Cautious optimism as national economic confab holds next week

                                  

Participants at the proposed economic summit billed for March 10 and 11 are expected to come up with recommendations to rescue the economy. But experts and stakeholders in the various sectors of the economy are skeptical about what happens to the product of the talk shop. Some believe that the conference may end up as another hollow ritual, unless President Muhammadu Buhari summons the political will to implement its recommendations. CHIKODI OKEREOCHA, EMEKA UGWUANYI, COLLINS NWEZE and TOBA AGBOOLA write on the expectations of Nigerians.

Its desirability is not in doubt; so also is the timing. For an economy that has been severely bruised by ripple effects of crashing oil prices, poor infrastructure and shoddy implementation of fiscal and monetary policies, the proposed national economic conference cannot come at a more auspicious time than now.

Expectedly, the summit, which is scheduled for March 10 and 11, will provide a platform for experts to brainstorm and come out with robust and far-reaching recommendations and strategies to halt the economy’s fast sliding fortunes.

Some experts and stakeholders, who spoke with The Nation, described the conference as laudable and overdue. They, however, expressed fears that the talk’s recommendations may go the way of previous ones that were never implemented by past administrations.

“The conference is long overdue. It’s a laudable programme and a matter of urgent national importance,” a Lagos-based lawyer and public affairs analyst, Obiora Akabogu, said.

 

 

He observed that the nation’s economic growth has been in reverse gear, requiring urgent intervention in the mould of the summit to chart a quick recovery course.

“There has not been a genuine economic growth. In fact, the economy is drifting. For the sake of national survival, the conference is overdue,” he said, urging the participants to fashion out a home-grown economy.

According to him, the Nigerian economy has been distanced and insulated from the dominant global economies. He suggested that the conference should consider a return to regionalism of the 60s when the groundnut pyramids of the North, cocoa in the West and palm oil/seedlings in the East were the economy’s mainstay.”

He recalled: “It was palm seedlings that Malaysians collected from the Southeast that changed their economy for good.”

The analyst described Nigeria’s over-dependence on oil revenue as its greatest undoing. He called for an “urgent and genuine” diversification of the economy and a return to regionalism.

“Each region should be allowed to exploit the resources in its domain and pay royalty to the national economy at the centre,” he said.

Diversification of the economy is one of the major issues slated for discussion at the conference that will opened by President Buhari.

A source told The Nation that the President will sit as a participant to demonstrate his commitment.

A Lagos-based businessman, Michael Obinna, spoke of need to critically look at economic diversification because of the implications of the sliding oil prices on the nation’s finances.

He noted that the unprecedented drop in revenue from the sale of crude oil has taken a debilitating toll on federal allocations to states.

 The Federal Government, which shared about N629 billion to the 36 states in January, last year, could only share N370.4 billion last month. The drop in allocation by almost half within a year showed an economy undergoing depression.

The proposed conference, Obinna said, presents the opportunity for states to share ideas on what they have been doing to shore up their incomes and become economically buoyant instead of relying on handouts from the federation account.

Obinna said the conference should also discuss the depleted foreign reserves, which prompted the Central Bank of Nigeria (CBN) to take measures to reverse the trend, notwithstanding that some of the measures and policies hurt operators invarious sector.

Not a few Nigerians have seen the conference as an opportunity to look at the foreign exchange (forex) reserves, which have fallen from $44 billion a year ago, to $27.8 billion.

Other issues expected to take the front burner at the conference include the continued call to devalue the naira, asuggestion that has been rejected by government; CBN’s forex policy.

An economist, Mr. Martins Biodun, noted that CBN’s tight forex policy has affected foreign-owned businesses in Nigeria. This, he said, should be looked unto at the summit.  He listed the opposition of foreign investors to a fixed/regulated exchange rate as issues for debate at the conference.

Biodun further suggested that participants should look at possible revenue sources for the funding of the N6.07 trillion Budget, the debt option to budget funding; the implementation of the Treasury Single Account (TSA) and its impact on government revenues.

Oil & gas, energy

‘shopping list’ ready

For a country that earns more than 70 per cent of its revenue and 95 per cent of its foreign exchange earnings from oil, it is not surprising that oil and gas operators are agitating for the convocation of a national economic conference.

Those who spoke with The Nation believe that Nigerians have not got appropriate value from the exploitation of the nation’s hydrocarbon. The benefits accruing to Nigerians, they argue, are not been commensurate to the six decades of oil production and export.

The thinking is that those at the helm of affairs have not properly accounted for the millions of dollars realised from the operation of a mono-economy in the past four-and-a-half decades. Some operators in the oil and gas and power sectors agree that the economic summit is timely.

The Managing Partner, Lonadek Oil and Gas Consultants, Dr. Lola Amao, believes the conference will proffer solution to the present shoddy arrangement in Joint Venture.

She said: “The Federal Government should encourage International Joint Ventures that competitively bid for equity participation, investment and loans, because currently, government no longer meets her cash-call obligations to the detriment of a well-balanced economy.”

She said funding, fiscal regimes and tax holidays should be addressed to stimulate projects focused on industrialisation and increased domestic utilisation of natural endowments.

To the Managing Director/Chief Executive Officer, Niger Delta Petroleum Resources Plc., Dr. Layi Fatona, there must be a focused and firm implementation of multiple small to medium – sized oil and gas processing facilities, such as refineries, tied strictly to producing assets.

Mr Akin Fatunke, a Manager at Mobil Oil Plc., the downstream arm of the multinational oil firm, is pushing for deregulation of the downstream oil industry.

“With the clout and policy thrust of the present government, we think the industry should be controlled by market forces of supply and demand especially now that prices of crude are fairly low,” he said.

According to Fatunke, the government at certain points could intervene, but the operation of the downstream should be driven by market forces, especially in the face of foreign exchange scarcity.

He urges the summit to recommend that the downstream sector of the oil and gas industry be a stand alone unit and not lumped together with the upstream and midstream.

If the downstream sector of the oil and gas industry is made a standalone unit, he said, the government would be able to check products’ smuggling and diversion.

“The summit should make the government know it has no business being in business of downstream. The government should have the courage and will to enthrone level playing field for players in the sector and allow economic forces come into play,” Fatunke told The Nation.

The Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, prays the conference participants to pay attention to gas provision issues.

He said the conference should deliberate on how to make gas available to power stations and also initiate achievable measures to attain generation and distribution of 20,000 megawatts (MW) of electricity by 2020.

According to him, pipeline vandalism in the Niger Delta must be stopped to allow unhindered power generation and distribution.

The ANED chief also prays the conference to come out with recommendations that would encourage the approval of appropriate tariff by the National Assembly.

According to Oduntan, only an appropriate tariff would stimulate investment in power and also guarantee steady supply to drive industrialisation.

Admitting the existence of policies and laws, he said the summit should brainstorm on how to enforce them, suggesting the establishment of a special court to specifically try offenders.

Oduntan, who noted that power thieves, vandals and those who by-pass meters should be tried by the special court, also urged the conference to look into ways of making operators in the power sector value chain – generation, transmission and distribution, to access foreign exchange at official rates, considering the fact that most of the equipment and facilities used are imported.

How Soyinka prompted the conference

Presidential approval for the economic conference came barely a week after Nobel laureate Prof. Wole Soyinka urged Buhari to, as a matter of urgency, organise a national economic summit to solve the prevailing economic challenges and save the economy from further drift.

Since mid-June, 2014, prices of oil have been plunging at the international market. The trend has triggered fiscal upsets, threatening to frustrate the proposed N6.07 trillion budget.

Besides the near-collapsed economy, the naira has slumped drastically against the dollar due to the scarcity of the foreign currency and tough regulations by CBN.

The dwindling oil revenue has triggered a spiraling inflation because most products are imported, a development that has put foreign reserves and the currency under pressure.

Pushing for the convocation of the conference during his visit to the Minister of Information and Culture, Alhaji Lai Mohammed, in Abuja, the literary icon said experts and consumers should be invited to brainstorm on how to rescue the economy.

Soyinka said: “The President should call an emergency economic conference with experts to be invited – consumers, producers, labour unions, university experts, professors, etc. I think we really need an emergency economic conference, a rescue operation, bringing as many heads as possible together to plan the way forward.”

Skepticms over

summit’s outcome

However, having heeded to Soyinka’s call to stage the economic summit, the expectations of Nigerians and industry operators that the conference would help turn things around are shrouded in doubts.

Akabogu said much as the summit holds a lot of promises, he doubts whether President Buhari’s administration would demonstrate the political will to implement its recommendations.

“Buhari should demonstrate enough political will to accept whatever the recommendations come out with. He should go beyond party and ethnic considerations,” Akabogu advised, noting that even if the President does not like the faces, guts and wizardry of the participants and resource persons, he should implement the recommendations.

Apparently skeptical over the summit’s fate, the Nigerian Labour Congress (NLC) urged the government to implement existing policies. Although, it threw its weight behind the proposed dialogue, the union urged President Buhari to ensure an all-inclusive conference that would involve the workers as represented by NLC.

Speaking with The Nation, the National Union of Textile and Garment and Tailoring Workers of Nigeria, NUTGTWN, Secretary-General Issa Aremu, insisted that as demanded by Soyinka, the dialogue must involve workers, represented by NLC and the Trade Union Congress of Nigeria (TUC), Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), women groups and youths, among others.

He, however, added that what Nigerians need is a national consensus on the economy not another elite consensus that would lead to nowhere but corruption and underdevelopment.

“The dialogue should be on how to implement existing tons of policy measures on economic recovery, not to reinvent new measures,” he said.

According to Aremu, previous administrations organised conferences, summits and debates with reports and recommendations, many of which have not been implemented to redirect and diversify the economy.

Some of the reports and recommendations that are presently gathering dusts include: the Abacha National Conference, 1995; Vision 2010, Vision 20:20:20, NEEDS, National Industrialisation Plan 2013; National Conference Report 2014 and National Industrial Revolution Plan, among others.

The unionist noted that each of the reports came up with different recommendations on how to reposition the economy, but they were never implemented.

“It is time to implement these reports and recommendations and move Nigeria from potential to actual in terms of development and prosperity,” Aremu said.

Will Buhari prove the skeptics wrong? Will he break the jinx and muster political courage to implement recommendations? How he handles the outcome of the coming conference will determine how committed he is to fixing the economy.