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.

                                             

Tuesday, 31 May 2016

President Buhari’s One Year in office: Economic assessment and public opinions on national and states’ performances.


President Buhari immediately after taking
oath of office, 29th May 2015.
By Dr. Ahmed Adamu

The following article reviews the economic performance of President Buhari in his first year in office, but it first reports and analyses the outcome of a public survey I conducted to crowdsource public opinions on the one year performance of President Buhari and state governors.

The survey was conducted online and lasted for 48 hours. The participants in the survey came from across the 34 states in the country, even though some 24 of them withheld the name of their states. The outcome of the survey differ from states and regions. There were some discrepancies in national and states outcomes. Only Oyo, Ondo and Ebonyi states did not participate in the survey.

Starting with the aggregate outcome, 53% of the respondents are satisfied with the President Buhari’s one year in office, and most of them think his policies are not extremely effective, but just effective, and 18% of them think his policies are not effective. 43% of the respondents think his policies are inclusive, while 15% of them think they are not inclusive. 86% of the respondents still have hope for the future under President Buhari. There are more of the respondents who think their state governments performed poorly or could not decide yet.

Majority of the participants from 9 states out of 13 southern states are not satisfied with the administration of President Buhari in its first one year. However, majority of respondents from 10 states out of these (southern) states think that their state governments performed either excellently or good. However, 100% of respondents from Bayelsa state think that their state government performed poorly. Likewise, 55% of respondents from Delta state think their state government performed poorly, and 66% of respondents from Abia state either think that their state government performed poorly or are indecisive. Majority of respondents from 5 southern states are still not hopeful for the future under President Buhari, and some majority from 7 states in the south do not have confidence in the competence of political appointees under President Buhari’s first one year in office.

All the 19 northern states participated in the survey, and majority of the respondents from 16 of these states are extremely satisfied with the first one year of President Buhari in office.  However, 100% and 77% of participants from FCT and Jigawa state are moderately satisfied with the government of President Buhari in the first one year respectively. Furthermore, 43% of participants from Taraba state are not satisfied with President Buhari’s one year in office, and another 43% of the participants from the state are moderately satisfied.

In terms of states performances, majority of participants from 10 northern states think that their state governments performed poorly. The poor performing northern states from the responses of this survey include Bauchi, Benue, Borno, Jigawa, Katsina, Kwara, Plateua, Taraba, Yobe, and Zamfara. Specifically, 100% of respondents from Zamfara state think that their state government performed poorly.

Respondents from Adamawa, Kaduna, Kano, Kebbi, Kogi, Niger, and Sokoto think that their state governments did not perform excellently, but performed just well. There are more perceived poor performing states in the north than in the south in the first one year of the current administrations, but they are largely more hopeful for the future and they are confident in the competence of the political appointees.

There are few shocks in the above discoveries, and that is important in identifying areas of weaknesses and strengths. The survey was based on general performance devoid of specific sectors. 

Even though there have been social and print media reports scoring the performance of the current administration in various sectors, I think they are not without sentiments. There are sectors that require intensive and strategic planning and implementation before witnessing any progress. So, it is not fair to judge the current administration on some major development indicators considering the fact that, it has not implemented any of its blue prints and plans yet, as the first budget of this administration has just been approved. Similarly, considering the economic situation inherited by the current administration, it will take time and patience to fix some of the infrastructural deficits and economic downturn.

The porous Nigerian economy has already responded to the global economic slowdown and have already imported inflation and unemployment. Of course, the current administration was not responsible of making the economy porous. It is the effect of long term mismanagement of resources and reliance on one sector i.e. Petroleum Resources. And recovery from this resource curse will definitely be long and slow. It is going to be a slow growth. The pace of economic downturn is always faster than its recovery.

Looking specifically at the inflation index, when President Buhari came on power, the inflation rate was around 9%, and at the end of his first one year it rose to 13.7%. This could be the repercussion of the much helpless economy built over the years and its vulnerability to foreign currency exchange shocks. With the recent sharp depreciation of Naira resulting from rising importation, the cost of importation became higher, and this caused increase in general price levels. Similarly, payments for some contractual obligations in foreign currency especially for foreign capitals invested in the country have become more expensive (due to Naira depreciation), causing increase in the cost of goods and service provisions especially in power sector. And this significantly affected prices. So the inflation is explained by the resultant effect of a porous economy (Naira depreciation) built over a decade. So, the currency depreciation was not caused by effects of the current economic policies, it is the remanence of the long ineffective policies.  

In terms of Job opportunity, the current administration promised to create 3 million jobs in a year during their campaign, but the unemployment rate has increased by 4.6% within a year, with new unemployed people numbering around 1.5 million joining the labour market in just the first quarter of 2016. This is not surprising due to the delay in the implementation of the expansionary fiscal policy, which the Buhari’s administration has to be responsible for. Likewise, job creations by organised private sector has dropped due to increasing cost of production and delay of investment as a result of recent political transitions and uncertainty in the new economic policies. Similarly, the proposed fiscal policy that will convert unemployment cannot be fully implemented without the passage of the budget. These explained the negative economic growth in the first quarter of this year.

The Central Bank of Nigeria has already injected close to N2 trillion in to the economy, and some banking population already possess enough resources to create jobs. Even though, the effect of this cannot be visible immediately, as people make investment decision as when they deemed optimal. However, with the recent passage of the budget, the government spending will commence, which will immediately create jobs and put more money on the hands of common man, which will increase their purchasing powers. So, there is need for at least a year to generate more jobs and distribute money through government expenditure within the framework of the first budget of this administration.

Within one year of President Buhari, the foreign reserve has declined by $5 billion, which can easily be explained by steep reduction in the crude oil prices and reduction in production of the crude oil due to vandalism. In addition, the rising importation and slow global economic growth has resulted to more utilisation of the reserve to offset local and international liabilities in foreign currency. So, any inability that reduction in the reserve may cause was apparently not as a result of the recent economic policy, but external factors.

In terms of electricity generation, it is evident that in just 2016, the average power supply has declined by 30%, this was largely caused by the shortage of gas supply to power plants as a results of gas pipeline vandalism. It is significant to note that the highest ever electricity generated in the history of the country was 5,074MW, which was generated on 2nd February 2016. But period after this was characterised by some few inevitable system collapses and pipeline vandalism, which lowered the generation to around 3,000MW daily at maximum.

It is apparent that some of the setbacks above are caused by some externalities and inherited weak economic systems, which the current administration must strive to address before building a new economy. So, this will require tough decisions and slow growth before the economy can pick up. This underpins the necessity to have more of economic advisers than luxury or political aids. The government must have the guts to tell the negative truths, and explain clearly and specifically the situations, and what the government plans to do to address them. Apology and keeping hopes alive cannot serve well, we have to be honest to ourselves and face our challenges together.

Some of the first year assessments of President Buhari are myopic and misguiding. For example, the Punch newspaper illustrated that, President Buhari performed poorly in electricity sector. This is not valid assessment due to above explanations under electricity generation. Even if this government will have to improve in electricity generation, it will take 2 to 3 years and huge amount of money to install new generation and transmission capacities, which the government cannot finance alone. Funds for power projects must be appropriated, and private investors must be wooed, which all cannot yield result in just a year.

It is apparent that, the economy is not so attractive, and giving excuses and blaming the past should not distracts the government. The government has done well in the area of tackling corruption, which made all other gained achievements possible, including security, financial prudence, efficiency of public institutions, patriotism etc. It requires an honest leader to fight corruption, which President Buhari is, so it is easy for him to fight corruption, and this is why he performed well in fighting corruption. 

Finally, it will take pains and patience to see the much needed positive change. Priorities must be set especially in energy and transportation, which is why there is need for separation of duties. No matter how much government want to minimise cost, it must share responsibilities to optimise quality outcome. It will be better to have separate ministries for power, housing, works, and youth. Similarly, the petroleum ministry require robust attention, as such it requires a substantive minister whose specific assignment will be the petroleum sector. 

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, 27 May 2016

President Buhari's One Year Assesment Form

President Buhari's One year assesment Form

President Muhammadu Buhari
29th May 2016 is the one year anniversary of Muhammadu Buhari as President of Nigeria. This evaluation helps to review government performance, and crowdsource opinions and reaction of the citizens on the current administration in the last one year. To participate in this voluntary and independent assessment, fill the following form.


This  survey is closed. No further submission will be valid


How satisfied are you with the one year of President Buhari’s administration?

How would you assess the effectiveness of the government policies in the first one year?