THE ECONOMY AND SOLUDO'S WARNING
The recent warning that the nation's economy is sinking and badly in need of rescue measures, by the former governor of the Central Bank of Nigeria (CBN), Prof. Chukwuma Charles Soludo, is timely and appropriate.The former CBN boss warned that if pre-emptive measures are not taken now, the economy will witness a worse type of structural adjustment programme (SAP) and 'something will have to give.'
He is worried that the government is piling up domestic and foreign debts with no improvement in the economy. Soludo surmised that the administration of former president, Chief Olusegun Obasanjo, managed to grow the economy at about 6-7 percent per annum from an average of 2.8 percent in the 1990s, in spite of the heavy external debt of $34 billion. This, the administration did with oil prices that ranged between $25 and $50. He maintained that the administration settled the $12 billion debt to the Paris Club and still saved about $22 billion as 'Excess Crude.'
The warning did not come as a surprise in view of earlier ones before it by both the Manufacturers Association of Nigeria (MAN) and the World Bank.MAN had last month alerted the nation to the sluggish rate of recovery of the economy. The association, in its First Quarterly Report, said that essential indicators had shown that the nation's economic performance between January and March, this year, was far below average.
It also observed that the anticipated economic recovery is not yet in sight except something drastic is done to ameliorate the situation. To MAN, the economy is under-performing and not growing. No doubt, the worst hit is the real sector, as the manufacturing sector is near comatose.
In the same vein, the World Bank pointed out that growing fiscal deficit is the major risk facing the nation's economy at the moment. Mr. Isma'il Rodwan, of the bank's Nigeria Country Mission attributed the growing deficit to increasing government expenditure, decreasing oil income and increasing level of borrowing by the Federal Government, both internally and externally.All the concerns expressed by Soludo, MAN and World Bank harp on the dangers of higher government expenditure and excessive domestic and external borrowings without contingent plans to grow the economy.
Therefore, the warning by Soludo should be taken seriously because all economic indices suggest that things are, indeed, not well with the nation's economy. This is time for us to increase our export capabilities and stop the over-dependence on oil. If the various regional governments of the First Republic were able to grow strong economies by depending solely on agriculture, especially production of cash crops, there is no reason such a feat cannot be re-enacted now.
The world is still in need of products such as palm oil, rubber, cocoa and groundnuts, which Nigeria can abundantly produce.It is worrisome that we have not deployed oil money to industrialize the nation as other countries in Organization of Oil Exporting Countries (OPEC) are doing. Instead, we are de-industrializing. It is sad that we are about the only OPEC member nation that still imports refined fuel and other petroleum products. Regrettably enough, money from oil has been frittered away through corrupt, uninspiring and unpatriotic leadership.
Soludo is right in giving this warning. The issues he raised should not be dismissed at all. The government must take them very seriously and put up necessary measures to avert the economic calamity foretold. We must heed Soludo's advice and curtail unnecessary expenditure in government. It does not make economic sense that while countries in Europe and America are introducing austerity measures in governance, ours is neck deep in undue ostentation and profligacy. What are we doing with our over-bloated bureaucracy? Why should we have two ministers for one ministry?
Do we need all the special assistants and advisers in government?Government should, as a matter of urgency, trim down this bloated bureaucracy. Such bureaucracy is fast depleting the nation's resources to the extent that our budgets cater more for emoluments of those serving the government, than capital projects. The amount of money pumped into the running of the various governments in the country is so huge that there is a need for cuts. This is, indeed, time to limit the number of ministers and government appointees at all levels of government in the country. Those who aspire to lead should tell us how they intend to tackle the nation's economic problems instead of over-loading the nation with unrealistic promises.