The Cattle Rearer Chronicles — A tale of seedless grapes and photo books

While preparing “jejely” to celebrate our first independence day in recession for almost 30 years, it was almost certain there would be some form of pantomime put on display by the government of the day…..after all, this is Buhari’s Nigeria. True to type and for good measure, two separate interventions duly occurred to spice up the polity. Let’s bear in mind the context — Nigeria is in a recession but that seems ambiguous to many, unless you are one of those directly hit by a loss of job or business downturn. However when you talk about inflation being above 17% (highest in more than a decade), an exchange rate of N480 to $1, a bag of rice selling between N18,000 — N22,000 (up from N9,000 — N11,000 at the start of 2016) and we all know how the price of fuel almost doubled from N86 to N145. 2016 has certainly not been the best of years for Nigerians.

And so it was that in a series of tweets, President Buhari’s social media person decided to lay the blame for Nigeria’s woes squarely at the feet of the middle class, ostensibly to drive home the “Change begins with me” message. The point being made was that the Nigerian middle class with their penchant for foreign vacations and imported items such as seedless grapes are happy for the economic situation to remain as is so long as they are able to use their MasterCards. Apparently, the middle class and their proclivities are now to blame for the foreign exchange shortage in the country and a message needed to be sent out. This is no surprise really as President Buhari is on record as showing disdain for use of Nigeria’s limited fx to sate bourgeoisie tastes for chocolates and glamorous dresses. What seemed to surprise many who took umbrage was perhaps, the expectation that this mouthpiece would do better, having been a staunch critic of the previous administration and seemingly someone of some intelligence and “international exposure”.

There is a malaise which particularly infects the typical Nigerian Arriviste; especially one that unfortunately has a soap box. The penchant to pontificate on things they have little or no idea about based on the assumption that they will be allowed to get away with it due to status and/or position. It explains why this same mouthpiece would come out to say Nigeria earned $90Billion from oil in 2014, without clarifying that this figure (even if true) could only possibly be total revenue before costs (about 20–25%) and JV sharing (60:40 in Nigeria’s favour) and even after that, 13% goes as derivation to oil producing states before Federal Government gets 52% of remainder… the math!

Nigeria’s fx crisis has nothing to do with foreign purchases by the middle class, they don’t have the critical mass to create such an issue (we are constantly regaled with data that says 62% of Nigerians are below the poverty line). Even at current official exchange rate of N305 to $1, Nigeria’s imports to GDP ratio is 24%. Global average for 2015 was 29%, Sub Saharan Africa 35% (World Bank database). Nigeria does not have an importation problem. Before the Buhari administration, Nigeria did not depend only on oil for fx, a fallacy which continues to be perpetuated. Between 2011–2014, total fx inflow into Nigeria was in excess of $520Billion (according to the CBN statistical database) and oil inflows accounted for no more than 60% of that (take into account that our total import bill (goods and services) has never hit $80B in a year). Annual Diaspora flows alone were in excess of $20Billion. Nigeria has always been able to attract fx flows beyond oil when the economic situation is positive.

Issues surrounding fx shortage have been talked to death, however it appears to retain some level of mystique for those within the confines of Aso Rock and the CBN head office in Abuja. At a time when a combination of low oil prices and reduced production (the Buhari administration’s seeming cold shoulder towards the South East and South South leading to increased vandalization of oil assets appears a key factor in the latter), has led to significantly reduced fx inflows from oil, one would expect policy decisions to respond sensibly and intelligently. It is more critical now to ensure the other 40% non oil inflows continue to come in and at perhaps a higher volume. Rather, real solutions are ignored for wild goose chases such as “fixing” a supposedly floating regime behind the scenes, raising interest rates to attract foreign portfolio flows and now berating citizens for spending their hard earned money as they deem fit. There seems to be an uncontrollable capacity for plumbing new depths in this current dispensation.

To cap off the week and usher in the independence “celebrations” a photo book created by the official photographer to the president was launched with fanfare. That Bayo Omoboriowo is an awesome photographer is not in doubt and it is certain that photo book will be fit to grace any coffee table. However, though it is unclear if this was commissioned by the Presidency or simply an authorized private compendium by Omoboriowo, the timing of the launch does appear quite off. Perhaps if this had come in at the 6 month mark while the administration was still in a honeymoon haze it might have come across better, or perhaps in a year or two when President Buhari may have turned around the country’s decline. To launch a photo book celebrating the Buhari presidency in the middle of a recession which has led to millions of job losses and untold hardship for the populace does smack of insensitivity. This could and should have been handled better, perhaps it was more important to get it out in time for the annual end of year corporate gifts season.

The Asset Sale Imbroglio

The ongoing discussion around the proposed sale of assets continues to be fueled by conflicting messages by the government. The information minister Lai Mohammed said recently it is all speculation, see here. However a Nigerian online publication says a memo has been sent by the Presidency to the National Assembly on the proposed economic emergency bill which includes the sale of assets, see here. While government flip flops are now a common occurrence, there needs to be an intelligent dialogue on the proposed disposal with the appropriate questions being posed to government. It is important to question the logic behind disposing assets in order to boost reserves and defend the Naira. This simply makes no sense. At this time the Naira should be left to the market to decide and the reserves allowed to grow organically. This need to control economic outcomes using archaic and sub-optimal measures needs to be brought to a complete stop.

A key question is: what assets are to be sold? A sale of Nigeria’s 49% stake in the Nigeria Liquefied Natural Gas (NLNG) company was among the first to be mooted, as well as sale of Nigerian National Petroleum Company (NNPC) Joint Venture (JV) assets. From 2004 to 2015 NLNG has paid Nigeria just over $15.3Billion in dividends alone, see NLNG 2016 facts and figures report here. Proposing a sale of such a cash cow which causes no drain on government resources is strange to say the least and raises red flags that this might be a case of persons close to power looking to secure the goose that lays golden eggs for themselves. A sale of the NLNG stake should not be considered at all, a definite no no. Selling off NNPC JV assets is understandable considering the difficulty NNPC has in meeting cash calls and the need to take government out of direct involvement in business. However, an appropriate valuation must be determined to ensure the nation is not shortchanged. The mode of disposal and decision on buying party must ensure Nigeria’s interests remain protected.

There are several assets which cause a drain on government purse through mismanagement and corruption, which should be considered for sale. Examples are significant real estate holdings (especially underutilized assets such as the National Stadium Lagos), Ajaokuta steel mill, all 4 refineries, airports, railway lines, schools, NNPC downstream operations and gas stations, etc. The mode of disposal can be varied from outright sale to divestments, making full use of the securities market and giving as many Nigerians as possible the opportunity to be a part of ownership. The proceeds must go to sorting out the big ticket infrastructure needs currently holding back the nation - power, energy and transportation. An expanded transmission network, efficient local refining capacity, completion of the second Niger bridge as well as the Lagos-Kano and Lagos-Calabar rail lines. Nigeria can no longer afford to be wasteful at a time of low income, government undertakings must be done with a higher degree of thoughtfulness and nous.

P.S. Nigeria is 56 years old today…..not the best of times but we have always proven to be a resilient bunch. Here’s wishing all Nigerians home and abroad happy independence day and much better times ahead….Salut!

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