Building A Developmental And Welfare State: Towards A New National Economic And Development Planning Framework For Nigeria – By Jaye Gaskia
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Loading ...The Current Failed Economic Paradigm
Let us begin by trying to understand where we are at – at the moment, so that we can put things in their proper perspective. This is because a clear unambiguous understanding of where we are and how we got here is decisive with respect to moving ahead from here.
Because the space for this piece is necessarily limited, it is important to try to be as concise and clear as possible.
What therefore is our current situation? A series of contrasts should enable us to make informed judgments. These sets of contrasts are at once an indication of the immense potential of our country, as they are also clearly a manifestation of the tragedy that has befallen us.
We are Africa’s largest economy, yet we also have an infrastructural base for this economy that is in the lower rung of the league on the continent. With a more than $510bn sized economy, we have also produced not only Africa’s Richest, but also one of the world’s top 30 richest men; Furthermore, we have the world’s richest black woman being a Nigerian. And whereas 15 of Africa’s 40 richest are Nigerians, we are also home to the largest concentration of poor people on the continent with more than 112 million poor people. So, we have the paradox of producing the richest Africa, the richest black woman, but also the largest number of poor people in Africa, and of any clack nation in the world.
And although our economy and GDP had been growing well above the African and global average growth rates at more than 5% annually for decades before the precipitous crash of 2014 to 2015, the decline into recession of 2016 and 2017, and now slow recovery since late 2017; it is also true that this economy had been shrinking for a long while, and continues to be based on very weak fundamentals. This GDP used to average about 8% annual growth rate in the first decade of the 4th republic, but it now averages just barely over 1%.
We have one of the lowest measured Business Confidence Index rates around the world, just as we have one of the highest Cost of doing business anywhere in the world. And even though we have only recently celebrated a positive movement of some 20 steps from a ranking of around 164 to one around 144 in the ease of doing business global ranking; our economy is still bedeviled with structural and bureaucratic challenges that us some of the most difficult environment in the world to do business. We need not look to big business alone for manifestations of this; a cursory look at the enabling environment for small and medium scale businesses tell a more grueling story.
To add a little bit of flavor, at the beginning of the 4th Republic, unemployment rate was around 8%, whereas 14 years down the line by 2014 general [composite] unemployment rate had exploded to 24% [NBS 2014]; and then continued its steep rise to around 39% as of December 2017 [NBS 2017]. Youth unemployment on the other hand had reached 45% by 2012 [NBS Youth Survey 2012] along with graduate youth unemployment rate topping 80% by 2012 [CBN 2012].
Average industrial capacity utilization on the other hand have continued to hover just below the 35% mark over the last several years. The most instructive of this indication of industrial decline is the situation with the refineries in the petroleum sector. The four refineries, after the injection of nearly $20bn on a series of Turn Around Maintenances [TAM] over the last 16 years now boast of a pitiable less than 10% average capacity utilization despite an assertion of the previous government that by the end of the last round of TAMs in 2012 capacity utilization would be brought up to an average of 90%! This is also against the backdrop of the claims by the current government that it is turning the sector around. The most glaring manifestation of this collective class leadership failure is the persistent and enduring nature of fuel supply crisis, and the fact that we still depend more than 90% on imported refined products to meet domestic requirements.
We have a more than $530bn sized economy, yet our present combined total installed power generation capacity stands hovers around 12,000MW, while our actual available and evacuable power generation capacity has continued to peak every now and then at just about 4,000MW. In fact, as of May 11th, 2015 actual power generation evacuated on the national grid was barely 2,800MW, just a mere 300MWs more than the power generation capacity inherited in 1999, and this after nearly $30bn of public investment into power generation over the last 19 years? And in fact, since May 2015 power generation and transmitted on the national grid has continued to fluctuate between extremes of less than 100MWs to 4,300MWs, with numerous total and partial system collapses of the National Grid annually.
As for the transmission capacity of our National Grid it has actually declined from the about 5,500MW inherited in 1999 to just about 4,500MW currently, due to wear and tear. This why we have continued to witness an average of 16 to 20 system collapses annually of which an average of 70% are total system collapses. And although the present government claims that improvements to the national grid infrastructure has brought the transmission capacity to around 7,000MWs, nevertheless systemic and structural challenges continue to make this improved transmission capacity available for utilization.
But it is also important to underscore a certain issue, the issue of corruption, and the impunity in governance that condones, enables, enhances, protects, promotes, perpetuates and perpetrates it. Since 1999 an average of N1tn has been budgeted annually for capital expenditure at the federal level, and if we add the combined total of all the annual capital votes of the 36 states of the federation, this should probably add up to about another additional N1.5tn to make a combined annual average capital vote of more than N2.5tn. The implication of this is that annually over 19 years just about N3tn has been claimed to have been expended on capital expenditure with precious little to show for it in terms of public service delivery and basic infrastructures.
The underlying problem is monumental corruption of historical proportion. It is this that has ensured that regardless of the huge sums of public investment expended, our infrastructural base have remained comatose, public service delivery has collapsed, and we have ended up with the phenomenon of non-inclusive growth. It is also why whereas the top richest 10% of the population own and control 40% of the economy and national wealth; the bottom poorest 20% own and control a meager 4.1% of the economy and national wealth.
What Is To Be Done? – A New National Development Planning Framework:
As stated above corruption, along with visionless leadership, and planlessness, has become the biggest problem and obstacle to our national development. Nevertheless, fighting corruption is neither an economic program nor an economic plan; it is instead the way of doing things; and it is therefore in this sense the acquired culture of governance in our country. It goes without saying that the new economic plan must have zero tolerance for corruption; must block and seal up all avenues for leakages and wastage, must identify and punish the corrupt, must protect whistle blowers, and must recover looted funds.
The implication of this is that anti-corruption campaign, no matter how vigorous cannot become the substitute for an economic plan, and a national development plan; it can only be an expression of a new way of doing things.
From the cursory look at our problems it is clear that our biggest challenges are that of increasing industrial and business capacity utilization; reducing the cost of doing business, improving the ease of doing business, improving the quality and quantum of the infrastructural base; increasing the quantity and quality of social investment in education, health, housing[against the backdrop of an 18 million housing deficit], and food security; and concerted and conscious efforts aimed at diversification of the economy not only away from dependence on the petroleum sector, but also away from an exclusive dependence on extractives and solid minerals, and raw material production.
We also have to put in place a sustainable framework for ensuring inclusive growth, enabled by a policy of wealth redistribution and promotion of social justice and equity. Given that we have one of the widest gaps between the rich and poor anywhere in the world, we cannot afford to continue along the path of non-inclusive growth, that results in immense wealth concentrated in a few hands, while the overwhelming majority of our citizens wallow in avoidable poverty. This is a recipe for crisis not one for harmony. It a major contributant to the heightened and heightening levels of tension across the country, and the weakening of the bonds of social cohesion that has generated the tendency towards fragility and disintegration, and the unprecedented levels of crime and criminality that we are now witnessing in the country.
No nation with these levels of sharp disparity in wealth distribution, can hope to nurture a common, shared and harmonious experience of citizenship among its peoples. And without such a shared and common experience of citizenship, no nation can survive, and avoid the consequence of collapse and possible disintegration.
An important foundational step to take is to move away from the current exclusive expenditure framework to developing full-fledged multi-year National Economic Development plans.
The current practice where annual budgets are merely expenditure outlays that are part of a three-year expenditure framework is not a planning framework. At best it enables one to organize one’s expenditures, but it is not a substitute for development plans. In this current form, the annual budget not being based on a plan regularly informed by needs assessment, merely indicates how revenue will be expended; but contributes nothing to laying out a vision of how revenue will be generated, and how resources will be mobilised and utilised to enable growth and development.
In this context of the proposed development planning, the expenditure frameworks will become transformed into tools that will help to organize the investments to realize the goals and objectives of the development plan being actualised through integrated development programs.
At the very least any new and visionary incoming administration and governing party would need to develop, and in a participatory manner, a 4 Year National Development Plan, on which its annual budgets and medium-term expenditure frameworks will be based and oriented.
The Four Year National Development plan should have as its overarching goal the establishment and building of a Developmental and welfare state that plays an interventionist role in the economy, that safeguards the weak through an efficient and effective social security/social protection system, delivers in an effective and efficient manner, quality public services, as the instrument to fulfill the provisions of the constitution in Chapters Two and Four, and in particular in Sections 14 to 16.
Such a National economic development plan would have to prioritise the following: Bridging the gap between the rich and poor; increasing average industrial capacity utilization to 80% and above; reducing drastically the cost of doing business; significantly increasing the ease of doing business for small, medium and big business, as well as for both public and private sector businesses; improving both qualitatively and quantitatively the quantum of power generated as well as the Distribution and Transmission capacities of the National Grid; diversifying the economy by encouraging investment not only in solid minerals but also in agriculture, manufacturing, tourism etc; creating a supportive and enabling environment for small and medium scale enterprises and business; and systematic and sustained investment in infrastructure development.
A significant component of the necessary programs that can lead to the improvement of industrial capacity utilization, reduction in the cost of doing business, enabling a robust small and medium scale business development, and consequently reducing unemployment and creating equitable access to wealth will require fixing the power sector and ensuring adequate domestic refining capacity for petroleum products, including promoting development of the value addition industries of the petroleum sector.
Engaging Niger Delta youths and communities for instance in processes leading to establishment of small and medium scale refineries, as well as programs on environmental remediation and regeneration will help create jobs, revive the environment, make agricultural livelihoods once again viable,diffuse tension, improve social cohesion, and help meet the refined products need of the economy within an integrated framework, and within a reasonable timeframe.
By revisiting the privatization process in the power sector, ensuring that companies actually have required technical and financial capacity, and sanitizing the system, the new economic plan can ensure the completion and availability of full capacity of all the ongoing power generation projects. It will then have to focus on rapidly upgrading the distribution and transmission capacity of the National Grid.
Ensuring availability and accessibility of both energy [fuel] and power will contribute immensely towards reducing the cost of doing business, improving the ease of doing business, increasing capacity utilization, and creating employment opportunities both directly and indirectly.
The current constitution already makes provision for start-up funds for diversifying the economy. There is a Solid Minerals development fund into which 1.68% of federation account is to be paid annually. What has been status of this fund over the last 19 years? There is also an ecological fund established by the constitution that can be utilized to ensure the cleanup of the Niger Delta and other environments along the lines of the recommendations of the UNEP report on Ogoni among others.
This new national economic and development plan will need to be funded and adequately resourced. Hence it will be necessary to probe and recover looted funds, as well as from the power, energy [petroleum, refineries], constitutionally established funds, and other statutory Revenue earning MDAs.
There will be an urgent need to reform and restructure the taxation system and mechanism. While we must do away with the scenario of multiple taxation, we must also ensure that corporations and the rich do not evade tax, and that the poor are nor over burdened with tax and multiple revenue charges.
Restructuring the taxation system could include ensuring that defined proportions of the tax paid are earmarked for specific purposes such as infrastructure development, Small and Medium Scale Business Development etc. It will also be necessary to introduce new taxes targeting the rich and luxury goods and lifestyles. The most significant such tax to be introduced should be a tax on personal savings in excess of N1bn that is not invested for instance.
Alongside this, the corporate social responsibility framework of corporations would need to fit into the framework of the National Development Plan. This will require continuous framework for strategic engagement with the private sector.
The New National Development Plan should promote a massive infrastructure development process based on a massive works and housing effort through use of direct labour among others, aimed at reducing the infrastructure and housing deficits.
Reducing the housing deficit for instance will require Urban renewal plans and efforts that are premised on modernization of slums without the eviction of slum dwellers, which ultimately enables slum dwellers to modernize their homes.
To Conclude:
Overall, there is an urgent necessity to evolve in a participatory manner a New Four Year National Development Planning process, focusing on a set of priorities; with set annual targets; and that is based on a massive mobilization and the effective utilization of the human capacity/social capital of the population.
This new economic plan must promote and enable the participation of women and youth while ensuring the implementation of an affirmative action framework that meets and accommodates the demands of women and youths for a minimum of 35% and 30% representation respectively in leadership positions politically and economically, and particularly in ownership of businesses, on their boards, and in political representation capacities in across all arms and levels of government.
Any policy that intends to ensure the full participation of women and youths, will have to ensure that no gender constitutes less than 40% or more than 60% in leadership positions politically or economically. This should also be reflective of the inclusion of youth in such leadership positions.
A serious visionary leadership, desirous of rebuilding our country, and enabling the realization of the full potential of every citizen, will have to ensure that all the policies, processes, institutions, and systems of government and governance are oriented towards the full realization of the provisions of Chapters Two and Four of the 1999 Constitution of the Federal Republic Of Nigeria as amended.
Such a new leadership and government must proceed from the recognition of the justiciability of the provisions of these two chapters of the constitution, and must take concrete steps, including preparing and giving annual progress reports in annual state of the Union addresses to the National Assembly.
This is our commitment to our people, our commitment underpinning our resolve to Reclaim Our Humanity, Retrieve Our Citizenship, Take Back Nigeria, and Rebuild Our Country.
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Jaye Gaskia Is Coordinating Director, Praxis Centre; Lead Consultant, Thinkact Consults; And National Convener, Take Back Nigeria Movement [Tbn]; & A 2019 Presidential Aspirant.
