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The Economic illiteracy of Imam Bello

By The Citizen
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By Mark Chieshe
The challenges that have been thrown up by the over 50% drop in oil prices have produced a booming market of  'economic analysts' with a dubious mission to give some Governors a convenient excuse to justify their irresponsible handling of their state's resources. Their half baked, illogical, simplistic economic analysis is founded on mischief, ignorance or a myopic reading of the economic environment. Majority of them are obviously sponsored by vested interests who in order to distract attention from their serial failures hope to put the Federal Government and the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala in the firing line of public opinion. It is an unfortunate reflection of the escapist tendency of these 'analysts' to blame the Federal Government for all the ills of the country while conveniently ignoring the obvious fact that the Federal Government is only one part of a three-structure federation which includes the states and the LGAs who are fiscally independent.

The latest of these cheap shots is from one Imam Bello in an article titled 'The economic hypocrisy of Okonjo-Iweala' which appeared in the Nation Newspaper of 15th May 2015. Obviously on an advocacy mission for state Governors who have failed to pay their workers, he claims that Okonjo-Iweala is the key reason for the current economic crisis, questions her management of the oil price downturn, accuses her of not understanding the scope of her responsibilities - which according to him should include states and LGAs – and also makes the most ridiculous point that Okonjo-Iweala should accept full blame for the inability of State Governors to pay their staff. According to the paid logic of Imam Bello, the Governors are only victims and are fully justified to owe their staff. Imam Bello's arguments ooze with strong bias for certain interest groups and one does not need to think too far to know where his inspiration for economic analysis is coming from.

First, Imam Bello's argument that Okonjo-Iweala is responsible for the current economic crisis is ridiculous and begs the facts. His simplistic argument portrays him as an economic illiterate on a mission to misinform Nigerians. The reality of the crisis is that oil prices have fallen by at least 50% and we do not have enough savings to draw on simply because some State Governors and the National Assembly against the advice of Okonjo-Iweala and even went to the Supreme Court to stop the Federal Government from saving in the Excess Crude Account. This is public knowledge and the fact that Imam Bello's 'analysis' does not include this vital information is very instructive. As Chair of the Economic Team under President Obasanjo, Okonjo-Iweala worked heard with other team members to set up the ECA which had the $22 billion that helped the nation to survive the 2008 global recession. When she came back, she fought for further savings and in fact under her watch about $9 billion was in the ECA by end 2012 but the insistence  of Imam Bello's friends in some Government Houses that the money be shared made it impossible to retain it and save more. By the time oil prices fell, the ECA had just over $4 billion in it. Every other issue Imam Bello is raising is contingent on this fact.

We would like Imam Bello to point us to any economic analysis that he wrote at the time Okonjo-Iweala was battling with the National Assembly to keep the budget benchmark low to support her advocacy that more money be saved. We would like him to tell us what he made of the statement from the National Assembly questioning the rationale behind saving for the rainy day. It would also be helpful if the economic expert Imam Bello would tell Nigerians the opinions that he published against the clamor by the State Governors that monies should be shared. I have done a check and there is absolutely none. Imam therefore has no right whatsoever to grandstand as an' objective' analyst.

Second, the claim by Imam Bello that 'the handling of the oil price downturn has raised serious questions about our economic management' is another instance of Imam's talent for economic myopia. Okonjo-Iweala has been strategic in the handling of the oil price downturn. It is on record that Nigeria is one of the best managed among the economies hit by the crash in oil prices. Unlike Russia, Venezuela and other countries whose economies will contract this year, Nigeria's economy is projected to grow by 4.5%. Recently at the IMF/World Bank Spring meetings, the IMF Managing Director, Christine Lagarde commended Okonjo-Iweala's strategic response to the oil price slide. According to her, as one of the seven oil-producing nations in the African region affected by the revenue loss, Nigeria's response was commendable. There is no Finance Minister in the world that will do better than what Okonjo-Iweala is doing now to manage the economy when we failed to save.

Also Imam Bello's allegation that the downward revisions in the budget benchmark prices created confusion at the states and LGAs is another instance of how uninformed his analysis is. One, contrary to his claim, Okonjo-Iweala had anticipated that prices would fall further and made this clear in her 2015 budget speech. The impression that this was not planned for or thought through is false. The 2015-2017 MTEF was prepared and transmitted to the National Assembly (NASS) early in September 2014. But shortly after, oil prices began to fall. This compelled further reviews that brought it as low as the $52 which was eventually adopted. Speaking during the budget presentation, Okonjo-Iweala had stated very clearly that 'The scenario of rapidly declining oil prices is playing out. Nigeria cannot control the price of oil, but we can control our response to it. We recognize that prices might still fall further but we do not intend to revise the price further down as price intelligence indicates that prices might average between $65 and $70pb in 2015. This is however not an ironclad guarantee. So if prices fall outside this range, Government would have to introduce further measures.' Imam's claim that Okonjo-Iweala has not been proactive in the management of the oil downturn is therefore less than honest.

Third, Okonjo-Iweala has not failed in any way to appreciate her role as the Coordinating Minister for the Economy. It is plain common sense that when you suffer a huge revenue fall like we have, you need to take a hard look on your expenditure profile, make necessary adjustments and re-prioritize your expenditure based on your inflow. It is instructive that while Imam is crying more than the 'bereaved' governors, the Ondo and Edo state governors have come out to say that they have been able to pay salaries and even execute important programmes and projects through fiscal prudence and prioritization of salaries. This shows that Imam Bello's thesis - Okonjo-Iweala is responsible for the failure of states to pay salaries is simply unwarranted and baseless.

From her vantage position as the Minister of Finance it is obvious she knows that with what some states are receiving from the federation account, they have no reason to owe salaries if they had made payment of salaries their priority within the context of available resources and priorities. She understands that the real problem for a lot of them is not lack of resources but lack of commitment to the people's welfare. This is the simple truth. The profligacy of most of the governors is no secret to Nigerians. The failure of Imam Bello to even mention this in his lengthy article puts a strong question mark on his objectivity. Instead he prefers to sell the simplistic argument that seeks to portray even the worst of the Governors as victims - as if it was the responsibility of Okonjo-Iweala to also manage state finances and economies. If governors were so clueless and passive then why do we have states in the first place? They should have just directed their commissioners of finance to report to Okonjo-Iweala in Abuja. And she is leading by example. With the approval of the President, she has taken the right decision and that is why the government is today up to date on its obligations to civil servants. By prioritizing salaries and making sacrifices, she has been able to keep things going steady. It is also pertinent to mention that even before the fall in oil prices, she had given the Federal Inland Revenue Service new revenue targets which were exceeded. This gives confidence that in the emerging post oil economy, the target of N450 billion from tax revenues over the next three years is doable.

That is why contrary to the ridiculous theory of Imam Bello, this is actually Okonjo-Iweala's finest hour. Okonjo-Iweala has done a decent job of managing the steep fall in the price of our most important economic resource. That over six months the economy is still standing is strong evidence to this. Imam Bello is too full of spite to get this. It is no surprise that Mark Lowcock, permanent secretary of DFID in the UK Ministry of Development Cooperation recently described her as 'a hero for Nigeria' and 'one of the world's most respected and admired Finance Ministers'. The Chairman of Global Business Policy Council of A.T Kearney, a  top global management consulting firm, Mr. Paul Laudicina, also recently named Okonjo-Iweala as one on his list of five 'Unsung Leaders of 2014'. She is being celebrated by the whole world as a star and feeble attempts by the likes of Imam Bello to tar her reputation are doomed to fail.

*Chieshe is a public analyst based in Abuja