Nigeria has been running in circle since the events of January 1966 that led to the fall of the First Republic, former Governor of the Central Bank of Nigeria (CBN), Professor Chukwuma Charles Soludo said in Abuja on Thursday.
Delivering a lecture as guest speaker at the 13th Daily Trust Dialogue with the theme “50 Years Since 1966: Is Nigeria Rising?” Soludo argued that the 2016 budget is not expansionary, stressing that it is less than $150 per capita and has a 37 per cent deficit within it.
“We have never had it this way and, like before, the total recurrent budget is still higher than the total revenue.This particular budget, as presented, will have 7 per cent of its recurrent expenditure borrowed. The implication is that 7 per cent of borrowed funds are actually going into recurrent, so we are still borrowing for recurrent, as was the trend with the previous government. I must say that the current budget under consideration is largely a missed opportunity and in my view largely more of the same,” he declared.
The former CBN chief noted that an alternative budget with different exchange rate configurations and efficient waste management efforts could fetch the country an N10trn to N15tr budget for starters. “We should be moving towards N15trn to N20trn for the kind of transformation that is being promised,” he said.
Although Soludo said the budget proposal contain some good innovative ideas in terms of employment, free education for some selected sectors and fighting corruption, and appreciated the haste with which it was prepared, he insisted it is largely contracted, rather than expansionary as many people have described it.
According to him, despite the fact that “oil, as the nation’s oxygen and the country having earned more than $1 trillion from oil, has managed to keep the looting elite united and organized and fuelled the economy.”
While commending the CBN for the preliminary step it has taken “in trying to dismantle the strangulating ad hoc restrictions that are hemorrhaging the economy,” Soludo insists something more audacious needs to be done to bring the economy back on track.
“My hypothesis is that if we continue along that path, the economy will be underperforming by at least 2 per cent of the gross domestic product (GDP). That is a dangerous route to go. We can do something more audacious and get the economy on track.”
He declared that his response didn’t detract from the realization that the Nigerian economy has under-performed relative to its potential, especially in economic terms. He identified the country’s challenges to include rapid urbanization, terrorism, unemployment and poverty.
Faulty Foundation:
Soludo who alluded that what Nigeria’s leaders have been doing over the years was “a 100-storey building on a quicksand,” warned the structure would not endure.
“We have potential to become even bigger, but this cannot happen on its own. It depends on what happens today. The choices we make today will determine whether we will go up or not.”
He added, “Nigeria will need skills, technology and infrastructure plus the institutions and strategies to unleash a new competition if the rising of a new Nigeria is going to be sustainable. We need to build a rigorous economic agenda. The former CBN governor advised that in building a new era, the country must move away from what he called the “dysfunctional system” it has been operating for decades.
The corruption level, he argues further, is now so disturbing that it has degenerated from the 10 per cent graft that the coup-plotters who aborted the first republic described it to “sharing national security votes” that run into billions of dollars.
He saw Nigeria’s Constitution as designed for “sharing oil wealth” and not for national development.Soludo ruffled not a few feathers when he declared Nigeria to be an “inconclusive federation.” He said if Nigeria must successfully borrow the glasnost and perestroika policies which the Soviet leader Mikhail Gorbachev adopted in tackling the economic problems of the defunct Union of Social Socialist Republics (USSR), it has to fashion a robust plan first. But the challenge in this, he said, “is that Nigeria is an inconclusive federation and Nigeria needs a coherent nationhood plan or agenda for a more perfect union. That should be the starting point.” The economist also drew the ire of labour leaders when he linked increase in workers’ wages with productivity, a position that the General Secretary of the Textile and Garment Workers’ Union, Mr. Issa Aremu, was quick to puncture. But Soludo, responding to Aremu’s critique, lamented that the clamours for increases in minimum wage over the years have never considered productivity. He said the best practice is to increase wage as a result of increase in productivity, otherwise, the economy would suffocate and industries would shut down. “I don’t have problems with raising wages in principle, but there is no place in the world where you raise wages that are not scaled by ability to pay. The key word is productivity. This is the only country you hear debates about raising wages and nothing is said about productivity,” he said.
By Olisemeka Obeche