SHOCKING THE ECONOMY BACK TO LIFE
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That the Nigerian Economy is in dire straits is pretty obvious to all. What may be in dispute is who or what caused the malaise. A section of the Nigerian People blames the last government. For them, the last government did nothing but ruin the economy. Another section blames the incumbent government. They accuse the President of having no idea on how to run the economy and that his inexcusable delay in constituting his cabinet has dragged our economy down.But irrespective of which side of this largely uninformed debate any one may belong, the signs of a struggling economy are evident. Blaming anybody or passing buck will not help.We have a national economic challenge which we must confront speedily.
National income has dropped by half or so, Gross domestic product(GDP) has declined to 2.34%, the lowest in nearly 10 years, and analysts( including the CBN Governor) predict a recession in 2016, inflation is almost at 10%, the Naira continues to decline against the dollar at the parallel market reaching 225 Naira against the US dollar last week even in the face of strenuous effort by the CBN to hold up the value Unemployment has worsened exceeding 7%, interest rates have remained high in spite of a recent mild reduction in Cash Reserve Ratio( CRR) and with rising inflation,the misery index has worsened. Manufacturing has already gone into negative growth and there is much rumbling in that sector. Even the informal sector is in difficulty as the CBN has effectively shut most out of the forex market. The Nigerian stock market is in decline and foreign direct investment ( FDI) flow has slowed down. Externally, our Foreign Reserves though slowly recovering, are unimpressive and the International rating agents have marked us down. Standard & Poor's have moved our sovereign rating from BB- to B- and JP Morgan has delisted our Bonds from their Government index.
Many of our State governments are still owing workers' salaries despite the well advertised bail out or relief packages from the Federal Government and Pensioners are in great distress in some states. Many contractors have pulled out of sites because of unpaid bills and domestic debt is piling up and there are indications that the ratio of capital to recurrent expenditure which reached an all time low of 18: 82 in the 2015 Budget may worsen in 2016. In summary the economy is in real difficulty. There is no attempt here to exaggerate or cause panic, but to draw attention to the need for urgent remedial actions to be taken.
Last week, the 21st Nigerian Economic Summit( NES) was held in Abuja and participants were confronted with this gory picture, but at the end, it was agreed that the situation was reversible and redeemable. But only if we were willing to make tough choices! To borrow from the Nika Gulari, former Prime Minister of Georgia, our economy needs to be put through shocks to come back to life- Competitiveness Shock, Confidence Shock, Mindset shock and Simplification Shock.
Our Governments need to benchmark other economies and take immediate steps to make us competitive and thereby attractive for investment. We need a Quantum Leap in Business Climate. Smart regulations, de bottling of all bottlenecks, vast reduction in bureaucracy and plenty of incentives to attract private sector investment in infrastructure( Economic & Social) and strong enforcement of law and order, including sanctity of contracts are key to climbing the rungs of the ease of doing business ladder. We need to shock our economy with attractive and irresistible investment incentives to excite a new wave of both local and foreign investment. Investments create jobs. Jobs create wealth. And wealth drives away poverty.
We need to vastly ramp up confidence in our institutions through a Quantum leap in Citizen services. Our Public sector institutions must be fully oriented to provide courteous and satisfactory services to the citizens. Citizens will need to feel that Government and its institutions are established for their good, protection and well being, rather than the current pervasive feeling that the institutions are there to repress them and make life difficult. This confidence shock which will be helped by an unprecedented display of transparency and accountability at all levels and tiers of government will help in internal revenue generation and public asset protection amongst many other benefits. It will also result in fewer laws and regulations, not more!
MIND SET SHOCK
This shock will be realized by a Quantum leap in cost effective management of Public Finances. Subsidies have to be fully removed to enthrone efficient allocation and utilization of public finances. Targeted assistance to the poor and deprived can be determined and implemented as part of social services. The one budget principle that captures all public sector income and expenditure must be enthroned. The current TSA policy and the zero-based budgeting represent movement in this direction. The shock will elicit efficient deployment of public finance to achieve higher value for the citizens. The entitlement mindset and it is 'our turn' mentality must be abolished..
This is to be realized through a Quantum leap in the structural reform of Public Administration. We need to redesign our processes for service delivery, streamline regulations, change mind sets and create motivational formulas. Every MDA must be subjected to performance based bonuses depending on agreed Key Performance indicators( KPIs). All passengers must disembark and all dead weights must be dropped on the Dead Sea. Businesses should be registered in one day and multiple taxes can be paid to one agency of government. If an application for license or permit is not replied in 14 days, then the silence will be regarded as consent!
In summary, what we need are the BEST REFORMS. These are Radical, Deep and Fast reforms that will arrest current decline, instigate rapid growth and stabilize the economy. That is the tough choice we must make, and that right early.
Mazi Sam Ohuabunwa OFR