Is Nigerian Great Depression Looming?

Speech Delivered by Dr. Ahmed Adamu at the Katsina Forum held on 25th December 2016.

Dr. Ahmed Adamu speaking during the Katsina Forum

On 1st week of July, 2016, Nigeria was declared officially in Economic recession, a situation where economic activities or productions decline for two consecutive quarters i.e. six months in a row. These continue to decline up to October 2016, making it likely for the country to face the most prolong economic recession since 1980s recession. A mere decline in value of goods and services produced in a country may sound a mere technicality. Yes, it is technical, because a country can be in recession, but the micro-economies might be doing just ok, and micro-economies might sometimes not be ok, but the country’s GDP growth rate going positive. So, it is sometimes beyond those negative GDP growth rate, it is about some key indicators like inflation (18.84% from 9% on May last year), real per-capita income and wages, access to infrastructure, unemployment (13.3% from 8%), value of currency (N490 from 200) , interest rate (14% from 12%), Foreign Exchange Reserve ($25bn from $37bn) etc. Looking at these indicators, records have shown that, they have not been favourable. These are the indicators people can observe to quantify the magnitude of a recession. If these indicators continue to be unfavourable for a period of up to a year, we can say we are in a depression. Depression is an extreme form of recession.

Therefore, depression is when we have significant increase in unemployment, decrease in access to capital, reduction in output, reduction in trades, currency value fluctuations, large number of bankruptcies. A technical definition of depression is when GDP decline rate exceed 10%, in Nigeria it started declining by -0.36%, then declined by -2.06%, and then by -.2.24%. So, going by this definition, Nigeria is not in depression yet. Going by the recent trend, the decline increased by more than 400%, but later increased by 8%, which shows the recent decline has increased at a lower rate compare to the initial decline. So, we cannot assume substantial decline up to 10% in a near future. However, if this decline continues for a period of two years, Nigeria can fall into depression. So, there can never be depression without recession, but there could be a recession without depression. A prominent example of depression was the famous 1930 depression.  To joke about it, recession is when your neighbour loses his job, but depression is when you lose yours. Demand fall can cause depression (Keynesians), increased money supply can also cause depression (monetarist).

Having looked at theories and facts above, we can see Nigeria is not likely to be in technical depression, but in the economy of many people, Nigeria is already in depression. Sometimes, we have to close the books, and look at reality. When you see people dying from starvation or economic frustration, that’s depression. When you have to go out and beg for food, that’s depression. When you can’t buy dinner for your family, that’s depression. Of course, when you cannot pay for the health and school bills, that’s depression. Now, look at your own economy, and tell me if you are somehow depressed or not.

Well, I know the level and severity of depression differ among individuals, so, some may already be in depression and some may not. In one way or the other, we can all agree that the Nigerian economy is not on the right track going by the indicators. If allowed to continue, we can face the general great depression . However, we can start thinking of solutions to avoid the great depression in the country. First, we have to know the causes of the current economic crisis in the country. Some of the causes were as a result of circumstances, inactions and sometimes as a results of “mis-actions”.

One of the circumstantial causes include the drop in oil price, which drastically reduce the country’s income and its ability to curb the resultant recession. This apparently exposed how vulnerable the country is to a shock in a single sector. This shows that the economy has no shock absorbers, and this was as a result of inaction of not investing sufficiently in other sectors of the economy to prevent severe hit from a sudden shock in one sector. Some scholarly findings have indicated likely presence of resource curse in Nigeria, as a reduction in oil revenue has thrown the economy into a recession. This caused the country to rely heavily on importation of goods and services to meet local demands, because the weak industrial and manufacturing sector cannot meet the demands. This then exposed the country’s currency to foreign shocks and continues depreciation due to increasing currency supply. To shield citizens from this depreciation and currency value fluctuations, the government created the foreign exchange subsidy, making it very comfortable to keep importing into the country to a level that was no longer sustainable. It has reached the level that people and businesses heavily rely on government to fund every foreign investment expenditure.

This made government to remove or reduce currency exchange subsidies, shooting the cost of import high. In addition, due to the low oil revenue, the government removed the petroleum subsidy, and as a results of these actions, the inflation reached the highest level in a decade. It was largely observed that inflation is the major cause of current economic hardship in the country.

Actions or inaction of every government must definitely have short and long term effects, and it is the responsibility of policy makers to take responsibility of any current economic challenge by identifying what was responsible so as to know the genesis and solutions. Despite the rising inflation, investments and productions keep declining, which push us near stagflation (persistent inflation and unemployment). Even though, it is common that political transitions cause delay or suspension of investment decisions, but lacklustre economic policies and decisions can help compound the crisis. Investors want to see clear short term and long term economic plans and strategy, and it is upon this they make their decisions. Nigerian economic policy indicators are not easily predictable, a times they come as a surprise. This makes aggregate demand to fall, due to low investments. Withdrawal or slow flow of income within an economy causes leakages out of the circular flow, which causes continues fall in aggregate demand.

Economic problems are natural, the pattern of the economy is always up and down, there are periods of stability and periods of stagnation, but what’s more important are the fiscal and monetary policies set to sustain stability or curb downturns. We now have to look at other fiscal policies that the policy makers put in place to address the economic recession. Spending more especially in critical infrasture and social welfare are very important. Borrowing money may be an option, but it has to be strictly for funding infrastructure projects capable of  generating revenue that can be used to service and repay the debt. The decision to operate a single government account created traffic in the flow of income, causing sluggish growth of demand in the pace of fast economic downturn. Despite its economic advantages, the treasury single account ought to have been clustered by sectors or suspended till period of stability.

Fiscal policy has direct impact on the economy, as such it requires very careful study but very quick in period of stagnation. Being very protective and suspicious of generous policies will not help in getting out of the situation. Closing land borders against importation of rice and cars are two important fiscal policy that we have to talk about when assessing the economic recession in the country. In period of economic recession, the economy must be relaxed and let free relatively to revert to equilibrium. Banning these importation are tantamount to exacerbating inflation and unemployment, leading to severe depression. Importation of rice and cars will automatically be stopped when Nigeria produces its quality cars and rice. It is not true to say until when we have no option that we will produce what we need, if we have to be this so lazy, many would have fall into depression. Despite all the options, we have to set target and strategy to replace all imported products with local ones. This is time to support local and big businesses, not to discourage them.

The monetary policy on the other hand has been targeting the inflation by raising and sticking the interest rate at 14% (from 12%), and Cash reserve ratio to 22.5% (from 20%), which reduces access to finances to reduce willingness to spend. However, the fiscal policy is doing everything to increase the willingness to spend and access to finances. This shows inconsistency between the two policies. The CBN must be willing to reduce the interest rate and increase money supply. The inflation we experience is not demand pull inflation, and once productions are subsidised and average cost reduced through provision of infrastructures, competition will increase and prices will reduce too.

Despite the monetary and fiscal measures, individuals have to play their roles of being patriotic and selfless. Market abuse or rent seeking is instrumental in aggravating depression. Everyone has to pitch in and sacrifice to make life better. People take advantage of inflation and Naira devaluation to exploit consumers, and if this continue, the Fiscal and Monetary Policy will not be effective.

Another important factor in analysing the economic depression is Population, a proxy for labour. Great depression can be imminent if more than half of country’s population are inactive due to their gender or poor background, and this is in addition to large percentage of unskilled labour force. Nigerian productivity rate per hour is $3.24 per hour, while in USA is $64.1 per hour, applying the same amount of labour inputs in an hour, Americans will produce output worth $64.1, while Nigerians will produce output worth $3.24. adding more unproductive population amidst shrinking resources lead to great depression. Women empowerment, skills prioritization (not qualification), reward for innovations and dedications, access to quality education and infrastructure will help Improve efficiency and productivity, and until then, we cannot be proud of the size of our population.

Finally, over dozing economy will make it sick again, what is more important is to identify the linkages between every sector and implication of every policy. One variable can be controlled, and others have to be let free. That is why engaging and involving experts in decision making  is inevitable for effective economic policies. To avoid further depression, there should be consultations prior to implementation of new policy, and necessary indicators have to be  identified to measure success or otherwise of every policy. We have to be ready to take difficult and vigorous policies, not necessary the lazy options, but enduring and careful policies.

Thank You.

SPEECH DELIVERED BY DR AHMED ADAMU DURING THE POLITICAL ORIENTATION WORKSHOP (SCHOOL OF POLITICS) HELD ON 10TH NOVEMBER 2016 AT KAPITAL CLUB, ABUJA.

Whenever we want to do something qualitative, we have to forget about time, because there is negative relationship between time and quality. So, if you want to go for time, we have to compromise quality. Now, we are going for the difference that we really want to make, not just to come here and talk and rush people to talk for five minutes and go. If you cannot be patient and listen and be transformed, then walk away. I am not a politician and my name is Dr Ahmed Adamu, I am the first ever global chairperson of the commonwealth youth council, I am also a university lecturer at UMYUK.

Moses Siasia (who spoke before me) run for governorship election but I will say, if you want to run for election, don’t run in the same way as others, you have to be different, if Dickson and Silver were riding those Jeeps, you should not compete with them, you should bring yourself down to the masses level, let them feel you, be with them.

Why do you think Moses has participated in politics? Why are we interested in politics? Why we have school of politics? Because politics is very important in our lives. Politicians make decisions that shape our life and our future and that is why we will not let it with them, we have to take the responsibilities and be part of the politics. But again, what else should motivate us to participate in politics? Some of us want to participate in politics because they want to be successful. But what is success? In your own dictionary, what do you want to see in your life to say that you are successful?

That is the beginning of everything. When you measure and quantify the scale of your success by the volume of the money you have, or the wealth you acquire, or the cars you ride, or the house you live, or the wife you marry, then you are not on the right course. And most people take politics as a way of getting money, enriching themselves, but leadership is not restricted within politics. Because leaders are not those political leaders, leaders are those people who make differences in the life of other people, if you really want to play politics or you want to be a politician or you want to be a leader, then you should start it now.  Everybody is a leader or can be a leader.

We have to define why we are here, to discuss about politics, but there are so many challenges we are facing now as young people. We either contest as politicians vying for positions, or as voters. Now they say young people can vote as long as they are 18 and above but they cannot contest. This is not appropriate. Leadership requirements nowadays does not require age; leadership requirements change over time. What you required in a leader 30 years ago is not what you need in the 21^st century in a leader, so there must be a redress, and like the national chairman of the youth council said we have to have a movement that will inspire institutional changes that give room for the young people to aspire and contest for any election. And if we really want to be political leaders, we have to start within our capacity, what can we do ourselves? And that will serve as a testimony or legacy for people to see you and say we have seen leader in you, the leadership quality we need in you and we want to you to be our leader.

As a muslim, the prophet SAW said whoever come out and say vote for me as leader I want to be your leader, then do not vote for him. Vote for people that are humble and responsible, and give them the leadership, then God will guide them. We understand that we are in a modern democratic system, even in that, we can identify credible leaders and ask them to contest. We have to prepare ourselves to be leaders, there are so many young people who were given responsibilities, but they disappointed young people, because they were not prepared to be the right leaders we want.  I am a university lecturer like I said, I mingle with young people who are coming out, growing out of the university and potentially are going to be the elite in the society and eventually become leaders, but I have seen the gaps in them, the leadership quality they need to have is not taught in our universities.

It is not just enough to have PhD, not just enough to finish from university, and that qualifies you to be a leader. You need strategic training and discipline to be an effective leader, that is why this kind of school of politics and leadership programme are very imperative that any person who wants to contest in any election should have this kind of training and preparation. Because they tell us we are inexperienced, but I tell them we are the most experienced people, because what is experience? Knowing your problems is 50% away of solving the problems. The old generation that ruled 30-40 years ago, they only knew the challenges of the past, the problems of that time, but we know the opportunities and challenges in our time, we the young generation, and that is what made us more experienced. So that is the best experience we have, and like I said the leader we needed 30 years ago is not the leader we need today, because this is different century and we have larger proportion of young people.

The decision to make the difference lies in our hands and I believe this is the best platform to achieve that, and we have to take it serious, and I understand so many people were invited but they were not here, we don’t need them, we have to start with a small number and that is how we can grow big. The strength we have, we will build it and others will join later. For us to achieve this we have to have serious social re-orientation. As I started earlier, what measures your success? What do I want to see in my life to say that I am successful? I swear is not just to be a governor, to be in the house of reps, to be president of Nigeria, No, that is what motivates me to go to University, to see young people looking out to you, they have problems, they have challenges, they need support, they are coming to you, you are helping them, they will never forget you, that is leadership, the difference you want to make. And Comrade Barde was telling me I have come back to Nigeria for over 6 months now and I am wasting away after all what I have achieved. I said no! I am not wasting away, in fact I am impacting and making difference for being a University lecturer. I don’t have to change thousand people, I just need to change one person, that is my success.

I have seen a friend of mine sharing a post on facebook, he said his children are celebrating birthday today, one of them is saying I want to be a governor, a president. We should not teach our children that becoming a governor or attaining highest position is the ultimate success in life, that is not it. You can be a leader in any spectrum of life. Academic institutions, organisations out there, you can make the difference. Sometimes you don’t need money to do that. For us to have this social re-orientation, we have to get rid of the corruption (thinking of political position first) in the young people.

What is the biggest corruption? The quest for short-cut. How do I get rich quickly? Because you think that money or wealth is your success, that is why you are crumbling, you want to get that money quickly and that is because you are lazy. If you struggle hard, don’t think you are disadvantageous, but you are stronger, the struggle you face makes you resilient and matured to face even bigger challenges in your life. Those guys you think they are privileged; they are not advantageous because little failure breaks them. But you are very strong, you fall and rise, and keep moving. Young people should not be lazy, we should not be afraid of failures, If Moses was afraid of failure (he would not have contested for Governor in his state), he would not have been here.

The second problem we face is lack of responsibility: If you see something wrong, change it. I am not campaigning here for any person, I agree absolutely change begins with all of us, with individual capacity, what can you do. If you come out in your environment/neighbourhood and see it is dirty, organise people, organise action, make the difference, no matter how little it is. If you are educated and see young people struggling in school, create a free class for them, teach them. This is important, because the negative effect of an illiterate person in a society surpass that of the benefit of those educated, because he (the illiterate) can make a serious negative action that will affect everyone and it will become irreversible, and we’ve see in our society that illiteracy and ignorance play role in electing bad leaders, because of ignorance people can collect 5000 Naira or even less to vote for incompetent candidates.

Lack of patriotism: we (the youth) put ourselves first before our country, it should be the other way round. Lack of patriotism kills our progress. Some young people nowadays would rather be sycophant, have Godfathers and follow them like dogs, if you do that, you can never get there. You have huge potentials in you, but you stoop so low to keep following someone who is expired. We (the youth) have the energy, the exuberance, the innovations, the ideas and knowledge to make the difference, but you keep following someone who doesn’t even know what is going on nowadays.

Those older generations lack the mental and physical stamina to rule the modern world. Problems are evolving every minute, you need pro-activeness, smart decisions and leadership, and these are enough reasons to awaken us to the truth. We say if you want to contest for election you must have a political party to sponsor you. I had a meeting with some young people recently, one of them said to me that he is a partisan member of PDP, and I asked him why? He said because PDP have the good people, and so on. I told him that I don’t expect young people nowadays to be partisan, and even other Nigerians too, we don’t need to be partisan for now, because we are in a stage of building good governance. At this stage we need to identify credible and qualified leaders irrespective of their party.

It is very sad; the APC politicians have to take responsibilities of poor governance especially in the north for taking advantages of the people there, by telling them to vote for a political party all the way, neglecting and passing out other credible candidates in other parties. That is how we missed out so many qualified candidates which is not good for our system. I know of someone who barely finish secondary school, but he beat someone who is a PhD holder and has all the leadership quality just because of the party ideology.

Party does not determine what you do as a leader in Nigeria. For example, in Katsina state, Gov. Masari can never be dictated by the party chairman, he (the governor) decides what he wants to do, nobody in the party can query him. The point here is that the ultimate person is the candidate, who is the candidate irrespective of the party. When we have credible leaders all round and across parties, then the question will become which party has the most credible candidates? At that time every party will have to fill all positions base on credibility and qualification. And when there are credible leaders/candidates with ambitions that is when you have a choice of which path to follow to greatest. If I want to go to greatest and someone says follow left and someone say follow right, and I think I prefer right, then I should vote for the party that says it is the right path, that is ideology. That is where the developed countries are now. Voting on party ideology in Nigeria at this stage is useless. We need to create a political movement that promote credible leaders across parties, but we are not restricting ourselves to a single party.

Way forward:

1.       Inclusion/accommodation of professionals in politics:  Most people take politics as their primary business, without positions they are nothing, they cannot do anything and we allow them to rule us (we the professionals), despite our skills and competence.  Professionals have to have space and stake in the politics. It is discriminating to say professionals cannot belong to a party. This movement should prepare to identify these areas where we want to have a review and then push forward for it. I learnt that we have the officials of a new party called “Young Democratic Party”, which is a welcome development. These are some of the starting points, but as a new party, it all depend on what you do in the party. You have to have a message, bring the people around. One of the major problem that young people have is self-insecurity. When you don’t have confidence in yourself, you become selfish so you will be afraid to bring competent ones around, because they will relegate you. If you are selfless,  you don’t care, you will bring the most competent person and give him the chance. Your legacy is the system. So youth movements and political parties shall not be self-centred.

2.       Unity: We should stop segregating ourselves, let us unite, we should stop looking at ourselves from different divides. Since the higher proportion of Nigerian population are youth, why can’t we have a young president. Pull your collective votes together and give it to that person. We can start by contributing money to fund/sponsor a young candidate.

3.       Reducing the cost of election: the large amount of money required to contest for an election is discouraging. Young people are growing up, they are trying to establish family and build some other life necessities. We need to have a strong structural and political change in Nigeria to reduce the cost of election, so that young people with little resources can aspire for any position.

4.       Political position should be made unattractive: why should a primary school teacher receives low salary while a member of house is receiving large cow share, who is contributing more? I am sure when the positions are unattractive many competent young people will be attracted to it, and other unpatriotic politicians would have to retire.

Those people at the top positions cannot make it alone, what they do is the subject of the people around them, but now they say, they cannot bring competent people, they need politicians. As we speak now, there is no single young person in the national cabinet even though young people have contributed to the success of the current administration. Political appointments should not be given exclusively to politicians. Governance is not only about politics and politician, we only need politicians during elections, but when dealing with serious business we need competent professionals. Most government appointments are based on political compensation, and even at that level, we don’t see young people (at least considerable number of them) being compensated anyway.

Finally, I would like to strongly emphasize on the need for the national movement that will unite and mobilize young people to support each other and aspire for various positions in the next election irrespective of party affiliations. Let us promote credible leaders, not parties. We may not have to start many of us, but gradually, we will make it. I Would also like to congratulate the organisers for the success of this events.

Thank you and all the best.

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

First Ever Global Chairperson of the Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University.

SPEECH DELIVERED BY DR. AHMED ADAMU DURING ENTREPRENEURSHIP WORKSHOP AND EXHIBITION ORGANISED BY THE NETWORK OF AFRICAN STUDENTS ENTREPRENEURS (NASE), AT UMARU MUSA YAR’ADUA UNIVERSITY ON 8TH OCTOBER 2016.

I would like to congratulate the NASE for organising this timely and important occasion, a rare of its kind. I congratulate the NASE members for not being just students but entrepreneurs. Promotion of entrepreneurship among students is extremely important, because, 90% of graduates expect government job or organised private sector job. However, only 1 out of 100 graduates gets government job, and 9 out of the 100 gets employed in organised private sector. This means, the chance of being employed after graduation is just 10 out of 100 chances. The reliable option for students/graduates is to create the job by themselves. Working for others limits your income and your success. You could have achieved more and earned more if you work for yourselves or others work for you.

So platform like this awakens the students to this reality and prepare them to be job givers not takers. Being a student does not restrict you from becoming entrepreneur. You might not be taught comprehensive entrepreneurship or business ideas in classrooms, but you have to find way of learning it outside the classrooms. Education is not restricted to schooling, there are so much you can learn outside the school. A true education is not merely learned through text book. It was once said, a child who is only educated in classroom is uneducated. Mark Twain once said “I never let my schooling interfere with my education”. So, your literacy and employability is determined by how educated you are, so be open minded to learn skills and ideas beyond school curriculum, and this will make you independent and effective entrepreneurs.

All of us are intelligent to be anything we want to be; we should not judge ourselves based on a particular measurement. As students, you should not judge yourself based on your class of degree or examination results, because the school examination is not a true test of your knowledge and ability. People learn through different systems, and if you are all subjected to a particular system of instruction, not all of you will be compatible with it, so if you fail the test, that does not mean you are not intelligent. It means you are not comfortable with the method of instruction. There are no bad students, there is only inflexible method of teaching. So, don’t look at your poor result and say, if I cannot make it in school, I will not make it in entrepreneurship too, that is not true.

There were many intelligent people, who did not make it at school, but they eventually excelled. The man that took us to the moon (Wernher Von Braun) failed maths examination three times. So, what you need to do is to figure out how you learn. There is no place and time more appropriate to be educated and to start Entrepreneurship. The more you delay it, the less chances of your peaking, so start now.

Entrepreneurship is about doing something new or differently to maximise your income. It is about identifying the gap or problem, and creating a solution to it. So it is not about doing any kind of business that others do. Think of a new business idea or new way of doing it.

Your background has nothing to do with what you can achieve. Entrepreneurship is not restricted to a group of people or nation. Before the Western civilization, Africa was the home of civilization and innovations. African is the next centre for modern civilization and innovations, but we have to start believing in ourselves. It has to start with you, but you have to be innovative and stop waiting for a job, just create it.

There was a graduate who became frustrated, because he was no longer having income after graduation. He used to save money given to him by his parent anytime he goes to school. So, after graduation, he could not have a source of income. One day, his friend visited him, and the friend became fascinated by the shirt he wore, and he sold the shirt to his friend. This opened his mind to the idea of producing and selling cloth, and as a result he became successful fashion designer.

It is not a bad thing to fail or face some obstacles along the way. Oprah Winfrey, Bill Gates, Steve Jobs, Jack Ma etc, came from poor background and faced different challenges, but that did not stop them from trying, and they eventually succeeded. It is recommended to start your entrepreneurship early enough to give room for possible falling and rising again. To minimize possible risks, it is advisable to get mentors, and NASE is a platform to get connected with peer mentors. Being a student, it is not excuse not to start entrepreneurship.

Marck Zuckerberg when he was a student he invented Facebook. When he was a child, he created games while other children play games. His entrepreneurship pursuit did not allow him to finish from University. He is now more successful than many of the University graduates.

As student entrepreneurs, you might face challenges. For example, you are expected to attend classes and pass numerous courses, which will limit your commitment to your entrepreneurship. Schooling might distract you a bit, but you have to make the right balance. The current educational curriculum does not give you the efficient skills to be effective entrepreneurs. So, work hard now, so that you can be happier later.

You may lack the capital to implement your ideas, but always remember that your idea is 50% part of the capital, you can reach out to your friends with the money to provide the remaining 50% share of the capital in cash. You can sell some of your gadgets or your properties to start a business. Steve Jobs had to sell his Volkswagen car, and his partner had to sell his scientific calculator to initially set up Apple company, now a leading mobile phone producing and technology development company. So, it is normal to sell off your assets for entrepreneurship purpose. You may not have to start big, but you must dream big.

You have to get rid of fear and doubt in your mind. These are two worst enemies to your success. Your background does not determine your success, don’t be afraid of executing your dreams. No matter the difficulty, don’t kill the dream, just execute it. Your target should not be to get rich quick, but to work hard and persevere. Don’t think less of yourself, and don’t change your status because of the little income you get now. Nowadays young people become eager to change their lifestyles when they get little income, and this makes them trapped in poverty. The first money you get is the parent money, you have to invest it, and the yield is the children money, it also has to be invested to give birth to grandchildren money. It is only when your chain of income reach grandchildren level that you can start to spend for personal expenses.

What you can achieve is subject to your dream, and you have control over your dream, so why not just dream big, Your Challenges are not disadvantages, they are opportunities provided to you to become more resilient and matured to life challenges. Life is full of challenges, and when you are used to overcoming them, you will be resilient to face any challenge, big or small. Those children of the rich, who have everything within their reach are not more advantageous than you, you are stronger than them. A small failure breaks them, but you, a big challenge mean nothing to you, because you are used to it, it will not break you. So, you are better than them, and by that, you have better chances of succeeding, because anytime you fall, you will rise.

Among you, there are those who are working their way through University, they work to earn money and pay for their tuition, and they are performing better. Even after school, they are already ready to face life challenges. They are already prepared to face the worst, and they are used to picking themselves up whenever they fell. They are used to moving through pain, and that is why they are stronger.

Finally, I will leave you with three messages: first, there is no excuse for you not to be entrepreneur. Secondly, whoever told you, you can’t, he is not your friend, find friends who are optimistic and believe in you. Thirdly, try any dream you have, because the worst regret is not about what you did, but about what you did not do. Fourthly, any amazing thing you see in life (aeroplanes, telephone, rockets etc) are made up by people who are not smarter than you, and if they can do it, you too can do it.

Thank you

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

First-Ever Global President of Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina.

08034458189.

OPEC oil output reduction and Nigerian Economic Recession

By Dr. Ahmed Adamu

In the face of economic recession in Nigeria, perhaps a good news came out from Algiers this week, where Organisation of the Petroleum Exporting Countries (OPEC) agreed to implement the first oil production cut in nearly a decade. This if implemented may likely raise the price of crude oil, which means more revenue for countries like Nigeria, Saudi Arabia, Venuezuela, etc. This agreement has already started to affect the price of the oil, where the Brent crude surged to $50.19 per barrel as at 30^th September, 8% increase within just three days. Arbitrators and speculators may continue to increase the demand and push the price up even before the November OPEC meeting, when we will see if this unlikely deal will see the light of the day at all. This may turn out to be a mere verbal intervention to create market sentiments.

Even if the output is eventually reduced, OPEC member countries may still be faced with lower revenue unless if the percentage change in oil price is much higher than percentage change (reduction) in the output. The elasticity of the oil price will not be the same as in the past due to the emergence of major supply alternatives. Russia (not a member of OPEC) produced 11.1 million barrels in a day in September, which was 4% increase from the month of August. Russia may not care about the interest of OPEC, it may continue to pump more barrels as buyers switch their supliers from OPEC countries to Russia and/or America. OPEC supply 40% of the world oil, making it directly uninfluential in the larger proportion of the oil supply. However, with Saudi Arabia and other low marginal cost producers in OPEC, the action of OPEC will definitely affect the price.

OPEC output reduction will mean decline in supply of low cost oil, which means high cost producers will have their chance to maximise profit, which will automatically push the price of oil up. However, the Saudi Arabia’s management of its quota can still affect other OPEC members. If Saudi Arabia reserves its usual 2 million barrels per day spare capacity, the price will surged significantly. However, if it becomes apprehensive about the market share and compete with major non-OPEC members, and peak its quota, the price will not increase significantly.

The Nigerian recession will come to an end soon, as the oil revenue will increase due to the imminent cut in oil output. Even though, the proposed 740, 000 barrels daily reduction by OPEC will not affect supply significantly, it will affect the cost of production of the oil supplied.  Russia and America will ramp up to fill the gap, but will not produce as cheaply as Saudi Arabia, Kuwait and Iran (all OPEC members). The increase in oil price will bring to the stream high cost producers like UK, Brazil and Canada, which will make the minimum oil price to at least $52.50 per barrel. This will mean, Nigeria will get a minimum profit of $21 per barrel. Even if Nigeria reduce production to maximum of 2 million per day, it will mean $42 million profit per day.

This will then increase supply of dollars and lead to possible appreciation of Naira, reduce the cost of factor inputs, and reduce inflation. It will make investment cheaper and increase employment.

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

1st October is not Nigerian Independence?

By Dr. Ahmed Adamu

States and settlements existed in Nigeria long before the illegal slavery and invasion of the West into West Africa. Edo Empire was one of the oldest and one of the highly established states in West Africa since the eleventh century, and it had organised social institutions. This later expanded to form the Oduduwa kingdom.  The Songhai Empire was the largest independent state in the history of Africa then, and it existed in 15th and 16th centuries. This empire spanned across northern and western Nigeria too. Even though the people of South Eastern Nigeria were politically and socially organised, they were under fragmental empires, popular of which is Nri Kingdom. An independent Islamic empire/caliphate also existed in most parts of northern Nigeria in the early 19th century. This empire linked with over 30 traditional leadership systems called the emirates. The caliphate ruled over 10 million people, making it one of the most significant empires in Africa in the 19th century. There were over 12 Kingdoms that existed in Nigeria before the invasion of Europeans into the country.

All settlements and states in Nigeria that existed before the invasion of the Europeans were independent, and socially and politically organised. Trade and agriculture were the major businesses then. In 1650, Europeans first invaded West Africa and illegally traded people of the area as slaves. From 1790 to 1807, the British purchased up to 2000 slaves every year in Lagos alone. Many free people from the above settlements were forced to become slaves against their wishes. They were taken to Europe and America to serve. They toiled and were abused and persecuted. This continued until 1807.

After abolishing slavery, the Europeans re-invaded Nigeria as missionaries, traders, and resource exploiters. In 1861, they started to take control and influence social and political systems in Nigerian communities. First, directly and later indirectly. A sovereign and independent states now became under control. By 1901, Nigeria became completely under British control, and by 1914, all the Nigerian protectorates were merged together and named “Nigeria” under Federick Lugard’s rulerships. This control lasted until 1st October 1960 after long agitations for Nigeria’s so-called independence.

Therefore, celebrating Nigeria’s independence on 1st October is uncalled for, because, Nigeria and the parts that made up modern Nigeria were naturally independent, socially organised and politically sovereign. The two invasions (slavery and colonialization) were unwanted and unnecessary. Marking and celebrating the end of these illegal invasions is indirectly recognising and endorsing them. So, 1st October 1960 is not Nigerian independence. 1st October only reminds us when the then illegal invaders left our shores. The amalgamation of the different kingdoms of Nigeria can be commemorated to symbolise and remind us of our unity in diversity, and to reflect back on our founding values and heritages.

The slavery and colonialization of Nigeria left a negative psychological footprint of low self-esteem and inferiority. The invaders came to convert free men to slaves and exploit resources in Africa so they can build their countries. This remanence caused backwardness to the continent and the country economically to date. Presently, we see how a shock in a foreign economy or a foreign currency directly affects the Nigerian Economy. The time when Nigeria was supposed to develop policies and resources to build its economy, it was colonised in the interest of the West. This foundation of dependence and rulership made it difficult for the country to build a resilient nation. Though, some of the country’s leaders played their roles in exposing the country more to external shocks for failing to build the real sectors of the economy and infrastructures.

At the time when Europe was developing, Africans were made slaves, building other people’s nations. Yet, after abolishing slavery, the illegal slave owners were compensated, but the so-called slaves were not. The so-called slaves were in better positions to be compensated for their persecution, this compensation should have been paid to their countries to rebuild what they have lost due to the exploitations.

Finally, like the second paragraph of the US declaration of independence stated, “All men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness”, this clause confessed the great error committed by the Europeans of turning others as slaves and for ruling other people’s lands against their wishes. The end of this error can be remembered anyway. Therefore, we can celebrate the departure of the invaders not our independence on 1st October, because we are all created free, and we existed with sovereignty long before the invasion of Europeans.

Dr. Ahmed Adamu,

Petroleum Economist,

Leadership and Personal Development Expert,

Superbrain Coach,

First Global Chairperson of Commonwealth  Youth Council,

University Lecturer (Economics), 

+2348188949144, +2348034458189

 

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

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.

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.

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.