All posts by Ifeanyi Uddin

About Ifeanyi Uddin

Mr. Udin heads the Business Intelligence Unit of First Bank of Nigeria Plc. He is a Member of Premium Times Editorial Board and a Columnist par excellence.

Making Sense of What We Say, By Ifeanyi Uddin

Ifeanyi Uddin

When plans to convene another talkfest around the seminal questions hemming in our quest for national cohesion were bruited about recently, my initial reaction was one of irritation. At the minimum, any such dialogue makes sense in response to a representation, accountability, or democracy deficit. Within this reading, a national conference was reasonable as part of our transition from rule by the United Kingdom’s Foreign Office, to political independence. It has also been valid each time we tried to recover from the political, social, and economic deceleration that military intervention in our national life has come to represent.

In a functioning democracy, however, the convention of a national conference is a fraught activity. Understandably, there are those questions, which the transition arrangement from our last rule by the military (in 1999) left unanswered. Again, precisely because no such transition arrangement could have found suitable solutions to what were (at the time) imponderables for an unelected government. That was (and remains) the point of our insistence on the democratic organisation of our collective space over the diktat that is military (and unelected) rule. Just about everywhere that the democratic project has worked, elected representatives have proven more able than arbitrarily appointed ones to negotiate the trade-offs without which a multi-ethnic, multi-cultural, multi-religious, multi-everything society would continue to favour centrifugal tendencies within it.

Moreover, we have had a decade-and-half to tackle these problems under “elected governments”. In this period, executive arms of government at the federal and sub-national levels have had to work with legislatures and the judiciary in the administration of our state. Indeed, at the federal level, such was our concern with full representation that the legislature is bicameral. A context that then indicates, any of several possibilities if still we think a national conference germane to the design of lasting solutions to our problems.

The first, and most damning one, is the possibility that the representative quotient of our current effort at democracy is too low to be of much use. Given the many references to flaws in the series of elections that brought the present crop of political office holders to power, it would not surprise if they truly were not “representatives of the people”. In which case, their capacity to negotiate on the people’s behalf was always going to be that much smaller.

Conversely, if I discount the democratic deficit, then the failure of existing structures to deal fruitfully with our myriad problems invites enquiry from another perspective. Either, the nature of our problems denies them easy solutions. Or, that a certain quality to how we have approached the problems renders them insoluble.

A national conference, to the extent that it identifies this democratic deficit as the problem, could then be advantageous. Properly organised (that is with participants coming off free and fair elections), representatives to the national conference could then haggle in our collective best interests: establishing desirable ends; the prices thereof; and funding structures thereto.

Arguably, if the problem is in our stars (which is the main case made by those who would split the country up) there is scant that a national conference, however convened, could achieve. If again, the bigger burden for our failures is a derivative of our approach play, there is only so much that a conference can repair.

Unfortunately, the dialogue around the convention of the current conference did not go this far. Once representatives to it were selected, it was dubious the extent to which, or if at all they could represent any interest but their selectors’. That was how I felt at the beginning. In the event, I have been tickled by the goings on at the conference. Too many somnambulists, true. Now, a growing number now wear sunshades in a lit hall. Nevertheless, to its credit, the conference has been bold enough to grab all our “third rails” — indigeneship and ethnicity, fiscal federalism, etc.

What it has done thereafter is the problem. And, nothing underpins the sense of despair that has arisen from the conference’s deliberations more than its decision on the creation of new states. A large number, yes. Still, that is but to niggle. More important in any consideration of the establishment of new states is the condition of existing ones.

This is not the place to interrogate whether or not more states drive development. It is enough to point out, instead, to subsidiarity as a more desirable principle. The point here is to organise the administration of our state in a way that ensures that the most important tasks are “handled by the smallest, lowest, or least centralised authority capable of addressing that matter effectively”. On the other hand, the danger with creating a state for every interest is that we end up with 170 million states.

Obviously, this number is a skit. And so are many of our current states: risible lampoons in the absence of the large fiscal transfers that the federal budget currently is. Doubtless, stabilising fiscal transfers, in the face of different regional economic performances are a non-negotiable requirement in a federation, so there is no real theoretical problem when the federal budget passes huge amounts of money to constituent regions.

However, when 90% of the constituent parts depend solely on these transfers, the order of difficulty is not just huge, but worrisome. It is worse, when an exhaustible resource is currently the only source of funding this humongous dependency.

Ought members of the national conference to have been alive to this fact? Methinks so. What to make of this breach of responsibility? I am not too sure about this. Still, blurred thought processes along a path this important does not offer much comfort on the success of the conference’s deliberations on the litany of worries it has put before itself.

Mr. Uddin, an economic historian and finance expert, writes a monday column, and is a member of the editorial board of Premium Times.

Of Attitude And Aptitude, By Ifeanyi Uddin

Ifeanyi Uddin

I have heard expressed a preference for “attitude” over “aptitude”; and I have come to realise that this preference is contingent on a variety of circumstances. Attitude, for instance would, conceived in the abstract, i.e. outside of any particular set of experiences, range from the extremely unaccommodating individual (a psychopath, for instance) to the one who bends over backwards to please (the country club manager, for example). And even within specific circumstances, what counts as desirable attitude would vary. A seminary where votaries have taken the oath of silence would obviously prize certain dispositions much differently than a nightclub would.

There is scant argument over basic definitions. Attitude is essentially a question of individual dispositions. How one feels or thinks about anything. Reaction to external stimuli, if you will. Aptitude, on the other hand, is slightly more involved. It is a capacity question – to learn and to do. Some dictionaries even go as far as to define it as “natural ability”.

If the choice ever came to either of these, I’d long persuaded myself that I would always plump for aptitude. But I have had senior colleagues argue that a mediocre staff with the “right attitude” is preferable to a highly competent one with the “wrong attitude”. I still struggle to come to terms with this phrasing of the matter. However, the argument is simply that whereas the former is “trainable”, the latter might be too set in his/her ways. A corollary to this is that “wrong attitudes” could be disruptive to the cohesion of work teams. So, out with the brilliant, but badly behaved team member; and in with the well behaved, but middling one.

My counter argument is simply that the “good” ought to cede ground to the “better”, and that it is just as inappropriate for the latter to hog space in the presence of a clear “best”. In our current environment, I believe this dynamic is ever more desirable. As a people, we have become inured to “second bests”. If we mean seriously to become a normal place I believe it is self-evident that we would need to overthrow our current obsession with mediocrity.

On the other hand, much of the changes that the world is a beneficiary to today are the results of folks challenging settled opinion. Living, and thinking, as it were, at the bleeding edge of all that is proper. Today, two things (one, a process, and the other, a development) are exacerbating the pace of change, and increasing the premium on aptitude: globalisation and the world wide web. Both these developments have speeded up the pace of change, the rate of dispersion of new thoughts and practices, and the rate of technological obsolescence.

Ought we then to abandon our preference for box dwellers, and begin investing, instead, in those people who live outside the box? A recent conversation altered my take on the basic premises of this conversation. My interlocutor then reminds me that even in those places where technology and its offspring have been husbanded relatively better than we have done, the consensus is in favour of “attitude”.

Only then did it strike me that this “tension” turns on a definition. No! It turns on the dominant ethos within which this conversation takes place. If an American argues in favour of “attitude” over “aptitude” for instance, he means something different from the Japanese, and both indicate an experience that the German might not fully share. Still, as the US becomes the global exemplar, we realise that other countries are beginning to approximate the attitudes that underpin Anglo-Saxon capitalism’s successes.

From this acknowledgement, it is but a short walk to the next question: what is the ethical context of our domestic preference for “attitude” over “aptitude”? Put differently, and what is basically the same question, what is our preferred attitude? Essentially, it is this: an unquestioning deference of the young to the old. And within the work place, of the junior to the senior staff. Indeed the felicity with which our traditional gerontocracy inverts in the work place is instructive. More “soviet” than “democratic”, the attitudes that matter to us, the ones before whose altar we sacrifice our most gifted compatriots are unlikely to bear us far, nor in the right direction!

Mr. Uddin, a monetary theorist, and economic historian, writes a weekly Monday column for Premium Times. He is also a member of the editorial board this paper.

The CBN’s New Challenges, By Ifeanyi Uddin

Ifeanyi Uddin

This month the Central Bank of Nigeria’s (CBN) rate-setting committee (the Monetary Policy Committee — MPC) meets for the first time under its new governor. He, incidentally, did feel a need earlier to put his “manifesto” out. Much commentary attended his presentation; and the consensus was that he had managed to drop so many balls all at once. By how much did he miss the plot, though? Was he justified, for example, in his effort to pre-determine the monetary policy reaction function ahead of this month’s meeting? How did he plan to push policy through, fully aware that the committee votes on policy options on the economy, and that, ideally, even as governor, he has only one such vote?

Within the context of ongoing conversations around what central banks should be doing in the aftermath of the last global financial and economic crisis, some of the commentary on the new governor’s “maiden address” was unkind to him. Not just does the CBN have to work through the unprecedented policy responses prompted by the global financial crisis, one of the more real lessons of the crisis is that financial stability is as important for an economy’s health as is price stability. What ought the post-Sanusi CBN to do under this markedly changed circumstance? And what tools ought it to resort to?

To be fair to his critics, the new CBN governor did not dimension his tasks this lucidly. For the most part, he came across like a low-level treasury apparatchik. Still, he did allude to the need to define new objectives for the bank, in the light of the much-changed circumstance in which it has had to operate of late. In this, despite the initial antipathy to him, he is supported by new post-crisis research on monetary policy.

One of such papers, “Monetary Policy in the New Normal”, an IMF Staff Discussion Note released about two months ago, agrees that, going forward, although necessary, long-term price stability might not be a sufficient condition for overall macroeconomic stability. According to the paper, “… additional intermediate objectives (such as financial and external stability) may play a greater role than in the past. When possible, these should be targeted with new or rethought instruments (macroprudential tools, capital flow management, foreign exchange intervention). But should these prove insufficient, interest-rate policy might have to play a role.”

Much of the paper goes on to re-examine monetary policy from first principles, in the light of the diverse stimuli and responses thereto that have been unique to the last decade. The paper leaves as much unanswered, including how the new worry over financial stability may be properly married to monetary policy. The flattening of the Phillips curve during the recession (as inflation refused to respond to changes in employment count) especially in developed economies, and the significance of this is one other unknown. This effect is important in our case, because of our new central bank governor’s plan to include unemployment numbers in the design of monetary policy responses.

The IMF’s researchers proffer a slew of possible explanations for the weakening of the relationship between inflation and unemployment, including the failure of existing models to capture fully “the cyclical component of unemployment increases during the global financial crisis”, globalisation’s sanguine effects on inflation, and strengthened central banks’ inflation-busting credentials.

Still, none of these appears to support the CBN’s plan to bring unemployment numbers on board its models for monetary policymaking. This also ignores the technical hurdle, in our case, to doing so. Instead, the case is made for more “flexible inflation targeting”. Thankfully, the CBN, especially under its former governor never neared the point where it was able to implement strict inflation targeting, so technically the transition to a more flexible approach to achieving price stability ought to be easier.

And, what about central bank independence? This matters because the appointing authorities for the office of CBN governor may be loth to strengthen in the light of their run in with the last but one governor. Whereas a weaker CBN governor might please the treasury, the IMF’s research concludes that “Independence is clearly still desirable with regard to price stability”. If however the CBN’s mandate broadens, especially because financial stability is now included in its remit, but also because the new CBN governor describes quasi-fiscal interventions as critical to his vision of the CBN’s trajectory, then the Fund’s researchers think that “independence” “may prove politically difficult”.

It describes as “critical” under these circumstances protection of the “independence of the role of central banks in protecting price stability, while allowing adequate government oversight over their new responsibilities for financial stability”.

Mr. Uddin, an economic historian and finance expert, writes a monday column, and is a member of the editorial board of Premium Times.

Why Must We Always Under-perform? By Ifeanyi Uddin

Ifeanyi Uddin

Anyone who has ever played a game online from a Nigerian IP address would understand the severe limitations of our domestic internet connections. At the same time, having worked out of places where internet connections are way faster than here, one wonders what the “4G LTE” acronyms regularly deployed by our internet service providers really mean.

I do not speak here of the top of the range platforms favoured by banks and the oil companies, but of the options available at the retail, household end of the market. Although the latter work well for social media activities and emails, I am an avid gamer, and have found few things as frustrating as losing an online football game to an epileptic internet connection.

This vexation persisted until a couple of months back, when I realised that the greater part of my online losses owed to a different dynamic entirely. It was always bewildering, playing one’s heart out, twiddling those thumbs until they got real sore, and then losing by an improbable margin. The magnitude of these losses completely ruled out “competence” as a causal factor. Conversely, I had long removed the relative age of my competition from the explanation. While not as old as I am, the average gamers’ age has trended up globally in the last decade.

These “unknown unknowns” remained imponderable, until I played against an opponent whose internet connection was clearly much slower than mine was. It was helpful to see his/her players literally standing still, while all I had to do was take the ball off their feet and score. Of course, the end scores were an improbable number — in the high double digits. My pre-teen son was persuaded that I had cheated — doubtless, I took full advantage of an “unfair advantage”.

Much later, however, a friend put this experience in proper perspective.

Our poor internet connections speak eloquently to the general domestic infrastructure challenges. As in the game, these handicaps then force domestic economic actors to put in more effort than would their peers elsewhere, just to stay in the same place. Like most Nigerians, I had recognised this fact long ago. But beneath this observation lay a deeper metaphor. For by not attending to our derelict infrastructure, like my online opponent (poorly served by his internet access) we literally stand on one spot, while competitor economies steal our lunch.

The bigger shame in all of this is the illusion that accompanies the hardware and software constraints. For the poor internet connection (as with our failed infrastructure) does not advertise itself as such. At the wrong end of such connections you have no reason to doubt that you are in play. On the other side, though, you look like caught in a time warp. Frozen, opponents run rings round you, and yet the illusion of activity denies one the opportunity to re-think engagement from first principles; and criticisms of one’s competence are met with unusually robust denials, which at the sovereign level show up in charges of a lack of patriotism on the part of domestic critics.

Befitting our national obsession with the “beautiful game”, another footballing experience recently raised a much deeper question. The on-going FIFA World Cup has seen the African contingent put in dismal performances. After so many years of over-promising and under-delivering, I doubt that anyone can seriously claim to know any more, what is par for the African course. Is the continent rising? How fast? In what directions? Driven by? Is this phenomenon, if true, structural (the result of domestic structural reforms with long-term significance), or cyclical (all the result of positive external conditions, including favourable terms of trade, and low long-term interest rates in the United States of America)?

Since flag independence around the late fifties and early sixties, performances across the continent have been two episodic to lend themselves to serious analyses. This in turn, makes it difficult to gauge whether the African performance at the 2014 World Cup has been sub-par or just okay for the course.

It is enough that in most cases our contingent have played like strangers. But in this detail lurks the entire devilry. Given the state of sport infrastructure on the continent, it would have been perverse to have our teams play any better than they have. Few stadiums in the country today are worth that name. In those cases where we have facilities that pass muster, both the necessary people-ware and software are just not there. No coaches. No physiotherapists. No dieticians. No sport doctors. Nothing. Indeed, in those cases where a handful of personnel pretend to these competences, parents/guardians do not trust the system enough any longer to entrust their children and wards to it. Private provision is prohibitively expensive; and with so many basic needs unmet, it is doubtful if resources hurled in this direction and at this point might not be both a mis-allocation and improperly sequenced.

Across the continent, bar South Africa and the Maghreb (plus Egypt), this is the general state of affairs. The South Africans did not make it to the World Cup. And the North Africans have had too much trouble on the political front, not to suffer scars elsewhere. Take these circumstances in, and all the excuses are accounted for — indeed a few scalawags would insist that even South Africa with its impressive resource endowment would not have bucked the trend. So why is the continent still playing poorly?

Now, the answer to this question matters. For in just about every case, the African contingent at the World Cup comprises players who ply their trade abroad — in Europe for the most part. Not just are they therefore playing against their team mates in the other national squads, in their respective club roles “our” footballers (some of whom have never been “home” and can barely recite “their” respective national anthems) play fairly decent football. In a sizeable number of cases, their overall performance levels mean that they are important first team presences.

Put them together under an African flag, though, and the equation changes. Uncompromising defenders turn battle rams, picking up red cards like these are going out of fashion. Fearsome strikers stroll through the ball park as they would the parks around their club sides. And coaches respond to tactical, technical, and procedural issues after an abecedarian style.

All of which leave but one question: What is it about the noun Africa, and its associated registers that predispose us to under-perform?

Mr. Uddin, a monetary theorist, and economic historian, is a member of  the editorial board of Premium Times.

A New Low, By Uddin Ifeanyi

Ifeanyi Uddin

Over the last four years, I have been worried by how the incumbent administration has managed the economy. Despite the roseate headline numbers, there are reasons to still fear that the structural underpinnings of the economy may be much softer than they appear. Worse. No one knows how the economy would respond to the beating from election-related spending as we near St. Valentine’s Day, 2015.

But before all of that, there are the difficulties with the oil and gas sector. We have increasingly earned less from oil exports even as global oil prices have remained in the US$100 per barrel range for a while now. Over a much longer time horizon, we ought to worry that US demand for Nigerian crude has fallen over the last 3 years,c as that country exploits more of its local resources – and that this demand may have further to fall, until, at least, the unconventional deposits that are behind the US’ increased domestic oil production start to taper (by 2035, according to one estimate).

Parallel with the search for new demand outlets for our oil output, there is a strong case for reforming the domestic industry in a manner that supports new production sources. Still, the Jonathan government has allowed the petroleum industry bill (a document flawed in many respects, but more so in its proposed governance arrangements) to fester in the legislature forever. Instead it has opted to advertise the consequent divestiture by international oil companies from the upstream oil and gas sector as victory for its local content policy.

The vicissitudes of the oil industry point us at further problems. The accounting there is self-evidently poor. It did not need the theatrics surrounding the expose by the former governor of the central bank to hint at the nature of the problem. Despite reforms to the public expenditure management framework, we find that government is still not able to execute fully those projects captured in its capital budget, while simply consuming the greater part of annual appropriation bills. Does it matter for the efficiency of our public administration that this capital budget is such a small portion of the annual appropriation acts?

Troubling though these structural vulnerabilities are, I have a new worry. The Jonathan administration may have dumbed down domestic debate. Yet, without vibrant discussion around major national questions, we will never agree on an outlook for the country. We will never be able to take advantage of windows of opportunity that may open as we go forward. Or design and put in place mitigants to threats that we envisage may crop up.

In part, this is an inevitable upshot of the administration’s peevishness. Looking in on the administration’s gut response to most issues, I am reminded of a quote that was the lodestar of my adolescence. Having learnt, growing up that Eleanor Roosevelt once said that “Great minds discuss ideas; average minds discuss events; small minds discuss people”, I plighted my troth as a teen to an acquaintance with, and an attempt at understanding the dominant ideas that have held mankind spellbound.

I may not have become a great mind in the process, but, of late, I have seen the national nous atrophy on the back of the Jonathan administration’s instinctive immersion of the president’s persona into every debate that has arisen since the administration came into office. We hear for instance that the administration’s initially lethargic response to the Chibok debacle owed much to the presidency’s persuasion that it was all a hoax designed by Dr. Jonathan’s “opponents” to trip him up.

From the furore over shenanigans in the aviation ministry, through to the former CBN governor shouting wolf over goings on in the petroleum ministry, this administration could see only threats to the president’s person. Not once did his minders see an invitation to reform practice(s) in ways that strengthened the country on the path to its eventual normalisation.
Thankfully, an emphatic vote against the incumbent administration ought to go some distance in redressing this new national vulnerability. The same cannot be said, unfortunately, of a parallel development in the polity. Over the same period that the administration personalised what used to pass for a national conversation, the quality of the national voice wants a decent standpoint. Scroll through the comments/responses at the end of most Nigerian-based online publications, and you get the sense that dearth of ideas and critical thought is a new national pandemic.

Thus, I long since stopped reading beyond the main stories and opinion pieces online. Then, last week, I read on my Facebook timeline a post by a “friend” of mine who is an avid “Jonathanian”. Don’t worry, for like “Amechists”, these nouns have no meaning beyond the acceptance by those who bear them of their close identification with the persons whose names these nouns extend. They represent no ideologies, no doctrines. Nothing worth remembering. And do much more worth forgetting.

This digression aside, this “friend” offered to respect “their emir” (the new one in Kano, I presumed), if “they” respect “his president”. I still think this odd. Not solely because “respect is earned” not through such transactions, but through respectable conduct. I thought it strange that this administration may have successfully inveigled us into mixing persons, events, and ideas, in ways that prevent us from telling good events, people, and ideas from bad ones.

Suddenly, “good” and “bad” have been relativised to the point that all that matters now, is that the person in question is “one of us”. Most of us laughed when first we heard the plea “Omo wa ni, e je ose”.

But, today, I suppose the joke is on us all?

“How To Be A Nigerian,” By Ifeanyi Uddin

Ifeanyi Uddin

Thirty seven years ago, I read Peter Enahoro’s book, “How To Be A Nigerian”, for the first time. It was a most worrying read for a pre-teen; and leafing through its 88 pages, I was never too certain whether to laugh aloud or cry quietly. I didn’t read the book again.

Wednesday, last week, I was at a bookshop, where a re-print of this book was the first thing that caught my eye. I was uncertain how to react. I’d thoroughly enjoyed reading it, and it had helped shape my sense of what remains a fitting response to the Nigerian challenge. Yet, I could not but recall that most of the cultural artifacts that I had partaken of growing up appear to have lost their resonance with the “modern mind”. At least in films, I find that my kids do not experience in those films I watched growing up, when I finally force them to sit through these, the frisson of excitement that memory still associates with first watching these.

I was then sure that it did not make sense to buy more than one copy of Peter Enahoro’s book. Good, if I was lucky to relive the experience three decades ago. Of course then I could buy more copies of the book later, gift these to friends and acquaintances in the hope that they would find it as rewarding as I once did. Better still, if it turned out a damp squib: for then I would have bought only one copy, and my loss would be a very private one. However, by evening that Wednesday, I was sure I had value for my money. First to read the book, was a young female colleague at work, who was as impressed by it as I was so many years back.

The problem for me has always been how to read the book. In it, Peter Enahoro is strongly persuaded that “in spite of the diversity of the country, a personality that was distinctly ‘Nigerian’ had emerged” a few years after the country obtained flag independence. If there was (or is) any truth to this, then much of the navel-gazing that has engaged the national imagination over the years is a waste of effort. All we have (or had) to do is (was) realise the full dimensions of this emergent “personality” and run with it.

But in truth, the canvass and broad brushstrokes of the Nigerian personality depicted in the book affronted my sensibilities back then. From our social ethos, through our etiquette, to our sense of humour, Enahoro’s Nigerian was nought but a lampoon.

Re-reading the book, I could not but marvel at how these traits have held up after so many years. Indeed, at the transmogrification of some of them. Take the “dash”, for instance. “Even when a Nigerian negotiates or demands a gift which is sure to influence his judgement, he does not accept the interpretation that this is a ‘bribe’. It is for him not corruption, but merely a fee or the price for doing you a favour.” Thus, Peter Enahoro on the “dash”!

How, may I ask, has the inability to tell the one from the other changed over the years? Not by much, if you ask me. We still have a lot to do telling “simple stealing” from “corruption”.

On the other hand, what in 1966, Peter Enahoro described under the rubric “Patience Aforethought” has become “African time”. I often cavil at family, friends, and colleagues who act like it is unfashionable to be on time. Well, it would seem that I am a couple of decades behind time. For, according to Enahoro, “The mistaken impression is abroad that the Nigerian is unambitious and that his cool reserve for Time is evidence of laziness. Wrong. It is simply a matter of letting Time race with time — with the Nigerian as an unperturbed bystander. As the Nigerian often says, ‘The clock did not invent man’. Give this thought. It is deeply philosophical.”

So what to do? Accept that this is the way we are. In which case we also agree that it is essentially “Nigerian” to drive in the wrong direction on roads designated “one-way”; to drive against traffic; and to use the left lane on a multi-lane highway as the one for slow moving cars, and the right lane for speedier ones; etc.

After all, what are these, but conventions that were bequeathed us by our colonial masters? And we have evidence that they were not an overly kindly lot. Why should their parting bestowals to us be kind, then? Why not re-write these gifts from first principles? Okay, why not re-invent the wheel along the way, too? Obviously, because the wheel does serve its purpose very well, and the effort and resources thus expended “reinventing” it are worthier of a better cause.

Sadly, this isn’t the only objection to the fact that 48 years after the book was written we have remained faithful to the character type it depicts. Of more weight is that these proclivities are worse than a burlesque. In the absence of strong remedial action, they are the millstone that would eventually drown our people.

Take the quaint notion of “African time”. Writing on the need to modernise the continent, Olufemi Táíwò (“Africa Must Be Modern) had suggested a link between our disdain for numbers, and our lackadaisical approach to punctuality. If indeed, “we experience numbers as a negative presence or value”, then our never being on time is a pathological state, rather than the expression of our successful conquest of “time”!

The sophistry that has attended the current government’s attempt to brush off charges that it may be one of the most corrupt administrations we have ever had ranks equally with this failing on time. The strong ethical and governance relationships without which few nations have made it beyond the pedestrian are clearly beyond us, if our leaders’ philosophies are a useful pointer.

What is to be done?

Mr. Uddin, an economic historian and finance expert, is a member of the editorial board of Premium Times and he writes from Lagos.

Backstopping The Naira, By Ifeanyi Uddin

Ifeanyi Uddin

About a year ago (May 22, 2013) Ben Bernanke, then Chair of the US Federal Reserve System, spooked the markets. In his address to the US Congress’ Joint Economic Committee, he indicated that depending on emerging data, the US’ central bank could commence unwinding (over the next two Federal Open Market Committee – FOMC – meetings) the unconventional monetary policies it had put in place to keep the economy ticking through the Great Recession. Almost immediately after this testimony, we had a fair idea of what it means to integrate our economy into the global market place.

Policy makers in advanced economies had responded to the last recession by lowering policy rates, and aggressively purchasing of bonds (especially in the US), as part of arrangements to support recovery in domestic demand. On the other hand, idiosyncratic conditions in most emerging and developing economies meant that available policy options had to be relatively less accommodative. In our case, increasingly loose public expenditure management practices, which fed into liquidity in the banking system, and from there threatened domestic consumer prices, especially the exchange rate, was the elephant in the room.

In response, the Central Bank of Nigeria (CBN) continued to tighten policy, including maintaining the policy rate at 12% over the last year-and-a-half, despite inflation remaining “comfortably” within the single digit range. With real returns that much higher in emerging and developing economies than in their advanced country counterparts, portfolio investors beat a path through the bureaucratic and regulatory thicket to invest in Nigerian bonds, treasury bills, and equities. The naira’s exchange rate was the main beneficiary from so much “hot” dollars chasing after naira assets.

All of this changed as soon as the markets interpreted Bernanke’s testimony as indicative of tightening in the US. The yield on 10-year treasuries in the US moved up, and investors packed their overnight briefcases and started to flee places like here. The CBN had to resort to unconventional monetary policies of its own (destroying banks’ public sector businesses in the process) to cushion the negative consequences of this outflow.

Fortunately, the US Fed managed the tapering of the quantitative easing programme without putting up the policy rate. In addition, it let the markets know that there is to be no tightening of monetary conditions until clear signs of heating began to show up on the back of the current economic recovery. The spread on US treasuries narrowed. And fixed income securities in emerging and developed economies have become fashionable once more.

Arguably, domestic monetary policymaking has not been helped by any of this. True, the demand pressure on the naira has eased considerably. However, the ease with which the portfolio investors exited after May 22 last year does call for a medium- to long-term response to the vulnerability of the economy to this new risk source. This has not happened over the last 12 months; and only recently has conversation around the appropriate mechanism for this been initiated.

This need for an arrangement to backstop the naira in the event of a sudden spike in domestic demand, as portfolio investors seek to convert their investments on their way out, is especially so, when it would seem that headwinds are building up as we move towards the general elections next year. In the near-term, the CBN’s best shot is to put together a stopgap plan that ensures that whatever the eventual stimuli is to portfolio funds outflow, it can match investors’ request for dollars whenever this is made.

It is not enough in this case, I am told, to point to robust external reserves; recall that these reserves were in place when the previous near-crisis occurred. It would appear, instead, that it is necessary, first for the apex bank to estimate the value at risk from portfolio investors’ activity in the economy. In essence, how much these category of economic actors have sunk into the fixed income securities and equity markets; and consequently how much dollars they would asking for when they need to leave. Currently this is estimated at between US$12bn and US$20bn. This, putatively, is the amount that would flee the economy if there were a shock that investors found disagreeable.

It is unimportant what this shock could possibly be. What matters is that having estimated how much would be needed to accommodate fleeing investors, the apex bank then sets this sum apart. It might be necessary as part of the process of reassuring the markets to add a firm third party guarantee to this, by for instance locking this sum up in an escrow account with any of the big global financial players.

Having set this money aside, governance arrangements are no less important. Our history means that we often conflate “governance” with the need to ensure process transparency. Important though the latter is, the other need here is to define the bureaucracy around this contingency fund in a way that allows flexible access to and use of it. It would be counter-productive to have so many layers of authorisation if the immediate need is to assure portfolio investors of its availability as and when required.

This way, we get to ensure that the next shock to the economy will not be as disruptive of money market operations as the last one was. Still, it is but a near-term palliative. It cannot substitute for the structural reforms that are needed if domestic macroeconomic policies are to benefit more of our people.

Mr Uddin, an economic historian and finance expert, is a member of the editorial board of  PREMIUM TIMES

Monetary Policy, Looking Ahead, By Ifeanyi Uddin

Ifeanyi Uddin

“Calm before a raging storm”! This was how a participant at a discussion, last week, described the state of the economy. I am privileged, every week before the Central Bank of Nigeria’s (CBN) rate-setting committee’s meeting, to sit at a table where bank treasurers and their economist friends dwell on the fortunes of the economy. One such session held, Friday, last week, to dimension today’s meeting of the CBN’s Monetary Policy Committee (MPC).

Last week’s session agreed that ahead of the MPC meeting, the main numbers on the economy are good. Headline inflation moved up a tick in April (from the May count), as food prices headed north. Not much surprise here, in the light of the continuing insurgency in key farm areas in the north of the country. Core inflation numbers, on the other hand, moved sharply in the wrong direction. Nonetheless, all these numbers remain well within the now-important single digit band. Listening to the bankers at the meet, industry liquidity did not come across as a near-term risk. Although liquidity remains “robust” (that is how one of them put it), much of it is the result of improved portfolio inflows. So the potential for adversely affecting money market rates is muted.

Conversely, we have seen marginal improvements in our external reserve numbers. Not too long ago, I was asked to explain the obsession with relatively large reserve numbers. Ought not the concern to be with establishing reserve balances consistent with a “decent” import cover? Or better still, one that is able to support the economy’s balance of payments needs over the medium- to long-term? The meeting last week did not advert it’s attention to any of these questions. Consensus, though, was that reserve numbers had benefitted from a 6 – 7% jump in the nation’s crude oil production.

“Are we, then, in a good place?”, one of the participants in the dialogue asked. The statement by the CBN governor-designate (he resumes in June) that he would do all in his power to hold-off speculative punts on the naira was interpreted as having helped calm the markets. Apparently, the slowing down of headwinds generated by concerns over the effects from the easing of unconventional monetary policies in developed markets also had a sanguine effect on the economy.As a result, we have seen reversals of the outflows which commenced mid-last year, and carried into the first quarter of this year.

With the Nigerian carry trade (the practice of selling currencies in economies with relatively low interest rates and using the proceeds to purchase currencies in economies with higher yields in the hope of capturing the rate difference) one of the most profitable around (although much of it is still at the short end of the market) portfolio investors have dribbled back in. On the back of these, domestic demand for foreign exchange has eased considerably in the last couple of months. Indeed, about two weeks ago, foreign exchange rates at the interbank market almost converged with rates at the official auction.

On this reading, the consensus at last week’s meeting was that monetary policy has not been particularly responsible for holding the course. A collocation of fortuitous circumstances has conspired to create favourable monetary conditions in spite of the CBN’s best efforts. So, is there anything that the apex bank can do to improve domestic monetary conditions?

It was agreed that the next big “trigger” for the markets will be the party primaries ahead of next year’s general elections. Depending on the outcome of these primaries, investors could once again make an uncontrolled dash for the exit (doors and windows). “Outcome” was defined to include not just the character of the eventual candidates, but the nature of the processes by which they emerge. The more democratic and transparent these processes are, the better. And vice versa – any form of “violence”, though will be a primary worry.

What instruments are available for the CBN (through today’s meeting of the MPC) to address this concern? And how big is the room available for deploying these instruments? How high, for example, can domestic interest rates still go? The CBN’s balance sheet haemorrhaged red ink last year following the huge sums it spent intervening in the open market. Can it proceed down this route later this year?

Agreement was that the CBN will need to build a sizeable war-chest ahead of these potential head winds. One big enough to easily accommodate fleeing portfolio investors. Given that the markets might allow the incoming CBN governor a two months honeymoon, the meeting I was at last week agreed that there is enough time for the CBN to put in its response ahead of the markets. Still, since the CBN’s default contingency plan is to sell money anyway, in designing its war-chest, “how” it sells this money, in the months ahead (in response to diverse pressure points) will matter more than the size of its interventions!

Why The President Matters, By Ifeanyi Uddin

Ifeanyi Uddin

One of the wackier arguments with which boosters of the Goodluck Jonathan administration have met the charge that his government has been unusually feckless in its response to the recent abductions of schoolgirls in Chibok is that the whole affair is a prank. The “why?” of what would then qualify as the most pathetic swindle ever played out on the Nigerian people makes sense only within the dynamics of our domestic politics. On this understanding, opponents of the government have apparently contrived the disappearances in order to buttress their “clueless” narrative on the trajectory of this administration.

However, even if one were to concede this bizarre possibility, i.e. if it was possible to ignore the spectacle of grieving parents/guardians running from pillar to post trying to recover their missing children/wards, or to stop one’s ear to the horrific accounts of those children lucky enough to have escaped their abductors, the government’s responses to an existential challenge have again been sub-par. How best to have exposed fraud on a scale as large this, than on the day after the alleged abductions, to have come out with a list of students registered with the Government Girls Secondary School, Chibok, and an accounting for each child having returned home? And to have exposed the “victim-parents” as crooked actors, their grieving as “crocodile”, and the tales of a handful of girls stealing away from the clutches of “phantom” kidnappers as idiotic”?

The Jonathan Government did not do this. Instead, it dawdled. It squatted on its haunches in the sand in which its ostriches hid their heads. Now and again, stretching its limbs. It yawned, even. Thereafter, like Emperor Nero, it twiddled its thumbs. Anything but literally, “take the bull by the horns”. It let social media activists gain and drive traction on the matter. It let the #BringBackOurGirls hashtag trend globally. And as diverse interests got on to this new bandwagon, it let the bandwagon trundle all over its space.

Then three weeks into this chapter of accidents, the president found his voice. By admitting the fact of the abduction (in his set piece media chat), he drove a stake through the heart of the conspiracy theorists’ wild imaginings. Then the home circus came calling, gaudier than lachrymal! All of which reinforced the fear that congenitally, this government might not be capable of decisive action. Did it help that even after no less a person than the president had acknowledge the full extent of the problem, we had to wait upon a committee to investigate the immediate and remote sequence of activities leading up to, passing through, and succeeding the abductions? Not really! Except to dispel residual doubts as to the government’s tortoise-like DNA.

Unsurprisingly, just about every new commentary on the government has been negative. From the “New York Times”, through “The Economist”, and back, the flow of adjectives have ranged from “callous” through “inept” to “corrupt”. I guess it is the close parallels between these words and the ones with which the local opposition has assailed the government for the last 6 years that may have convinced the federal government and its minions that most of the foreign commentary in the wake of the president’s most recent media chat was “ghost written” by the domestic opposition.

Still, there was a window of opportunity, brief, true, but open nonetheless, for Dr. Goodluck Jonathan to have acted as president of this country. To have led from the front, in other words. In order to have successfully exploited this window, as soon as the kidnappings took place, he ought to have had his security apparatus establish the circumstances of that faithful night (no need for the new committee?).

This would include ascertaining the number of kids on the school register. How many are back home? How many ought to have been in school that evening, and how many remain unaccounted for (some may have just played hooky)? Then the number of assailants. The mode of assault, especially transportation (this matters because you can then estimate how far each such vehicle can travel before refueling), and the armaments used (there must have been bullet casings left behind).

The president ought thereafter (not later than two days after the event) to have addressed the nation armed with these statistics and pledging to do all that is humanly possible to extract as many of the abductees as possible while inflicting as telling a blow on their kidnappers as possible. That window unfortunately was not going to remain open forever.

Now we are looking through a looking glass that has the all-knowing Americans pulling this chestnut out of the fire for us. But I wonder how many feet the Americans and our new coterie of non-African helpers mean to put on the ground. For each foot holds out the possibility of being returned home to the US as a body bag. Is the current domestic political environment in the US kind to Americans dying in Nigeria? Which is the bigger threat to world security? A government unable to bake its own cakes? Or a domestic terror movement that wants to gobble up the kiln? Or are these but flip sides of a failing state?

Before It All Unravels, By Ifeanyi Uddin

Ifeanyi Uddin

Can one mourn too much? Are there circumstances in one’s life that one ought not to give up on? Are there bounds to the weight a camel can carry? Must that last straw, the one that compromises the camel’s back, be the heaviest? These are, indeed, very difficult times. An explosion of questions; but very few answers. What about those ordinarily responsible for securing our lives and property? How have they responded? Invariably, they are either too quiet, giving to the odd misstatement, or prone to the telling understatement!

At times like these, it is very easy to go over the top. To overreact, as it were. So it helps to separate the truth from how each one of us is minded to respond to the verities.

Fact is that we confront a most unusual situation in the country today. Perhaps not since the events leading up to the civil war in 1967, and the three years after, have Nigerians feared so much for the safety of their lives and property. Nor been this apprehensive over the short- to medium-term outlook for the country.

Invariably, we indicate Boko Haram and its brand of terrorism as the main cause of this sentiment. Now, within the broad church that this is, we nearly never make the distinction between bombings designed to frighten the citizenry, and acts of brigandage in likely support of terrorist cells. And, truth to tell, why split hairs? Any which way, the man on the street suffers the most! The latter category, acts of brigandage that fuel the new insurgency, include the rising spate of bank robberies, and the recent abduction of more than 200 school girls in Chibok. Yet, these distinctions matter. For it is through the analyses of these details that the identification of modus operandi, which helps separate terrorist-linked acts from copycat events, can take place.

Does it matter, therefore, that our criminal justice system may not be architectured to address these new risks properly? I never cease to wonder, as I approach major hotels in Lagos what the delays at the gates are all about. Running that upturned mirror by each vehicle’s undercarriage, how does that pass as a test? Why cannot the explosive device be concealed under the vehicle’s hood, in its boot, or in the cabin, for that matter? And what do they look like, these devices? Would the security checks recognise one were they to encounter it.

Take Semtex, for example, popular with terrorist organisations in the early 80s: colourless, tasteless, odourless, and extreme malleable, it was nearly undetectable — until international agreements governing its continued production decided on putting markers in it. Can our security establishment identify these markers? There may be a political environment to Boko Haram’s reign of terror, but without the right forensic competence, we combat the sect’s operations in vain!

Sadly, Boko Haram’s barbarities do not fully describe the universe of threats that we confront today. Another war, maybe not as bloody, but no less harmful to all this nation represents is being lost in the Niger Delta. Oil theft we understand eats injuriously into government revenue. On current form, the brigandage in the Niger Delta threatens future governments’ ability to meet the public sector’s wage bill (70% of our budgets, remember, go to paying salaries) and to maintain physical and social infrastructure. Along with the federal government’s failure to successfully reform policy in the oil and gas sector, current conditions there have dissuaded the new investments needed to drive capacity growth. As the independent oil companies sell marginal oil fields to local companies in response to the uncertainties in the sector, the official spin on the matter is to describe the transition as the triumph of the federal government’s local content policy.

For obvious reasons, the administration at the centre is in a funk. In its favour, it has been argued that we may be seeing the result of concerted efforts by disparate groups bent on making the country ungovernable as part of a process that ensures that the incumbent president is not elected next year. While this may be true, it is scant comfort. For the success of any group committed to the disabling of the infrastructure of governance directly impeaches the apparatus of governance itself.

In other words, these non-state actors have succeeded only to the extent that the state has ceded ground to them. Indeed, in its many utterances, the state, our government, has sought a new accommodation with disruptive non-state actors. While other jurisdictions have stressed the risk of negotiating (placating) terror groups, our government has invited us to accept our home-grown movement as our own contribution to a new global vogue. “Come to terms with these explosions, for the Pakistanis, Afghans, Iraqis, Egyptians also have them”, we have been told.

The auguries are far from healthy! For even if we were to vote our fears next year, and replace the incumbent administration with another one, all we would have done would be indicating our displeasure with how improperly the Jonathan administration has husbanded national resources. We can have no guarantee today, that come 2015, a new government will better address these new risks to the nation. It will take time and cost a prince’s ransom to reinstate good governance in this country.

Nigeria – What Manner of Leaders, By Uddin Ifeanyi


There is no question but that the quality of our national leadership has deteriorated of late. The consequences of these are particularly telling at the economic level. Despite the roseate statistics favoured by the incumbent administration and its supporters, even they do not deny that the incidence of poverty (however we choose to measure it) is both onerous and growing.

The misery index may have improved (at the margins) lately as the Central Bank of Nigeria (CBN) successfully throttled the life out of inflation over the last year-and-a-half.But this has been at considerable expense: the cost of money has risen so much that bank loans in what the industry refers to as “the retail segment of the market” currently stands at about 24% per annum. Access to credit, a serious problem before, is thus compounded further. Higher borrowing costs also mean that we cannot grow the new businesses (especially at the micro- and small-and-medium-size levels) that put a dent on unemployment numbers. Is this the point about economic growth being a necessary (but not sufficient) condition for development?

However this question is answered, government’s failures stare one in the face across other departments of the economy. Security? An executive presidency (in an American-style government) regularly appears not to know where to place responsibility for lapses here. By all means, blame the opposition for everything (so long as these are not illegal, we ought to remember that opportunism aside, the point of an opposition is to make life as difficult for the incumbent administration as is possible), but we cannot forget what the pre-election campaign promises meant: a commitment to resolve as many of the problems facing the country as possible.

So, there is no question about who is responsible (and for what), or for that matter, what to do when a department of state fails in its responsibilities: to protect citizens’ lives as in the botched Nigeria Immigration Service’s graduate entry examinations; or the abduction of 173 (maybe even 200, who knows) school girls at Chibok.

This failure, though (of competence and a lack of accountability in public office), did not start in 2011. It has worsened, no doubt. But it has always been with us. Or how can you explain the construction of gas-fired power stations without access to the gas grid? O. A. Lawal’s “Economics”, which was the entry fare for students of this discipline several years ago (when most of our current leaders ought to have been in school), made much of “nearness to raw materials” as a condition for locating industries.

There is the one possibility that those who lead us today either played hooky, or missed the whole point of their studies. We may be minded, come 2015, to correct this. To ensure, in other words, that we elect folk into public office who took their growing-up lessons seriously, and in consequence, understand the nature of the responsibilities that they acquire as keepers of the public trust. But I worry.

Daily, I run by and through evidence that suggests that it was not just our leaders who were truant growing up, or who never managed to wrap their heads round the concepts without which civilised societies perish. “We the people” fail significantly in these respects. Nowhere does this failure rankle more than in our treatment of others’ spaces. The fecundity and ease with which we violate these spaces I’m told is in direct relationship to the failure of the criminal justice system. In other words, a more efficient policing and court systems would have encouraged the litigiousness that would put a heavy cost on tortious behaviour.

Civil society fails in other, subtler respects, too. A tort is an injury we suffer, not one brought about by our conduct. This is how most of us would describe it. A felonious conduct by a “clan” member is to be tolerated, while we ought to denounce, as loudly as possible, that from members of other “clans”! Conceptually, few things about how we think, or are subsequently organised prepares this country for the “greatness” that we ceaselessly pay lip service to.

An irresponsible leadership. A feckless followership. Indeed, do our people not deserve the leadership they have gotten this far? But then again, to run with this pack is to succumb to a particularly Nigerian form of ennui. The simple truth is that today, in the run up to general elections next year, we confront a strong case for untying our own Gordian knot. All we want is our own Alexander The Great, who, thinking outside the box, takes a broadsword to the problem.

And this is the definition of leadership that has thus far eluded us. It is the one, which Frantz Fanon’s words so eloquently speak of as arising out of relative obscurity, to discover, fulfill, or betray its mission. It is not leadership that acts only because a people (acting in its own self-interest) vests it with the responsibility and authority to act for the betterment of the commonweal. Instead, it is leadership, which addresses the greatest good of the commonweal, in spite of its peoples’ benightedness.

Nigeria – What Manner of Leaders, By Ifeanyi Uddin

Ifeanyi Uddin

There is no question but that the quality of our national leadership has deteriorated of late. The consequences of these are particularly telling at the economic level. Despite the roseate statistics favoured by the incumbent administration and its supporters, even they do not deny that the incidence of poverty (however we choose to measure it) is both onerous and growing.

The misery index may have improved (at the margins) lately as the Central Bank of Nigeria (CBN) successfully throttled the life out of inflation over the last year-and-a-half.But this has been at considerable expense: the cost of money has risen so much that bank loans in what the industry refers to as “the retail segment of the market” currently stands at about 24% per annum. Access to credit, a serious problem before, is thus compounded further. Higher borrowing costs also mean that we cannot grow the new businesses (especially at the micro- and small-and-medium-size levels) that put a dent on unemployment numbers. Is this the point about economic growth being a necessary (but not sufficient) condition for development?

However this question is answered, government’s failures stare one in the face across other departments of the economy. Security? An executive presidency (in an American-style government) regularly appears not to know where to place responsibility for lapses here. By all means, blame the opposition for everything (so long as these are not illegal, we ought to remember that opportunism aside, the point of an opposition is to make life as difficult for the incumbent administration as is possible), but we cannot forget what the pre-election campaign promises meant: a commitment to resolve as many of the problems facing the country as possible.

So, there is no question about who is responsible (and for what), or for that matter, what to do when a department of state fails in its responsibilities: to protect citizens’ lives as in the botched Nigeria Immigration Service’s graduate entry examinations; or the abduction of 173 (maybe even 200, who knows) school girls at Chibok.

This failure, though (of competence and a lack of accountability in public office), did not start in 2011. It has worsened, no doubt. But it has always been with us. Or how can you explain the construction of gas-fired power stations without access to the gas grid? O. A. Lawal’s “Economics”, which was the entry fare for students of this discipline several years ago (when most of our current leaders ought to have been in school), made much of “nearness to raw materials” as a condition for locating industries.

There is the one possibility that those who lead us today either played hooky, or missed the whole point of their studies. We may be minded, come 2015, to correct this. To ensure, in other words, that we elect folk into public office who took their growing-up lessons seriously, and in consequence, understand the nature of the responsibilities that they acquire as keepers of the public trust. But I worry.

Daily, I run by and through evidence that suggests that it was not just our leaders who were truant growing up, or who never managed to wrap their heads round the concepts without which civilised societies perish. “We the people” fail significantly in these respects. Nowhere does this failure rankle more than in our treatment of others’ spaces. The fecundity and ease with which we violate these spaces I’m told is in direct relationship to the failure of the criminal justice system. In other words, a more efficient policing and court systems would have encouraged the litigiousness that would put a heavy cost on tortious behaviour.

Civil society fails in other, subtler respects, too. A tort is an injury we suffer, not one brought about by our conduct. This is how most of us would describe it. A felonious conduct by a “clan” member is to be tolerated, while we ought to denounce, as loudly as possible, that from members of other “clans”! Conceptually, few things about how we think, or are subsequently organised prepares this country for the “greatness” that we ceaselessly pay lip service to.

An irresponsible leadership. A feckless followership. Indeed, do our people not deserve the leadership they have gotten this far? But then again, to run with this pack is to succumb to a particularly Nigerian form of ennui. The simple truth is that today, in the run up to general elections next year, we confront a strong case for untying our own Gordian knot. All we want is our own Alexander The Great, who, thinking outside the box, takes a broadsword to the problem.

And this is the definition of leadership that has thus far eluded us. It is the one, which Frantz Fanon’s words so eloquently speak of as arising out of relative obscurity, to discover, fulfill, or betray its mission. It is not leadership that acts only because a people (acting in its own self-interest) vests it with the responsibility and authority to act for the betterment of the commonweal. Instead, it is leadership, which addresses the greatest good of the commonweal, in spite of its peoples’ benightedness.

Why I Would Not Vote Next Year, By Ifeanyi Uddin

Ifeanyi Uddin

Come St. Valentine’s Day, 2015, I would not vote in the general elections scheduled for that day.

I also did not vote in the 2011 general elections.

Then, I was certain that the larger number of our compatriots were mistaken on the “I had no shoes growing up” narrative of the incumbent president. Arguably, there was a narrow sense in which they were justified in hoping that “one of us”, one who had known privation as a child, would rule differently from the disorderly lot that had governed us thus far. That his measure of our want would no longer be whether (and how) we rummage through garbage bins, but how his administration would help move our garbage in an environmentally friendly way, amongst other deliverables.

I was, however (and remain), indifferent to the substance of this narrative. Truth is that it never mattered whether the president was shod as a child or not. After all, as children, most of us (boys) ended up trekking home barefooted, anyway, after losing our footwear at “football matches”. In those days, our matches were played with “monkey posts”; and our footwear and other colourful items delimited those quaint contraptions.

What mattered to me four years ago was that we committed to electing into office, as president, someone who had avoided the “presidential debate process”. This was as ahistorical, as it was near criminal. For one who had seen how important the 1993 presidential debate between late MKO Abiola of the Social Democratic Party (SDP) and Bashir Tofa of the National Republican Convention (NRC) was to the outcome of that process, the “presidential debate” became a sacrosanct “condition precedent” to my participating in any elections — as a voter.

I suspected, then, and still do, that the decision by the incumbent president to avoid the debates was no less informed by his party’s understanding of how the 1993 debate contributed to upending Bashir Tofa’s campaign. The spectacle of our first would-be PhD-president tying himself in knots in a bid to avoid talking against General Muhammadu Buhari (hardly renowned for his conversational skills) was all that I needed to know four years ago about how this country was going to be run.

Would that I could dismiss all that as “history”. For, again, we are at the cusp of new possibilities for our commonweal. And I dread my compatriots’ ability to act in their own enlightened self-interest. Last time around, we wanted very much to put “someone like us” in office. We hoped that he would thus be better able to sympathise and empathise with our miserable lot.

Today, as we run into next year’s vote, the worry is with the proliferation of knaves in our political space. And as enjoined by the nursery rhyme “Rub a dub dub”, we are minded to turn out all the knaves in our political tub. Actually, whatever may have been their crime, the butcher, the baker, and the candlestick maker in that children’s rhyme, do not hold a candle to the gang that has lately been in charge of our national affairs.

And yet, knaves, as we all know (remember what the “Queen of Hearts” did to hers?) are uniquely persuaded by slight chastisement from a “wand of noble wood”. The “Queen of Hearts” did beat her thieving knave “full sore”. After which, not only did he return the tarts he’d earlier stolen, but, in addition, pledged never to steal again.

This, then, is our main assignment at the polls next year: how do we chastise our knaves so thoroughly that they vow to steal no more? In the light of how badly we have been ruled, and the near criminal indifference of our leaders to the daily evidence of our sufferings, this does appear, from our current vantage, an extremely difficult goal.

However, like the “to do” about shoes at the last election, this difficulty is more apparent than real. Turf the Peoples Democratic Party out. Vote in the opposition, however constituted. And this is where I fear. I am reminded at every turn that the opposition comprises an especially distasteful assortment of unprincipled principals and their psittacine sidekicks. Most only just left the ruling party, anyway, so that’s not surprising.

But the point we make by voting the ruling party out, even when we vote their clones in is that we will no longer tolerate mediocre or thieving rule. Now, coming in on the back of this sentiment, we can only hope that the opposition understands the nature of the new contract that we are ready to enter into with our rulers: “zero tolerance” for thieving practices. If, therefore, they continue in the tradition to which they are heirs and/or are familiar, then come next elections, we will turf them out too.

This is how we deal with our domestic servants who try to rob us out of pocket. Why should we act differently regarding our public servants? Besides, there is this additional boon from voting in the opposition: we have bruited about the maturing of our democracy because it has peacefully handed over power to different administrations. But all of these have happened within one party over the last 15 years.

A vote for the opposition next year would raise the performance bar for our democracy that much higher by effecting a peaceful change between parties.

I fear though, that, as with the case of the missing shoes at the last general elections, our people are still searching for real change. And so, in 2015, I’ll “siddon look”. In the increasingly fading hope that they will be ready in my generation and then my vote would finally have some meaning.

Still on the New GDP Numbers, By Ifeanyi Uddin

Ifeanyi Uddin

There was no question but that the new domestic output numbers for the Nigerian economy was going to attract much interest. A rare event in the nation’s calendar, and a momentous result, it has attracted interest at home and abroad. Actually, it has elicited much more interest from the talking heads than I expected. Locally, the debate on both sides has been intense; and has gone further than I thought possible before the National Bureau of Statistics (NBS) put the new numbers out. At great risk of appearing blasé, the dialogue on this from outside the country has been more illuminating. As the conversation has gone on, I’ve found it harder to hold of asking “Why two sides to the local leg of the debate?”

Throughout the long incubation of the rebasing exercise, almost two years, my primary worry was how reliable, (i.e. how reflective of our actual lived experience) the final figures would be. At any stage of the process – enumeration, categorisation of domestic activity (and into sectors), and final estimation – gremlins could have crept in, compromising all of it.

Alas, the debate around the new national statistic has had nothing to do with any of these fears. Few who have taken exception to the new numbers have done so from a check of the base data. And, how does it matter to the current numbers that a previous attempt at rebasing in 2000 was put off for fear that new higher numbers, then, may have hurt our chances of the debt relief, which we finally secured five years later?

Arguably, what we have is evidence of a previous administration, cynically, manipulating a process to improve the administration’s odour. Is this proof that the current administration has similarly manipulated the same process questing for similar results? I don’t think so. On the face of it, the timing of the these new data is suspect. Ahead of the St. Valentine’s Day elections next year, could the new numbers on the economy’s output have been put out to help a government with bad case of bromhidrosis smell better?

The Jonathan administration hasn’t helped this sense of the purpose of the rebasing. It takes an especially long stretch of the imagination to blame such consequential development on the last six years of government. Especially, when in this period, we’ve lurched from crisis to crisis. But that hasn’t stopped staffers of the administration and their boosters in the media from trying. However, by politicising the discourse around the new numbers, those who would make easy political capital off its positives miss several points.

The most obvious of the missed points, is the fact that civilised communities go through this rebasing process a lot more regularly – every five years, apparently. With our new measure of domestic output putting us firmly at the fore and centre of the world’s leading economies, the next deliverable ought to be to normalise the economy: make it look a lot more like “civilised” economies, a lot more like South Africa, for instance. In other words, and what is basically the same thing, to institutionalise the rebasing process. To understand why it took us all of a decade-and-a-half to do, and to put structures and processes in place that ensure we are already preparing for the next iteration in 2019.

This leads to the second point. The NBS, it would seem, made the extra effort to ensure that its result on the GDP rebasing was as reflective of domestic economic activity as possible. It had the World Bank, International Monetary Fund, and the African Development Bank authenticate its procedures, and fact-check the result. I do have doubts over the correctness of the Coordinating Minister of the Economy’s claims (at the launch, Sunday, of the new GDP numbers) that our own economists had also been given a chance to look at the process/numbers and had given their nod, but this is to nit-pick at this point.

Of more weight is the World Bank’s claim, Friday, “that the accuracy of GDP figures can be increased further following the completion of key new surveys for agriculture, industry, and households”. This new numbers are but a beginning. There’s so much that’s still to be done, including democratising the gains from our higher levels of GDP growth.

On The New GDP Numbers, By Ifeanyi Uddin


So, finally, we are a bigger economy than South Africa. Indeed, at US$509 billion (estimates for last year), we now are the continent’s biggest economy — in 2012, the World Bank had put South Africa’s GDP at US$384bn and Nigeria’s at US$263bn.

At about 2.00pm yesterday, at a press conference at the Transcorp Hilton Hotel in Abuja, the Statistician-General of the National Bureau of Statistics released new output numbers for the economy, which put gross domestic product numbers at N80.3tn (based on new measures of 2010 output), from N42.3tn previously.

But, bragging rights over South Africa (now the second biggest economy on the continent) aside, what does this really mean? Technically, we ought to have done this re-basing at least twice since we last did it (1990). Following the slew of reforms to the economy in 2003, which, besides bumping up the trend growth rate of the economy from the previously phlegmatic 3 – 4% per annum to the current 6 – 7% annually, also freed up new sectors (telecommunications and the wholesale and retail trade sectors, for one) to new investments (especially foreign), the old GDP measure clearly was undercounting production patterns in certain sectors of the economy.

According to the Statistician-General, “In 2010, the rebased nominal GDP represented an increase of 59.5% over the nominal GDP using the old base year, 69.10% in 2011, 75.58% in 2012, and 89.22% in 2013 (forecast)”. Consequently, whereas real GDP growth was estimated at 5% in 2010/11, post-rebasing, the new counts now stand at 5.09% in 2011, 6.66% in 2012 and is forecast at 7.41% in 2013.

The old GDP measure overestimated patterns in other sectors, apparently. According to the new numbers, agriculture, which accounted for 30.3% of the 1990 nominal series, is now only 23.96% of domestic output using 2010 as base year. In its place, services have grown, to a little over half of gross output numbers. Not much to cavil at here. There was always something the matter with (rain-fed, subsistence) agriculture accounting for that much of GDP under the old measure.

And with the significant advances made in the telecommunications, and wholesale and retail trade sectors, services’ 50% share of domestic output is not out of place. I am not too sure what to make of the fact that industry’s share (declining to 25.8% from 46.1% in the 1990 nominal series) is down. This again is not much of a surprise. It would have been a surprise if our run down infrastructure, obese bureaucracy, and light-fingered criminal justice system (including an antediluvian judicial system) supported more industry than this. Yet, I think there is a worry element in our transition from an agriculture-based society to a service-based one — completely skipping the industrial stage.

A 59.5% jump in the size of any economy is not something to be trifled with. True, despite the increase in GDP per head that a bigger numerator for this measure implies, we are no richer this morning than we were at 1.00pm yesterday. However, these new statistics make it easier to deal with the domestic economy, whether it is planners in government or investors (domestic or foreign). Obviously, the inroads into the supermalls was an informed one, as indeed would be any investment in the economy that seeks to leverage consumer spend.

Now, there is a paradox of some sorts here. How poor are we? If the National Bureau of Statistics is (2012) to be believed, four years ago, 61% of our compatriots subsisted on a little under US$1/day. 170m people spending a dollar a day is a lot of spend indeed. But since we are in the business of comparing with South Africa, it helps to remember that at US$2,994, our GDP per head is still lower than that of our southern neighbour’s — the World Bank estimated South Africa’s GDP per capita at U$11,255 in 2012.

Evidently, despite the new ginormous size of our economy, there is an equally humongous opportunity for improvement. We could glory in the many upsides of the new numbers: a lower debt-to-GDP ratio (down from 19% to 11%), lower budget deficit to GDP ratio, etc. Or we could undertake the reforms truly needed to put us at per with the standards down south: improve domestic competition across sectors of the economy; upgrade our criminal justice system; put a gastric band on the bureaucracy, etc.

Truth is, despite the nice news, we still have a long way to go.

Measuring Bank Liquidity, By Ifeanyi Uddin

Ifeanyi Uddin

In the last four years, the Central Bank of Nigeria (CBN) has tightened monetary conditions even as inflation moved into and seemed comfortable in the single digit range — an unusual experience for this economy.

The organised private sector has made much of how these tight conditions, especially high interest rates have made it difficult for businesses to thrive — indeed, may have been responsible for high mortality rates in the middle corporates. Incidentally, these tight monetary conditions have had the added advantage of attracting foreign portfolio inflows (FPI) — the dollar portion of which may have helped the CBN maintain relative stability in the exchange rate markets.

The fate of the naira into which these dollars are converted is, however, a different matter entirely. Does the domestic currency equivalent of the FPI end up with the banks? And if it does, what do the banks with them? The CBN has often charged excessive bank liquidity with being the main source of demand pressure in the foreign exchange markets; and its rate-setting committee (the Monetary Policy Committee — MPC) has repeatedly acted in restraint of this liquidity, by targeting its policy measures directly at the banks’ money-pot.

Imagine my surprise, then, at a meeting two weeks ago with treasurers and market liquidity managers of a few banks (in the space before last week’s MPC meeting), when it emerged that the CBN’s measure of market liquidity might be missing several tricks. The central poser at this meet was “even if we take traditional measures of liquidity, how well does the apex bank’s measure reflect market conditions?”

The CBN has about twelve components that go into its calculation of the numerator of banks’ liquidity ratio — local currency deposits sit at the bottom of this measure. Of the twelve, three are properly liquid: net interbank placements with other banks; net money at call with other banks; and net placements with discount houses. According to one bank treasurer, the rest of the CBN’s measures have a limited degree of acceptability in the market place for liquidity generating purposes.

Indeed, the apex bank also includes the sum of all banks’ closing balances deposited with its standing deposit facility (SDF) in its estimation of market liquidity. Ostensibly, the SDF balances measure cash flow, and not liquidity. This is because a large part of these balances comprises third party funds, including from the recent foreign portfolio inflows. Thus, in those instances where a bank faces large maturing treasury bills obligations, it is difficult to properly argue that its balances with the CBN reflect its net liquidity.

A better assessment of the industry’s liquidity position that includes this measure would benefit a lot from decomposing maturing treasury bills and bonds by holder. Thus disaggregated, i.e. with third party obligations stripped out, the residual on these balances would be made up of banks’ proprietary holdings, based on which industry liquidity may then be properly computed.

Actually, the consensus amongst the banks’ market liquidity managers whom I spoke with is that, currently, Federal Government bonds make up about a third of banks’ liquid assets. True, there is a repurchase market for these instruments. However, the repo market functions in such a manner that these bonds properly speaking are not as liquid as the apex bank makes them out to be. Therefore, not just can they not be easily deployed in banks’ daily operations, but by including them in the computation of banks’ liquidity, the CBN would always arrive at a high computed liquidity ratio for the industry.

It could, on this basis, move to tighten monetary conditions, whereas, in truth, banks face limited cash liquidity. The danger that the CBN might be going at a fly with a sledgehammer is as real, in this case, as the dread that it might have been blitzing a mammoth with a peashooter. Any which way, the economy suffers. Constrained cash liquidity means that banks put up rates across board.

Put aside, briefly, the perennial worry that higher rates mean that the real sector is then denied access to loanable funds. (Truth is that bank lending is necessarily short-term; and if we were truly to develop this economy, we would need to develop different sources of longer-term capital).

Consider instead the threat to the banking industry of a worsening portfolio of dodgy loans, as borrowers buckle under higher interest rate burdens. And/or the resulting incentive for banks to cut corners as they struggle to deliver promised returns on a reduced lending base.

Removing the Fuel Subsidy, By Ifeanyi Uddin

Ifeanyi Uddin

The queues are back at the filling stations; and our lived experience has taken a turn for the worse; a few fires have started.

Yet, this is but a seasonal experience. Like the rains which will soon start to fall, methinks our response ought to be to prepare to contain its less salubrious fall outs, rather than rail against it. As with all seasonal occurrences, our perennial fuel scarcity has leitmotifs that we should interrogate further.

The resumed debate around removal of the fuel subsidy as solution to these shortages is one of such recurring themes. Its main question is whether we should continue to dispense fuel at the pump-stations at prices far lower than the market clearing rate?

The huge sums that government spends in keeping the price of petrol at N97 per litre across Nigeria could arguably be (better?) used elsewhere. Nonetheless, the decision over whether these alternate uses are better than the current expenditure line is contingent on how we estimate the gains to the economy from keeping fuel prices artificially low.

It would seem that in our case, a large portion of the gains from lower fuel prices is appropriated by society’s middle and upper classes (whatever these categories mean) who are able on account of cheap fuel to maintain private car pools. The meat, though, is cornered by fuel importers (pretend and real) who through a variety of scams divert subsidy payments into their pockets. These then buy private jets and yachts.

What about the poor and the vulnerable? These are left holding the short end of the straw. Sad, really. For the world over subsidy schemes are designed to protect this category of persons from the deleterious effect of high or rising prices. With three quarters of our 150 million compatriots eking out a living on less than US$1 a day, higher fuel prices would always impact negatively.

The “poor and the vulnerable” may not have private cars, jets, or yachts, but they would face rising prices across a range of spending options: food; transportation; rent; children’s school fees; medical bills; etc. Indeed, deferring to this reality, government then goes about designing lower order subsidy programmes (SURE-P being the latest in a long line of alphabets soups) aimed at ameliorating the poor’s poverty.

In a roundabout way, we thus reach a point of inflection in this conversation. There is nothing intrinsically wrong with a programme of “subsidies”. So long as its rationale (social and/or economic) is clear; its target beneficiaries are identifiable and reachable; and its administration is transparent. Sunset clauses are useful, too, when self-negation is a key part of the design of the subsidy’s structure.

On these measures, the problem with our “fuel subsidy” programme is simply one of an inept government. Translucent accounting\administration mean that folks are robbing the scheme blind, and government is not aware until the public physically resist a price hike. Government has not successfully prosecuted anyone since the scandal aired. And we have no guarantees that the robbery is not still on.

Indeed, the plethora of often competing (and official) reasons for the current scarcity, including the activity of speculators, pipeline sabotage, fuel tanker diversion, etc. indicate how not on top of the sector government is. As if we needed reminding. We are currently in as much need of foreign forensic auditors as we are in need of answers to what may have happened to US$20bn oil money.

At this point, I can think of a dozen reasons why the fuel subsidy should stay. Easily the first is why any Nigerian should trust this government with any fiscal savings that arise at his/her expense. We ought not to endure further increases in our tax burden without a palpable scaling up of the quality of our representation.

Then there are process arguments. The leading case for removing subsidies in the downstream sector is a market-based one. In search of an easy example? Take the ease with which private providers in the telecommunication sector solved the stasis that NITEL had superintended for aeons. Is there space for private provision doing the same for domestic petrol distribution?

Unfortunately, by conflating private provision of a service with a proper market for such service, we ignore two possibilities. The first is the likelihood of the transfer of a public monopoly to a private monopoly. And the second is the possibility of private providers colluding in the absence of a strong anti-trust infrastructure.

Two illustrations are useful here. The first is provided by the poster child of government’s reform efforts: the telecommunication sector. The lesson of more than ten years of private provision in this sector is that whereas private providers are more efficient than the public sector, in the absence of a properly functioning market (i.e. where supply responds to price signals, and vice versa), this “efficiency” could turn out to be more apparent than real.

Compared with the quality of GSM service provided elsewhere, the Nigerian offering is rudimentary to the point of insulting. (In parenthesis, we have been invited by the sector regulator to go to court to enforce our right to value for subscriptions paid). The same argument holds with the advances we have purportedly made in the cement sector. Over the 6 months to end-December 2013, a glut in the Ugandan cement market, resulting from reduced demand in its export markets, pushed prices down from US$180 per metric tonne, to US$150 per metric tonne. In contrast, in Nigeria, a glut in the market for cement usually pushes prices up.

Several years ago, General Ibrahim Badamasi Babangida was reported as have argued that he Nigerian economy defies economic logic. True. But only because, as in the oil sector, significant non-economic actors have hijacked the nation and its processes. A feckless government then runs from the “private sector provision” pillar to the “market” post, searching for quick fixes!

The Constitution and Presidential Powers, By Ifeanyi Uddin

Ifeanyi Uddin

The recent spat between the newly appointed defence minister, General Aliyu Gusau (rtd.) and the military chiefs of staff over reporting lines has resonated in the most unlikely places. I believe, the most startling of these resonances, is the possibility that the office of the federal minister of (or for) defence, at least, until now (and since 1999) has been a sinecure. That is, “a job or position in which someone is paid to do little or no work”.

If, and this is the argument most eloquently made by the Chief of Defence Staff, Air Vice Marshal Badeh, both our constitution and its associated statutes (the Armed Forces Act) describe a line of command (and control) that goes unmediated from the President to the service chiefs, then what have our defence ministers since we commenced this new republic, been up to? Clearly, they could not have been responsible for much. One possibility is that they only gave public expression to the results of conversations between the commander in chief and his men. But isn’t this why there is a minister for information?

Even if less assertive defence ministers before General Gusau had found a less “in your face” way of meeting with the commanders of the armed forces, or were perhaps more (amenable to) adept at passing operational instructions to the service chiefs (without passing through the defence chief), this procedure could not have satisfied the requirements of efficiency, and or of the need to de-layer the chain through which final decision making on these issues goes through. Need we be reminded, here, that our experience of the military’s incursion into politics, means that a key requirement of a properly functioning democracy, is the subordination of the military hierarchy to civilian oversight?

It is easy to argue that, in part because of its provenance (written at the behest and guidance of a military administration), our constitution was always going to fail this test. Still, because our constitution fails several other tests, much bigger concerns arise. If for no other reason, we have only recently come to learn that within the understanding of operators of the constitution, a presidential directive (it is an executive presidency, remember) does not have the force of law — at least until it appears in a gazette.

The same document, too, also has that clause that appears to legitimise child marriage. And who knows what other limpet mines are concealed in its inner reaches. I often suffer from a sense that the biggest problem with our constitution is this understanding that it must solve all of our existing problems and many others that its framers imagined.

Alternatively, what is the point of insisting on a minister from each state? Neither the need for efficiency, nor a narrower span of control is answered by this profusion of ministers. It may be that we thereby nod in the direction of inclusion. But then as government completes the transition from public provision of services to provision by the private sector, a lot of these ministers would increasingly have a very light plate, if any at all. The minister of communication is an interesting case in point. What does she do, when most of her remit have independent regulatory structures in place?

Nonetheless, the constitution can only carry that much blame. In conversations leading up to writing this piece, a friend asked which constitutional provision allows the kind of harassment by law enforcement agents, which invariably ends with the purported law breaker, now turned victim parting with a bribe? His point? That the meaning of a constitution is fully served, once it describes a broad spatio-temporal dimension, within which sane folk may be expected to conduct themselves properly.

In this particular case, even when Section 217 of the Nigerian constitution, and Section 7 of the Armed Forces Act, may be interpreted to mean that only the president has the powers to issue directives to the military chiefs; the same constitution also allows the president to delegate his powers to ministers. Somewhere in all these details, there must be a mean.

Nonetheless, only a constitution drafted by the military could then have thought it meet and proper to circumscribe the president’s powers by including a list of offices that responsibility over the military chiefs could be delegated to!

Still on Our Rising Debts, By Ifeanyi Uddin


Each time I read of our governments (central and sub-national) contracting new debt, I cringe. Several years back, a friend and boss advised me not to pay for what I can have for free, or take on credit. So my worry isn’t from an “ideological” or “religious” aversion to debt. It is instead from a concern with the use to which these credit lines are put.

I imagine that the central criterion for public borrowing would include the ability of the loan to generate returns that cover payment of both the interest on the debt and in the end, the principal sum. Easy then, to insist that all public loans be for commercial purposes: a subway; new train tracks; new roads; etc. These facilities make it possible to structure “user pays” tariff arrangements that permit cost recovery.

But governments’ bailiwick reaches beyond these. There are activities in an economy, especially the provision of schools and healthcare facilities, the total benefits from which cannot be captured by any one provider. Whereas this is one reason why market failure is regularly cited in the provision of these public goods, the positive externalities they generate are the strongest arguments for public investment in these sectors.

Consequently, although government has a strong case for channeling monies into these sectors, on their own, they may not meet the criterion for fully covering the cost of any borrowing that government may have incurred in investing in them. The best educated students, for instance, would need close to ten years of schooling, before they begin contributing to their own net welfare. By extension, net growth in contributions to domestic output from a better educated and healthier citizenry should ultimately boost an economy’s ability to repay all such loans.

I worry then that the federal government only recently contracted a US$170 million (N27 billion) loan from the French Government to improve the provision of power in the Federal Capital Territory, FCT, Abuja. Arguably, the provision of power is one of those investments that government makes on which it can structure “user pays” tariffs that permit cost recovery.

However, the history of the ECN, NEPA, PHCN, and now the DISCOs suggests government is signally unable to manage this feat in the power sector. In part, you may blame a citizenry that has come to accept government provision as an entitlement. You may absolve the citizenry of this foible by also citing its familiarity with the venality of persons in power. So by refusing to pay a commercial rate for government provided services, all that we are doing is negotiating our share of the national loot.

All of which is besides the point in the matter of this new loan. The bigger question is how government provision of power in the federal capital territory sits with its current commitment to privatise assets in the power sector? In other words, why does the federal government think it can make better use of the new capacities it is investing this new loan in, than it made of the ones it only recently sold?

Invariably, concern over our large appetite for borrowing (the “how much debt is too much?” question) is rejoined, by government functionaries, with a plethora of statistics. We are reminded that our debt-to-GDP number (at 21%) is not only lower than that for other countries. It is also well within the generally accepted bounds for this metric (40% – 60%).

But what story does this ratio really tell? The numerator refers to all claims on government – bonds, treasury bills, etc (and irrespective of the claimant’s nationality/residence). The denominator describes the size of economic activity. The presumption in its use is that government’s revenue (taxes) are a function of the size of its economy. In other words, the bigger the economy, the more taxes are available to government. The more taxes government collects, the better it can meet debt obligations.

In Nigeria, what is the tax portion of government revenue? And crude oil exports? That goose no longer lays golden eggs. Only last week, the Bayelsa State government was mulling pay cuts in response to huge shortfalls in allocated revenue from the centre. Global oil prices have remained elevated, and Nigeria’s earnings are lower. Besides, as soon as the much-touted re-basing of the nation’s GDP is done (the economy is projected to become much bigger than it is now), this favoured ratio would suggest more space for borrowing.

However, it would only be a fool who then argues that this is because government’s capacity to service the additional debt (a larger tax take, for example) is that much bigger.

  1. Ability to pay.  Ideally, this is the point of the different ratios with which public debt is estimated (check them).  Our preferred ratio is misleading (is this the word?)  2. Is that ratio a target towards which we ought to aspire.

In Search of New Scapegoats, By Ifeanyi Uddin


My attention was drawn, last week, to the possibility that the American government may be behind the random acts of barbarity in increasingly large swathes of Northern Nigeria that have, especially with the most recent killings of 59 secondary school pupils, soured the nation’s mood. Apparently, if this new reading is to be believed, the Americans are tampering with our sovereignty in a bid to validate a report some years back by some security agency in the US to the effect that Nigeria might break up next year. Another version of this narrative cites concerns in the US that a more organised Nigeria might be inimical to US interests in the region as possible cause for the superpower’s scheming.

For evidence of the United States of America’s perfidious role in the escalation of our domestic insurgency, my interlocutors point at Boko Haram’s growing sophistication, and the ease with which the insurgents have hit soft targets across key states in the north. For good measure, I was informed further, as with every such salacious report these days that these revelations were contained in the nether reaches of Edward Snowden’s wiki leaks.

“I heard”. “I was told”. In other words, I wasn’t minded to cross check these facts. To tell the truth, conspiracy theorising usually ignores a priori questions, some of which I will try to pose here (if not answer outright). First, to the question of motive. The “world against us” leitmotif has been around for a while. Pravda, the Telegraph Agency of the Soviet Union (TASS), Progress Publishers, and associated news media related to the defunct Union of Soviet Socialist Republics and its satellite states regularly directed propaganda containing this “shocking revelation” at the then “Third World” countries.

In Nigeria’s case, the charge against the US is in want of a good leg to stand on. Since independence, not only has Nigerian and US interest in sub-Saharan Africa coincided, including the hounding of socialist activists by our governments in the sixties. Bar the Murtala Mohammed administration and its peevish response to Gerald Ford’s prompting, we have, on the whole, done the US’ bidding in the region.

Flip the case over, and it reads differently. In this new rendition, the US’ strategic concern with Nigeria is not just a regional matter. Instead, the American’s main gravamen is with the threat that a rising black African state poses to it. And to forestall the crystallisation of this threat, the US is committed to bringing Nigeria, as we know it, to an end by 2015.

How come this threat to US interests is not present in the example of a rising Brazil, South Korea, or even China? How come instead the US sees these other economies as potential markets, whose continuing demand for US goods and financial assets could help hold output growth in the US at sustainably high levels?

How dangerous can a democratic, prosperous black African country really be to the world as it is organised, today? If nothing at all, a Nigeria that manages to solve its development challenge in a way that takes as many of its nationals out of poverty as China did in the three decades after 1979, holds out the prospect that America’s black under-class may be presented with an example of peer success that helps them better integrate into the US economy, or emigrate.

I think, therefore, that this new theory about how much outsiders despise us, and want to see us fail serves a much more nuanced purpose. Across the continent, the main driver of poverty is inept and thieving rule by Africans. The famines, the droughts, the fighting that leads to internal displacement of large numbers of our compatriots, and spews malnourished refugees across international borders — these are but symptoms of how poorly we have managed (and continue to manage) our spaces.

Within this latter context, a different reading of “the world against us” theme presents itself. A pre-industrial, agrarian mindset has most of us blaming others for our afflictions. This was the stock in trade of the babalawo’s, bokaa’s, and dibia’s businesses. It is the mainstay of the new Pentecostal Christianity. With this difference: whereas with the former, chances were that the witches and wizards behind one’s predicaments were familiars; the new Christianity with its richer phrasing offers a much broader canvas — “principalities and powers”.

The point of all of these is that rarely is the African responsible for his actions. Always, he is the victim of the sinister machinations of detractors, and allied agents of negativity. So even when the Nigerian Army has proven so ill-equipped to tackle the menace of a loosely knit force of bandits, rather than look to examples of how other communities have addressed guerrilla movements, we blame the apparent competence of our adversary on the help they must be receiving from a more competent (and necessarily malevolent third party), rather than on our own poor organisation.

Reforming Our Universities, By Ifeanyi Uddin


Decades after its ouster from office, the Ibrahim Badamasi Babangida (IBB) administration remains one of the most steeped in controversy in Nigeria. How much of the country’s current baseness is the consequence of that administration turning “corrupt practices” into a tool of statecraft? You are likely to find debate heating up the more Nigerians you find gathered round a table where this question is up for discussion.

Eventually, most such fora agree that regime capture was more likely to happen under the Babangida administration than under any other (whether before or after)! Was this because the government made a persuasive case? Or because it had an uncanny knack for “settling” its critics? Much the same fervour attends discussions about the extent to which the government set back the country’s slow progress to democratic rule when it annulled the June 12, 1993 elections.

Yet, in one sense, Babangida’s administration laid the foundation for some of the more remarkable progress the country has made thus far. Most commentators still denounce the series of national conversations (supervised by the administration in the late eighties) which led to the country opting out of the IMF’s prescriptions on how to address the nation’s balance of payments problems and adopting, instead, the “home-grown Structural Adjustment Policy — SAP).

However, an unacknowledged contribution of the IMF debates to the eventual course taken by the country was the role it played in persuading the chattering classes of the need to move the country away from a government-led and towards a private sector-led growth model. A considerable part of the talk in this regard was about letting the market do more of the allocation of increasingly scarce domestic resources. Today, this is the prevailing orthodoxy. But by far the most important advance down this route was convincing a left-leaning country of the need to sell off state owned assets as part of this transition.

Labour unions and left wing academics not only failed to set themselves up against this process, but remarkably, in a number of cases did join the argument on the IBB administration’s side. Their capitulation several years ago, made possible a number of the market-based reforms implemented largely by elected governments beginning from 2003.

Since then though, would-be reformers have defined their tasks in purely technical terms. No government has sought to talk the people through the need for further reforms – appealing to the hearts and minds of the populace as part of their reform effort. And we are beginning to see the consequence of this.

Nowhere is this failing more prominent than in the education sector. Here, unreconstructed student unions, and residues of the old Marxist-Leninist apparatchiks insist on the continuation of an arrangement that has each student paying a little under US$500 for each university session. These students also expect to be taught by professors, and hand-held by sundry graduate students engaged in serious research.

Is their space for computing the cost of sending a student in Nigeria through a four-year programme in our local universities? Is the argument thereafter for the commercialisation of our publicly owned universities, or for their full privatisation?

To some degree, we do have answers to some of these questions.Existing private universities seem to have put the cost of a “basic” (is there anything like this?) university education at about N4m. This is evidently much more than the N400,000 that students in our public universities can expect to fork out over the average four-year course. It is much more, for that matter, than most Nigerian parents can put together (especially, with more than one child in school at a time).

What remains to be done? Without recovering costs, our publicly owned universities will get progressively worse than the best secondary schools (most of the private ones currently charge far more for care of our wards/children than the universities do). Yet, we have too much need for qualified workers across all sectors of the economy to agree to this fate.

Is the case for a more transparent capture of government’s subsidy to the educational sector? The problem with this solution is the possibility that it then distorts the incentives that have allowed private sector provision of university education. There is the ineluctable need for a students’ loan scheme. Nevertheless, here, the devil is in designing the structure of the loans, and repayment terms.

None of which is impossible. But all of which invite very robust debate about the entire sector.

Mr. Uddin, an economic historian and finance expert, resides and writes from Lagos.

The Business of Policy Making, By Ifeanyi Uddin


Last week, the federal government upped the policy ante. In the wake of the recent launch of a national automotive policy, its inauguration of the Nigeria Industrial Revolution Plan and the National Enterprise Development Programme is nothing if not ambitious. According to one newspaper report, “both programmes, initiated and spearheaded by the Ministry of Industry, Trade and Investment, are aimed at launching the nation’s industrial revolution”.

Given the serious development challenges confronting the nation, it is hard to carp about a policy that aims to “build a great economy based on solid industrial sector, with well diversified minds and sources of revenue”. Still, it is difficult to resist a question that is so contingent on the nature and timing of these policy measures. How much of this new policy thrust is part of a programme? What are the dimensions of this programme? Put differently, why is government implementing these programmes in the twilight of its current tenure? Without doubt, a lot more value could have been obtained off such important initiatives if they are implemented early. And how is government sequencing the implementation of its programmes?

Answers to these questions matter. Not simply because policy success is negatively correlated with arbitrariness. Nor because headlines events so close to an election year, suggest something different. It matters more because the mortality rate for government policy making is unsustainably high here. To take but one example both the NEEDS and NEPAD documents were no less visionary in their time. What has become of these and the lofty goals they were pledged to?

On a different level, ought we to worry that government is still bent on picking industrial champions? The response to this question is easier: yes. Because whereas we have examples of industries that have thrived in spite (indeed, because) of government’s inattention (the domestic movie industry until recently, and India’s IT sector are but two useful examples), it is harder to indicate successful industrial policy anywhere.

Besides, which is the more difficult challenge with domestic industry today? Is it the absence of an all-embracing set of policies? Or the litany of lets to doing business across the land? Government may well claim to be on the path to solving the power problem, which for decades has been regularly cited as a major component of domestic business costs.

However, where does land reform feature in all this? Land prices in Nigeria (on account of the burdensome provisions of the Land Use Act) are the highest on the continent (second only to Angola). And both the cost and processes involved in securing access to and use of land go a long way to holding back entrepreneurial activity here. Innumerable studies attest to the huge amounts of “dead capital” currently concealed in our rural communities because of improper titling arrangements.

Sadly, these are but a small part of a much larger story. On the strength of available evidence, in Nigeria, it takes 8 procedures (5 in South Africa) and 28 days (19 in South Africa) to start a business. Whereas here, the cost of starting a business (as a percentage of income per head) is estimated at 58.3, it is well below 1% in South Africa. Does this surprise? No it shouldn’t. By the time the number crunchers are done re-basing the budget, expectation is that we would have become a bigger economy than South Africa. But with private credit bureaus covering a little under 5% of our adult population (55.6% in South Africa), access to credit would remain a big problem here.

The list of reasons why it is more difficult to do business here, than elsewhere is near endless. But what these impediments point to is the need for painstaking reform across every sector of our lives. Some of these reforms may not show up in the newspaper headlines that might guarantee an incumbent administration more votes ahead of a general election, but they are likelier to deliver more mileage than the standalone plans and programmes that our governments are enamoured of.

Reforms to policing for instance are so important to contract enforcement in the country. At first blush, these would be about how the police gather intelligence, as it would be about how they deal with crime scenes. DNA and fingerprint evidence would matter just as much as authorised wire-tapping in a sting operation in securing convictions. However, the larger contract enforcement need is about setting our criminal justice system aright.

Here, the courts matter as well. Constant power would ensure that the courts are not the ovens that they currently are; while improving the ability of the system to capture proceedings in real-time. Additional reforms should aim at speeding up the turn around time for cases; and clearing existing backlogs. We could then hope to reduce the procedures for enforcing a contract from the current 40 (29 in South Africa) to a more manageable 10. While reducing the costs of and time needed for enforcement.


Accounting For Crude Oil Sales and Revenues, By Ifeanyi Uddin

Ifeanyi Uddin

Why does it matter that the governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, has indicated accounting sleights of hand at the Nigerian National Petroleum Corporation (NNPC)? Or that shenanigans in and around Nigeria’s proverbial golden egg-laying goose may be responsible for the federal budget’s recent (and unprecedented) revenue haemorrhage?

Which is more important? The difference between US$48.9 billion (the original figure claimed by Mallam Sanusi as missing — in his now contentious letter to the president), US$10.8 billion (the “mere” sum, which the Finance Minister, Ngozi Okonjo-Iweala could not account for after a reconciliation of the relevant books), or US$12 billion (which the CBN governor claims is left over from the same “reconciliation”?)

Truth to tell, the spectre of poverty which now haunts just about every corner of our lived experience would not be diminished, nor scathed by any of these sums. The levels of output growth required to lift most of our compatriots off their borderline lives need far more (and deeper) reforms to the structure of our economy than much of the debate around the missing NNPC funds speak to.

Still, if newspaper reports are to be believed, someone in government is persuaded that these sums matter. Or that debate about them ought not to be ignored. Enough for certain arms of government to have put pressure on the Senate to deep freeze its planned public hearings into the matter.

Yet, we all cannot have forgotten so soon that one of the first resignations under the Jonathan administration was by a junior minister in the finance ministry, who had adverted the nation’s attention to the possibility that the NNPC might be broke. Too broke, in fact, to then continue supporting the federal purse.

Evidently, therefore, the problems with the finances of the national oil company are not new ones. Indeed previous scandals surrounding the petroleum ministry, suggest that these problems have been with us for much longer. The sense that successive governments may have used the NNPC as a piggy bank is not helped by the super-budgetary nature of the agency’s accounting.

Isn’t it odd that the financial transactions of an agency of the state do not show up in the federal accounts? Instead, the federal government looks more like a beneficiary of the NNPC’s acts of charitable giving. The corporation choosing to dispense largesse the federal government’s way “as the spirit directs”.

The demand for better governance and improved transparency recommend immediate reforms to the way the NNPC is run. It is hardly surprising that a super-state agency should choose to correct the prospect of continuing revenue losses from the production sharing contracts governing off-shore oil exploration through a root-and-branch review of existing oil laws, even when the production sharing contracts have clauses in them allowing review of the contract terms whenever conditions in the operating environment change.

The NNPC’s failure to activate the review of the PSCs’ terms until its Petroleum Industry Bill (PIB) is passed, even when we may be losing monies on the current terms of the contract is clearly subversive of the interests of the nation. The inefficiency of the current organisation of the oil industry is one properly told by the fortunes of the PIB.

The difficulty that we face around the structure and source of federally-collectible revenue is more profound than this, though. On the strength of publicly available government numbers in the years 2010 to 2013, the average price of crude oil (the nation’s main revenue earner, and responsible for slightly under 20% of annual output) on the international markets was US$79.76, US$113.15, US$112.72, and US$110.8 per barrel respectively.

Over the same period, domestic oil production was 2.44 million barrels per day (mbd), 2.46mbd, 2.34mbd, and 2.23mbd respectively. However, the numbers for official earnings from this source tell a different tale. Total crude oil revenue rose from N5.39tn in 2010 to N8.84tn in 2011, before falling from N8.02tn in 2012 to N6.89tn last year. Until 2012, on this evidence, the trajectory for oil price, domestic oil production, and total crude oil revenue were in sync. Last year, a gap, almost N2tn wide opens up in the revenue numbers.

Whether you believe the “conspiracy theorists” who argue that these sums have been squirreled away in advance of the 2015 general elections, or those who blame a lack of transparency (and who knows, may be dollops of incompetence) in the preparation of the official numbers for the shameful discrepancies in the official numbers, it is increasingly difficult to argue against the need for drastic change in the national accounting for the oil sector.


The MPC’s Effect On The Domestic Balloon, By Ifeanyi Uddin

Ifeanyi Uddin

At its first meeting this year, held Monday last week in Abuja, the Central Bank of Nigeria’s rate-setting committee (the Monetary Policy Committee — MPC) opted to tighten monetary policy.

Reflecting on this decision, I am still not sure which is the more surprising of the committee’s decision: the MPC’s preferred tool for tightening; or the argument behind the decision.

First, the thinking behind the decision. The MPC was persuaded that there is a surfeit of liquidity in the system, and that much of it is held in bank vaults. There is no arguing that additional demand pressure, irrespective of its source, so long as most other economic indices remain unchanged would have price effects. And if the CBN’s bean counters are to be believed, these price pressures are showing up in the market for foreign exchange.

Apparently, this same price pressures would have been evident in the general price level if the CBN were not diligently “mopping up” the additional demand through its open market operations. In this case, the price we are paying for our current single digit inflation rate is the apex bank’s ballooning balance sheet.

I worry, though, when the CBN blames the redemption of AMCON bonds (December 31, last year) for the current surfeit of liquidity. Those bonds were always going to be due last year, and thus it ought to have been clear to our policy wonks that they would have an adverse effect on domestic liquidity. A forward-looking CBN ought therefore to have tightened earlier, (preferably at the MPC’s meeting in November, 2013), just before the bonds matured.

Except of course that the CBN may have also believed that the funds would not have a noticeable effect on liquidity. After all, significant portions of the redeemed N1 trillion series one, two, three, and four bonds were already held on the books of banks (which held most of the bonds); and in a few instances, the banks had even swapped some of the bonds for cash in repo transactions.

If the CBN dropped the ball on the AMCON redemptions, is it right to fret now over the impending OMO maturities and the effects on the domestic economy of the likely increase in government spending this year (ahead of next year’s elections)? The answer to this is an undeniable, yes. In spite of the preference of boosters of the economy to search for and cite numbers that speak to its rude health, the more unpalatable truth is that current husbandry of the economy has been below par, even for the course.

Just before we tee off the 2015 general elections, though, I must confess to having entertained a slight worry about the weapon with which the apex bank has opted to address its concerns with monetary conditions. By increasing the public sector component of banks’ cash reserve requirement (the proportion of deposits that banks must set aside with it) to 75% from 50% (it only recently moved it this far from 12%), the CBN confirmed the fears that worryingly loose fiscal policy might be the main source of the liquidity that it has done battle with for so long.

The banks may have been profitably mining this source of funds: creating high priced assets (sometimes extended to the same government) off low priced deposits (from government ministries, departments, and agencies); and building unconscionably large balance sheets off arbitrage opportunities in the foreign exchange market.

But, is it the case that the banks are the reason why government spends the way it does? Put differently, if the CBN or government itself, contrived to take all government accounts away from commercial banks would this rein in government’s bulimia for spending?

Conversely, is the CBN not merely squeezing away at a balloon? Now and again, managing to move the air, but never quite getting the air to go away. All its displacement may have achieved, is move the air into an area of less resistance. All guesses are good in the present circumstance.

And who knows, the CBN may just not be dead to the futility of its current policy trajectory. Monday’s meeting of the MPC acknowledged that “monetary policy is almost at its limits”. What should be done?

Clearly, the one sane option left for monetary policy, today, is to increase the cost to the fiscal side of the latter’s continuing intemperance. How best to do this? By embracing the nuclear option: “allowing the currency to depreciate by either shifting the mid-point or widening the band”.

Mr. Uddin, an economic historian and financial analyst, writes from Lagos

On Today’s Meeting of The MPC – Matters Arising! By Ifeanyi Uddin

Ifeanyi Uddin

The Central Bank of Nigeria’s (CBN) rate-setting body, the Monetary Policy Committee (MPC) meets today monday 20th January, under a cloud.

The mass of gray overhead has nothing to do with the recent public spat between the Office of the President of the Federal Republic of Nigeria, and that of the Governor of the CBN. Although most watchers of the Nigerian economy would argue that more than ever, the country is in need of very close cooperation between managers of its fiscal and monetary policies.  Still, with a little over five months left on his watch, the CBN governor had long since moved into lame duck territory; and so the apparent disagreement over whether he should go immediately or in June is near irrelevant.

Of greater moment is the composition of today’s meeting. Statutorily, the MPC comprises twelve (12) members. Its quorum is of six (6) members, “two of whom shall be the governor and a deputy governor, or two deputy governors”.

Of the MPC’s twelve (12) members, Mr. Tunde Lemo, the Deputy Governor (Operations) at the Central Bank of Nigeria (CBN), retired on Friday, January 10, 2013, after serving two full terms of five years each. As at end-December, 2013, five (5) other members (Dr. Adedoyin Salami, Mr. John Oshilaja, Professor Chibuike U. Uche, Dr. Shehu Yahaya, and Professor Abdul-Ganiyu Garba), served out the first four years of their appointments.

So technically, the MPC meeting today is six (6) members short. Nonetheless, baring the unfortunate absence of any other member, it should still be quorate. This rather slim quorum shall comprise Sanusi Lamido Sanusi (Governor,CBN), as chairman, and Alhaji Suleiman Barau (Deputy Governor, Corporate Services), Dr. (Mrs) Sarah O. Alade (Deputy Governor, Economic Policy), Dr. Kingsley Moghalu (Deputy Governor, Financial System Stability), Daniel-Nwaobia, Anastasia (CBN Board Member), and Mr. Stephen Osagiede Oronsaye (CBN Board Member) as members.

Doubtless, the sense of CBN “independence” would be poorly served by an MPC thus constituted. “Independence” in this instance is not construed in terms of being beholden to the fiscal side of the economy. The governor has so dramatically demonstrated that the CBN is not lacking in this quality of autonomy.

The current concern is more with “independence” from the group thinking that could hem in CBN bureaucrats. And to tell the truth, the five members whose terms expired last year brought a whiff of fresh thinking into the apex bank’s policymaking. Invariably, when issues came to the vote over the four years to last December, the deputy governors were of the same persuasion with the governor on the CBN’s policy trajectory.

The economy is thus best served by having these five (5) folk at today’s meeting. The CBN also believes this; for as at Friday, last week, a couple of them had received invitations to participate at today’s meeting.

The CBN Act 2007 obviously anticipated this possibility, too. It provides that after their first four years in office, this category of MPC members “shall be eligible for re-appointment for another term of four years”.

This is where the dark clouds begin to gather. If “appointment” in the first instance involved choice by the President, subject to the Senate’s confirmation, what constitutes “re-appointment”?

The point of the Senate’s “confirmation” is about allowing the people’s representatives in a democracy to pronounce on the fitness and propriety of personnel put forward by the executive for jobs of this nature. The live broadcast of the hearings lent additional credence to this reading. All it said to the people was “here are the functionaries that the President has chosen to perform this onerous but important function, and this is what we, your representatives, think of them”!

Four years into that office, whereas the President may be satisfied with the performance of his appointees, the spirit of the provisions of the law around their appointment does suggest that a more expedient route would be to have the Senate re-confirm these folks, via a televised process — as it was done four years ago.

This may not happen. However, the least the CBN owes “we, the people”, as we do battle ceaselessly against vested interests, is to demonstrate a transparency in the “re-appointment” of these five members of the MPC.

Mr. Uddin an economic historian and finance expert lives and writes from Lagos.