Where Has the Money Gone?

0

Wole Olaosebikan

In every nation, taxi drivers are always fountains of knowledge, not only do they eavesdrop on the conversations of their passengers, they also have insight of the beer parlour and food vendor discourse. A recent encounter gave me a remarkable insight into the current national debate across all strata of society. Where has the money gone?

Under previous administrations, there was money, people were spending and now under this current administration it has seemingly and suddenly dried up. This is a simplistic but accurate summary of the present economic challenges but it is one that must be frontally addressed.

It is impossible to explain our current predicament without an understanding of our recent economic history. Since 2005, when the historic debt forgiveness was agreed, Nigeria enjoyed a period of historically high oil prices and relatively stable output at the same time it embarked on new borrowing. Indeed, with oil as high as US$112 per barrel, supplemented by borrowed funds, the only challenge was in the famous words of General Gowon, decisions as to what to spend money on.

Nigeria spent, but did not spend optimally and the GDP growth that occurred was driven not by improvements in infrastructure or productivity, but was largely accounted for by the circulation of bumper oil receipts through government spending. That circulation of oil receipts in an economy is not in itself a bad choice but the quality of such expenditure is critical in determining future outcomes. Those outcomes are what we are experiencing so painfully today. Our GDP growth was not accompanied by development, our indices showed widening inequalities and fundamental weaknesses particularly exemplified by low capital investment, high unemployment and increased import dependency. The warnings about vulnerability to oil price shock were largely ignored.

Capital can either be accumulated in the form of infrastructure and projects or retained in cash reserves; sadly, Nigeria has neither. After the first line charge of corrupt diversion, based on available records, in 2015, 90 percent of Nigeria’s expenditure was on recurrent items, with only 10 percent allotted to capital; this translates to an individual spending 90 percent of his salary on entertainment and lifestyle items, leaving only 10 percent for building or saving for the future.

This underinvestment in our infrastructure has impeded our economic growth and driven us into a vicious cycle of inefficient public expenditure dominated by salaries and closely followed by debt servicing which left little or no head room for capital investment. The N165 billion monthly wage bill which translates to N1.9 trillion per annum dwarfs by a ratio of 100 to 1, the N19bn spent on roads for the entire Federation.

Now I am not among those who are seeking to blame the 1.2million public servants paid by the Federal Government, they are victims themselves. Many have been recruited into agencies that government is simply unable to fund in a manner that allows them to operate optimally. A recent audit of a particular unit found 20 drivers allocated to a department that did not have a single vehicle. The lack of fulfilment of such staff is unimaginable.

Our huge wage bill would be justifiable if staff were operating in much needed areas such as teaching, healthcare, midwifery, agricultural extension; at least our health and other developmental indices would be improving. However, our propensity is to create administrative staff who are not specialists in any particular area. This explosive growth of the public sector and its wage bill is a function of our failure to develop the private sector and this failure brings us squarely back to infrastructure.

It would have been so easy and convenient and politically comfortable for this administration to continue in that direction. To continue to simply borrow to meet the wage bill rather than as it appears that they are doing, to question its authenticity. To pay lip service to our infrastructural decay with a few token payments and the flagging off of unfunded projects with great fanfare.

Today, the data of food price inflation, cost of living challenges and loss of confidence are reaching a crescendo, it is sorely tempting to revert to what Nigeria has always done.
This administration has a different philosophy; they are intent to attack the factors that have put us in this regrettable position. The first was the pervasive corruption, the second was wastage and inefficiency and the third was failure to invest in our much needed capital, particularly infrastructure.

Targeted investment in infrastructure has the potential to ensure that our agricultural and solid minerals sectors can compete, that manufacturing can be revived and that the cost of living concerns can be addressed. None of these strategies will produce quick wins and we understand the frustration and the people, but we really have no choice. There is no credible alternative that will reposition Nigeria and ensure that this never recurs. There is no strategy that will allow us to tackle our problems rather than postponing them for future generations to face. We need a strategy that will refocus and revive our economy and will restore us to growth.

We need a strategy for Investment for growth; this has to be a long term strategy with long term rewards. However, the current lack of existing infrastructure means that a lot of benefit will be available to every Nigerian where new infrastructure becomes available, as they utilise the new infrastructure, they enjoy the immediate benefits therein.

As it been stated repeatedly, in the recent months since the budget was signed, over N360bn has already been released for capital projects. Many of the major road contractors received their last payment in 2012 and were initially reluctant to remobilise to site until they received direct assurances that the payments would and could be sustained. The responsibility of this administration is to remain committed to its initiatives and be firm without turning back in their quest to resolve our infrastructure challenges.

It appears that the airport modernisation projects across the country that had been stalled due to lack of funds have now been funded and rapid progress is being made. The process of funding another tranche of N350bn in releases that will see new major infrastructure projects in Railway being funded with an estimated 20,000 jobs being created, would go a long way to restore confidence in this administration.

Similarly, if the recently announced transformational initiative in Housing Finance, which is meant to raise One Trillion Naira becomes a reality, one can start to say that this administration is making significant improvement in the diversification of our economy. This level of finance for affordable homes development and ownership will catalyse the mortgage market, especially with the promised single digit, 20 year mortgages that will address the cost of living for workers whilst creating thousands of jobs.

Investing in growth and reflate our economy in a sustainable manner is critical for the future of Nigeria. Doing it in a manner that is private sector driven will allow for efficiencies and equity across all the stakeholders. However, it is important that this administration remains sensitive by ensuring that our most vulnerable are not left behind and our unemployment challenges are not left unchecked.

Government records state that, to date, about N20bn has been released towards the rollout of the Social Intervention Programmes which will provide instant relief. The administration has also put in place the Budget Support Facility aimed at ensuring reform in State and Local Governments that will ensure that they are better positioned to meet their salary obligations. Collectively we must work within our communities to ensure that these initiatives are followed up and carried through. Otherwise the initiatives would fail and the entire population would be worse off.

So I close this discourse with the question that opened it, where has the money gone?
Where has the money gone? We earned at US $110, US$90, US$80 and even US$70 per barrel?? Even from any point of view, I struggle to answer that question with any clarity. Nigerians would not be groaning now if we had no cash but we had 24-hour power, or if we had no cash but we had an excellent railway system or world class roads. I suspect that some of the cash is sitting frozen in bank accounts abroad, hidden in soakaways, wasted on fruitless journeys and invested in luxuriously