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By Salihu Lukman
High Uncertain Declining Economy
Official accounts as contained in annual budgets presented to National Assembly reported that the Federal Government of Nigeria earned N3,890 and N3,731 billion respectively in 2013 and 2014. Aggregate expenditure was respectively N4,987 and N4,725 billion. In 2015, FGN revenue is projected at N3,602 billion and expenditure estimated at N4,358 billion, implying projected deficit of N756 billion.
Between 2011 and 2014, the Federal Government earned N14,608 billion. Corresponding aggregate expenditure was N19,073 billion, producing cumulative deficit of about N4,465 billion. Partly on account of rising budget deficit, the nation’s foreign reserve was drawn to $34.51 billion in January 2015 from $44.6 billion in January 2013. With oil prices in the international market currently on the decline, Nigeria’s 2015 revenue and expenditure projections as presented to the National Assembly are no longer tenable. The fact that the 2015 budget was based on $65 per barrel oil benchmark, with daily production of 2.28 million barrels is the confirmation. Currently, OPEC price of Nigerian crude is $55.77 per barrel. The House of Representatives, while debating the 2015 Medium Term Expenditure Framework (MTEF) on March 3, 2015 adopted $54 per barrel.
Assuming the price of $54 per barrel is upheld and stabilized in the international market throughout 2015, what does this mean for the nation’s 2015 budget? First, it translates to about 16.9% reduction in projected oil price for 2015. Assuming for instance, net impact of the emerging reality is 10% reduction in federal government revenue, this may mean projected revenue drops to about N3,242 billion. If Nigeria is to retain proposed expenditure of N4,358 billion, it may also mean potential increase in budget deficit of over N1,000 billion.
How can the federal government fund this potentially high deficit? Choices to be considered include; loan facility, reduced public expenditure and drawing down the nation’s foreign reserve. What is the potential for a loan and at what cost? In other words, what will be the terms for the loan and how much will the federal government be borrowing to sustain projected expenditure levels? Already, the Debt Management Office (DMO) estimates the nation’s debt (exclusive of states domestic debt) at $56.76 billion as at December 2014. What is the implication of higher debt profile given high rising revenue uncertainty?
If rationality and objectivity is to guide decisions of the Nigerian federal public authorities, the second option of reduced public expenditure may be a natural course of action. This will conform to the logic of living within the nation’s means. In other words, ensuring that we don’t live above our earnings. What will that mean in practical terms? Is a likelihood of reduced public expenditure going to affect capital or recurrent components of the 2015 federal government budget or both? What will be the distribution of reduced public expenditure across the different sectors and agencies of government?
Necessities and Possibilities: Political Exigencies
Perhaps, it needs to be acknowledged that it is possible for the federal government to earn the same level of revenue as proposed in the2015 budget against the background of declining oil revenue. This will mean substantial increase in non-oil revenue. With the oil sector contributing over 60% of federal government revenue, what is the possibility of expecting substantially increased non-oil revenue to offset declining oil revenue? Are existing conditions in the country favorable?
For the purpose of analysis, let us assume this is possible and conditions in the country are favorable, what does this mean? It simply means increased taxation, which presupposes increased incomes in the country. With poverty levels of about 70% and unemployment rate of 23.9%, can we really assume increased incomes to support correspondingly increased taxation?
Whichever way one looks at it, the federal government is confronted with hard choices in 2015. For many optimists, it can be argued that necessity is the mother of invention, based on which we can postulate wonderful economic models, matrices and equilibrium that produce wonderful public accounts consistent with the notion of the biggest economy in Africa. It doesn’t matter even if such models, matrices and equilibrium produce negative economic indices of high inflation, unemployment, and poverty rates so long as the outcomes generate the desired revenue gap.
Unfortunately, 2015 is also election year, which meanscertain levels of public expenditure must remain high. As a result, government will be weak in reducing public expenditure. Besides, increased taxation may also produce high negative public ratings of the government and with the current President seeking re-election; the choice of increased taxation may not be attractive. At another level, if reduced public expenditure is to affect recurrent budget resulting in possible retrenchment of public sector work force, in an election year, it may mean high political risk for the ruling party.
With oil prices hovering at $55.77 per barrel and a possible benchmark of not more than $54 per barrel, sustaining current public expenditure become very challenging. Existing high public expenditure engender a flamboyant public account with expenditure consistently more than revenue. With budgetary oil price benchmark much lower than actual prices, since the mid 2000s, it helped nourish the nation’s Excess Crude Account with all the legal and political contestation around it, at the same time providing a huge financial buffer to the federal government.
With foreign reserve of $34.51 billion, all things considered therefore, the possibility of convenient political option of heavily drawing down the nation’s foreign reserve is very likely. The question will be by what magnitude? Considering that between 2013 and 2014, the nation’s foreign reserve was drawn by at least $10 billion, with the level of current decline in international oil price, to sustain current expenditure levels as proposed in the 2015 federal government budget proposal, our nation’s foreign reserve risks being drawn by more than $15 billion by the end of 2015.
High Public Expenditure Embed Corruption
National reality of financial recklessness fuelled more by the federal government defines the Nigerian economy. Allegations of mismanagement and corruption against public functionaries have become frequent and reduced to public noise without any consequence. For instance, in 2012,following the January national protest against increases in the prices of petroleum products, there were allegations of oil subsidy fraud, with the House of Representative eventually setting up the Hon. Farouk Lawal Ad-hoc Committee to verify the actual subsidy requirements of the country.
At the end of the investigation, the Committee reported that “contrary to official figure of subsidy payment of N1.3 Trillion, the Accountant-General of the Federation put forward a figure of N1.6 Trillion, the CBN N1.7 Trillion, while the Committee established subsidy payment of N2.587 Trillion as at December 2011, amounting to more than 900% over the appropriated sum of N245 Billion. This figure ofN2.587 Trillion is based on the CBN figure of N844.944 billion paid to NNPC, in addition to another figure of N847.942 billion reflected as withdrawals by NNPC from the excess crude naira account, as well as the sum of N894.201 billion paid as subsidy to Marketers. The figure of N847.942 billion quoted above strongly suggests that NNPC might have been withdrawing from two sources especially when double withdrawals were also reflected both in 2009 and 2010.”
The report of the 2012 subsidy probe threw up issues of accountability especially by NNPC with the strong charge that “NNPC feasted on the Federation Account to bloat the subsidy payable, some of the marketers were involved in claiming subsidy on products not supplied.” In particular, the report also indicted the Accountant-General of the Federation that served in 2009 for making payments in equal installments ofN999 Million for 128 times, totaling N127.872 billion.
Following the release of the House of Representatives subsidy investigation report, the Chairman of the Ad-hoc Committee, Hon. Farouk Lawal enmeshed himself in $3 million bribe scandal reportedly demanded from Mr. Femi Otedola, a major oil marketer, to clear him from allegations of subsidy fraud.
Since the House of Representatives subsidy investigation, the nation has continued to witness claims and counter claims of missing oil revenue. In October 2013 for instance, former CBN Governor, Mallam Sanusi Lamido Sanusi alleged that $49.8 billion from the sales of crude oil between January 2012 – July 2013 was missing from NNPC accounts. Following series of audits and reconciliation meetings involving NNPC, CBN and Ministry of Finance, the former CBN Governor reported the missing amount to be $20 billion while the Minister of Finance, Mrs. Ngozi Okonjo-Iweala reported $10.8 billion. On February 20, 2014, President Goodluck Jonathan suspended Mallam Sanusi from office on charges of financial misconduct.
With the suspension of Mallam Sanusi, allegations of missing oil revenue from NNPC accounts took backseat. So also were issues of subsidy fraud. However, public flashes of allegations of corruption against public officers continue. In 2012, there was the case of Police Pension Task Force resulting in Senate investigation. Some of the revelations include withdrawal of N24 billion for payment of pension that required about N3.5 billion. The Chairman of the Pension Review Task Team, Alh. Abdulrasheed Maina, informed the Senate Committee of two accounts in Lagos where police pension funds was lodged, each amounting to N21 and N24 billion. Alh. Maina reported daily withdrawals of various sums of money from these accounts ranging from N200 to N300 million. Total sum of N273.9 billion was reported by the Senate Committee to have been looted in 6 years.
Other flashes of corruption charges against public officials include the recurring case of $180 million Halliburton; $1.1 billion Malabu Oil; Princess Stella Oduah N255 million Aviation Ministry bulletproof cars; N10 billion jet scam involving the Petroleum Minister, Mrs. Deiziani Alison-Madueke; House of Representatives Capital Market probe; N360 billion service wide scam; and the recent Soludo’s allegation of missing N30 trillion.
What these suggest is that substantial component of public expenditure services shady activities of public officers and their collaborators. Unfortunately, inconclusive investigations both cover the size of the proportion of public expenditure that is lost to corruption and as well as encourages and entrenches the incidence of corruption in our national life.
Politics – Corruption Drive High Public Expenditure
On Saturday, December 20, 2014, the Peoples Democratic Party (PDP) organized fund raising dinner ostensibly for President Goodluck Jonathan 2015 re-elections. The dinner, which held at the Old Banquet Hall, Presidential Villa, Abuja, was reported to raise N21 billion. Players in the nation’s Oil and Gas sector donated N5 billion; Friends and Associates of Prof. Jerry Gana in the Power Sector, N5 billion; Real Estate and Building, N4 billion; Transport and Aviation, N1 billion; Food and Agriculture, N500 million; Power, N500 million; Construction, N310 million; Road Construction, N250 million; National Association, N450 million; and Shelter Development Association, N250 million. Flagging off the donations, Mr. Tunde Ayeni, Chairman of Skye Bankdonated N2 billion.
Although owing to public criticisms, and of course legal implications, the PDP subsequently argued that the fund raising dinner was not to support President Jonathan re-election campaign, the question needs to be asked; why this generous support coming from virtually all the leading sectors of the Nigerian economy? Do altruistically ideological or business investment considerations or both inform these contributions? If the consideration is altruistically ideological, what does that mean? If business investment decision, what are the expected returns?
Underpinning this extravagant donations is certainly the expectations to access business opportunities by way of contracts and consultancies to the magnitude of these contributions. Ethical and legal considerations are hardly regarded and this may have accounted for situations where federal government makes subsidy payments for fuel products that are never supplied. It also account for why N24 billion payment will be made for pension that required just about N3.5 billion and daily withdrawals of N200 to N300 million can be made from pension accounts without any internal audit system reporting it. Total payments of N127.872 billion in equal installments of N999 Million for 128 times can be audaciously made without any query. And with Accountant-General, NNPC, CBN and Ministry of Finance having different public account returns, everything goes!
If all these have happened, how can anyone then dismiss the recent APC Presidential Campaign allegation of President Jonathan awarding contract of N24 billion to a car wash company surreptitiously for railway rehabilitation? With probes only producing archival materials in the names of reports, the beneficiaries are brazen and therefore could publicly announce donations for election campaigns of billions even when the law clearly limits it to N1 million per individual.
Entrenched Interests and the 2015 Elections
Certainly, high political investments produce entrenched interests. With PDP being the ruling party since 1999 and elections merely rituals of producing so-called results of votes, it is “rational” to be over-confident and therefore proceed to mobilize N21 billion for the re-election of President Jonathan.
Perhaps, again for the purpose of analysis, it can be assumed that many of the actors really don’t have options. If not for anything, with many possible allegations and in some cases indicting investigation reports, to protect themselves from the law, they have to support President Jonathan. Supporting Gen. Muhammadu Buhari whose agenda is to fight corruption will be suicidal. Not even the pledge of not looking at issues before May 29, 2015 can assuage them. Because in real terms, what does this mean? Will it allow them to get paid for products and services not rendered? Will it permit huge withdrawals from public accounts on daily basis for clandestine pension payments that required minimum of monthly withdrawals?
With Gen. Buhari as the potential winner of the 2015 elections, other bigger questions may include what will really happen to all the pending probe reports? Will they, in the spirit of looking at issues from May 30, 2015, be left to the archives? Or given that they are pending, and with the pledge not to interfere with the work of the judiciary, are these probe reports going to be given judicial life?
These questions can be endless and any answer other than victory for PDP and President Jonathan will mobilize those benefiting from all the high incidences of corruption against the 2015 elections. What is it that is possible in the circumstance? Are we going to just watch how the PDP, President Jonathan and the formidable interests around them subvert our democratic rights, return by all means President Jonathan in whatever guise to continue to rule Nigeria post May 29, 2015 and unguardedly deplete our national resources and assets without let or hindrance? Or, can Nigerians rise up to the challenge of depending our democratic rights to support the defeat of PDP and President Jonathan?
Mobilizing for the Defeat of PDP and President Jonathan
For most Nigerians, especially outside PDP, what will the defeat of PDP and President Jonathan translate to, both with respect to national governance and citizens’ welfare? Issues of national economic management are at the heart of the campaigns for the 2015 elections. From the narrative, so far, it is clear why and where the source of support for the PDP and President Jonathan originates. The source of support for APC and Gen. Buhari would appear to be organic but yet to crystalize into support from the nations’ organized groups. What are these groups? Do they exist? Do they have the capacity needed to mobilize for the defeat of PDP and President Jonathan? Assuming they do, under what conditions will they want to support the defeat of PDP and President Jonathan? Specifically, are these organized groups insulated from the pervasive corruption that characterizes our national life?
Many would readily cite organizations such as the trade unions, students movement, professional bodies, civil society organizations, notably women, youths and human rights organization, faith based groups, etc. Specifically, Nigeria Labour Congress (NLC) and its affiliates, Trade Union Congress (TUC) and its affiliates, National Association of Nigerian Students (NANS), etc. will readily come to mind. Records of pro-democracy struggles against military dictatorship in the 1990s and more recently against Yar’Adua cabal could be cited.
Some reality check would however be necessary so that we don’t chase shadows and end up defeated. The hard truth is that most of our organizations are either weak, compromised or both. They are weak to the extent that they are mostly alienated from their membership with very little services, if any. They hardly convene meetings of structures of these organizations and when meetings are convened, leaders hardly submit themselves to members’ scrutiny. As a result most of our organized groups reflect our corrupt national realities.
By far, the source of major concern is that public officials clandestinely heavily fund most leaders of these non-governmental organizations, probably on account of lack of sources of independent funding. In fact, many were sponsored by government officials to emerge leaders of their organizations. Having therefore been sponsored by federal government, some are embarrassingly and openly campaigning for PDP and President Jonathan even when for instance they claim to be “not for profit and not political”. A good example is the case of the President of TUC, Mr. Bobboi Kaigama who openly campaigned for President Jonathan during the opening session of the February 8, disrupted NLC Delegates’ Conference. Even the NLC is riddled with many allegations of underhand deals with some contestants for many NLC offices being funded by the federal government.
Going by reports in the media, there are daily allegations indicting some of our civil society leaders too. With all these, what is the prospect of mobilizing these organizations to work for the defeat of PDP and President Jonathan? Given that many are already compromised, will the defeat of President Jonathan enable them to at the minimum sustain current privileges? In other words, what will facilitate the relationship between political forces opposed to PDP and President Jonathan?
Spontaneity would appear to be the savior and often come to the rescue of societies and nations in period of great national challenges.This is largely because our formal leaders are hardly prepared to lead at periods of adversities, which required great sacrifices. Some of our formal non-governmental leaders, are far more entrenched and compromised and in the circumstance get themselves deeply entangled with the leaders of government in power.
Look at our experiences under military with the challenges thrown up by the annulment of June 12, 1993 elections. Our recent experience of fighting the Yar’Adua cabal between 2009 and 2010 bear the same attributes. And looking at unfolding political events, we are almost replaying 1993 scenario, scene after scene. The only different is that in the case of 1993, the election held before Gen. Babangida came up with those infamous allegations of voters being coerced, huge array of electoral malpractices, lack of decorum and fairness on the part of electoral umpire (Prof. Humphrey Nwosu’s National Electoral Commission), charges of money and other forms of inducement, conflict in the process of authentication and clearing of credentials of the presidential candidate, contradictory decisions and conflict of interest between government and candidates, etc.
The reasons cited by Gen. Babangida for cancelling the June 12, 1993 elections bear strong resemblance with reasons being advanced today for postponing the 2015 elections. The only one element that may have been new is the factor of insurgency. And just like in 1993, long before the elections and its annulment, there were calls for stopping the elections, including legal cases, so also is the case of postponing the elections today. There are allsorts of media campaigns and protests calling for the postponement of the 2015 elections just as there are uncountable court cases.
It is clear that given the entrenched interests around President Jonathan, the struggle for 2015 elections will continue even after the elections. Depending on how the APC and Gen. Buhari are able to use the period of transition (between now and May 29, 2015) to develop relationships with sympathetic leaders of organized interests, the risk of emerging as a government that is highly polluted by the same interests that have benefitted immensely from PDP’s inglorious corrupt era are very high.
June 12, 1993 Experience
What is it that can therefore be done? Again, learning from history of June 12 struggles, APC and Gen. Buhari need not to be bothered too much about perfect situations. The key strategy should be to open up to be able access all groups on regular basis. Process of relationship building between APC and Gen. Buhari, on the one hand, and the nation’s organized groups, on other, should be mapped out such that daily and weekly engagements and consultations hold.
Most of the times, we dismiss these suggestions but once we reach levels of emergency thresholds, we return to them. Typical example, in 1993, the attention of SDP and Chief MKO Abiola was more on organizations like Nigeria Union of Teachers because of their roles during elections. Attention on trade unions was limited to the top leadership of NLC under Comrade Pascal Bafyau. By the time of the annulment, with the NLC President very reluctant on account of being connected to the regime of Gen. Babangida and also not picked as the running mate to MKO, capacity to mobilize national resistance against the annulment was hardly predictable.
The only saving grace was that in 1993, the nation still had some remnants of vibrant organizations with some individual leaders such asChief Alao Aka Bashorun, Dr. Beko Ransome Kuti and Chief Gani Fawehinmi. These leaders, long before the annulment of June 12 started the process of campaign for an end to military rule in the country under Campaign for Democracy (CD). The effort to form CD started around July 1990 with the attempt by Chief Alao Bashorun to lead the convocation of a Sovereign National Conference, which was blocked by the Babangida administration. Eventually, it was the CD, under Dr. Beko’s leadership, that spearhead the campaign against the annulment of June 12 elections.
The Save Nigeria Group (SNG) Experience
Unlike the 1993 June 12 annulment, no one expected the2009/2010 Yar’Adua experience to lead to threaten our democracy. Largely because the Yar’Adua government was a product of democracy, it was inconceivable that functionaries of the Yar’Adua administration will seek to subvert the constitution in order to hang on to power. Perhaps, like today’s formidable interests, interests around the Yar’Adua administration wanted to hang onto power in order to continue to access public resources.
By the time Yar’Adua was taken out of the country for medical treatment in Saudi Arabia in December 2009, concerned Nigerians (about 54) came together to issue a statement. This gave rise to some media campaigns, advocacy, consultation meetings that produced the Pastor Tunde Bakare-led SNG and eventually started organizing rallies in Abuja and Lagos calling for respect for constitutionalism and upholding provisions of section 145 of the 1999 Nigerian Constitution that require handing over the mantle of the nation’s leadership to Dr. Goodluck Jonathan as Acting President. Struggles of SNG, in no small measure help to mobilize Nigerians leading to the “doctrine of necessity”, which led to the swearing in of Dr. Jonathan as Acting President. Instructively, throughout the struggles of SNG, leaders of trade unions and some of the renowned civil society took backseat.
The truth is that the state of our organizations today are far worse that the reality in 2010. Today the nation is in short supply of patriotic Nigerians such as Chief Alao Aka-Bashorun, Chief Gani Fawehinmi and Dr. Beko Ransome Kuti. Of course, we still have the Pastor Tunde Bakares, Mr. Femi Falanas and their likes. Unfortunately, we can hardly talk about CD and SNG largely because somehow we have failed in so many respects to build these organizations.
The CD collapsed as far back as 1994 and organizations like NADECO sustained the struggle for June 12 more as a regional campaign. In the case of SNG, inability to open up and allow members to take control of the post Yar’Adua emerging reality contributed substantially in extinguishing organizational life out of the young SNG.
With CD and SNG practically non-existent, is it possible to produce similar organizational frameworks, especially in the event that the formidable interests around President Jonathan today succeeds in creating constitutional crisis in the country? Must we have such interventions to be able to resolve constitutional crisis?
Necessities of Peoples Movement to Resolve Potential Constitutional Crisis
There is in existence strong possibility that in the coming days and weeks, the nation may be confronted with constitutional crisis. The simple reason being high probability that PDP and President Jonathan will be defeated in the Presidential elections. The stronger public rankings suggest that President Jonathan will be defeated in the 2015 elections, the more desperate will be the PDP, President Jonathan and the interests that mobilized N21 billion (and more) to seek to undermine the 1999 Constitution.
What is needed at this point is some constant reminders of J. Stiglitz message in his 2002 book Globalization and its Discontent that democracy “is more than just periodic elections; it entails ensuring that voices are heard, and that there is a deliberate process.” Given our national reality, it is not enough to assume that opposition to the naked looting of public resources are loud enough and they will translate into electoral votes. We need far stronger national processes to continue to amplify the voices and consolidate them into national processes that destroy our economy through looting.
The good thing is that there is strong currency of independent actions aimed at mobilizing Nigerians to support Gen. Buhari and the APC. What is needed at this point is to consolidate all these independent processes to stronger relationship both with the party, APC, and the candidate, Gen. Buhari. The relationship needs to be founded around the goal, for instance, of policy advocacy, including interfacing with individual leaders of non-governmental organizations.
Small as this would appear, it would help to lay foundation for a stronger national campaign both in the event of a likely constitutional crisis and smooth transition to a Gen. Buhari Presidency following a victory at the March 28,2015 elections.
Conclusion: Setting Agenda for a Peoples Driven Governance and Economic Management
It needs to be emphasised that the option of building a peoples movement is almost inevitable especially if, as a nation and opposition, we want to actualize the defeat of President Jonathan. All nations that are able to achieve democratic consolidation resulting in transfer of power to opposition leaders following electoral defeats have to of necessity develop peoples movements.
Closer home, the case of Cote de Voire in December 2010 with Mr. Alassane Quattarra defeating incumbentPresident Laurent Gbagbo readily comes to mind. And like ourPresident Jonathan, former President Gbagbo almost aborted the December 2010 Ivoirean elections but the Alassane Quattarra-led opposition party with the support of international community was able to force Gbagbo to respect the result of the elections.
The story was similar in the case of Senegalese elections of March 2012. Former President Abdoulaye Wade almost created constitutional crisis with the amendment of the Senegalese constitution to accommodate his attempted third term re-election. However, a strong alliance of the opposition with civil society organizations facilitates the defeat of President Wade and the election of Mr. Macky Sall.
Both Gen. Buhari and leaders of APC need to always remember the experiences of these and many others as a source of inspiration. But more importantly, they also need to remember the many revelations of allegations of corruption, to use the words of President Jonathan, public theft of national resources running into billions and trillions. This should call for humility and moderation and the need to ensure that relationship with Nigerians at levels are strengthened. The words of leadership scholar, Warren Bennis advocating for the emergence of ‘leaders of leaders’ who “will decentralise power and democratize strategy by involving a rich mixture of different people from inside and outside the organization in the process of inventing the future”should be a constant guide.
Gen. Buhari and our APC leaders and candidate need to be emphatically called upon to transform all the swelling Buhari Support Group, Organizations, Volunteers, etc. into a national political networks, united and linked to the APC structures in all the 36 states. This way, APC can be transformed into a party that is committed to creating a new Nigeria, and in line with that vision engage all our governmental and non-governmental actors with the goal of rebuilding institutions founded on stronger values of productivity, service, equity and mutual respect.
Article written By Salihu Moh. Lukman
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