Memo To Vice-President Yemi Osinbajo

Prof Osinbajo

By Simon Kolawole

Your Excellency, Professor Yemi Osinbajo, Vice-President of the Federal Republic of Nigeria, you would recall that when the coronavirus pandemic began to take its toll on the Nigerian economy, President Muhammadu Buhari set up the Economic Sustainability Committee (ESC) and made you the chairman. Your brief, according to media reports, is to help work out a sustainability plan for the economy post-COVID. The seven-member committee under your leadership is made up of three ministers, the group managing director of the Nigerian National Petroleum Corporation (NNPC) and the governor of the Central Bank of Nigeria (CBN), among others. This is heavily loaded.

Before I proceed, though, first things first. The COVID-19 pandemic has damaged economies around the world, but the stronger countries are braving the once-in-a-lifetime global health hurricane mainly because they have the capacity, even excess capacity. The biggest economies have injected over $7 trillion in stimulus packages — in form of government spending, tax breaks, loan guarantees and printing money. The US stimulus package includes direct transfers to citizens and residents. The UK is paying 80 per cent of salaries of private businesses to protect millions of jobs. Japan’s own package is about $1 trillion, with $55 billion in cash handouts to citizens.

Your Excellency, I do not need to tell you that a vast majority of Nigerians believe that the government has not done enough for them in these difficult times. Not many Nigerians want to hear that the government itself needs bailout.  With a huge budget deficit, low crude oil prices and a crash in forex inflow, this must be one of the most difficult times for the government in the history of Nigeria. And with the economy grinding to a near halt in the last eight weeks, I do not expect the Federal Inland Revenue Service (FIRS) and Customs to have good tidings to deliver at the Federation Account Allocation Committee (FAAC) meetings in the months ahead. We are in the soup.

However, Your Excellency, I am not writing you this memo to list the problems. My educated guess is that your committee already has a fair idea of what the problems are — far more than an average Nigerian like me. But, pardon me, knowing the problems has never been our problem in Nigeria. Every Toyin, Tochi and Tanko can provide a comprehensive list of the problems. Committees upon committees always come up with brilliant ideas, plans and programmes. Where things always come unstuck is implementing them with an unbreakable political will. We would go to bed happy that finally we are charting a new course; we would wake up only to see summersaults and slow motion.

Mr Vice-President, I do not intend to pre-empt the work of your committee, but there is one common mistake I propose you avoid from the very beginning: the fallacy that the Nigerian economy is not diversified. This lie is so repeated it has almost become the truth. But this is patently untrue, and I am certainly not the first person to point it out. According to the National Bureau of Statistics (NBS), this was the GDP distribution, by activity, among the top five sectors of the economy in 2019: agriculture (25.16%), trade (16.01%), information and communication (13.04%), manufacturing (9.06%), and mining and quarrying (8.85%). What again is diversification?

What many intend to say, I believe, is that the sources of government revenues are not diversified. Government relies on oil revenues to finance a significant slice of the national budget. We also rely on oil exports to provide at least 90% of forex inflows. Oil is basically the only product we export — the rest are so tiny they amount to less than 10%. But the fact that the sources of government revenue and forex are not diversified does not mean the economy itself is not. It only means we are not deriving enough value from our diverse economic activities, so they are unable to contribute enough to public revenues and forex inflow. But the economy is bigger than government revenue!

Your Excellency, you will wonder why I am saying all this. It is very critical: the conceptual fallacy that the economy is not diversified is a major thinking error in government. This fallacy makes the government focus more on its own source of revenue (oil) while hurting the sources of revenue for millions of Nigerians. Government has failed to see for so many years that prosperity for Nigerians is automatic prosperity for government: there will be millions of jobs created and several taxes paid — PAYE, VAT, company income tax and such like. This thinking failure, in turn, has retarded government’s ability to diversify its revenue base in a sustainable, less coercive way.

The diverse sectors of the economy that are generating the most activities and should be propelling revenue growth and prosperity have continued to be undermined by governments at all levels as they implement regressive policies that harm value creation, promote importation, accelerate forex flight, and sustain the underdevelopment of Nigerian businesses. We are dealing with problems whose solutions are obvious. We do not need to produce another bulky “economic recovery” document. We do not need to propound another set of theories. We do not need meetings upon meetings. We have produced enough economic policies in this country to last a lifetime.

Mr Vice-President, what we need, in my opinion, is an action plan. What we need is ruthless commitment to implementation, the same way we have pursued the rice policy despite the pains and the pushbacks. Permit me, Your Excellency, to point your attention to some of the “little” areas I believe your committee should consider in designing the post-COVID economy. In my previous article, I said we should not allow this COVID-19 crisis to waste. I said other countries will learn and start doing things differently. I concluded that we need to seriously and urgently rethink how we organise our economy and politics. Because of space constrain, I will advance a just few thoughts today.

Here we go. I touched the cotton and textile industry in my previous article. I later got a call from Comrade Issa Aremu, the former general secretary of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), who took me on a journey into the history of the rise and fall of the textile industry in Nigeria. As at 1978, he said, Nigeria’s textile industry was the third largest in Africa and one of Nigeria’s biggest employers of labour. The textile industry in those days boasted of Asabatex, UNTL, Zamfara Textile, Arewa Textile and Aswani Textile, among others. We did run well. What hindered us? Let’s look at where the rain began to beat us.

I am not here to lament, Mr Vice-President. There is good news. While commending the CBN for the revival of cotton production, Aremu believes the industry can bounce back to life. He listed the value chain and the millions of jobs the industry alone can create in weaving, spinning, finishing and the biggest one — garmenting. Now, Mr Vice-President, do you know that the uniforms of our armed forces, police and paramilitary forces are made in India and Bangladesh? Shame on us! Look at how we shoot ourselves in the foot! We turn around to wonder why unemployment is high while rendering our tailors jobless! We conclude that the economy is not diversified! Shame on us!

I grew up at time there were vehicle assembly plants all over Nigeria: Peugeot in Kaduna, Leyland in Ibadan, Mercedes in Enugu, and so on. They were assembling cars in a way that helped the local economy: they used Nigerian components. We produced several parts, including the glass, the wires and the tires, locally. The rubber industry was alive. Glass manufacturing was bubbling. Today, we are shamelessly importing Toyota vehicles, burning our forex and killing key factories and jobs. For a start, why can’t our own Innoson vehicles be patronised by governments at all levels? We complain that millions of our youths are unemployed as if the jobs will fall from heaven.

With due respect, Mr Vice-President, I am not teaching you your job but you chair the Presidential Enabling Business Environment Council (PEBEC). Why there is evidence that PEBEC has achieved some results, government still remains a major headache for SMEs. Government cannot be talking about diversifying revenue while its agencies are terrorising SMEs — the biggest engine of any economy in the world. Government cannot see that prosperity for SMEs means a lot to diversifying its own revenue. Instead of helping them grow to keep them on sound footing, government unleashes tax collectors on them for quick revenue gains — and kill them in the process.

I can go on and on, Mr Vice-President, but I think I have made my point: we don’t need to reinvent the wheel. Your committee is all about Nigeria’s economic sustainability and not some quick-fire revenue relief, so it must go beyond how to generate quick money by the usual way of placing higher tax burdens on businesses. Rather, how can we maximise benefits from key contributors to the GDP? Even our almighty oil sector is grossly underdeveloped. It can perform far better, especially in the midstream sub-sector. Let us pluck the low-hanging fruits right in front of our noses. Please accept, Your Excellency, the assurances of my best wishes as you lead the thinking process.

Simon Kolawole is the Publisher/CEO of TheCable

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