Poorer now richer in the long run

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By Dele Sobowale

The economist, like anyone else must concern himself with the ultimate aims of man.” Alfred Marshall, 1842-1924.

Alfred Marshall, the father of classical economics and the person who pointed out the principles of comparative advantage taught us what any professional economist must understand as his main contribution to society at large. Given the scarcity of resources, even in temporarily affluent nations like the USA, Qatar and Saudi Arabia, no nation has all the resources to do all that it needs to do, now and in the future.

Udo Udoma

If crude oil reverts to its pre-1973 prices of $3 per barrel for ten years, even Qatar and Saudi will be in deep trouble. In the long run, nobody can guarantee that it will not.

That brings us to the issues concerning the 2018 Budget, the Economic Recovery Growth Programme, ERPG; the prospects for 2018 and the latest report from the National Bureau of Statistics, NBS, which had become more professional under Dr Yemi Kale and the supervising Minister of National Planning, Senator Udo Udoma.

The NBS rendered the overall Gross Domestic Product growth for 2017 in the final week of last month and despite the fact that the economy recorded the fastest growth for the fourth quarter in 2017 – 1.92 per cent — for more than three and a half years, the annual growth rate which was a mere 0.82 per cent wiped the smiles off the faces of those in government who would ordinarily have been shouting at the top of their voices.

The truth, which even the most ardent dissemblers in government cannot deny, is that an economy growing at less than one per cent with its population jumping at three per cent increases poverty on the aggregate – particularly when inflation which is still raging at over 15 per cent is taken into account.

The cumulative result is even more depressing. With recession in 2016 and -1.56 GDP growth that year, it means that in the first two fiscal years of the Buhari administration, the economy has receded into negative territory.

“Insanity is defined as doing the same thing over again and expecting a different result.” Chinese philosophy

With Nigerians now poorer at the start of 2018 than in 2015, the first question is: what can be expected in 2018? The dispiriting answer is: more poverty. The reasons are not hard to discover. Despite the brave efforts of the Minister of Budget and National Planning to get the budget to the National Assembly in early November of last year, the document has landed in familiar territory despite an All Progressives Congress, APC, majority in both houses of the National Assembly.

NASS. Last week, the Senate Appropriations Committee threatened to pass the 2018 appropriation bill without inputs from the Ministries, Departments and Agencies, MDAs, of the FG because many of them have failed to change their behaviour with respect to annual budgets. Even the Ministry which plagiarized the slogan “Change starts with me” is not an exception. Its own officials have also failed to cooperate with the NASS to get the budget passed as soon as possible.

Those who are not economists might not realize the damage done to the economy when the federal budget is delayed. Unfortunately, time and space will not permit a full discussion of the economic consequences of delayed budgets. But, the fastest growing economies in the world in general and Africa in particular are those where the annual budget is passed annually like clock-work.

The politicians in those countries, like Kenya, know that their first and most important duty is to keep the economy moving. Without it, chaos will overtake everybody and even politics will be difficult to practice. Nigerian politicians, despite the changing cast of actors in Abuja, have uniformly failed to grasp this simple fact.

“Fish rots from the head”.

Three elected officials have always been responsible for this rot in our budget making process. The first is the President. Every president, since Obasanjo in 1999, had dumped the budget proposal on the NASS; and then turned his back to attend to “more important things”. Usually, it is the second term (or in the case of Obasanjo the third term).

The Senate President and the Speaker, if they are on good terms, also have their own re-election campaign to manage and they are constantly busy working to avoid being impeached by their colleagues. Given three distracted leaders of the country, the budget invariably languishes in the NASS because the members of the two chambers follow the examples of their leaders.

Buhari has also followed the bad examples of his predecessors. While he continues to bore Nigerians with his complaints about the rot he inherited, he has failed to understand that he had also imbibed the poor attitude of his immediate past predecessor.

He should have been more involved in the budget process. He should have instructed every Minister or Departmental Head that attending NASS briefings was the most important task before them before and immediately after presenting the 2018 budget proposal to the NASS.

In fact, Buhari should have gone further. He should have threatened to fire any MDA Chief Executive who is reported by the NASS for not attending briefings. Then, he would have exonerated himself and his administration. The Senate President and Speaker also should have taken strong positions.

As it is, Nigeria’s topmost elected officials are dragging the economy down. They get richer; while Nigerians get poorer. By this time 2019 we will certainly be poorer than we are now because GDP growth for 2018 cannot possibly reach 3 per cent.

To be continued…

 

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