Saraki: Senate's practical, inclusive, timely economic rescue plan
By Samuel T. Adakole
“Many times experts have quipped that Nigeria is finished, but we come back stronger. This occasion will not be any different. But it will not happen by a slogan! No, it will take positive leadership and unity. Never in our history has the need to show leadership and unity been more acute, more urgent than now. We cannot afford to play politics with our current situation. As a parliament we are in this together with the Executive and the Judiciary, we cannot afford to fail Nigerians.” - Senate President Bukola Saraki
The 14-Point Plan for resolving the economic crisis that the Senate last week sent to the Executive is so far the most comprehensive, practical and timely response to the economic nightmare that the country is facing.
I am particularly impressed by the clarity of the recommendations which should be a lesson to the Executive arm of government whose actions and pronouncements have been defined by incoherence and confusion.
WhiIe the specific recommendations are not revolutionary or unprecedented, they constitute a clear and practicable path out of the economic woods in which the country has found itself.
What I like most about the recommendations is the inclusive nature of what the Senate is proposing. Unlike the Executive, the Upper Chamber is not focused on unproductive scapegoating and blame game that has unfortunately become the trademark of the Executive's response to the economic crisis.
The Senate is not only suggesting solutions but making itself an integral part of the process of implementing these solutions. This is clear from the very first of the recommendations which requests the executive to forward an Economic Stimulus Bill containing all the fiscal stimulus packages, investments and incentives for accelerated consideration and passage by the National Assembly.
Another key recommendation is the call for the fiscal and monetary authorities to harmonies all policies to show policy consensus. This is important because the public disagreement between the Federal Ministry of Finance and the Central Bank of Nigeria on interest rates is a great disservice to the country. How is the international community and investors supposed to take us seriously when at the time we should be projecting a stronger focus and unity of purpose on the economy, the two leading institutions responsible are squabbling over fundamentals. It doesn't inspire confidence, when delicate conversations that should be conducted outside the public domain become headline controversies. In this regard the Senate is very much on point.
The Senate's call for the adoption of peaceful means to resolve Niger Delta crisis at a time of increasing militarization of the conflict is also a very good one. The current reality is that in spite of the growing consensus on diversification, it will take the country a little while to get to the point where other sources of revenues will start competing with oil. As for now, oil still remains our number one source of revenue. So the military solution and the attendant crisis which is likely to worsen the quantity shock which has already crashed daily production from about 2.2million barrels per day (bdp) to 1.6million bpd will be disastrous for the country.
Also spot on are the recommended areas for the economic stimulus to be applied: Safety Programmes; Humanitarian Activities in the North East; Power Generation; Agricultural value chain; Textile manufacturing; National highway network construction and maintenance; Railway construction and maintenance; Motor vehicle assembly plants; Completion and commissioning of Ajaokuta Steel Complex; Arts, Science and Technology. By any measure, these are the critical focus areas where impact is most needed for the economy to turn the corner.
The Senate's recommendation for caution in the issuance of bonds and treasury bills, a practice which is becoming a key part of government's arsenal for fighting the economic recession, is also appropriate. It is a fact that in the rush to issue bonds, the local business entrepreneurs who are already under pressure due to high interest rates, unstable power supply and the many 'checkpoints' at the ports are being pushed out of the investment space. That is why it is important that this call for the Federal Government to cap the issuance of bonds and treasury bills in order not to crowd-out local investors from the market be heeded because Local Domestic Investment (LDI) is as important, if not more as Foreign Domestic Investment (FDI).
Also very appropriate in this regard is the additional recommendation that the Federal Government should ensure the payment of all genuine domestic debts owed to local contractors who have completed their jobs. The health of the domestic private sector must be a central component of any viable strategy to get Nigeria out of this economic crisis.
In line with the longstanding conversation regarding the use of pension funds for infrastructural projects, an idea which has been championed by, among others, Babatunde Fashola, the Minister of Power, Works and Housing, the Senate plan also includes a recommendation for the use of pension and insurance funds to support long-term capital on lending for agriculture, industry and housing projects.
This also deserves serious consideration by the executive. The deployment of pension funds into priorities like infrastructure in order to catalyze growth and improve demand has been successfully done in many countries. But a word of caution is necessary here. Though the results are largely positive in many other countries, it is also true that, in some cases, pensioners have lost their life savings as a consequence of such initiatives.
This is why this idea should be explored with caution. The focus should be on ensuring a fidelity with extant rules and regulations to ensure that the objective of boosting infrastructure is not achieved at the expense of pensioners' life savings/welfare.
There is no doubt that the crash in the global price of oil with began in mid-2014 has devastated revenues at all levels within the 3 tiers of government by at least half. This development was of course exacerbated by the country's failure to save when oil prices were high.
But the conversation on boosting inadequate revenues cannot be complete without reference to the reality that poor governance and waste of resources especially at the state and local government levels is also a big problem. State Governors continue to live large and local government chairmen are not doing much better. This is why the recommendation by the senate for compliance with the Fiscal Responsibility Act's guidelines for prudence and accountability in revenue and expenditure management is so important. But for this recommendation to have practical value, there is a need for people who have breached the act to be held accountable. Without that, fiscal responsibility will continue to have more bark than bite. In this regard, civil society, the media and more importantly the judiciary have a very important role to play.
The country's revenue crisis is of course compounded by the ceaseless bleeding that continues to take place at various points of the petroleum value chain. By all accounts, the incidence and intensity is on the upward swing as both small and big time players continue to rip off the country. There have also been several reports of scams on the high seas reportedly carried out in collusion with unscrupulous staff of government agencies and rogue agents of multinational companies resulting in the loss of millions of dollars in revenues which would have gone into the national coffers.
Against this background, the Senate is very right in its recommendation that cases involving unaccounted oil exports should be pursued vigorously to logical conclusion. The hope is that the Department of State Security, the EFCC and the police will act on this as speedily as it has been handling political cases.
It is increasingly obvious that a major underlying cause of the worsening economic crisis is the crisis within the government's economic management system. This crisis as earlier stated has found unfortunate expression in the public spat between the Finance Ministry and the CBN over interest rates. But it has manifested itself in other areas as well. The Senate's recommendation that the President should consider establishing a Council of Economic Advisers made up of experts in economic management, if implemented properly should help to strengthen confidence in the economy.
Perhaps the best part of the Saraki Senate's 14-point Plan is the commitment of the Saraki Senate to fast track the passage of important bills which are critical to the economic recovery process. In addition to the fiscal and monetary initiatives, this is the third leg of the tripod on which any sustainable progress with the economy should be anchored. The bills which the National Assembly has committed to 'examine, prioritize and fast-track' are: the Petroleum Industry Bill; National Development Bank of Nigeria (Establishment) Bill; Nigerian Ports and Habours Authority Act (Amendment) Bill; National Road Fund (Establishment) Bill; National Transport Commission Act of 2001; Warehouse Receipts Act (Amendment) Bill; Companies and Allied Matters Act (CAMA); Investment and Securities Act (ISA); Customs and Excise Management Act; Federal Competition Bill; National Road Authority Bill
To retain credit and credibility for these well thought out and timely recommendations, the Senate must make good on its promise to pass these laws as soon as possible. That will be the true icing on the cake of economic recovery.
*Adakole is a public analyst based in Lagos