Between Bad Politics and the Bad Economy

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It was bad politics that got Nigeria into the current economic quagmire and the present-day leaders must change to the right kind of politics in order to free the country from the mounting difficulties. Vincent Obia writes

Change is unavoidable. Unless a system creates positive change for itself, it is bound to have negative change and, ultimately, become obsolete. Nigeria’s present economic woes bear testimony to that fact. And the federal government underscored this point on Wednesday, when it admitted the harsh economic realities in the land and the largely politician-made causes.

Minister of Finance, Mrs. Kemi Adeosun, stated that Nigeria was in its “worst possible time”, as the National Bureau of Statistics said the country was in its worst economic recession in 29 years. She said, however, that the federal government was in no confusion as to what to do, stressing that diversification of the economy and investment in critical infrastructure are the best way to go.

NBS said in a report on Wednesday that the growth rate of the Gross Domestic Product went down from -0.36 per cent in the first quarter of the year to -2.06 per cent in the second quarter. It was a wholly negative picture for the economy between the first and second quarters of the year, as inflation rose from 16.5 per cent to 17.1 per cent; unemployment rate increased from 12.1 per cent to 13.3 per cent; and investment volume fell to $647.1 million from $710 million.

The major drop in economic activities had been obvious since the last one year. The federal government blamed the situation on a record fall in crude oil prices; though, it refrained from calling it a recession. But in the end, the government has admitted that the country is, indeed, in a recession.

The present economic woes are the bitter fruits of decades of bad politics. Nigeria runs a debilitating economic monoculture that is made worse by obsolete – sometimes, unwieldy – laws, which seem only intended to hinder progress. A case in point is the petroleum industry, the mainstay of the economy, which is governed by regulations that are generally archaic and awkward. The regulations have seemed to make the natural resource a curse rather than blessing to the citizens.

There are about 30 laws governing the upstream and downstream sectors of the Nigerian petroleum industry, many of which are anachronistic and retrogressive. In addition to section 44 (3) of the 1999 Constitution, the legal and regulatory framework of the petroleum industry are mainly expropriatory and exploitative. They have encouraged agitation, indolence, and retardation by seizing development resources from the communities and the federating units, and vesting them almost entirely in the federal government. The laws have promoted consumption to the detriment of production. The result is a hazardous economic monoculture that exposes Nigeria to the worst vagaries of the domestic and foreign environments.

The Petroleum Industry Bill, which aims to streamline, standardise, and improve the guidelines for the operation of the upstream and downstream sectors has been stagnated by politics for nearly one decade.

Agriculture, too, has been hampered by tenuous government support, lack of finance, dearth of storage facilities, and insecurity. These have discouraged people from going into farming and exacerbated rural-urban migration, urban congesting, and crime.

Bloody clashes between crop farmers and animal breeders, which have been going on for several years, have worsened in recent times. This is, apparently, due to the absence of a determined effort by government to solve the problem. The situation has seriously affected crop and animal production. Despite expert suggestions of proven modern solutions, solutions that worked in societies in similar conditions as Nigeria, the federal government has remained evasive about stopping the traditional, yet controversial, practice of herding cattle from one place to another in search of forage.

Like the finance minister pointed out on Wednesday, “We’re too dependent on oil whereas, 87 per cent of our GDP is non-oil. So, let us drive those other areas.”

The issue of diversification has taken centre stage in the country. And there is no better time to diversify than now, when the dwindling prices of crude oil has forced many oil producing countries to begin to explore alternative sources of revenue. But it is difficult, almost impossible, to drive the much needed development in other areas of production without fundamentally restructuring the laws guiding the ownership and control of the means of production.

Restoring the power of the states, the federating units, to a reasonable level of control over their natural resources is the key to success in the economic diversification drive. The excellent performance of the First Republic federating units bear witness to this. Every Nigerian comes from a state. This natural attachment, which, in fact, was the basis of the coming together of the diverse peoples of Nigeria to form a federation, cannot be legislated out of existence. It can only be improved.

The federating units, which obviously have the greatest influence on the citizens, must own the production process if it is to produce the right results. They must also have the right and power to secure and police their territories.

Like the former governor of the Central Bank of Nigeria, Professor Chukwuma Soludo, stated at the fourth Progressive Governance Lecture series organised by the Progressives Governors Forum, an umbrella body for the 23 governor of the All Progressives Congress, the ruling party must have a vigorous “agenda of competitive federalism.” According to Soludo, “The federal government must loosen its hold on the states to allow them use their mineral base for the states. You have right over land but the federal government has right over what is underneath it.

“May be, the first place to start in freeing up the states is to first get the constitution amended…you can amend the constitution to take your mineral resources.”

APC controls 23 of the 36 of the federation. This majority stands the party in good stead to effect the constitutional changes needed to ramp up productivity and revamp the economy. The federal government must summon the courage to channel the party’s majority properly.

To change the present conditions, the President Muhammadu Buhari government needs to move beyond the familiar cosmetic solutions and engage in a fundamental reform of the system. Having acknowledged that these are unusual times, the administration needs a deep change of perspective; it needs to develop new ideas.