Wednesday, 28 September 2016

X-raying The Current Nigeria’s Economic Challenges: Prospects & Solution

By Dr. Ahmed Adamu

Recently, I have written and spoken on many media about the current economic crisis in Nigeria. Some of my recent articles can be accessed via my blog at www.ahmedadamu.blogspot.com.ng. Subsequently, I was invited to New York to speak on the above topic by the Nigerian Young Professional Forum, even though I could not make it to New York, I decided to write the following short piece as the extension (different perspective) of some of my recent articles on the Nigerian economic crisis, which was presented in the event.

Nigerians expect so much from the current administration, and this was as a result of the appealing and ambitious campaign promises during the elections by the ruling party. Coming to power, realities defer significantly from fantasies and expectations, the politicians are now caught in the cross-fire. Things are not going well, but they (politicians) decided to put the blame on the past administration, the easiest exit, though valid. However, things are continuously getting out of hand, but one thing that we all have to keep doing as citizens is to continue hoping and believing in “May Be”. May be if prices of crude oil increases, we might get out of recession. May be Naira will appreciate if we develop the real sector of the economy.

picture sourced from http://vincentnwani.com
According to the Sheikh Al-Maktoum (The King of Dubai), “Leaders must always look forward, further than anyone else, in order to anticipate the future, predict the challenges it will bring, and prepare their people to face them”. If the past administrations will have to take the blame for the current economic conditions for not saving to build the real sector and provide the necessary infrastructures, the current administration must also be ready to accept the responsibility of thinking about the future and the challenges it might hold, to avoid been blamed too. Therefore, there is need to develop the country’s economic roadmap for the next 20 years or more, and the plan of actions toward achieving the set targets.

Nigerian economy is cursed for relying heavily for so long on hydrocarbons and depending on the subsidised importation of foreign goods and services. Now due to low oil revenue, currency depreciation and increasing volume of importation, government cannot continue to subsidize foreign currency demand. Subsequently, inflation rose to the highest level of 17%, and foreign reserves declined to the decade’s lowest level of $26 billion. Poverty is becoming endemic as many depend on government, as access to business capital and infrastructure are lacking. This limited the disposable income and wellbeing of the people. Agricultural outputs are not optimised due to the outdated agricultural system. Population is on the increase amidst inadequate infrastructure and income. Which direction are we going? what is up in our front?, the government must give answers to many of these questions.

The challenges are numerous, and they must be identified and strategically chosen to address step by step. Things are moving very fast and problems are compounding quickly. There is need for aggression and proactiveness to address ever evolving economic challenges. Being so protective and too cautious will not auger well in the period of emergency. Action is the best way to solution.

Moving forward, the government must identify the major import demands and set targets and action plan to eliminate them. For example, government might set target of five years to stop importation of refined petroleum. How can we achieve that? we have to allocate substantial amount of resources and policies to encourage construction and development of local petroleum refining capability. This must be rigorous and inclusive, where private sector plays significant role. So, by the end of this five years, the 15% demand for foreign currency must be eliminated. So, the import demand will then reduce to 85%. In addition, the importation of plastics (4%) would have been eliminated as well. 
             
The Importation of vehicles, which constitute 8% of the total imports, can be eliminated too by providing efficient and adequate public transport systems, so that individuals would not need to own private vehicles, and the need to import them will not exist. So, there is need for rigorous development of inter and intra state public transport systems, which include within town and inter towns trains and public busses. This will result to reduction in the demand for transport fuels, and enable saving for other consumption and investment purposes. If can do this, the total imports by then will reduce to 73%.

Electronic equipment, machines, engines and pumps contribute 22% of the Nigerian imports; to reduce or eliminate some of these imports, public and private sector must collaborate to set up industries that produces these specific items. Foreign companies can also be invited to open factories or workshops within Nigeria, through any possible incentive. It is easy to achieve this due to the recent improvement in security and access to energy. Achieving this will reduce the import demand to around 50%. This is a feasible target, only if we plan for it.

If we can achieve above, then achieving local sufficiency for Pharmaceuticals, iron and steel will be easy. And funny enough, the $814 million spent for importation of fish in 2015 can be eliminated by encouraging and establishing fish rearing and processing firms.

Finally, if we can reduce the import demands by 50%, the Naira will appreciate significantly, and our foreign reserves will appreciate too. Unemployment, inflation and poverty will reduce. But, there has to be plan and commitment. This cannot be possible without competent economic team made up of public, private and academic sectors. There has to be genuine reduction in unnecessary expenditure from the government. Private individuals must stop unnecessary foreign trips for holidays, shopping, education, and medicals. Government can enforce this where necessary. The government must listen and be open to criticism and suggestions. It must effectively communicate and engage with public on its activities and plans.

Regarding the recent speculation about the sale of federal assets, I would advise the Federal government not to sell public assets, because these assets remit revenue that will stream for years to come. You don’t kill source of income for immediate need. You can only use the profit/earning for immediate need. Government needs to diversify sources of income not to switch source of income. Efficiency can be optimised even in public sector. Government should raise money through tax enforcement, open market operation, and infrastructure tax for high income earners. These public assets are the sources of income that can be used to fund infrastructural development and social welfare. Instead, government should motivate private sector to construct and operate infrastructures for a period after recovery. Private individuals willing to buy devalued public assets should partner to establish their own capital assets and compete with that of the government.

Best regards!

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth  Youth Council,
University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.

+2348034458189

Friday, 23 September 2016

Leaders and Social Media Activists: A piece of Advice

picture sourced from www.gigaom.com
 
By Dr. Ahmed Adamu

My attention is drawn to the detention and arraignment of some social media activists in Katsina state. Prosecution of social media activists is not new in this country, as numerous social media commentators were interrogated, detained or imprisoned in the past at different levels and under different administrations (including the current administration). I write this small piece to give advice to both leaders and social media activists.

To Social Media Activists:

1.       When you get any news, investigate before you share. “O you who believe if an evil person comes to you with a news, verify it first, for fear that you may harm people in ignorance, and afterwards you become regretful to what you have done” Quran 49:6.  This mandates us to always confirm an information we hear from others, and teaches us that if we share unverified information, we will harm others and we will regret our action.  For initiators of false information, know that you are evils, and you should not endanger innocents by selling them fabricated news. Any news relating to government or any person should be verified by reaching out to the individual or government media aids. Any information that is not verified shall not be worthy of publication, no matter how appealing it will be to the audience. Prophet (SAW) said “Say the truth, or remain silent”. He also warned us to guard our tongue, and try our best to use it in the right direction. Investigative journalism is highly encouraged to avoid regrets.

2.       When you want to criticise or advice leaders, first do it in private if you have the chance. Prophet (SAW) said “whoever wants to advice a leader with a matter, he should not do so in public, but let him take him (the leader) by the hand and go into privacy with him and then advise him. If he accepts it from him then that is good, and if not, then he (the advisor) has fulfilled that which was upon him (to do).” So, the manner we are taught to criticise and advice rulers is first private. Leaders can be advised privately in the first instance. If there is no single opportunity to reach the leader, an open letter can be written in case someone close to the leader may come across it and deliver the message, but this has to be in respectful manner, and based on substantiated facts and evidences.

3.       It gives good feeling to be the first person break a news, and that is why some journalists are eager to share information to take the credit, and as such they cannot wait any longer to allow time for little and easy verification. They are afraid someone will share the news before them. My advice is that it is better to share truth late than to share false first. This adds to the integrity and reliability of your media outlets.

4.       We are all human, we can make mistakes. Anytime you share a wrong message, always be humble to use the same medium to discard it, and clarify issues immediately. Try and apologise to the individual or entities affected publicly.

5.       Social Media activists should not be subjective, they should be objective to criticise, advice and praise where necessary. This will make them reliable government performance indicators. They should give more advices than criticism, or both.

6.       Activists should note that freedom of expression allows people to express their own ideas and opinion freely through speech, writing, and other forms of communication BUT without deliberately causing harm to other’s character and/or reputation by false or misleading statements.

To Leaders:

1.       According to Carey Nieuwhof “Leaders should not focus on being liked, If they do, the won’t lead. As a leader you must be kind when people are not, even if it hurts and it will hurts “. Effective leaders must be prepared to be mocked, misunderstood, and misquoted. The Prophet was abused and attacked with negative words, and he was physically attacked. Garbage, stones and dusts were thrown at him. One day, when the daughter of the Prophet became angry and crying for her father’s humiliation, the Prophet told her “My daughter, weep not, for verily the Lord will be your father’s helper”. The Prophet was called madman, magician and many other evil names. He remained patience, he rather pray good for the people that hurt him.  He was advised by Allah (SWA) to be patient and respond with good actions: “So, be patient in the face of what they say” Quran 50:39. “Do not be grieved by what they say” 10:65.  “Repel the evil  with that (deed) which is better, and thereupon the one whom between you and him is enmity will become as though he was your devoted friends” 41:34. Therefore, leaders must be willing to accept people’s weakness and be kind to them, by this the politicians will be recruiting new allies that will vote for them in the future.

2.       In the modern democracy, elections are won far before the election time, and a leader is judged by the way he reacts in difficult circumstances. Maimonides said “I will destroy my enemies by converting them to friends”, and Robert Green said “a former enemy will be more loyal than a friend, because he has more to prove. In fact, you have more to fear from friends than from enemies. If you have no enemies, find a way to make them”. So enemies are not that so harmful to have.

3.       Leaders should identify all social media activists and give them the required capacity building, so that they can be more professional. They can be empowered with money to run their pages. Social activism is a form of formal job, so it can help in curbing unemployment and poverty.

4.       Leaders should create constant and frequent press briefings, where all media practitioners can attend and know about government works and ask any kind of question for clarification.

5.       As I observed, our political leaders now have many media aids, these aids should always put their eyes and ears on emerging rumours and updates on social media, and make clarification when necessary immediately. Leaders should not let people define who they are, they should always have to craft how they would want people to view them, this cannot be achieved without constant explanations and briefings especially to journalists.

6.       Government should not scare opposition, without opposition government cannot assess its performance, if oppositions are silenced, politicians would not know when they lose ground. If government observed too many valid opposition, it means it needs to adjust and do better.

      Finally, the people in authority should let go these young men, but caution them to be careful and put them on a professional training (if they are guilty). Who knows the politicians (under the current administration) might need them (and their followers) again in 2019. What I will recommend is reconciliation without the need to go to court. Government should not stoop so low to waste resources in prosecuting these poor young men. These young men are the children of government, they can make mistakes, and they can make it up. If they are found in any form character defamation of the government, they can be forced to apologise and undertake not to repeat it, and they should use their pages to counter their earlier posts.

      Let peace and harmony reign!!

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth  Youth Council,
University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.

Tuesday, 13 September 2016

Change Begins With Who?: Social Learning and Islamic Theory Perspective

By Dr. Ahmed Adamu

The social reorientation campaign (#ChangeBeginsWithMe) launched by Mr President came with mixed reactions, as some think the President is the only one responsible for the change he promised Nigerians, and some have the opinion that change is an unconditional collective task for everyone.

Even though, President Buhari was the one that Promised to bring the change, but that does not mean we should not do our parts in bringing changes in our own lives for good. I agree with the theory of “Charity Begins at Home”, and Mr President should take this as a challenge to do more and promote the social changes he wants to see in people through action, i.e. examplenary leadership. President Buhari is generally known to be honest and trustworthy, then we ask ourselves, are we?

Mr President, just like any other Nigerian needs to change. But, whether Mr President changes or not, we need to change too. Change here entails identifying what you are doing that is not right and replacing it with better option. This can be in public and private life. So, change is a personal project for everybody.

The change we seek requires systematic and deep social changes, which entails changing norms of the people. Most of the good and bad things we do were learnt through socialisation (Social Learning Theory). A random act by one person can become a social norm for the entire population, and this act can be good or bad. So everyone can be a change agent. Who knows your random act might become a norm, so your action must be good always. People tend to consider and act tasks as normal behaviour when they grow up seeing people performing the task. That what makes them feel comfortable, otherwise they will feel excluded.

All of us we are mirror to some others, and they socially learn from us. Social learning takes place through observation or direct instruction even without enforcement. So we don’t have to instruct others to copy our actions. Therefore, we are all change agents. Example of how everyone can be a change agent can be described using traffic light scenario; if the first person to meet the red traffic lights stops, all others behind him will equally stops, but if he passes under red light, all others will copy and take it for granted. So, would you be a good leader or a bad one? Another example is to do with environmental sanitation, if you drop an empty sachet of pure water on a clean environment, others will also do the same, but if they see clean environment, they will hesitate to be the first to spoil it.

Change can be multidimensional, it may not necessarily has to do with actions, but in our values too. Changing our attitude and embracing Honesty, Trust, Selflessnesss, and Responsibility is also changing for good. When we stop measuring our success by the quantity of money and mighty of power we possess to by the scale of our honesty, trustworthiness, selflessness and responsibility, then we have changed for good, and others will change the same way. So, Change is the responsibility of everyone, and it has no best time to begin, and it does not require waiting for others to change first. When you wait for others to change, then there will never be a change.

For those that say Mr President should be responsible for social change, remember you can be the leaders that will change not only yourselves, but the president himself. The President might promise social changes, but he cannot do it, not without the people, and he has now given us opportunity through the #ChangeBeginsWithMe to change ourselves. Once we change our characters and attitudes for good, our lives will be blessed, and our leaders will change too, and our country will prosper.

In the Holy Quran, Allah said “Verily, Allah will not change the condition of a people as long as they do not change their conditions themselves” Quran 13:11. This means that, if we want to see change for good economic and social conditions we have to change for good first, and Allah will bless us, and give us a better life. Thereafter, He will not change for us our good condition until we change (stops) our good attitude. So, this call for change is timely for better economy. Similarly, Allah said “Whatever strikes you of disaster or misfortune, it is for what your hands have earned or committed” Quran 42:30, so the current economic calamity requires all of us to change, because we are punished for our bad characters, as “Whatever of evil befalls you is from yourself (your actions) Quran 4:79.

So, all of us are leaders for change, and we are required to be. Prophet Muhammad (SAW) said “Allah does not punish the individuals for the sins of the community until they see evil spreading among themselves, and while they have the power (even using their tongue) to stop it, but do not do so”. This teaches us that Change include stopping the bad things within your ability.

If we seriously need good leaders, then we have to be good people, because “your leadership will be a reflection of you (the people)” Prophet (SAW). So, we have to do our best to be good people, so that we can have good leaders. So, “Change Begins with Me” is our social, economic and political call, we all have to pitch in.

Change cannot happen on its own, not without mobilizers. Change is the collective responsibility of everyone, and it cannot happen without the people. Change from worse to better, Change from being unpatriotic to being patriotic, change from being irresponsible to being responsible, and change from silence to speaking, change from not doing anything to action etc. The change agents are the ones who refused to be cynical about what they can get done.

It is now up to the people, how do we help our neighbourhood and communities? How do we spend our extra income? Do we help others live to their potentials? Have we stopped collecting that little bribe? Did we quit that ghost job? How honest are we? Do we know what our elected public leaders get and spend? How can our voices matter in governance?  Have we called our members of parliament and tell them what we want?  Have we checked on them if they are doing their jobs?  Etc. the change require bigger actions, and the big action require all of us. Together we can keep changing this country for the better, and this is achieved through this campaign.

Change Begins With Me and You

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth  Youth Council,
University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.


Tuesday, 6 September 2016

Dr. Ahmed Adamu’s Responses to Economic Recession Questions on Facebook.


Someone (Com. Ibrahim Bature) on Facebook asked me the following two questions relating to the current economic recession in Nigerian and these are my answers:

What is recession?

I will try and explain in lay terms. Recession is when country’s production level reduced in two consecutive quarters. For example, In Nigeria, the level of production of goods and services within its territory has declined by 0.40% in the first quarter of 2016 and further declined by 2.06% in the second quarter of 2016. Therefore, theoretically, Nigeria is in recession. This is the first time Nigeria entered recession in more than a decade. This can be further substantiated looking at the major economic indicators. Nigerian inflation currently stands at 17.1% the highest in a decade, unemployment rose to 13.3% the highest in six years, the value of Naira lost its value by 59.30% in just a year, and the Nigerian Foreign Exchange Reserve declined to $26 billion, the lowest in a decade. These indicators confirmed the technical recession in the country. In terms of Microeconomic, the purchasing power of disposable income has reduced, courtesy of the inflation, consumption have reduced, investment have declined, and households are willing to hold cash for fear of unknown rather than invest. Generally, the poverty has become endemic.

Leaders may make decisions that may not necessary be popular or result to immediate benefit to people. There are times when tough decisions have to be made to avoid bigger catastrophe. There might be some difficulties in turning the economy around, from commodity based to product based, and from infrastructural deficit to surplus. There has to be sacrifices, but people have to endure and do their parts. The economic condition in the country is the ramification of the past neglect of the real sector and reliance on the too much importation. So, we have to pay the price if we have to make it right.

How can we manage it, What are the quick solution to it?

Short term: Government must embark on rigorous and inclusive social investment through capital incentives and production grants, interest rate must be reduced to allow access to capital, Banks cash reserve ratio should be reduced, and importation of goods and services that are locally available should be discouraged especially through additional penalties. There should be incentive for importation of basic factor inputs. Individuals must stop unnecessary travels for health, educational and tourism purposes, and maximise utilization of local services.

We should encourage foreign investment through temporary tax holidays. There has to be reduction in government expenditure and save more for capital and social investment (I suppose this is ongoing). Specifically, convenient public transport systems have to be provided to reduce the total demand for petroleum products, so that people will drop their cars and use public transports. This will reduce the total demand for petroleum importation (the largest share of Nigerian import), it will also relieve households of the need to buy their own transport systems and save for other expenses and investment.

People have to adjust their expenditure and standard of living temporary. Unnecessary personal expenditures must be replaced with investment. Government should set deadline for the stoppage of importation of certain products and act rigorously toward sufficient and efficient production of these products within the country. However, the government must open land borders for importation of rice temporary until when sufficient local production capacity of the rice is achieved. Mechanisms to checkmate corruption at land borders must be provided, which might include reward and punishments for performance and lack of it respectively.

It is a good development to see how electricity supply is improving and relative security achieved in the country, this will encourage investment and reduce cost of production. Even though government intend to implement 30% of its budget for capital projects, it should simultaneously implement the recurrent expenditures. What the economy needs is financial liquidity in the short run. The current inflation is cost push inflation, not demand pull inflation, and if the ability of individuals to purchase goods and services is improved, the marginal cost of production will reduce, and eventually help reduce the inflation. However, the CBN has to watch the money supply and the prices to avoid possible resultant demand pull inflation.

Export promotion have to be made priority, which underpins the need for the development of the real sector, through subsidised production and standardisation of products. Lack of honesty and trust have killed thousands of businesses. Many people have started business, but have to close down due to lack of trust and honesty from the workers. Some investors have to delay or forfeit investments due to risks associated to lack of trust. Lack trust have also added to the cost of production, because, more staff have to be employed to ensure accountability and/or new machineries have to be acquired to checkmate flows of income. So, there is need for social reorientation.

Long run: finally, there has to be structural economic change, where exports will be higher than import. To achieve this there has to be establishment of more factories and refineries. Diversification of the economy is necessity to avoid being vulnerable to shocks in one sector. Agriculture and solid minerals development can be explored. Real sector production of textile, machineries, appliances, vehicles, processed foods, etc. has to be emphasized and incentivised. Tax collections should be a major source of government revenue, and this can be achieved if everyone is back to business, and that is the time when people will feel part and parcel of the government, because they have paid their taxes. And this will eliminate corruption, as people will demand accountability of the taxes they paid, and leaders will not waste people’s hard earn resources.

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of the Commonwealth Youth Council,
University Lecturer (Economics) at Umaru Musa Yar’adua University Katsina.

Saturday, 20 August 2016

What causes the current Economic Hardship in Nigeria?

By Dr. Ahmed Adamu

President Muhammadu Buhari

He came home with no food and no money, and met his two children crying, they did not eat for the whole day, he perspired and collapsed as a result of frustration and anxiety. He died before reaching the hospital. That is how poverty can kill. Another person burst into tears for not receiving his monthly salary on time, he had to borrow money to transport himself to a town (where there is a Bank) expecting to receive his salary alert so that he can buy food to celebrate Sallah festival, but he was disappointed as government did not pay his salary yet. People around had to contribute money for his transport back home. This is how dependency on government salary can frustrate.

However, these could have been relatively avoided if people reduce too much dependence on government. Many people rely heavily on salary from government or single source of income. This has made many lazy and vulnerable to an income shock. It also added so much burden on government. Majority of young graduate finish school expecting to be employed by the government. The government is now unable to sustain the increasing burden of salary payments. The low crude oil price has significantly reduce the capacity of the government, and it is not surprising the government is trying to reduce the salary burden to the minimal level.

The implication of tightening the salary liability is that there might not be new employment in the short term and possibly some may have lower salary or delay in receipt. And because salary is the sole source of income to so many, the people’s economy is now in worst jeopardy. In addition, inflation has so far increased by 6% from last year, and yet salaries did not increase, which means people’s economy are getting weaker as their purchasing power has reduced by 6%.  Therefore, too much dependence on government salary or single source of income has caused the recent endemic poverty in the country.

The repercussion of so much dependence on government is manifesting due to the recent shock in government revenue. So, this should serve as a wake up call to everybody to diversify sources of income and engage in productive ventures. Doing this will relieve the government of so much responsibility and allowing it to provide social services. People find it easy to blame government for their poverty condition, they overlook their own share of blame for being so much dependent.

One of the major contributor to the endemic poverty is lack of social services, which has been inadequate, and people have to use their little income to provide those services for themselves. So, government must save to provide these services for all, so that individuals can be responsible for their own economies.

My advice to Nigerians is to engage in production, do not just buy and sell, make or produce something. This is what will add significant value to the economy and increase income taxes to government. By doing that, we would not need government job, rather we will create the job ourselves. Instead of employing new employees, government and private individuals should create entrepreneurship funds, which will be accessible to entrepreneurs especially makers or producers. The capital incentive should be a grant, not a loan, as interest payment/loan hinders access to capital.

President Buhari has been reported in many occasions pleading with Nigerians to be patient with the current economic hardship, and I think Mr President should not only ask for patience, he should use his goodwill to preach and advocate for Entrepreneurship among Nigerians. He should consistently ask or challenge Nigerians to embrace business and productions (Agriculture inclusive).  Entrepreneurs must be creative and engage in producing things we import like Cell Phone, Cars, Electronics, Fabrics, foods etc This will help reduce inflation and create more jobs.

We have so much innovation and strategies in raising money for our personal projects, like marriage, building houses, buying cars etc, we should channel similar strategy and energy in raising funds to fund our productive businesses. We can postpone such kind personal projects for later times. After our businesses prospered, we can then do those personal projects. Every young person shall have innovative idea and plan for creative production. We should stop wasting free times, we should use it to learn new business skills, ideas or source for capital. Young entrepreneurs with little capital should learn to engage in business partnerships. If we do that, we will be responsible for our own economy, then we would not expect from government, rather we help the government.

Finally, Women must equally step it to contribute to the growth of the economy, with almost half of the country’s population, women can make differences and help families. Working parents can adequately cater for their children and themselves, and support each other. Therefore, spouses should help each other to establish businesses.

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth  Youth Council,
University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.


Friday, 12 August 2016

Road to 2030: Eradicating Poverty and Achieving Sustainable Consumption and Production

This article is to commemorate the 2016 International Youth Day. 

Today is the 2016 International Youth Day, and this year’s theme is “Road to 2030: Eradicating Poverty and Achieving Sustainable Consumption and Production. The theme is informed by the Sustainable Development Goals (SDGs) number 1 and 12.

Eradicating poverty in all its form in the next 15 years sound very ambitious, and would require decisive actions. To achieve that, we have to Know what this poverty is all about, and what measures poverty status of a people. Poverty can be understood from different perspective. From income perspective, Poverty is a situation where a person is wanting to spend more than $1.90 a day, but cannot because the person does not have the money (United Nation Threshold). From National Poverty Line, a poor person is the one that cannot spend approximately N300 in a day.

Poverty can be perceived from Education perspective, where a person does not have the required knowledge and understanding to live a decent life, so that he/she can be responsible agent politically, socially and economically. Lack of Education and Skills are the worst poverty in the world, and have caused insurgency and terrorism, which have caused loss of lives and property.

Another Poverty perspective is the Mind Poverty, where person lacks self-esteem, vision, self-discipline, determination, and selflessness. Self-confidence and believe can be a serious prerequisite for success. The limit of what we want to achieve is set by our minds, and if we can control our minds, why do we have to set lower ambitions?

Now, let me ask, if I spend N300 above, does that mean I am not poor. The answer is No, because you may spend more than N1000 in a day, but still be poor. Poverty is multidimensional, because, even people with all the money may still lack access to some basic requirements. Inadequate social amenities make many poorer. With relative access to income, one may still have to pay more to have access to quality education, healthcare, security, water, energy e.t.c., which makes the person poorer. This means inadequate social services resulted from poor governance, corruption and higher cost of governance in many countries is responsible for people’s poverty. So, income measurement of poverty is not always a correct measure.

If social services are adequate, people will only use their personal money to buy food and some direct personal expenditure, which are affordable. So, to eradicate poverty, social services must be provided. For Nigeria to provide adequate social services, N70 trillion has to be expended, and clear targets and roadmap must be set.

Similarly, going by the dollar income poverty threshold, more Nigerians are becoming poorer due to the depreciation of Naira. Since poverty threshold is $1.90, the Nigerian poverty line which used to be N300 has now increased to N760. So, we now have more poor people than before. The wealth of the rich people have also depreciated, as each unit of Naira has reduced in value.

Another reason why poverty increased in Nigeria is inflation. Because, the Nigerian economy is dependent on foreign import, once the Naira depreciates, the cost of import will increase. This will then be reflected in the final price. That is why the Nigerian inflation rate is now approaching 20%. This led to the reduction in the purchasing power of individuals. Since income did not increase, but prices increased, many people will now be downgraded below the poverty line, and we will have more poor people in the country.

The Nigerian Vice President said, there are over 100 million Nigerians who are poor going by income measurement. And MarketMogul estimated that 68% of Nigerians are poor. Majority of the poor people are young people. Young people have higher tendency of becoming poor, because, they are at a transition stage of becoming independent, and they would require resources to set up their family, acquire shelter, and handle additional responsibilities. Unfortunately, many young people could not fulfill their ambition due to endemic poverty. This leads them to frustration, envy and violence. So, this is the day to identify issues bedeviling the young people, and identify solutions.

There is need for a consolidated Poverty index that disaggregates poverty status by age and by dimension. We can set deliberate targets and work to achieving it. If by 2030, Nigeria has to eradicate poverty in all its form, then we have to identify our poverty threshold, and it has to be reviewed timely to accommodate inflation and exchange rate fluctuations.

Averagely, 1 million people are becoming poor in the last 10 years annually. This is expected to increase in the future. So, if we have to eradicate poverty in all its form in the next 15 years, efforts have to be doubled.

One of the tool of eradicating poverty is sustainable production and consumption. Sustainable production is producing goods and services using the minimum amount of factor inputs i.e. efficiency. While sustainable consumption is the consumption that does not undermine the consumption of others and/or in the future. So, both can save resources and preserve the future.

Sustainable consumption is very important especially in Energy. For example, the quantity of fuel that can transport one person to a destination using private vehicles can be used to transport 18 people. So, public transport systems should be in place to ensure efficient use of transport fuels in the economy. This will help reduce the total emissions and conservation of natural resources. Efficiency in the use of appliances and lighting bulbs have to be intensified to save electricity for others. 

Similarly, the residential cooking methods are not sustainable, because the minister of environment mentioned that 1.5 million trees are cut down daily in Nigeria, and mostly are used for traditional energy use especially for cooking. So, sustainable energy consumption strategy must be designed in every sector to save more. This will reduce cost of production and bring prices down, and by extension put more people above the poverty line.

Our economy has to be skilled based. Educational institutions must prepare young people to acquire skills that will automatically give them a job or help them to set up businesses. Employment should be accessible to people with skills. Skill is what enable young people to competitively produce, and it is what makes them job creators. Once young people can create their own jobs, they will get out of poverty.

It is necessary to establish a national action against poverty, with active private sector participation, where funds can be collected from various sources and channelled toward eradicating rural and urban poverty in a transparent and accountable manner. Cost of governance have to be reduced and transfer resources to productive sectors by empowering young people to acquire modern and relevant skills of creativity and innovation.

To eradicate poverty in 15 years, child street begging must be eradicated, it is a crime socially and civic wise to send children to the street. Parents responsible must be prosecuted. However, social services must be provided to help household manage their economy easily. This means that adequate access to quality education, health care, water and sanitation, energy etc must be provided.

Mechanism should be place to stop importation of foreign goods and service to protect the local currency and curb inflation. We must not judge our economic status by looking at the nominal GDP, we have to look at the real per-capita wellbeing and income status. We all have to donate and do our part to eradicate the biggest threat to humanity i.e. poverty.

Dr Ahmed Adamu
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of the Commonwealth Youth Council,
University Lecturer (Economics) at Umaru Musa Yar’adua University, Katsina.


Tuesday, 2 August 2016

Dr. Ahmed Adamu Named Among 100 Most Influential Young Africans

100 Most Influential Young Africans
Africa Youth Awards, the continent’s biggest honour for young achievers with annual participation from over 140 countries has announced its inaugural list of 100 Most Influential Young Africans.

The list which has representation from 27 African countries has a gender equity of 62 men and 38 women with the youngest being 14, considering the age limit of 40.

Selecting 10 of the most influential across 10 distinct categories, the number 100 represents the force of young people who are creating change and making sure it translates into making the lives of other people better.

Making the list is Dr. Ahmed Adamu, the Pioneer Global Chairperson of the Commonwealth Youth Council and a University Lecturer at Umaru Musa Yar’adua University, Katsina, Nigeria. Dr. Adamu who was previously voted as the “African Young Personality of the Year for 2015” was honoured to be on the list for his consistent commitment in Youth Development.

Dr. Adamu expressed his profound gratitude for being nominated and selected to be among the 100 most influential Young Africans. “I am filled with humility and happiness, and I would like to sincerely thank those that nominated me for this great honor, and I would like to appreciate the Africa Youth Award for honouring me once again. Having won “The African Youth Personality Award for 2015, which is one of the highest Youth Award in the continent, and now being listed among the 100 most influential Young Africans, it gives me great courage to do more in making difference in other people's lives. Dr. Adamu said.

He added “Appreciating others who are doing amazing works is very rare in our culture, that is why we have to recognise the Africa Youth Awards for sacrificing everything to appreciate others, they too should be appreciated. I am extremely happy for this award, because, I did not give money to earn it, it was by God grace that enabled me to have unconditional and unyielding passion for Youth development, which I do without expectation of a reward. And I want to encourage other Youth to do the same. We should do things without expecting appreciation from others.”

Dr. Adamu concludes “Finally, I would like to use this opportunity to call on Young People to think of what they can do for themselves, not what others can do for them. Young people should count their richness by the lives they were able to touch. They should not blindly follow the so called “Godfathers”, those old generation have tendency of using the Youth and dump them later. Young people must take responsibility and demand for their rightful positions in leading the African continent and the world at large.”

The list of 2016 100 Most influential Young Africans was compiled in consultation with a jury made up of young Africans based across the globe after weeks of public nomination represents hope for the continent and exhibits the potentials Africa has to become a global phenomenon.

Prince Akpah, President of the Africa Youth Awards, reiterated the need for the continent to be inspired by its own success stories and hope the list will provide a great reference of motivation for most young people to take a step in creating a great future for themselves and Africa.

The list comes with a publication which features Profiles and other details of the 100 Most Influential Young Africans accessible for download on www.africayouthawards.org  

Partners for the ranking included Avance Media, My Naija Naira, Dream Ambassadors Foundation GH, Global Skills Exchange, Project Know Thy Self International, ACME Consult, Afro Lynk, with the support of various Media Organisations across the continent.

Arranged in Alphabetical Order, below are the 2016 100 Most Influential Young Africans

  1. Abraham Attah
  2. Ahmed Adamu
  3. Ahmed Musa
  4. Alain Nteff
  5. Alek Wek
  6. Alengot Oromait
  7. Amira Yahyaoui
  8. Anas Aremeyaw Anas
  9. Anthony Mutua
  10. Arthur Zang
  11. Ashish Thakkar
  12. Ashley Uys
  13. Ato Ulzen-Appiah
  14. Aya Chebbi
  15. Baba Rahman
  16. Barkha Mossae
  17. Bethlehem Tilahun Alemu
  18. Bitania Lulu Berhanu
  19. Blessing Okagbare
  20. Bogolo Kenewendo
  21. Bright Simmons
  22. Byrite Asamoah
  23. Chancel Mbemba
  24. Chidiogo Akunyili
  25. Chimananda Ngozi
  26. Christian Ngan
  27. Christopher Ategeka
  28. Clare Akamanzi
  29. Diamond Platnumz
  30. Emmanuel Makandiwa
  31. Eric Kinoti
  32. Eunice Jepkoech Sum
  33. Farida Bedwei
  34. Franklin Cudjoe
  35. Fred Swaniker
  36. Habsana Jallow
  37. Hadeel Ibrahim
  38. Henok Wendirad
  39. Heshan De Silva
  40. Ik Osakioduwa
  41. Issam Chleuh
  42. Jama Jack
  43. James Mworia
  44. Jamila Abass
  45. Jim Iyke
  46. Johnson Sakaja
  47. Julius Malema
  48. Kansiime Anne
  49. Kelvin Macharia Kuria
  50. Kennedy Odede
  51. Khaya Dlanga
  52. Landry Ndriko Mayigane
  53. Landry Signe
  54. Lina Ben Mhenni
  55. Linda Ikeji
  56. Ludwick Marishane
  57. Lupita Nyongo
  58. Makosi Musambasi
  59. Maletsabisa Molapo
  60. Mamadou Touré
  61. Mark Essien
  62. Mfonobong Nsehe
  63. Minoush Abdel-Meguid
  64. Mmusi Maimane
  65. Moustapha Ben Barka
  66. Murtala Mohamed Kamara
  67. Mustapha Mokass
  68. Nadeem Juma
  69. Nelson Oduma
  70. Nima Elbagir
  71. Nkechikwu Nkeiruka Valerie Azinge
  72. Ola Orekunrin
  73. Omojuwa Japheth
  74. Omotola Jalade
  75. Patrick Ngowi
  76. Peace Hyde
  77. Phiona Mutesi
  78. Pierre Emerick Aubameyang
  79. Rapelang Rabana
  80. Richard Nyong
  81. Riyad Mahrez
  82. Rosebill Satha
  83. Saadatou Mallam Barmou
  84. Sadio Mane
  85. Samuel Malinga
  86. Sangu Delle
  87. Sarkodie
  88. Serge Aurier
  89. Simbarashe Mhuriro
  90. Siyabulela Xuza
  91. Sophie Ikenye
  92. Suleiman Sani Bello
  93. Thato Kgatlhanye
  94. Tom Osborn
  95. Tonye Rex Idaminabo
  96. Trevor Noah
  97. Vincent Aboubakar
  98. Vusi Thembekwayo
  99. Wizkid
  100. Zuriel Oduwole
Africa Youth Awards is Africa’s most prestigious award scheme with the prime aim of appreciating the works of young Africans in Africa and the Diaspora.


 

Friday, 24 June 2016

The UK Exit: The consequences

By Dr. Ahmed Adamu
Picture sourced from masterinvestor.co.uk
The UK were in some ramifications out of Europe already, different currency, different visa, and different people and culture. Immigration policy is the major UK compliance to the union policies, which allowed citizens of poor European countries to overflow the UK seeking for better economic life. Some British would not want too much flow of people into their country, especially of those they consider poor people. The British rather prefer to relate with people from developed countries even within the Europe. So with the exit of UK from Europe, UK will now marginalise the poor European countries in its diplomatic and economic engagement. They will now relate with the developed European countries like France, Germany, Switzerland, Netherlands, Spain etc in a relax manner.
The UK exit from Europe will send large number of the cheap labour forces out of the country, as so many will not fulfill the new UK immigration policy. This will create scarcity of labour in some sectors, especially small skilled labour sectors. Other legal immigrants from other parts of the world will now have to choose among jobs. This will push the labour cost high, which will cause inflation.
Many people who would have freely fly in to UK to spend their money will not be able to do so. This will reduce the demand of the Pounds Sterling, causing it to depreciate relative to Euro and US dollar. Many business will collapse do to the resultant reduction in aggregate demand. The economy will then shrink.

Many of the UK businesses in other European countries will no longer be profitable, or will have to be repatriated. Many of the British air transport businesses will incur losses or may have to close down. The supply of commodities and products from the Europe will reduce as suppliers will find alternative destination of their raw materials. The alternative destination of European commodities will likely be the Paris. So businesses will migrate to France, making the French economy more competitive than the UK's. The UK will face huge reduction in food supply leading to food inflation.
The football stadium may not be that filled again, as the cost and hurdles of coming to UK will increase for the Europeans, so people will rather stay at home and watch matches even with slow motion pictures. The revenue and taxes from sport clubs will reduce. The overall revenue of the government from transportation, education, tourism, VAT, and Taxes will reduce.
With the ongoing European football tournament, one will wonder if England, Wales, Northern Ireland and Scotland will ever play in European tournament again. Or if Leicester City and Arsenal will play the European champions league this year. Anyway, they will, as the UK will not change its geographical locations yet.
The UK has send message to the world that you are better alone. The regional unities that have been promoted across continents are discouraged by this move. Bigger and influential countries in other unions may start thinking the same. This exit is a move to marginalise developing countries. Even though the votes were not inclusive as majority of Scottish and Welsh would have prefer to remain. The English will always have their say and their way.
The UK will survive of course, but difficult survival. However, the referendum has once again showed the strength of the constitutional democracy of the UK, and that the people's voice matters more than anything in governance. The unnecessary Cameron's decision to resign was not a surprise, because he will not be responsible for the aftermath of the decision he was not responsible for and didn't advocate for. He will allow those that promote the agenda to handle the ramification.


Still on UK exit: The Scottish tend to be more accomodating and willing to integrate, but their voices did'nt matter in the referendum. That is why Scotland will repursue their independence so that their voices can matter. This hold same for Northern Ireland. When you go for simple majority, you are bound to be exclusive. The best way is to take the regional voting average. And when 28% of the British didnt vote, the 3% difference is marginal. A sensitive once in a generation voting like this require more than 70% majority. Many British were taken by surprise and some regreted voting to leave. So, they must be given the second chance if they demand for it. If UK eventually divorced EU, then the UK must divorce Scotland at least. So, UK will be disintegrated if it disintegrate from EU. The myth that UK being dragged behind by the slow growth pace of poor European country cannot be true. The UK financial contribution to EU is lower than the benefit it drives from the union. The perceived security vulnerability can be addressed without the need to disintegrate. Already, the UK's allies are shocked and not happy with the leave outcome. The Russia will now have more influence in the EU, as its major competitor exited. The US has lost its puppet in the EU. The trillion dollars lost in financial market has already outweight the financial saving for not contributing to the EU. Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth Youth Council,
University Lecturer (Economics) at Umaru Musa Yar'adua University Katsina.

Saturday, 18 June 2016

Critical Review of Government Social Intervention Programmes

By Dr. Ahmed Adamu

It is a welcome development that the government planned to spend N500 billion to implement its social intervention programmes to ease the economic condition in the country. Without going deep into the detail of these programmes, this article raised some issues that need to be addressed to ensure effectiveness and inclusiveness of the programmes. The opportunity cost of this investment is the additional investment in the power sector. So for not investing the money in the power sector, there must be compelling efficiency and higher multiplier effects from these social interventions. So, this article aims to maximize the returns from these interventions by raising some issues that required to be reviewed.

There are some perceived flaws associated to these programmes, which if not addressed will undermine the success of this intervention. First, the Government shall not be hasty in implementing programmes without proper preparations. Too much pressure to do something now or to score political credit can make government to make bad decisions. It is better to make it better than to make it quick.

The first issue is regarding the application process, which is online. Online applications are not always transparent and can give room for unnecessary exploitations, as the computer cannot ascertain the validity of the information provided. Many young applicants who may not be qualified to participate in these programmes will apply and eventually be selected. This means that, some youths who may already have jobs or are already engaged may still exploit these opportunities, and there by denying others who are in serious economic hardship the chance. This causes distortion or misplacement of resources, and will not enable achievement of the set objective.

To address this problem, there is need for a comprehensive Survey that will report on the poverty and unemployment demography in the country before implementing such programmes. There should be a specific database that covey status information of the poor youths clustered based on gender, state, location, physical ability, marriage status, age, qualification, etc. These data should be independently collected to genuinely ascertain the economic conditions of the respondents. The local and traditional institutions should support in ascertaining the information provided by each respondent. This will enable the government to plan for each individual how much he/she may be required to be helped to get out of poverty. The database will collect information on the persons’ preferred level of support and areas of intervention.

With the help of this database, the programme will be more targeted, and specific individuals will receive the suitable and preferable support. Each amount will be allocated strategically based on the information available. Consequently, the participants will not be forced to embrace new economic venture, as they are being supported in their chosen economic activity. This will enable appropriate placement of the resources and will make it more inclusive and easily trackable.

There is also need for some approved indicators and targets that can be used to assess the impact of the investment on each individual. Some of these indicators could be the money spent per day, quality and number of meals per day, clothes, health, etc. The development of the database and evaluation of the project can easily be implemented while engaging other members of the society. For example, University staffs and their students can help in collecting this database and tracking success in each ward. The academic staffs are reliable since they have proved their integrity for effectively discharging a more sensitive responsibility of returning election results in the last elections. So, they can be trusted to compile and report this database and develop the targets and indicators, as well as to track success of the programmes.

Another issue relating to the online registration process is its exclusivity. Online applications automatically exclude those who cannot have access to computer or internet, or the required skills to operate the computer. There are graduates who still cannot operate computer or use internet. There are high chances of ineligible youths registering for this programme, which means youths who are doing well economically may still want to exploit this opportunity and deny other qualified youths the chance, as earlier highlighted.

So, it is better to make the registration offline, just like the voters registration process. This will make it inclusive as youths who may not have the money to buy internet data or do not have the computer operating skills can still be registered.

The programmes also gave more emphasis to graduate unemployed, rather than non-graduate unemployed who have less chances of becoming employed. 500, 000 graduate unemployed will benefit from these programmes and only 100,000 non-graduate unemployed will benefit from it. The proportion should have been equal at least, by adding more slots for the non-graduate applicants. The programmes were well crafted to provide skills for the unemployed, which is commendable. The Nigerian economy requires more of skilled and efficient labour forces, which will help in transforming the economy. Therefore, the graduate applicants should be strongly encouraged to apply for skilled based training, rather than just teaching training.

One of the irresistible questions has to do with the sustainability of the programme, will these programmes be rolling over again? There is no clear sustainable plan yet. Some of the participants will be motivated by the monetary benefits attached to it, instead of the value addition of improving skills and work experience, and once the monetary benefits seized, they may likely abandon  their skills, and will start looking for other jobs that give them money. So, the programme should incorporate reorientation programmes that will change the mindset of the participants, so that they can value skills and self-reliance, not immediate monetary benefit. This will help them in using their acquired skills to set up owned businesses, without waiting for others to employ them again.

Specifically for the Teacher Corps Programme, the participants will be provided with some computing devices to help with their specific engagement and information for their continuous training and development. This particular innovation should be extended to the permanent teachers and existing workers in agricultural extension and health services. The permanent teachers who will train the Teacher Corps Trainees need to be trained on better teaching skills and improve their knowledge too, so that they can train the teacher trainees effectively.

The programme also should be accompanied with some policies that will recognise and professionalised small skilled labour. To avoid marginalisation and contempt of small skilled businesses, there is need to count those small skilled jobs as professional jobs and its wages regulated and/or standardised. This will attract more young people to acquire skills and engage in small skilled businesses. It will encourage and motivate the participants to stick to their acquired skills.

On the feeding programme, the government will have to consider feeding the teachers as well, as the teachers too are hungry. And once food is provided in the schools, then all the Almajiris will drop their bowls and join schools, but the question is, do the schools have the required infrastructures and manpower to accommodate the trooping new entrants, and will it be sustainable? If the feeding budget is for 100 pupils per classroom, once the feeding programme commenced, the number of pupils in classrooms may increase to 200, which bring about the question of whether government can spend extra to feed the increasing number of pupils in schools.

Another concern has to do with process of the feeding. Who will cook the food? How efficient and sufficient will the feeding be? We have seen in IDP camps where huge amount of money is spent on feeding, but the IDPs get little or nothing of the food. Even if this feeding programme must be implemented, the contract for cooking the food should be given to the poor parents to empower them, so that they can afford to sponsor the children for post primary school education.

I totally don’t think the feeding programme will help. The priority in the educational sector is not only the quantity but the quality. The feeding programme will virtually put almost all children back to school, but how many more classrooms, qualified teachers and infrastructures can government put to the schools. If there is no quality in putting people back to school, then the investment will be a loss as the spending will outweigh the resultant benefits. There are children of well doing parents, who get adequate feeding, and will still unnecessarily benefit from the feeding programme. So the feeding programme will subsidize even the middle class and rich parents. So, the investment in the feeding programme will be misplaced.

Generally, I recommend that the feeding programme be stalled or postponed, the money budgeted for this programme should be invested on the poor parents who cannot send their children to school or who cannot feed their school children. The problem was that children refuse to go to school because they have to hawk or help parents to bring money to the family. So, if the family is empowered economically, the children will be spared and will start going to school, and they will bring food to school. So, the objective should be to give job to the poor parents.

The government should train people how to catch fish, rather than giving them the fish. If the children receive fish today, during holiday or when they graduated, who will give them the fish? So, if the parents are empowered to catch fish, they can always give fish to their children.

Finally, the intervention programmes should invest in training young people in energy solution businesses, like solar panel production, installations and maintenance. There should be some selected young trainees who will be trained to engage in advocacies and training others for best practices in energy conservation. This will give them the skills to help address energy crisis in the country.

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of the Commonwealth Youth Council,
University Lecturer (Economics) at Umaru Musa Yar’adua University Katsina.

Sunday, 5 June 2016

Petroleum Pipeline Vandalism in Nigeria: Implications, causes and solutions


By Dr. Ahmed Adamu

Vandalized petroleum pipeline
It took Nigeria seven years to subjugate Boko Haram militancy in the north eastern part of the country, and this cost lives of many gallant soldiers and innocent lives, it also cost the country huge amount of money. It caused instability and economic downturn as resources that would have gone for critical sectors were directed toward fighting the insurgency. Now, with relative peace in the North-East and restoration of democratic veracity in the country, one will think the country is on the brink of stability and prosperity. Alas, the re-emergence of the Niger Delta Militancy has cast doubt once again on the ability of the current administration to overturn the socio-economic downturn in the country due to the extensive implications of the ongoing petroleum pipeline vandalisms and destruction of facilities by the Niger Delta militants.

IMPLICATIONS

The effect of this militancy is multidimensional, and include, but not limited to the followings:
1.       Revenue: The Petroleum sector contributes around 98% of the Nigeria’s foreign earnings, as such the country’s economy hugely rely on income from petroleum exports. Any shock in the supply of the petroleum will directly affect the country’s economy. As a result of the recent petroleum pipeline vandalisms, the government revenue drastically reduced by 25%. In the third quarter of 2015, the government revenue was N994.02 billion, and in early this year, it came down to around N746.99 billion. This is a reduction by N247.03 billion in just three months. This monetary loss resulted by the vandalism could have been sufficient to share N1 million each to 250,000 young entrepreneurs in the Niger Delta area. Unfortunately, this is entirely lost, and by extension led to other social cost.

Alternatively, we can look at the volume of the petroleum production to quantify the implication of these vandalisms per day. For example, at the end of the first quarter of 2016, the daily oil production in the country reduced to 1.4 million barrels of crude oil, falling short by 800,000 barrels of the estimated average daily production of 2.2 million barrels. Using the oil price of $50 per barrel, this means that on daily basis Nigeria lose $40 million, which is equivalent to N10 billion daily as a loss.

The effect of income reduction has extended to the feeble state governments, most of whom were recently rescued. And now, they had to share the lowest allocation in recent years. The state governments shared N281.5 billion in May 2016, which is 28% lower than what they shared in the month of May last year. So, the revenue reduction as a result of the vandalism will again affect the Niger Delta states.

2.       Political: The reduction in income will entirely affect the implementation of the 2016 budget, and government will have to prioritise and leave other projects. This will reduce the performance of the current administration. The political implication will be that the people will be disappointed given the higher expectation on the current administration, and voters may try other options in the next election. An average Nigerian has high tendency of blaming government for his plight, and with the current economic hardship, the government is becoming helpless especially at state levels. The implementation of the expansionary fiscal policy will be less effective, which will make the economic recovery even stickier. The popularity of the current administration will reduce if this continues.

3.       Expenditure: The cost constructing and laying down of petroleum pipeline in any oil and gas venture is huge. It will cost $82,000 to construct a gas pipeline per kilometre in Nigeria, which is equivalent to N20 million. Now, for every one kilometre vandalism, the government will have to spend N20 million to reconstruct and it may take long time to fix depending on the enormity of the destruction. This will add to the overall government expenditure in the petroleum sector and undermines its expenditure in other sectors.

4.       Default in Contractual obligations: Some of the Petroleum Fiscal Regimes require contributory payments to operator who fund the petroleum production on behalf non-operating partners in JOAs. Nigeria has so far being unable to answer operated cash calls of $7 billion as contributory payments to oil and gas operators for the risks and cost incurred in petroleum production in the country. And this was caused by reduction in the government petroleum revenue and increase in petroleum expenditure as largely caused by vandalisms in recent months.

The expensive LNG business is hugely affected. Some of the LNG supply are time, volume and destination specific, and once the contract is signed the entire risk is on the supplier. These pipelines vandalism has reduced supply of gas to the NLNG plant in Lagos, which may delay fulfilment and add to the cost and risks of the business on the Nigerian government.

5.       Environment: The aftermath of most of the petroleum pipeline vandalism are associated with environmental costs due to the oil spillage or gas emission or explosions. These cause both water and air pollution, which affect the health and economic activity of the affected community. This externality is costly and may not easily be quantified. The activity of reconstructing the damage facilities also adds to the pollution.

6.       Investment: At this important economic turning point, when Nigeria needs more investment in other sectors of the economy, the pipeline vandalisms add to the country’s business risks and sends bad signals to potential investors, not necessary in the petroleum sectors, but other sectors. So, there will be reduction in capital transfer to the country. This will weaken the effectiveness of the country’s economic diversification programme.

7.       Energy: From the beginning of this year to date, the total electricity generation has reduced on average by 30%, and this was caused by the sharp reduction in the gas supply to the power plants as a result of these vandalism. The gas powered plants provide up to 80% of the country’s power generation capacity, and they are operated mainly with gas. Any shock in the supply of gas will make these expensive power plant redundant, which will affect their viability and put the nation in darkness. The vandalism has contributed to making cost of production more expensive due to the electricity shortages that it caused. This is tantamount to discouraging local entrepreneurs and reduce their efficiencies. It will also lead to inflation as energy is an integral part of the factors of production. Any reduction in the supply of electricity will add to the cost of energy in production, as producers have to spend extra for autonomous energy supply.

8.       Refining output: With the recent deregulation of the downstream petroleum sector, the petroleum pump price has increased up to N145 per litre. However, for a litre of petrol refined and transported within Nigeria, it can cost as low as N60/ per litre. Efforts have been made to revive the existing refineries in the country so as to improve local supply and reduce cost of petrol. However, the operation of this refineries have drastically reduced as the supply of crude oil to the refineries have reduced due to the oil pipeline vandalism. This made the refineries redundant, and make the country rely more on the imported refined petroleum, which will eventually lead to further depreciation of Naira.

CAUSES

Now, one will be curious to know what motivates these militants to engage in this kind of activity that is tantamount to national destruction. So, before addressing the problem, there is need to identify the causes:

The militants are not asking for money or amnesty, they are only asking for sovereign state. They don’t want to belong to Nigeria again. But, what make them want to have a separate nation? Maybe, they think, they are politically irrelevant within the current country settings or they think someone from their region is more deserved to rule the country. The current leader of the country defeated the former president who came from the Niger Delta area, some believe that, it is a deliberate attempt to scuttle the current administration that defeated the candidate from Niger Delta. This is just a theory, and it has not been substantiated yet.

It is apparent that the militants have political motive, and is likely that they act on their own to protect the interest of some of their leaders and agitators from their region. These leaders may not have to give them orders. The representative of the region in the central government, Hon. Rotimi Amaechi lacks the command to convince the militants, because, he is considered a political sell-out.

The current administration is committed to arresting some of the former leaders of the Niger Delta agitators, prominently Mr. Tompolo, for alleged corruption in some petroleum contracts during the last administration, and despite some bloody attempts to arrest him, the government was not able to achieve that yet. The government accused him of diverting the sum of N45.9 billion belonging to the government during the last administration. However, Mr Tompolo said, it was a legitimate contract and due process was followed before he was granted the contract to protect petroleum facilities in the region, and his services were effective as there were no vandalisms or destruction at that time. If there is any question regarding the legitimacy of the contract, he said, the Economic and Financial Crime Commission (EFCC) should summon the government officials that granted the contract first. So, Mr Tompolo felt aggrieved that his Business bank accounts were frozen, and he thinks that he is innocent and the government owes him.

Mr Tompolo has an unyielding command among the armed agitators and militants in the region, and by seeing that the government is against their idol, the militants don’t need command from him to retaliate. And for them to see their mentor humiliated unduly, they rather separate from the country. There are anticipations that more leaders from the region are likely to be arrested and tried for corruption charges. The militants will do everything to protect their leaders or retaliate. That is why they first attack, because, attack is the best way of defence.

It was not coincidence that few weeks after declaring Mr Tompolo wanted, the vandalism resurface in the region. So, the vandalism is aimed at avenging the harassment on their leaders.

During the last administration, the government signed a contract with the militants that they will drop arms and stop vandalism in return for pipeline protection contracts. With the coming of this new government, this contract was cancelled, and the pipeline protection is now saddled with the Nigerian army. Despite the presence of Nigerian army in the oil production region, the militants still vandalise pipelines, because, the creek is their home, and they can navigate and ambush soldiers. The militants can even stay inside water for three hours and some believe that they use magic in their fight.

So, the justification of this fight from the militant perspective is that, their leaders were granted the contract through due process, and now the contract is reversed and their leaders are hunted for crime they did not commit. This to them, is a breach of the contract terms, and as such the condition of peace cease to exist as well, and they will have to avenge. That is why they have no further confidence on the government and the country.

With the economic hardship and unemployment in the region, it is very easy to recruit and brain wash new members in the struggle. Even though, some of the leaders are literate, but they leverage on the illiterate ones to add more forces. And it is very easy to convince new recruit by preaching political and economic isolation of the region, due to apparent infrastructural deficit and poverty in the region.

SOLUTION

So, knowing some of the causes, we can easily draw the solutions:

The government must plan for short term, midterm and long term measures. In the short term, the previous contract signed by the previous administration should be revisited with a view to identify exaggerated figures and suspicious clauses, and then sign a reviewed contract within weeks. The government must drop all charges against Mr Tompolo, and reinstate his business accounts. If government still find any foul play in the execution of the previous contract, should invite government officials from the previous government for inquiries. In addition, heavy military power has to be deployed to prevent any further destruction.

In the midterm, the President must personally meet with the influential agitators from the region. The President should not rely on the regional representatives in his cabinet, he must engage with the former president and invite all the agitators for a peace talk. The president must agree not to arrest or try anyone of them for any crime committed in the past. The president should consider some political appointments to few of their respected leaders, whom they listen to. In return, they must drop arms and help the Nigerian army protect the pipelines and other petroleum facilities. The President should use power to convert enemies to loyal friends.

Any special consideration for the militants has to be done moderately and strategically not to promote violence for economic benefit. The special consideration will have to be through investment in education, agriculture, and environment to increase the inclusive economic participation of the young people from the region. The Amnesty programme of President Yar’adua was very effective and it has addressed the economic motive of the militancy. The current vandalism is politically motivated, so there is less need of monetary investment on the militants.

There is need for general awareness and campaign for social cohesion and tolerance, as well as regional integration. The six regions are integral part of each other, and the young generation must appreciate the contribution each region give to achieve the Nigeria of today.

There is need for awareness to understand the national and international laws of land and natural resources. All minerals and natural resources on land and in sea belong to the Nigerian state, not to any particular state or region. And the sea where the oil and gas operation take place belong to the Nigeria, because, nobody can own a sea except the government. Nigeria is lucky to own a longer nautical miles in the sea because of its wider land mass. So, even the north that contribute 72% of the land mass, which resulted to wider sea ownership to Nigeria, cannot claim ownership of the petroleum deposit in the sea. So, petroleum resources within the country’s territory belong to Nigeria exclusively. 

The theory that groundnut money were used to build oil wells may not be substantiated, as the beginning of petroleum industry in Nigeria was based on concessionary fiscal system, where international oil companies invest their money in exploration, development and production of the petroleum resource. Commercial discovery and production of oil was first made in 1956 in Oloibiri (in present Bayelsa state) by Shell D’Archy, not by Nigerian government.

In the long-term, the Nigerian economy must be independent of petroleum sector, to avoid being vulnerable to any shock in the sector. Alternatively, petroleum deposits can be explored in other parts of the country to diversify its sources of supply. Development of renewable energy sources can be another option.

It is just my opinion!

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth Youth Council,
University Lecturer (Economics) at Umaru Musa Yar’adua University.