Peter Obi, former Anambra State governor has said the crises facing Nigeria’s economy requires deep reforms rather than cosmetic approach it seemed to be treated.
With Nigeria’s population expected to double in the next 30 years with a birth rate of 5.5 percent, over 40million children unprepared for the digital economy through quality education, and mono economy where national income from oil is bends to the will of armed militants, Nigeria’s economy is in crises.
“We are in recession but without fully aware of what recession is all about; we have a worsening security situation, children are not safe in school and farmers not safe in the farm. There is resilience from Boko haram, resurging corruption and a widening disunity among the various ethnic groups in Nigeria,” Obi said in an interview monitored on CNBC Africa.
Latest inflation figures from Nigerian Bureau of Statistics paints a grim picture putting headline inflation at 18.55 per cent, its highest in more than 11 years, Obi contend that the crises facing the country requires more attention than it is currently getting.
Rather the government is looking to entrap itself in a debt of $30billion when the current economic crises should have provided the best incentive to save Obi said.
He averred that Nigeria could generate $60billion if it saved 50 percent from budgeted income for the next 44 years.
“If we have saved five percent of all our oil earnings, from 1960 till today, which is about $1.2 trillion and considering maybe a compound interest of about 5 percent we should have had about $150bn today,”
“I am saying we have 44 years to our 100 years of independence, today if we decide that we will save 50 per cent of our own budgeted output of 2.2million barrels per day at the current $50 per barrel, in the next 44 years we will be at 50 -60billion,” Obi said.
Experts say Nigeria’s economic managers in the current dispensation have applied band-aids where deep economic reforms should suffice.
Nigeria’s Central Bank ignored calls for more than a year to devalue the naira as other oil exporters did when crude oil prices fell to around $55.
Capital controls installed by the apex bank to defend a currency peg of N197-199 per dollar, sent investors scampering for the hills, as there were no safeguards to their investments.
Local businesses groan further with another directive that banned the importation of 41 items that they say harmed their operations.
“We seem to be trapped in the process of yesterday and it doesn’t solve the problems of today, worse still is depriving us the energy to think for the problems of tomorrow,” Obi said in reference the recurring themes of wasteful spending and a failure to plan.
Obi urged the government to pay attention to recommendations made at several national conferences as they may provide answers to the problems the country currently face.
On restructuring the country, the former governor said Nigeria fared better when the regions struggled to grow their own economy rather than depending on oil.
Against the backdrop of anticipated tax holiday to the power sector that the Finance ministry is reportedly considering, the former governor said it will do little to address the problems in the sector.
Obi said the government’s decision to hand over the power assets to individuals who are not financially and technically competent was largely responsible for the current crises.
“Power is not something you just prepare and put on a shelf for sale, it requires investments over the years and for that to happen, we need proper pricing and people with technical knowledge,”
Recent data from the Nigerian Bulk Electricity Trader (NBET) shows electricity distribution companies can only meet about 22 per cent of their outstanding invoices.
This has impacted the ability of NBET to meet its obligation to the electricity generation companies (GENCOs) and now settles about 21 per cent of debts to them.
On the other hand, the GENCOs cannot meet their payment obligations to their Gas Suppliers under respective Gas Supply Agreements completing a triangle of chaos.
According to figures from the Nigerian Electricity Supply Industry operational (NESI) report released January 3, over N534 billion of revenue was lost by the power sector in 2016.
Chuks Nwani, energy law and vice president Powerhouse International Limited told BusinessDay that the government needs to reset the electricity market to reflect the realities in the economy such as lack of cost reflective traffic, foreign exchange challenges, high inflation rates and transmission challenges.
“Upon identification of the right pricing, government should undertake to fund the shortfall that is embedded in technical and collection losses for a five year period contemplated in the privatization process.”