan. All nations that are able to achieve democratic
consolidation resulting in transfer of power to opposition leaders following
electoral defeats have to of necessity develop peoples movements.
Closer
home, the case of Cote de Voire in December 2010 with Mr. Alassane Quattarra
defeating incumbent President Laurent Gbagbo readily comes to mind. And like
our President Jonathan, former President Gbagbo almost aborted the December 2010
Ivoirean elections but the Alassane Quattarra-led opposition party with the
support of international community was able to force Gbagbo to respect the
result of the elections.
The story was
similar in the case of Senegalese elections of March 2012. Former President
Abdoulaye Wade almost created constitutional crisis with the amendment of the
Senegalese constitution to accommodate his attempted third term re-election.
However, a strong alliance of the opposition with civil society organizations
facilitated the defeat of President Wade and the election of Mr. Macky Sall.
Both Gen.
Buhari and leaders of APC need to always remember the experiences of these and
many others as a source of inspiration. But more importantly, they also need to
remember the many revelations of allegations of corruption, to use the words of
President Jonathan, public theft of national resources running into billions
and trillions. This should call for humility and moderation and the need to
ensure that relationship with Nigerians at levels are strengthened.
The words
of leadership scholar, Warren Bennis advocating for the emergence of ‘leaders
of leaders’ who “will decentralise power and democratize strategy by
involving a rich mixture of different people from inside and outside the
organization in the process of inventing the future” should be a
constant guide.
Gen.
Buhari and our APC leaders and candidate need to be emphatically called upon to
transform all the swelling Buhari Support Group, Organizations, Volunteers,
etc. into a national political networks, united and linked to the APC
structures in all the 36 states.
This way, APC can be transformed into a party
that is committed to creating a new Nigeria, and in line with that vision
engage all our governmental and non-governmental actors with the goal of
rebuilding institutions founded on stronger values of productivity, service,
equity and mutual respect.
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