Yesterday, we celebrated commemorated Democracy Day. It also marked the one year anniversary of APC and President Muhammadu Buhari’s rule.
Several weeks ago, we ranked the Top 5 Ministers on the hot seat. As you can imagine, these things are fluid. Yesterday’s prisoner can be tomorrow cup bearer. You’d understand if you read your bible.
So I believe it’s only fair to update the list and see where we are right now.
Tie- Minister of State for Petroleum – Emmanuel Ibe Kachikwu
Previous Rank – 2
The fuel supply situation has been resolved although at a massive inflation inducing cost. After the prices of a liter of PMS aka petrol went up from N86 to N145, every supplier all of a sudden had so much product to sell that the queues essentially died overnight. However multiple issues still plague the office, the biggest being the seemingly daily bombings of Nigeria oil pipelines. The effect is a reduced production capacity of over 50% which means Nigeria can’t even take advantage of recent spike in oil prices. Kachikwu is the face of the Oil and Gas sector and right now, he needs a lot to start going his way if he’s to hold onto this job for the long haul.
Tie – Minister of Petroleum – President Muhammadu Buhari (PMB)
Previous Rank – 1
Many Nigerians still don’t agree with a president Buhari filling the position with himself. That said, as Minister of Petroleum, he shoulders the responsibilty for the issues that come up. Right now, the biggest on his plate is the terrorist activities perpetrated by militants from the South-South. Oil revenues are down due to poor supply as a result of blown up pipelines. PMB is planning on visiting the troubled region which may be a first step to stemming the violence. Some say increased military action is the way to go while others advocate negotiations. Perhaps a combination of both could be the solution. Nevertheless, if the situation continues, no doubt it could devastating effects to the legacy of this administration.
Minister of Information – Lai Mohammed
Previous Rank – 5
The only reason Alhaji Lai Mohammed isn’t higher on the list (and perhaps the reason he still has a job) is that those higher on the list have significantly more pressing issues to deal with and are thus under more pressure. One of the knocks on the current administration is the lack of a cohesive message. It has become routine to have cabinet ministers contradict themselves when talking about the same issues. This is one of the many roles of an information minister; ensure that the administration speaks with one voice. So this marks a failure on his part. The leaked document of the minister seeking loans for foreign travel was also embarrassing if not scandalous. If such things continue, Alhaji Mohammed would no doubt find himself higher up this list and perhaps out of a job soon.
Minister of Agriculture and Rural Development – Chief Audu Ogbeh
Previous rank – Unranked
Tomato Ebola? Considering that tomatoes are a major ingredient in many Nigerian dishes, it is unsurprising that there is a public outcry over the scarcity as well as the soaring cost of the vegetable crop due to a pest ravaging tomato farms across the nation. Chief Ogbeh is on this list because the situation has reached critical mass. The fact that this isn’t the first time this pest has been an issue and that it has been tackled without fanfare in the past under previous administrations is troubling. It also speaks to a lack of foresight by the ministry and all fingers point to the head. If this isn’t tackled with intensified efforts and the “jollof rice enjoyment index” suffers, Chief Ogbeh might want to brush up on his resume because the average Nigerian will call for blood and he may be the fall guy.
Minister of the Niger Delta – Usani Usani Uguru
Previous Rank – Unranked
One of the reasons for this list is accountability. Let us make famous those who appear to be incompetent at the execution of their jobs. While the apparent portfolio of the Niger Delta Ministry might not be easily accessed, it is safe to assume that what is going on in the Niger Delta should fall under his jurisdiction and it is currently completely unacceptable. Mr. Uguru should bear some responsibility for this. If a country operated as a business entity and the largest revenue source fell by more than 50%, there’s no doubt the division head would be on the outside looking in. Mr. Uguru should have been much more proactive in checkmating the source of anger in the region and at the very least found way to bridge the divide between the administration and the communities. If he’s not up to the job or doesn’t feel this is his responsibility, then it is time for him to go.
Minister of Finance – Folake Adeosun
Previous Rank – 4
The economy is on the verge of recession (back to back quarters of economic contraction). The nation just experienced its first quarter of contraction in over a decade. Foreign Direct Investments (FDI) are practically nonexistent. Just last week, United Airlines announced it was pulling out of Africa’s largest country, a move already made by Spanish airline, Iberia. Dozens of other foreign companies are considering pulling out. Right now, the Nigerian economy is in shambles. As such many people think that the Finance Minister, Folake Adeosun is way in over her head in this job. President Buhari recently remarked that it would be up to Nigerians to tell him who isn’t performing among his cabinet members. If one had to be chosen, many if not most Nigerians would opt for the former finance commissioner.
* Just missed joining the ranks
– Minister of Industry, Trade and Investment: Okechukwu Enelemah
– Minister of Labour and Employment: Chris Ngige
– Minister of Budget and National Planning: Udoma Udo Udoma
** Dropped off from last ranking
– Minister of Power, Works and Housing – Babatunde Raji Fashola
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The Central Bank of Nigeria (CBN) on Tuesday announced plans for a flexible exchange rate regime aimed at increasing foreign currency accessibility. This move had been expected and predicted by many economists for weeks. Even the Vice President Yemi Osinbajo has hinted at a rate of N285 per $1 as a guideline for oil marketers setting fuel pump prices at N145 per liter.
Addressing reporters at the end of the meeting of the Monetary Policy Committee (MPC), the CBN Governor, Mr. Godwin Emefiele said,
“In a period of stagflation, the policy options are very limited. To avoid complicating the conditions, the committee decided on the least risky option to hold. With the foreign exchange market framework now ready, the MPC voted unanimously to adopt greater flexibility in the exchange rate policy to restore the automatic adjustment properties of the exchange rate. Consequently, all nine members voted to hold and introduce greater flexibility in managing the foreign exchange rate. The bank would however retain a small window for funding critical transactions. Details of operation of the market would be released by the bank at an appropriate time.”
Lack of Details
Perhaps just as important as what was said by the Governor, was what wasn’t said. And that is any substantial details, only speculation. The governor mentioned that details would be released at an appropriate time.
While this move was expected, the lack of details wasn’t expected and as a result, the parallel market rates remain unchanged. In fact, as of the close of the trading day, the Naira fell slightly from where it opened yesterday.
Details needed include, the interbank rate, regulation of the parallel market, plans to support new forex prices, implementation of two separate rates and most importantly what constitutes “critical transactions” and qualifies for a subsidized rate by CBN.
Therein lies the problem.
Avenues for Corruption
Financial Analysts have piled on that phrase “critical transaction” and warned that it could lead to abuse in the system. Mr. Emefiele tried to shed a little more light on this. He said,
“There are people who would want to import plant and equipment to produce goods where raw materials are almost 100 per cent available locally. We would support such attempts by people to set up factories, foreign direct investment coming in, or even local direct investment coming in, if they want to import plant and equipment and their raw materials are almost entirely available locally. We will look for an opportunity to provide the incentives that they need to import the equipment so we can produce locally and stimulate growth.”
In my opinion, this is misguided. Using a two tiered foreign exchange regime that rewards one particular group of investors at the expense of others in a country where corruption isn’t controlled is basically asking the fox to guard the hen house.
During the height of the fuel subsidy regime, there were allegations of oil marketers without depots or tank farms going through the trouble of bringing in vessels laden with fuel products and going through all the due diligence using forgery, bribery and false documents to file subsidy claims. Only to then send the cargo to neighboring countries and selling the product to the open market.
In this forex subsidy regime, what stops similar subsidy thieves from forging documents or even the prices of machinery (an example used by the governor) to obtain several millions of dollars only to sell the excess in the parallel market and make a fortune?
For example, $1m obtained at N200 per dollar would today yield a profit of N120m sold at a wholesale price of N320. This can be accomplished in minutes and requires less gravitas than bringing in cargos of fuel to docks only to then send it to Ghana.
Freeing the dollar from its N197 peg is a welcome move. Freeing the dollar completely and without prejudice is the only way to operate a free market economy that is just and fair for all while limiting avenues for government officials and their friends to line their pockets even further. In other words, we need to stop giving government officials opportunities to be ‘fantastically corrupt’.
Venezuela is on the brink to total collapse. Venezuela as of now is a failed state. And that’s just the beginning because unfortunately, things are actually going from bad to worse. Venezuela’s GDP is expected to plunge by and additional 8 percent this year, and inflation is set to rise even more by 720 percent according to projections.
The Washington Post writes,
“According to the International Monetary Fund’s latest projections, it has the world’s worst economic growth, worst inflation and ninth-worst unemployment rate right now. It also has the second-worst murder rate, and an infant mortality rate that’s gotten 100 times worse itself the past four years. And in case all that wasn’t bad enough, its currency, going by black market rates, has lost 99 percent of its value since the start of 2012. It’s what you call a complete social and economic collapse.”
Earlier this week, President Nicolas Maduro declared a state of emergency to combat the economic war he blames on “foreign powers and right-wing forces” in Venezuela.
Currently, there is a recall effort on the way to oust President Maduro and that effort is gaining steam. 70% of Venezuelans want him out.
Food shortages are prevalent leading to long queues that start at dawn and looting has become rampant. In Venezuela’s hospitals children are dying for lack of medicine.
So how did the country with the world’s largest oil reserves get to this point? What can other oil producing nations especially Nigeria learn from it?
All this began with socialist policies of the past President Hugo Chavez who came into power in a socialist revolution that was very popular. Chavez imposed heavy taxes on business and redistributed the wealth to reduce poverty, a move welcomed by the people. Several businesses were nationalized and price controls drove many others out of business.
Here are some quick hits
Venezuela depends on its vast oil reserves so much so that it counts for 96% of her exports and 50% of the government’s budget
According to Transparency International, it is the 9th most corrupt country in the world and several politicians are and having accused of enriching themselves with sovereign funds
Venezuela has the second highest murder rate in the world at 90 per 100,000 people
Venezuela’s budget was pegged at $40 to the barrel for oil. The excesses rather than being saved over the years was blown due to corruption and high subsidies on nearly everything from groceries, to fuel (lowest fuel prices in the world) and power.
So does any of this sound familiar? Currency controls, crime, subsidy, dependency on imports, dependency on oil prices for a budget…stop me when you’ve heard enough.
It is easy to say that several of these don’t apply to Nigeria. But as the labor unions continue to protest the removal of subsidy from fuel, it is important to note that petroleum was easily the largest single item in the budget for Nigeria until this year.
Our population is 180 million and projected to reach 400 million by 2050. Opponents of subsidy removal have also championed subsidies in other avenues such as food, transportation, power e.t.c. But even if we only subsidized fuel consumption, that level of population growth would put significant strain on the coffers of the country.
But the solution to moving Nigeria forward long term has to be private industry. We can’t continue to subsidize consumption in whatever form it exists.
Instead, Government should subsidize production. I am not advocating that the federal government give actual cash to business owners. I do advocate lower business taxes, public private partnerships, stronger intellectual property protections and incentives to aid companies who choose to start manufacturing companies and create jobs.
We should seek a reduction of our dependency on oil exports. Venezuela as I mentioned earlier depends on its vast oil reserves so much so that it counts for 96% of her exports and 50% of the government’s budget. It stands at 80% and 40% respectively for the Nigerian government.
We should also at all cost look to ways to shrink the size of our government. Say what you want about dictatorships, at least there was only one mouth to feed. Today, we have umpteenth amounts of senators, representatives, state governors, state senators, state representative and numerous duplicated ministerial feeds with each individual with endless amounts of commissioners and assistants.
We should also pass laws to curb the way the government spends not just how much. If we make civil service an actual service and reduce the glam and corruption in politics, it will reduce the attractiveness to higher office to people who want to actually serve.
One can at least make the argument that Venezuela reduced poverty of her citizens when things were good. All we did was line the pockets of the elites.
Now is the time to make the tough choices and avoid a similar fate to Venezuela. It has started with the removal of fuel subsidy. That should only be the beginning.
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Here are some interesting links for you! Enjoy your stay :)