INTERESTING TIMES

Was that in the script? Ninety seven naira per liter or did something happen in Aso Rock?




Did we bargain for this sell-out ? Do you support the terms of the resolution? You mean we just barked and shut up!

These are interesting times in Nigeria!

NO MAGIC WAND!

Nigeria’s future is the subject of current sabre-rattling by the government and the people on two sides of the divide.  With much tough-talking and misinformation on both sides, the real mission to secure Nigeria’s future and better our today is being relegated to the  background. Gradually, more people are getting fixated on the price of petrol as the crux of the campaign. People are chanting “on 65 naira we stand”. The battle is not for the price of petroleum products. It is a battle for the rudder of the Nigerian ship, a wake-up call to the  government, buckle up lest we sink!

Every casual supporter of the current people’s action against the government is likely to think this   mass action is directed at Jonathan Goodluck’s government. Far from it, this pent-up anger is directed at the perennial recklessness of government and the impunity of asking the people of Nigeria to suffer more while a few opportunists in power  acquire  more  booties of rulership. Because government is a continuum, an ongoing entity that inherits both assets and liabilities of its predecessors, Jonathan Goodluck must face the good luck of being the president of Nigeria at a time like this and facing the challenge. He must also think about it creatively, almost paternalistic in carving out solutions. He must see this not as an affront to his authority but as direct feedback from his constituents. He must harness this people power to undertake earth-shaking reforms he promised in the polity. He must enlist the people of Nigeria in fashioning out solutions to our collective challenges. The solutions must be owned by the people, signed off in a comprehensive charter and monitored by an independent body.

The solutions to Nigeria’s problems are multi-dimensional and require an eclectic mix  ingenious solutions woven together into an integrated strategy to wean Nigeria off oil dependency, create an infrastructure paradise, diversify the economy, create employment and attack poverty. It is called the P.I.E.S strategy.

The P.I.E.S strategy stands for the four areas of implementation which will drive initiatives and tangible results  to the people of Nigeria:

·     Political

·     Infrastructure

·     Economic

·     Social

This plan is based on a phased withdrawal of the fuel subsidy over a twenty for month period during which the government must take pre-planned steps in the four areas of strategic importance. The plan starts by moving the price of petrol to eighty five naira immediately, one hundred naira in another six months, one hundred and twenty naira in eighteen months and one hundred and forty naira in the twenty-fourth month. This plan addresses the deficit balance of trust which the Nigerian government currently enjoys by allowing the people to see and evaluate the steps taken by the government before moving to the next level. It also allows the government to plan its revenue and phase its promises, rather than promise everything to everyone at the same time.

Why should we increase the price of petroleum products? It is clear to everyone that any form of subsidy compromises both both economic and fiscal success especially in a nation where corruption and inadequate monitoring allows a privileged few to corner the gains and enrich themselves. It is also clear that the economics of subsidy is not sustainable on the long run as it encourages inefficiencies and creates abracadabra econometrics. It allows people to feel at ease with our comatose refineries and import petroleum products for West Africa while Nigeria pays. The policy it too juicy to be transparent and has several points of failure and compromise.

It is also clear that the global economics of oil, the vicissitudes of the global financial system and the turbulence of the oil prices dictate that we must achieve internal price parity  on the long run while ensuring that Nigerians get value for the volume of  trade in this commodity. To achieve this, Jonathan Goodluck’s government must galvanise action in the following areas:

Political

Nigeria’s political structure as it stands now is big, bogus and financially unsustainable. But it has constitutional backing! The constitution supports several duplicated functions and bodies. The government needs to consult widely and take action on the  drain pipes of waste. The following  questions are poignant:

·     Do we really need a government this big ?

·     Do we need really need a minimum of 36 Ministers ? Some of these portfolios are so narrow, they do not need a minister and some of them have two ministers.  Water resources could be merged with Agriculture.

·     Do we actually need 36 states? It is a touchy issue but I think we should explore the matter. Nigeria is just as big as one big state in America!

·     Do we need all the ministries and parastatals ? We need to prune down the number of agencies. We have Nigeria Boundary Commission and a Nigeria Border Community Development Agency.

·     Prune down the Budget! More than half of the 4.2 Trillion naira in the 2012 budget is pork, meant for needless, phantom expenses. I have looked at the budget provisions and it is appalling that  we are spending close to two billion for food in the presidency. We are also buying furniture for the Vice President with over 300 Million naira. If we continue to budget like that, we will soon be bankrupt, even if we paid 500 naira for a liter of petrol. There is too much financial laxity in our budget and it cuts across every Ministry, Department and Agency.

·     Reduce the perks of political office holders. It is an absurdity that our senators earn more than the American president. Let every political office holder take a 70 percent pay cut. Just to remind us, we are a borrower nation!

·     We must limit the size of government cabinet at all levels.

·     We must stop all frivolous foreign trips no matter the guise. We do not need to travel to  get medical attention if we fixed our own hospitals.

·     Create a fast-track court to try corruption cases and impose very stiff penalties combining jail time and forfeitures of illicit wealth.

·     Can we have local government chair persons serve as members of the house(s) of assembly in each state, sitting on Mondays alone, without all the frills and thrills of the current theatre ?

·     Create a special purpose account for the revenue accruing from the proceeds of the petroleum products and inaugurate an independent mix of technocrats, labour unions and international consulting firms.

·     Implement the KPMG report on the NNPC. Privatise the NNPC through a joint venture agreement. Make the organization a lean and professional organization, able to compete with the oil majors.

The government must  send  a  graduated constitutional amendment to the National Assembly and ensure that all of this in six months after the initial increase.

Infrastructure

The sore point of Nigeria’s nationhood is her underdeveloped infrastructure base. The government must come up with a twenty four month infrastructure development plan that will change the current level of infrastructural decay. The government must prioritise the following projects into short term, medium term and long term  objectives:

·     Category One Roads Repairs: Federal Roads must get immediate attention. Six months from the implementation of the first phase of subsidy renewal, all category one roads must be repaired in their current state while we plan on expanding or building new ones within 24 months. The Lagos-Ibadan Expressway, the Sagamu-Benin Expressway, the Onitsha-Enugu-Port Harcourt and the Abuja-Kaduna-Kano expressway are in this category

·     Our Airports and Seaports require urgent attention. They should be given to international firms to build, operate and transfer. We should have port capacity to serve the entire West African sub-region and make our airports aviation hubs in West Africa.

·     We must expand our transportation options beyond roads. We must invest heavily in the rail sector and include safe marine travel in our transportation model.  Each state should come up with a unique transportation model and draw funds from the “subsidy fund” to  implement under supervision.

·     Our petroleum jetties, stations and pipeline require urgent attention. They should be phased for attention. Some of them require expansion (Atlas Cove Jetty) while some of them require outright redevelopment (Mosimi Depot)

·     Health and Emergency Services must be shored up immediately. Just like the PTF interventions, we must highlight primary, secondary and tertiary health institutions for immediate assistance. We must identify some specialist institutions for special capacity building and equipment support to become areas of competence in healthcare, capable of competing with renowned institutions in the world. Once this is achieved within twelve months, political office holder will not be allowed to travel out of Nigeria, even for health reasons. We must institute and implement a robust emergency management agency, capable of responding to minor road accidents and major natural disasters.

·     Power projects must be prioritized and pursued for completion with vigour. The government will publish a list of power projects to be commissioned within a cycle of subsidy withdrawal. These will include all gas-powered turbines, dams and coal-powered power plants. As government has started deregulating the sector, a strong monitoring mechanism should be put in place to ensure that Nigeria and her citizens get the best value from investors in terms of investment and service quality.

·     Education is an area of critical need. The government must create a comprehensive development plan for  Nigerian universities with the aim of making at least six Nigerian universities to be the best in Africa in the next ten years. This requires a roadmap which must be properly articulated and implemented.

Economy

It is clear that the economy needs to be  diversified to move away from the mono-economic lame duck that  we currently have. The government needs to implement the following:

·     Make it easier to start a company in Nigeria. We are currently one of the worst places to  start a business.

·     We must provide a mix of incentives for SME’s  by providing low-interest loans for this sector

·     We must provide adequate incentives for the agricultural sector with an understanding of the potential of the sector to become a very important mainstay of the economy.

·     We must revisit the role of export promotion agencies and banks, providing access to loans for exporters and monitoring for actual implementation.

·     We must create hubs for technological advancement, innovation and entrepreneurship.

SOCIAL CHANGE

The withdrawal of the subsidy will not be complete until the government targets specific programmes at the vulnerable poor and aim to alleviate the pains. The government must do the following:

·     Provide fuel vouchers for indigent people who register with their state government.

·     Provide transport vouchers for  minors and senior citizen who are above 60 years of age

·     Run campaigns for Nigerians to share transportation and use less fuel.

·     Run campaigns to encourage Nigerians to use public transportation.

This plans takes into the Nigerian refineries into consideration as the government has signed agreements for their Turn Around Maintenance.  When they come up and start refining again, it still possible that the price of petroleum products will fall due to the forces of demand and supply.

Just a plan to consider, because there is no magic wand!

SOLUTIONS TO NIGERIA'S PROBLEMS

HOW ABOUT SOME SOLUTIONS ?


LET US START SOLUTION-SEEKING!

SEND ME YOUR OWN SOLUTIONS TO NIGERIA'S CURRENT PROBLEMS!

HOW TO LOOT FROM THE TOP:2012 BUDGET PROVISIONS

I cannot lay claim to being an accountant. I however have over fifteen years of corporate experience which has exposed me to budgeting and budget analysis as required of every modern–day manager. I have spent countless days in my career looking at several budgets in order to fillet the import for the operations and profitability of my organization(s). Budgeting is critical to the life of every organization. It signals the intention of the budget creator in terms of priorities, fiscal and structural discipline and overall direction of the corporate entity or nation. The budget of a nation tells you where the leader’s vision is focused, his perception of the challenges facing the  nation and the solutions he proffers  to the myriad of problems that face his constituency. Whoever presents a budget  must think it through as he is ultimately responsible for the content of the budget and the realistic achievement of the budget. So let it be with Goodluck Ebere Jonathan.

In the later part of 2011, I had looked at the 2012 budget without in depth analysis when it was first presented to the National Assembly. I saw the headlines and sectoral allocations as highlighted in the president’s speech. I did not look for the details in the allocations. I totally forgot that “the devil is in the details”.

The announcement of the deregulation of the downstream sector by the government was my wake-up call. The subsidy removal is a policy that jolted me just like all Nigerians. I wondered what the government wanted to achieve by stoking am already volatile polity. More importantly, I wanted to know  if the same government that was asking Nigerians to  make more sacrifices had  cut down its own excesses and imbibed the same spirit of sacrifice. Has that happened? Please read on.

I had wanted to compare the 2011 and 2012 budget but the sheer size of the challenge was prohibitive concerning the expediency of the current face-off between the impoverished people of Nigeria and the profligate government of Goodluck Ebere Jonathan.  This is not to say this current government stands alone in financial and economic recklessness. It is a battle trying to waddle through Nigeria’s accident scene of sleaze, corruption and ineptitude that has characterized budgeting and its implementation in Nigeria. There was no adrenalin spike in comparing the budget drawn up by Musa Yaradua to Goodluck’s budget. Jonathan apologists would quickly cry foul. It is only fair to judge Jonathan’s intentions by a budget he drew up and presented to the national assembly of Nigeria: the 2012 budget! It is impossible to look through the entire budget, it is instructive to see the major parts of the budget, starting from the office of the budget-creator. Let us therefore start  this journey by examining the budget provisions of the Office of The President of the Federal Republic of Nigeria!

Total allocation for The Presidency is N43, 595, 512,439 Billion naira. This includes the budgetary allocation for the following agencies domiciled under the Presidency:

•  Economic and Financial Crimes Commission (EFCC): N10, 978, 037, 521 Billion.

• National Boundary Commission: N767,255 273 Million

•  Border Community Development Agency: N646,748,662 Million

• National Institute of Policy and Strategic Studies (NIPSS): N1, 548,213,476 Billion

• Bureau of Public Enterprises (BPE): N3,863,431,314 Billion

• National Emergency Management Agency (NEMA): N1,463, 138, 127 Billion

• Bureau of Public Procurement: N1,193, 545, 830 Billion

• Nigeria Investment Promotion Council (NIPC): N1,068, 142, 196 Billion

• Nigeria Extractive Industries Transparency Initiative (NEITI): N1,174, 212,080 Billion

• OSSAP MDG: N200,000 Billion

•  National Atomic Agency Commission: N2,348, 354, 790 Billion

• State House :N18,344, 524, 169 Billion

Let us proceed to itemize some shocking entries that are part of the budgetary allocation for the State House. I am going to start with the Office of the Vice President. Please read on.

LOCAL AND INTERNATIONAL TRAVEL

•  Local Travel and Transport (Training and Others): N723,783,408 Million

• International Travel and Transport (Training and Others):N951,028,384 Million

Total budgetary allocation for the Vice President’s travels is N1,674,811,792 Billion.

UTILITIES

•   Electricity Charges: N85, 209, 564 Million
• Water Rates: N42,941,329 Million
•  Telephone Charges: N56,483,025 Million
•  Leased Lines: N80, 487,953 Million

Total allocation for the Vice President’s utilities is N263,663, 567 Million.

MATERIALS AND SUPPLIES

• Office stationery and Computer Consumables: N343,299,190 Million

• Books: N12, 273,286 Million
• Newspapers: N43, 081,323 Million
• Magazines and Periodicals: N8,703,937 Million
• Printing of Non-security Materials: N121,248,260 Million
• Drugs and Medical Supplies: N314,323,463 Million
• Teaching Aids and Instructional Materials: N10,741,419
• Foodstuff and Catering Materials Supply:N476,966, 327 Million

Total allocation for Materials and Supplies in the Vice President’s office is N1,332,637,365 Billion

OTHER ISOLATED ITEMS

• Maintenance of Office Furniture: N53,387,659 Million

• Maintenance of Office Building and Residential Quarters: N1,736,208,393 Billion

•  Maintenance of Office and IT Equipment: N137,827,777 Million
•  Maintenance of Plants and Generators: N15,215,500 Million
• Other Maintenance Services: N113,682,232 Million
• International Training: N183,208,461
• Financial Consulting: N82,500, 152 Million.
• Fuel and Lubricants: N168,722,871 Million (Remember electricity bills)

• Refreshment and Meals: N293,695,515 Million (Remember Foodstuff earlier on)

SUNDRY CAPITAL BUDGET PROVISIONS FOR THE OFFICE OF THE VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA

• Office Furniture and Fittings: N135,053,350 Million
• Purchase of Computers: N265,111,472 Million 
• Purchase of Photocopying Machines: N23,566,100 Million
• Purchase of Scanners: N150,783,304 Million
• Purchase of Canteen and Kitchen Equipment: N45, 427,848 Million

• Purchase of Residential Furniture: N295,322,579 Million (Remember Furniture for office and maintenance earlier on?)

• Purchase of Health and Medical Equipment: N93,776,918 Million

•  Purchase of Library Books and Equipment: N44,166,229 Million (Books again?)

•  Provision of Office Buildings: N3,353,561, 982 Billion
• Provision of Residential Buildings: N300, 341,085 Million
• Provision of Electricity: N204,878,658 Million (Remember, Fuel and Lubricants and Electricity earlier, right?)

• Provision of Water Facilities:N15,361,852 Million
• Construction of Hospital and Health Centre : N268,444,076 Million

• Provision of Agricultural Facilities: N29,261,612 Million
• Provision of Infrastructure: N324,827,187 Million
• Provision of Recreational Facilities: N141,358,532 Million

And yet more of these capital projects………

• Rehabilitation and Repairs of the Residential Building: N694,893,729 Million (Which building.. the new or the existing?)

• Rehabilitation of Hospitals and Health Centres: N122,921,332 Million

• Rehabilitation and Repair of Roads: N21,511,233
• Rehabilitation and Repair of Office Buildings: Look out for this figure : N 419,960,802 Million! 
• What a very ominous and instructive figure. I could not help but repeat it: N419, 960,802 Million ! Please note the first three digits!

If you read this far, you must be wondering why this overbloated, unrealistic allocations were submitted right under the nose of Goodluck Ebere Jonathan. Why did he submit this to the National Assembly?

The answer is simple: Goodluck Ebere Jonathan is used to  watching when others loot. What did he do when his former boss Diepriye Alamesiegha was robbing Bayelsa blind? Alams has resumed in Abuja as de facto presidential adviser, right? He is doing the same thing to this few Nigerians who have been robbing us blind through the subsidyy. Instead of tackling  them, he wants to  further impoversh ordinary Nigerians. Why do we have such funny allocations in the office of the Vice President?

The answer is profound: people design budgets to loot, from the top. Looting starts from budgeting and it starts from the top. Everyone knows how Jonathan has planned to spend close to a billion to feast in 2012.   I will examine his budgetary allocations tomorrow but his Vice President’s proposed allocations is indicative  and tells us that Jonathan does not have the moral fecundity to ask Nigerians to make more sacrifice when the state house is feasting. Like Nero, they want to feast while Nigeria burns.

Do you know of better use of the monies allocated to the Vice President’s office? I see a lot of monies destined for misappropriation and outright stealing, while people die of hunger, disease, bad roads and empty pharmacies in dodgy hospitals.

Why should you remove the subsidy without addressing these leakages in the system.  We need to fix our conduit pipes; it leaks from the top!

When Jonathan does that, then he earns the moral temerity to ask us to tighten our belts.

NIGERIA'S 2012 BUDGET OF PANIC !!!

In about three hours, I will share with you specific line items from Nigeria's 2012 budget. Some are laughable, others are ridiculous while some bother on  a very rabid form of executive madness and chronic kleptomania of gargantuan proportions. No apologies to Patrick Obahiagbon !

Just a teaser: The Vice President's office is to buy newspapers worth 45 Million Naira in 2012 and  is to pay out  80 Million naira for "financial consulting"! Please do not ask me what financial consultant is !!!! PULEEEEEASE!


Don't miss it. I am poring over the document and will let you see the pork in three hours!

May you live (and read) in interesting times!

SUBSIDY: NIGERIA AND IRAN COMPARISON!

Fuel subsidies are the crack cocaine of global economic development: easy to get hooked on, hard to give up. And as every addict knows, there are good and bad ways to try to kick the habit.

Consider Nigeria and Iran. In Nigeria, the government’s recent decision to remove fuel subsidies and more than double the price of gasoline has led to riots and now a nationwide strike. Two years ago in Iran, an initiative to cut subsidies and almost quadruple the price of gas (as well as boost the price of food and water) provoked little unrest, lowered oil consumption and bolstered the economy and the government.

The differences between the two efforts offer valuable lessons about the best ways to eliminate fossil-fuel subsidies - - a staggering global misallocation of resources that does little to help the poor, distorts markets and pumps more greenhouse gases into our atmosphere.

In 2010, the value of all fossil-fuel subsidies, for both production and consumption, was roughly $500 billion. On the consumption side, 37 countries spent $409 billion underwriting their citizens’ fuel purchases, according to the International Energy Agency. Venezuelans, for example, enjoy the world’s cheapest gasoline: You can fill up a 32-gallon Hummer for about $3. In pre-reform Iran, the price of gasoline was 40 cents a gallon; in Nigeria, it was about $1.50.

Support Skews Development

There’s not much good to say about fuel-consumption subsidies. For starters, they encourage waste -- Venezuela has the dubious honor of having Latin America’s highest per-capita energy consumption. They also skew economic development because investment decisions are made on the basis of false market signals. And because consumption subsidies reward high-energy users, they help the middle class and the rich over the poor, who rely heavily on dung or wood and aren’t connected to the power grid.

The IEA, an independent body formed after the oil shocks of the 1970s, estimates that only 8 percent of that $409 billion went to the bottom-income quintile. Moreover, such government funding sucks up money that could be used to help the poor in other ways: Venezuela devotes at least 6 percent of its gross domestic product to fuel subsidies, about double its education budget; in Indonesia that amount is around 4 percent; the $6 billion that Nigeria has been spending to keep fuel prices low is three times its health budget.

In addition to freeing up hundreds of billions of dollars for more productive uses, unwinding all consumption subsidies by 2020 would reduce demand for energy by 4.1 percent and carbon- dioxide emissions by 4.7 percent, according to the IEA.

Here’s where Iran comes in. Whatever the conduct of President Mahmoud Ahmadinejad’s government in other realms, its fuel-subsidy reforms in late 2010 make it something of a role model. Legislative debate began almost two years before the changes went into effect; officials, academics and community leaders led an extensive public-awareness campaign that included sending households mock bills showing the true cost of their electricity. More important, the reforms included a clear benefit to Iranians: direct cash payments to more than 80 percent of the population, paid out before the changes took effect. In the case of the poorest of the poor, the sums amounted to more than half their monthly cash income, which helped to insulate the program from political criticism.

The administration of Nigerian President Goodluck Jonathan took a different path. It released its proposal a mere two months before it was to go into effect. Cash payments are to be directed only to small subsets of the poor (mainly pregnant women). Others will receive menial jobs, with pay low enough to “ensure the self-selection of only the poor.” The government says the cost savings will be recycled to the poor through building roads, railways, and irrigation projects. That doesn’t seem likely in one of the world’s most corrupt countries. No wonder Nigerians have taken to the streets.

Spurring Wasteful Consumption

The problem is hardly limited to the developing world. In 2009, the Group of 20, whose members encompass big oil exporters and importers, pledged to phase out “inefficient fossil fuel subsidies that encourage wasteful consumption.” One way to ensure that this goal is met -- and not largely at the expense of the poor -- would be for the Organization for Economic Cooperation and Development to team up with the United Nations Development Program to compile best practices from Iran and other countries, as well as from the work being done by an alphabet soup of other groups (the Organization of the Petroleum Exporting Countries, the IEA, the World Bank and its regional cousins).

The OECD has already pulled together a 350-page inventory of more than 250 ways in which 24 of its member countries subsidize the production and consumption of gasoline, diesel and other fossil fuels. But this transparency exercise looks only at budgetary support and tax breaks; it has yet to tackle the harder-to-estimate subsidies provided through things like loan guarantees. In order to speed up the process, how about turning the database into a public wiki, enabling the hive mind to exert its collective powers?

One benefit of this approach would be to highlight the contradictions indulged in by even relatively green countries, such as Norway and New Zealand, which tax fuel consumption heavily while still supporting their fossil-fuel production industries. The G-20 has so far deferred defining “inefficient” subsidies and “wasteful consumption.” We put forth a candidate: the tens of billions of dollars a year in forgone fuel taxes associated with diesel for agriculture, fisheries and other “off-road” uses, mostly as a result of exempting them from excise levies. Farmers and fishing fleets would have more reason to be energy-efficient, and we would have cleaner air and water in the bargain.

This article is culled  from Bloomberg View.

WE SHALL OVERCOME !

It has been a very interesting day. Curfews declared in Kaduna, Benin and Oyo this evening. The police behaved better  today with  lower casualty figures.  We pushed forward today! It is time to rest and prepare for tomorrow. Please rest, assured that we have started an irreversible process of change in Nigeria.  Do not be deterred. We will win this!

Have  a restful evening. See you hale, hearty and spritely tomorrow!