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Nigeria Decides 2019 - The Presidential Candidates' Economic Thinking ... and The Winner Is Moghalu

Politics	5780 VIEWS
Politics
5780 VIEWS

Friday, January 04, 2019 11:50AM / By Andrew S Nevin, PhD

Review Coverage: APC, PDP, ACPN and YPP

Previously, we have discussed the criticality of this election in Nigeria from an economic standpoint - we continue to get poorer and poorer per capita (from 2015 and potentially to 2022, according to the IMF) and the absolute necessity for the next President to reverse this.

We also discussed some harsh realities about Nigeria, including the fact that we will never be able to deliver the critical programs we need on the ground (like education and primary healthcare) in a centralized way, implying that some type of Federal/State political restructuring is required if we want to not be a failed state.

These articles were all leading up to an assessment - from an economic perspective - of the Manifestos of the leading Presidential aspirants. Here as promised are some thoughts on the 4 leading Presidential candidates' economic programs - APC (our incumbent, President Muhammed Buhari), PDP (Former Vice President Atiku), and the 2 smaller party candidates who look the most credible to me: Madam Obi Ezekwesili (Allied Congress Party of Nigeria - ACPN) and Dr Kingsley Moghalu (Young Progressive Party - YPP).

I chose Dr K and Madam Obi as the most credible candidates outside the 2 main parties.

If any reader thinks someone else has equal credibility, please let me know and I will expand this analysis to include other Manifestos.

Let me also state again these are my personal views and do not represent the views of any organization I am associated with and that these are thoughts from a purely economic perspective (not a political perspective) and do not consider other critical issues Nigeria faces (corruption and security being the most important).

Finally, Nigeria is a young country, with over 50% of the population below 30. The young people of Nigeria in fact have it in their power to choose Nigeria's direction. I urge every young person in the country to do the best they can to be engaged in the political process and to vote. You are the future and this is your country ... take control of it.

So coming back to our core issue in this post, the exam question is: Which economic program will:

Drive inclusive GDP growth of at least 6-8% and stop us getting poorer and poorer;
Reduce our unacceptable unemployment and underemployment levels (which reached 43.3% in total in the latest statistical release);
Reduce the number of Nigerians in absolute poverty (which currently stands at 87m);
Get our children back in school in large numbers (currently estimated at 13m out of school);
And - finally - put Nigeria on a path to take our rightful place in the world order (we are the highest population SSA nation and the 7th most populous nation on earth, possibly going to 3rd) ... Nigeria needs to stand tall in a complex world.

For the APC, I consider the Economic Recovery and Growth Plan (ERGP), since there is no indication that the APC will stop pursuing this detailed agenda if re-elected.

For the PDP, I consider the Let's Get Nigeria Working Again program.

For Madam Obi and the Allied Congress Party of Nigeria, I consider Project Rescue Nigeria.

For Dr Kingsley and the Youth Progressive Party, I consider Build, Innovate, and Grow - My Vision for our Country.

All of the Manifestos are over 100 pages (with PDP's almost 200), so not a simple Christmas task!

Proshare Nigeria Pvt. Ltd.

Source: LinkedIn

Let me say on a positive note that all candidates recognize that we cannot continue to get poorer and poorer and have put considerable effort in their economic policies. All at least state that we need to have a vibrant private sector if we are to succeed (I have been saying we need a private sector 10-15 bigger in 7-10 years for quite some time now).

However, looking at the totality of the program's, the candidate who has the most coherent economic vision for Nigeria is ... Dr. Kingsley Moghalu. Build, Innovate, and Grow (BIG) does 3 things that the other Manifestos do not:

BIG begins with foundational principles, considering long sweep of history to rightly diagnose Nigeria's social and economic challenges; BIG does not offer band-aid programs, but a coherent set of policies that have the highest probability of working
BIG addresses difficult issues head-on, particularly the need for a real Federal-State restructuring if we are going to make an economic progress
BIG is a deeply ethical program and recognizes that our politicians need to start with a moral foundation - otherwise, we will continue to be lost.

So let's look a little deeper at each Manifesto.

Let me start with the ERGP. This was issued in 2017 and we can in fact evaluate the results so far. On the positive side, there are many people in the current regime working very hard and doing the right thing to make Nigeria better. Let me cite 3 of these:

PEBEC - the incredible work of Dr Jumoke and her wonderful team has made a real difference to the Ease of Doing Business in Nigeria.
FIRS - though we have not yet dramatically increased the tax take (because it is hard to do this when we are getting poorer and poorer) there has been great progress on identifying taxpayers (individual and corporations) and on using IT to modernize the tax system.
Nigerian Export Promotion Council (NEPC) - the NEPC is working on a comprehensive policy approach for a zero oil world. After all, either we do not use oil in 30 years, or Nigeria is richer and needs oil here. It is unlikely that we will be exporting much oil in this timeframe and the country needs to prepare. NEPC is doing a lot of the heavy lifting here.

However, these positive areas cannot compensate for 4 major structural impediments to economic progress:

The continuing fuel subsidy that does not help the BoP (why am I receiving a fuel subsidy in Nigeria!!) that costs us N623bn, 14% of total tax receipts from Jan - Oct 2018;
An FX regime that means some economic actors get subsidized USD and foreign investors remain reluctant to invest in Nigeria. Without significant foreign investment, we cannot achieve GDP growth rate more than our population;
A dysfunctional power sector with all the players effectively insolvent, despite the fact that Nigerians have already shown they are very willing to pay for power (even at generator prices) and a myriad of options that would work in a decentralized power system; and
Inability to pass a Petroleum Industry Bill that will result in a coherent and effective hydrocarbons industry for Nigeria, including investment in critical downstream sectors like refineries and fertilizer production. We continue to conflate the regulatory and operating roles, and suffer from the opacity of the current NNPC structure.

Finally, the ERGP makes no real mention of any type of Federal/State economic restructuring economic that gives the States the power and resources to do what can only be done at a State and local level - education, primary healthcare, local infrastructure, and attracting investment.

We have been continuing to get poorer and poorer under the ERGP (even when the oil price was over $70) and it is hard to see that reversing in 2019, particularly as oil prices crash (Brent is below $55 as I write) if the APC regime continues.

Now let's consider the economic manifestos of the PDP and the ACPN (I consider them together because it many ways they have similar challenges). Let me acknowledge both these manifestos give a clear and precise diagnosis of our economic and social challenges - the most people in absolute poverty (87m), the most children not in school (13m), and our massive youth unemployment problem.

Madam Obi's Manifesto in particular gives a compelling case for what needs to change, and her dashboard numbers are extremely helpful. I was particularly impressed by her passion for getting our children into school and recognizing that our most valuable resource is people (I in fact wrote about this recently). So both Manifestos start out as very promising. But if we look at the details, both are very likely to result in continuation of the/our current problems:

Despite the emphasis on the need for the private sector to thrive, both Manifestos have a confusing plethora of programs, interventions and new Federal initiatives. Each new intervention requires a new bureaucracy (and spending), and will take years to set up. In addition, each of these type of interventions create more opportunities for diversion and corruption.
An example is the PDP's suggestion for the power sector - despite the top-line rhetoric about being private-sector led, the power approach is a confusing collections of penalties and sanctions for non-compliance; that is, further FG interventions in a sector that can function just fine on its own. After all, Nigerians already pay a huge amount for power, and will be very happy to see new technologies that reduce this cost. The ACPN power suggestions are similarly interventionist and centralized, relying on massive guarantees from Development Banks; it is hard to see why they would do this given the track record of the electricity industry in Nigeria when the FG is involved.
Even though both candidates state they favour Restructuring (acknowledging that our current Federal-State system is economically unsustainable) there seems to be no recognition that 30 of 36 States are insolvent and economically unviable and both Manifestos in fact have the Federal Government doing more and more (not less and less as Restructuring would imply). The ACPN says simply we need more consultations without taking a position and the PDP obviously never addressed this issue while in power.
The PDP Manifesto in particular seems to multiply new Federal programs at an alarming rate - I was astonished to see the PDP say publicly (and contrary to the Manifesto) that it would restore the economy while simultaneously bringing the price of fuel down to N87... so more subsidies for people like me.
But the ACPN Manifesto is almost equally guilty of multiplying interventions. To give one example, the Manifesto envisages a national program of basic rent-to-own housing that includes the concept of a partial rebate of rent paid (if the renter/owner paid promptly). It is difficult to imagine a program more likely to increase waste and corruption - trying to solve our 17m housing deficit from the centre, and then determining who is owed this partial rebate from the centre as well.
In the end, despite an intellectual admission of the need for Restructuring, and a stated objective of growing the private sector, the visceral reflex for both the PDP and the ACPN seems to be for the centre to continue to hold on to as much power (or more) as possible. Restructuring is only possible if the FG stops doing some things, tells the States they need to solve these issues - and then let the States get on with it. In fact, real Restructuring would also imply that the returns from resources would eventually have to revert to where the resources are found - an inconvenient truth the ACPN and PDP do not address.
As a Canadian - where the provinces actually do most things that matter to people (like education, health, policing, and welfare, and - yes - control over natural resources), it always astonishes me that the centre in Nigeria wants to do everything ... even after demonstrating time and time again the complete failure of trying to manage the lives of nearly 200m people from one place.

In the end, I see the Manifestos of both the PDP and ACPN as essentially long wish lists still rooted in the over-centralization of the Nigerian Federation and lacking both an overarching philosophy and the courage to tackle the real issues that are causing our massive underperformance.

Given this massive underperformance, only a bold program that is candid about what needs to be done - and is prepared to do it - can be successful.

And this is where the Manifesto of Dr Kingsley and ultimately the economic program of the YPP is superior. Dr K begins his economic analysis (p67 if you want to read it in full ) with a detailed look at the range of capitalist models to argue precisely what will work in Nigeria (Entrepreneurial Capitalism is his conclusion). He also rightly - and candidly - diagnoses that our current system of crony capitalism cannot work for us, so needs to be changed.

Dr K has the most incisive analysis of our unsustainable fiscal regime and is willing to face up to our looming debt crisis (we currently use 60 kobo out of every Naira of tax revenue to pay interest on our debt).

He also rightly recognizes that we need rural Nigeria to prosper if we are going to succeed. Fifty Three percent (53%) of Nigerians live in rural areas and it is not sufficient for just Lagos State to do well ... or even Lagos, Kano, Port Harcourt, and Kaduna ... we need all of Nigeria to do well.

Finally, Dr K faces up squarely to the Federal/State Restructuring issue - he is courageous enough to say, not only do we need Restructuring, but that at least 30 of 36 States are economically unviable, so only a Restructuring that reduces the economic units (back to 6 in Dr K's case) can work for us.

Here are 5 critical policies from the YPP Manifesto that will have a particularly positive impact on reversing our decline:

Partial privatization of the NNPC, with a listing on the NSE; this will dramatically improve governance and transparency at the NNPC, as well as allowing ordinary Nigerians to own part of the oil wealth. At the same time, it gives a chance to give some of the shares to communities where the oil is actually produced.
Abolition of the Land Use Act; Dr Kingsley rightly posits that without well-regulated property rights in land, we will never be able to grow our economy.
Elimination of the Fuel Subsidy; to be fair both the APC and the ACPN have this in their Manifestos, though the APC has backtracked from this publically. Subsidizing people like to drive in Nigeria cannot be the right policy.
Engagement of the Diaspora; what is keeping Nigeria afloat today is not oil, it is the Diaspora remittances. The YPP has a clear program to engage what is our most critical export at the moment; and finally
Real Restructuring; 30 out of 36 States are not economically viable, and any Manifesto that does not face up to the hard reality will mean we continue getting poorer and poorer. I fundamentally believe Nigerians - who are obviously immensely talented as evidenced by the great success outside of Nigeria - are perfectly capable of solving difficult issues (like health, education, and power) at the local and State level. So let them do it ...

So of the Manifestos of the APC, PDP, ACPN, and YPP, only the YPP's Manifesto has the coherence and boldness to reverse our current economic path.

Let me re-iterate again these are my personal views and do not represent any of the organizations with which I am affiliated.

Finally ... I urge all Nigerians to exercise their hard won democratic rights. As we look around the world in 2019, we see democratic rights being rolled back around the planet - don't let this happen here. What we have accomplished in the short time since military rule is astonishing and wonderful ... please treat it with respect and continue to support the maturing of democracy and the growth of a stronger civil society in Nigeria. This means at a minimum being engaged with this critical election, and voting.

I particularly want to see young people engaged and voting - not only are they the future for Nigeria ... they also can control Nigeria today if they used their power.

God Bless Nigeria.