Buhari did well but successor has a lot to do – Policy Expert

BUHARI DID WELL BUT SUCCESSOR HAS A LOT OF WORK TO DO - POLICY EXPERT Vahyala Kwaga and TVC News's Tolu Ogunjobi on Business Nigeria

Policy analyst and Researcher, Vahyala Kwaga, has commended the Federal Government under the administration of President Muhammadu Buhari for some of what he said are positive Economic strides as the government inches towards the end of the 8 year term as leader of Africa’s largest Economy.

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Mr Kwaga who was speaking on the TVC News’s flagship Business Programme, Business Nigeria, said the current administration has made very good strides in the area of Agriculture, Infrastructure Development and Others.

He however said the next President of Nigeria has a lot to do in addressing the issue of inflation, Security and a general improvement in creating a value add chain for the Agriculture sector which has consistently performed well during the life of the Buhari administration.

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He added that Power Sector despite the many strides that the Buhari administration made in the needs very close attention.

 

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“So I think the outgoing administration in many respects can be given some applause, especially when it comes to the infrastructure deficits and the control and the administration and the projection around those areas, looking at roads, looking at trains, linking regions of the country together, as should be the case that would stimulate trade and agriculture.

I think this administration has done quite well enough. Yes, there’s always room for improvement. But when you are an administration that has experienced two recessions, one due to COVID 19 and then the fallout from Covid- 19, it would be difficult for Nigerians to really be the objective because their bottom lines, their amount of income, the value of the money that they have has really been eroded.

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The business reforms as well. There is the business window that was opened by a government agency a couple of years ago that was meant to streamline and really make more effective the ease of doing business at that level. And even various states in the federation have been doing several things in terms of taxation, in terms of providing incentives to businesses.

And that has been shown in some studies done around the country. So, yes, it would be wrong to say that the government has done nothing, but it might be that the problems, the inflation, the exchange rate issues, the insecurity, the lack of adequate and regular power supply may actually dwarf those winds.

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So at the end of the day, are Nigerians really better off? You know, even if one even if one were to look at the issue of debt and the budget deficits, these things would actually cause more problems for the governments to come.

Yeah, thank you so much for that. I recall you and I had a discussion about this some months ago, and there have been hundreds of billions of naira disbursed to farmers. And we also have to look at this in the light of additional programs being implemented by development organizations. You have the African Development Bank and the work they are doing with smallholder women farmers. You have the irrigation programs and the incentives that are being given and administered by the World Bank.

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The irrigation programs that are helping to provide better irrigation systems in the northern part of the country in particular. So you look at these things in combination and you ask yourself, so what has the effect been of a truth? Looking at NBS data, we see that agriculture has consistently performed quite well, always maintaining an above 20% contribution to Nigeria’s gross domestic product.

And I think this is really interesting this year. I think that the second quarter of 2022, the agricultural sector contributed about 23%. I mean, it’s less than 2021. And of course, 2020 was probably the worst in the last five years because of the COVID-19. But I think agriculture has really been faring. Well, the issue of agriculture and an improvement in the share of its contribution to GDP really revolves around several factors, and a couple of them are well known to a lot of Nigerians.

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The first is insecurity. Nigeria is a country that has regions that have specialized in producing certain agricultural commodities. And when those regions are cut off from other parts of the country, you are cutting off supply. You are not only cutting off supply, but you are forcing these farmers to deal with goods that perish very quickly. And when you couple that with the inadequate storage facilities for agricultural innovators and farmers, you see that this problem becomes compounded. So insecurity, I think is one problem that this government, and I hope the next government, is able to really quell in its entirety. Another problem is really with the issue of inflation.

So you have smallholder farmers who are struggling to get by even with their contribution to GDP, having their produce, having their outputs, the value of that output constantly goes down. And this is a problem for them because it forestalls any incentive to reinvest.

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When you see yourself making less and less despite producing maybe even more or just as much as you produced in the previous quarter of a previous period, you are not really encouraged to continue going on.

I think another issue for me is the amount of value added to Nigeria’s agricultural produce. So we are very good at producing primary goods, but we still lack the infrastructure to move those primary goods to intermediate goods and perhaps even to finished goods that have an increased level of value add.

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Now, it is that value add that makes these goods more productive, that makes these goods more expensive to the benefit of the farmers and agriculturalists and increases the amount of economic activity as a result of the increase in that value add.

So as opposed to importing certain intermediate or finished goods, you have these things being produced and distributed in Nigeria. But again, these are problems that stem from our storage facilities, inadequate energy supply and of course, a bit of finance.

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But to summarize, and really to go back to the issue of the CBN’s interventions, yes, there has been billions of Naira and I think that is a good intervention in principle. However, there are arguments by scholars that there’s a problem when your ultimate monetary authority goes into the space of where your fiscal authorities or where your fiscal authority should be.

Indeed, because that means you have a monetary authority doing something that it’s not supposed to do. The central bank is meant to encourage price stability, encourage full employment and reduce inflation.

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By entering into the realm of providing interventions. It’s doing something that we are not particularly sure it is equipped to do moreso what is the data being gathered on these interventions and how well have they made the lives of these farmers and how well have they increased their outputs?

Yes, I mean the present administration, I think wise mentioned this in his budget speech of bringing around some funding or financing to improve transmission capacity. And you are right to point out that the government still controls that area of the power supply chain.

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And I mean, Nigerians are probably very aware of the amounts of transmission losses that are occasioned as a result of poor infrastructure, obsolete infrastructure. And that really spells losses for the DiscoS and for the gentles, because the Gencos are making losses through power that they have generated that has not been received. And the Disco’s will have to make up for that shortfall with less and less payments for electricity that has not been supplied.

I mean, looking at the power sector, there has to be the intervention of private capital. I know that the Siemens deal is one around transmission, but if it’s possible, the government needs to build this infrastructure.

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The funny thing about power generation is for many of the developed countries, the government was actually the prime player in terms of providing the infrastructure for the power sector. And then later on, you have private players come in to just slightly expand or maybe work on the networks within particular defined geographic locations.

But the skeleton of the power supply industry from the power generation to the transmission and sometimes even to the distribution lines, was provided by the government. So you need large amounts of capital.

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You need large amounts of capital to ensure that the areas where power has been low, where output is low, is improved, and the areas where power has been unstable is stabilized. The GENCOS and the DISCOS, I think, are the key players in looking at how to address this power supply gap.

And I think bringing in private capital because there have been challenges the government has shown in the way it has gone about, even divesting these companies to the private sector. And you hear cases of banks that are purchasing.

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Yeah, you hear cases of banks taking over these companies because the corporate governance structure has been unable to really efficiently and effectively discharge its obligations. But then again, these things, and I’m referring to the DISCOS, these things stem from a poor power output in the first place.

So you have DISCOS suffering from no product to really market. So how then can they really get consumers to pay? Again, at the level of the DISCOS, they also have distribution losses where you have customers that circumvent or bypass the proper legal way of getting electricity. And that’s all of that, GENCOS, is another kettle of Fish yeah.

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“That’s something that I think whoever becomes a CEO should look at of the country. Yes, I totally agree. I think poverty is really a multidimensional problem, as scholars have put it. And some would even say that it’s a problem of enhancing people’s capabilities.

So you have a country where your currency is not doing well. You have a country where insecurity is the order of the day. You have a country where people’s potentials cannot really be actualized because the little disposable income that they should use or they ought to use is being eroded by inflation.

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The productivity that should be the order of the day. That comes with proper management of an economic system. That comes with an understanding that fiscal and Monetary authorities have to work in tandem to ensure that the value of the narrator appreciates that inflation reduces, that there is finance and there’s capital for entrepreneurs to go into the market and make money, that there is adequate regulation and oversight by the government.

And the government speaks with one voice and the government is consistent and the government gives the signal to the markets that it is willing to be just an objective arbiter of that economic system. A lot of these things seem like textbook theoretical issues, but they really go a long way to determining the stability of an economy.

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I think it’s instructive to look at other nations and how many of them have been able to escape from poverty. It took deliberate government action over time. And an example can be found in adherence to Nigeria’s National Development Plan.

This administration will be leaving next year, but the plan itself is meant to extend to 2025. It is hoped, I mean, I’m one of the persons with hope that the incoming government will look at the gains or the positives of this plan and at least adhere to some of the issues or some of the agendas that have commenced. It is critical for an economy to be stable.

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That way investors would have more confidence and entrepreneurs would be more consistent themselves in the investments that they make. When they see that the economy is predictable, when they see that government intervention is predictable, when the international community sees that government actions can be predicted, then you will find more and more investment. You will find more and more input in terms of finance, in terms of economic activity, because it would be irrational for you to invest in a country where you are not sure whether or not a policy would come out tomorrow that would completely wipe out gains that you have made.

And all of this has to be encapsulated in Nigeria. That really works for everyone. I know that lawyers would point out that the contents of chapter Two, the Fundamental Objectives and Directive principles of Government Policy, are nonjusticiable.

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But maybe we need to begin to have conversations around making some aspects of that section of the Constitution justiciable and things that you can actually sue the government for, like education, like health, like infrastructure, adequate infrastructure, however we define it to be.

So, you know, for the person that will be the president, and especially for Nigerians, we really need to ensure that these gentlemen coming in give us sure, definite plans that they will hold themselves to.

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The problem with four year electoral cycles is that you can only measure things after the fact. It’s after the person gets in after a year or two that you have to look backwards and say, okay, so his policy was able to achieve XYZ and not ABC as he promised.

This is a fundamental bug, or I guess a feature, really, of our four year electoral democracy system. But by and large, I know that Nigerians are expectant, Nigerians are hopeful. And I know I speak for a lot of people when I say Nigerians really should go out to vote, as the problems will not go away. And we have to make very, very concerted efforts to ensure that we put the right person in that place.

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