An economist, Tope Fasua, in this piece reviews the state of the economy and declares that it is high time President Muhammadu Buhari embraced the solutions proffered by All Progressives Congress (APC) National Leader Asiwaju Bola Ahmed Tinubu in a letter written to former President Goodluck Jonathan on November 18, last year.
As things stand, except we see something new soon, it doesn’t seem that this government will run the economy any differently from what Jonathan did. We will likely have a bunch of people who will take us aborrowing, who will subtly push for naira devaluation in spite of Buhari’s extant stoic approach on that front.
On November 18, 2014, about three months to the initially scheduled dates for the last presidential election, Senator Bola Ahmed Tinubu (BAT) had cause to write to the then President Goodluck Jonathan on some ways forward for the economy which had showed signs of going into a tailspin as a result of the crash in crude oil prices.
The widely-publicised open letter was necessitated by the quest by that government and its economic manager, Dr. Mrs. Ngozi Okonjo-Iweala, to ‘rebrand’ the good old austerity bogeyman and foist it on the people. They actually succeeded to a large extent. The argument was that since the crude oil prices had depressed, government had little money for anything at all. And so, the people had to suffer the consequences. In Nigeria, it is far too easy to make the people bear the brunt of corruption, visionlessness and mismanagement. As can be seen after the departure of that government, corruption like never before seen was happening while all this was going on – if we are to believe the kind of figures making it out of the grapevines these days.
Callousness of politicians second to none.
But, I am afraid; afraid that the same hopeless, baseless and dangerous economic philosophies always float to the top; afraid that our economic managers are always sent here, on recommendation from World Bank, International Monetary Fund (IMF) and of late, Goldman Sachs. Whereas we may be lucky to have people from their stable who haven’t imbibed the one-track-minded approaches which have kept our economy down till date. Still, it is important to sound the alarm on time. Asides from that, it is very interesting, the kind of thoughts and approaches that came from the pens of the great BAT – love him or hate him – such that it will be a great irony if his party departs from them. I have read and reread Tinubu’s treatise, to be sure that I didn’t miss any trick. It is a study, not only in economic philosophy, but in erudition; the choice of language is sophisticated, modern, sterling and advanced. Humour was subtly deployed but the seriousness of the message couldn’t be mistaken. And I found out that this man may not be who they say he is. But, let us find out what I mean.
The letter starts with an admonition
“No matter who is in power, we must do whatever is in our capacity to do to steer the nation away from economic woe. The people have suffered too much hardship already”.
The economic statistics which are regularly peddled by these kinds of economists I mentioned were equally questioned. Senator Tinubu believes, as some of us have averred time and again, that indeed, Nigeria has almost always shown signs of ‘depression’. Those who think like us are concerned that all the symptoms of depression are here – huge poverty, high unemploymen rate, social dysfunction, crime, filth, racketeering, mindless religiosity and the incursion of fraudulent ‘men of God’ who fleece people, dissonant governments and even corruption. Think about the United States of America (U.S.A.) in the 1930s, and you have Nigeria. Yet, our ‘highly educated’ economists prefer to speak about Gross Domestic Product (GDP) growth, (a figure obtained largely by conjecture), and of ‘market forces’, when they know that markets here are terribly rigged.
But Tinubu said: “…After viewing these statistics, most objective economists would conclude Nigeria is mired in a long-term, secular depression. Forget the rosy GDP numbers. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the current administration, the haves shall become the ‘have–mores’ and the ‘have-nots’ shall become the ‘have even less….’.
“ The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidises their economic bounty. A tight confederacy rides an economic skyrocket while the bulk of the people languish in the swamp. For one group, the economy is effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.”
I can almost see many readers sniggering at the fact that these words were written by Tinubu, a multi-billionaire if ever there was one. But sometimes, we must be ready to accept that something good comes forth from Nazareth. Jesus Christ teaches us not to summarily condemn the tax-collector (no pun intended), the Pharisee, the heathen, and not to assume a puritanical position. I don’t mean to pontificate; this is serious business. As things stand, except we see something new soon, it doesn’t seem that this government will run the economy any differently from what Jonathan did.
We will likely have a bunch of people who will take us aborrowing, who will subtly push for Naira devaluation in spite of Buhari’s extant stoic approach on that front.
But, we have to take BAT serious. This is the person who discovered guys like Tunde Fashola and many more. He certainly has a redeeming feature. The thoughts are also profound. And what do we expect? Are we better off with elite who continue to deceive us, and milk us dry to the bones, or with elite who sometimes – however rarely – speak some truth to our situation? I prefer the latter. Asides from these, reading the letter my thoughts were ‘what is sauce for the goose should also be sauce for the gander’. In other words, good advice to the Peoples Democratic Party (PDP) should also be good advice to the All Progressives Congress (APC). Apparently, no one is emphasising these lessons to the new kids on the block.
The great big argument around our economics is whether to use a ‘commonsense’ approach, which requires that we think for ourselves because we know our society, our social psychology, our strengths and weaknesses better, or whether to continue along the ‘plastic path’; the path of the traducers of our people, who have seized control since at least Obasanjo’s first coming in 1977. Those who sell this approach had a field day in the Babangida days, and became more sophisticated when civilian rule returned in 1999.
They have only gotten stronger since then. The result! As quoted above, has been a one-way traffic to poverty and hopelessness for the majority, while a tiny minority (a ‘tight confederacy’)– mostly politically-connected – live in an ‘effervescent economic skyrocket’. Is it any wonder? No matter how much Nigerians are complaining and businesses are going belly-up, Nigeria became a country where billions are spent daily on champagnes in nightclubs. The ostentation here cannot be found anywhere else in the world. Huge buildings spring up under months, all paid in cash. In any western country most of them are financed.
The ‘confederacy’ only gets tighter. You have to be expressly invited to ‘come and eat’. It gets more difficult to make it into the clique. Even recent appointments by Buhari are of those who are tightly connected one way or another – silver spoons, sons and daughters of age-old politicians. The advent of private schools is ensuring that blue blood remains separated from others not so pure. And that the money is kept within the ‘family’. Rich folks pair their children in marriage; even if they sometimes fail. All good!
This call is imperative because Senator Tinubu, among Nigeria’s elite, is the only one who has made this kind of call. The meat of the story is not about the printing of naira, but the need to invert our economic development paradigm, to be honest and to start from scratch. It is about reinventing the Nigerian economy, and in my view, is the only available option we have. Nigeria has wasted much time and resources and we must stop listening to non-patriots who have put us in much trouble for selfish reasons, up till now.
Yet, the runners of the economy preached belt-tightening, austerity for the hoi polloi. This is why this amplification of Bola Tinubu’s letter is important.
All we have heard since the APC government rode in is…austerity. The people have been asked to be ‘patient’. We have been regaled with the fact that PDP damaged the economy over several years. ‘Baba’ has asked – albeit sternly on a few occasions – why Nigerians want him to perform magic. The underpinning ideology points to the need for the people to suffer some more in the hope that they, ‘in the long-run’, will enjoy. Maynard Keynes said we are all dead in the long-run. I think Tinubu also subscribes to Keynes.
He said: “…As with the Euro zone, the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is to tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor…
“Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don’t have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a committee of beggars and street urchins….
“The austerity that the current administration offers is an insensitive, myopic policy that lends primacy of favour to meaningless accounting figures instead of to the material wellbeing of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due”.
Very importantly, a major kernel of Tinubu-nomics is that there is an alternative. He weighed in against the idea of alluding to the crash in crude oil prices as a basis for the total slowdown of the economy (especially for the poor majority). He advocates that where necessary, the government may print and spend, and dislink this economy from the current “dollar standard”. This will be radical, and may incur the wrath of those crazy financial market guys who are known as ‘masters of the universe’, but if we play our cards smartly, we can get away with it.
However, this needs to be sold to the present government. The problem is that those of us who think like Tinubu don’t have the ears of the government. But he does. I am writing this so that he ditches political considerations and does the needful; for his own good and the entire Nigeria.
Tinubu said the following on the anomaly of linking our economy to a ‘dollar standard’, akin to the ‘Gold Standard’ which the world abandoned in 1971, courtesy of President Nixon: “…The dollar intake is basically irrelevant to determining the amount of Naira the government commands and places into the political economy. …The last I looked, Nigeria operates a Naira-based economy not a dollar-based one. There is no legal or moral restriction strictly limiting the amount of Naira in the system to match the amount of dollars collected via oil sales. More importantly, there is no economic justification for the close linkage implied by the government…. If we take its position at face value, the Jonathan administration is advocating that we effectively place the naira and thus our fiscal policy on a ‘dollar standard.’
“The world jettisoned the gold standard in 1971 because it proved unworkable, reducing the policy space in which governments could pursue fiscal programmes promoting full employment and social welfare. We should likewise reject this government’s imposition of a dollar standard on our nation’s fiscal operations…. Because we operate a sovereign fiat currency the federal government issues at its sole discretion, the federal government can never be rendered insolvent in naira. This means it can run naira fiscal deficits indefinitely. The only outer bound is to ensure the fiscal expansion does not incur damaging inflation rates…. There is no logical reason to peg the flow of naira into the economy to the flow of dollars received. The correct perspective is not to mechanistically restrict naira expenditure to dollar intake. This would be tantamount to those crippled with economic blinders forcefully leading those who can see we are heading for disaster. It points to deflation, recession and worse.
“The better methodology is to ascertain, then achieve, the level of naira expenditure needed to expand the economy and create jobs without causing inflation to rise to dangerous levels. This is how broadly-shared prosperity is generated in a sustainable manner.”
Perfect! Tinubu says the worst we will suffer is some inflation if we print to spend, but that we must target the spending. I disagree slightly from him in the areas he advocated, but I have developed an alternative which I have tested on a different forum (story for another day). The bottom line is that if we spend for the youth, and for low-paying labour, the money stays home. However, our successive governments seem more interested in large spending. We speak of power sector, manufacturing, infrastructure and so on being the next ways forward.
But, this economy must be focused on the little things. I pray and hope this government will not be captured by the ‘heavy-spenders’ and the ‘mega-thinkers’, who, together with their foreign friends, will siphon all the money that Buhari is trying to collect back and save. The emancipation of this country lies with the youth. And there is much work for them to do, only that the government has not been able to see this for whatever reason.
Senator Tinubu went on for emphasis
“…In this way, the nation’s economic engineers should focus primarily on allocating value and opportunity to our under-utilised labour force and our idle, yet potentially productive capital in a way that promotes wealth creation and expansion of aggregate demand. It is this sustainment of aggregate demand that empowers the nation to rescue itself from the whirlpool of economic contraction. This avenue is more benign than the one the federal administration now advocates…. In the face of recessionary headwinds, government should run counter-cyclical fiscal policy by using its naira sovereignty to fund fiscal deficits. The deficit is not simply for the sake of running a deficit; the funds cannot be spent on non-productive matters. It must be used to fuel infrastructural and other projects that not only employ great numbers of people but enhance the overall productivity of the economy… Inflation is the major risk of running budget deficits to spur growth. We can contain inflation to acceptable levels by ensuring additional government expenditures are for items that can be supplied domestically, particularly labour. Naira paid to poor and working class people mostly circulates in the domestic economy, spurring additional local commerce and production…This is because their consumption patterns do not approach the level of import expenditures associated with their wealthier compatriots. Related to this, we must decrease our level of superfluous imports.
In other words, if we have to devalue, but have targeted spending towards the youth, the effects will be cushioned. Bola Tinubu concluded his treatise by stating:
“…Regardless of our partisan affiliations, let us consecrate this land by dedicating ourselves to the betterment of the poor, weak, and needy members of our national family. Let this moment not pass like so many others where we have demanded that the most vulnerable among us bear the greatest weight of the national burden. Let us give them the hope, change and dignity they deserve and human decency demands. This is how we make the nation great. When I speak of a common sense revolution, this is what I mean”.
In the final analysis, all the arguments about the economy should be about the PEOPLE. Nothing else matters. However, what we have seen so far, is that government is easily swept off its feet by money-mongers, who convince us easily that what is most important is to ‘raise money’. If we focus on money and ignore the people, we’d be repeating the same mistakes. We’d be inviting shylocks from all over the world. They will lend to us. We will sign up to conditions that will enslave generations unborn.
This is a great place for me to draw the curtains on this write-up. I have quoted copiously from Senator Bola Tinubu’s earlier missive, because of the sheer relevance of the writer to Nigeria’s politics. I don’t know a lot about the politics, and some may say he is being edged out. A lot happens underground in politics. I don’t think he can be sidelined very cheaply. But I also don’t want him to stand aside and feign unconcern lest we lose this golden opportunity. Also, this letter was written to Jonathan, at a point when neither Tinubu nor Buhari were sure of victory, so I believe it mirrors, the truth, the only truth, and nothing but the truth. Our nation is not reputed to be a truthful nation, so I hold on to this.
I have amplified Tinubu’s thoughts and ideas, because we have lost ample time already, having promised ‘Change’ for the people. Some of us who supported the candidacy of Buhari/Osinbajo were not happy at some of the dilly-dallying. We were not happy when an attempt was made to deny party promises, or when there was a long delay in open declaration of assets. We were also not happy, when from Day 1 of this government, we started to hear appeals for patience, for time, and the same buck-passing and shifting of responsibilities, for which Jonathan was hated and eventually booted out. Tinubu has been largely silent. But we will not let him go until he weighs in with these truthful ideas and ideologies. These ideologies espoused in his letter are based on commonsense, and only require, that those who offer to lead this country, open their eyes to the reality, rather than kowtow to textbook-thumping economists brought from foreign lands, and their hawkish backers who have always cynically put Africa – especially Nigeria – in economic trouble, only to laugh at us later.
The team put together by Buhari is a bit encouraging. Fashola, Kachikwu, Fayemi, Amina Mohammed. These guys sound and look like they are ready for business. Relating to the economy, Okey Enelamah may have worked with Goldman Sachs a long time ago, but I doubt if he is ingrained in their ways. He is more a venture capitalist who has seen many indigenous transactions while running African Capital Alliance – a company which a friend tells me may be the most successful indigenous company in Nigeria ever! His knowledge of our local business is an advantage. At least he is not coming with textbook ideas, or from the ‘prima donna’ mentality which working at the World Bank or IMF confers on people. Kemi Adeosun made a lot of sound-bites during her interview at the Senate. She may fall into the trap of ‘trickle-down’, ‘entrepreneurship is the only way forward’, ‘market forces will sort everything out’, except she gets help.
This call is imperative because Senator Tinubu, among Nigeria’s elites, is the only one who has made this kind of call. The meat of the story is not about the printing of Naira, but the need to invert our economic development paradigm, to be honest and to start from scratch. It is about reinventing the Nigerian economy, and in my view, is the only available option we have. Nigeria has wasted much time and resources and we must stop listening to non-patriots who have put us in much trouble for selfish reasons, up till now. I echo my brother Simbo Olorunfemi, whose article – “Lest We Forget We Won And Why We Won” – is still making the rounds. Our greatest war will be against soulless economists who regurgitate theories that won’t work. For many of them, their allegiance is not to Nigeria, but elsewhere. Indeed, economics is not rocket science. It is about sincerity, human nature, leadership. Complicated quadratic equations cannot solve our problem in a country where our data is dodgy and tainted with emotion and corruption.
In the final analysis, all the arguments about the economy should be about the PEOPLE. Nothing else matters. However, what we have seen so far, is that government is easily swept off its feet by money-mongers, who convince us easily that what is most important is to ‘raise money’. If we focus on money and ignore the people, we’d be repeating the same mistakes. We’d be inviting shylocks from all over the world. They will lend to us. We will sign up to conditions that will enslave generations unborn. They will focus us on GDP growth, and when we are left carrying a bigger can, they will snigger and mock us, and theorise about our failure. It’s always been this way.
So, Dear Senator Tinubu – whom I’ve never met before – over to you sir. This regime must not fail.
Fasua, an economist, wrote this piece for .Premium TIMES