Soludo: Jonathan not managing economy well
My attention has been drawn this morning to an
article entitled: “Jonathan Replies Soludo over
“missing N30 trillion” claim”— extracting from Mr.
President’s interview as published by Thisday
newspaper. ThisDay quoted Mr. President as saying
that “Soludo said that under Ngozi’s watch, they
stole N30 trillion” but that since the sum of the
federal budget over the last four years was less than
N30 trillion, such an amount could not have been
“stolen”. According to the President, “it is all
political”. I had earlier stated that I would not make
further comments on the issues until probably after
the elections but since Mr. President has decided to
join the fray, I am constrained to make a further
brief clarification. For me, President Jonathan is a
gentleman and a friend but I have a fundamental
disagreement on his management of the economy.
On the issues at stake, I believe that the pressures
of office and the hectic electioneering campaigns
have not allowed him time to read my articles or
that his staff have not explained the contents to him,
hence he totally missed the point in his comments.
For the avoidance of doubt, let me clarify as follows:
1. In my article entitled “Ngozi Okonjo-Iweala and
the Missing Trillions”, I presented some rough
calculations covering: oil theft, money that ought to
accrue to stock of foreign reserves, unbudgeted oil
subsidy payments, customs duty waivers, leakages
through the self-financing government parastatals,
unremitted sums by NNPC, etc. I concluded that
section of my article by noting that: “I have a long
list but let me wait for now. I do not want to talk
about other ‘black pots’ that impinge on national
security. My estimate, Madam, is that probably more
than N30 trillion has either been stolen or lost or
unaccounted for or simply mismanaged under your
watchful eyes in the past four years”.
2. It is evident that the monies I referred to are “off-
budget”. These are monies that did not make it to
the budget. I find it funny that the Government
deliberately avoided the issues raised above but
instead has sought to divert attention by focusing on
the “federal budget”. Let me state for the record that
I believe that the amount of resources that are
either stolen from the economy or out-rightly
mismanaged by government far exceeds the federal
budget per annum. Ours is about a N100 trillion
economy, and I will be shocked if the government
pretends that it does not know that currently, about
10% of the GDP falls into a ‘black hole’ on annual
basis. We have not added figures based on
counterfactual analysis such as the cost to the
aggregate economy of bad or misguided economic
policy. For example, in today’s Thisday newspaper, a
headline news reports that “Aliko Dangote, Africa’s
Richest Man, Loses $7.8 Billion as Naira, Stocks
Plunge” while reporting that “In dollar terms, the
devaluation has knocked more than $40 billion off
the value of Nigeria’s economy”. Of course, most
people predicted that oil prices would soon fall but
we were caught unprepared, and today, the parallel
market exchange rate is N225 to the dollar. Thus,
the kind of analysis in today’s Thisday is just one
little example of the kind of collateral
damages–‘costs’ or ‘losses’– that mismanagement
foists on the system. To repeat, my article did not
focus on the federal budget: the mismanagement of
the consumption budget and its unprecedented debt
accumulation (with low value-for-money
expenditures) are entirely different matters.
3. What I found particularly disconcerting as a
Nigerian from the comments I read is the fixation to
validation from the World Bank. According to Mr.
President, “we asked the Minister how her
colleagues at the World Bank saw the accusation”. I
shook my head in disbelief. It is instructive that no
one asked what Nigerians thought or ‘how Nigerians
saw it’ but rather what was important to government
was the impression of the World Bank. If this is the
mind-set of our leaders, then ordinary citizens have
real cause to worry. Well, I have read several
editorial comments of Nigerian media and they do
not agree with the ‘impression’ of the World Bank
official. I read a similar comment by a high
government official stating that World Bank officials
and CNN had told them that government was doing
well and, therefore, who else could question them.
But neither the World Bank nor CNN conducts
comprehensive independent surveys on the economy
— they comment based on the data they are given—
and their subjective “opinions” cannot substitute for
hard facts. The World Bank is not a statistical
agency. I can provide a long list of countries that
World Bank reports praised as ‘star performers’ and
they slumped into deep crisis almost immediately
after. Check out the World Bank and IMF reports on
the US and other countries’ economies shortly before
the unprecedented global financial and economic
crisis in fifty years (the Great Recession of 2008/09).
Actually for many countries once they start getting
such ‘praises’, then perceptive officials begin to
worry. Nigeria is probably the only country where
its government officials quote the World Bank while
ignoring data from its own statistical agency!
A serious concern is that while government relies on
external validation (opinion) as ‘proof’ of its
performance, it is selective in the process—accepting
the positive ones and disparaging the negative ones.
Our recent exchanges illustrate the point. In my first
article (26th January): “Buhari Vs Jonathan: Beyond
the Elections”, I argued that “the economy seems to
be on auto pilot, with confusion as to who is in
charge, and government largely as a constraint.
There are no big ideas, and it is difficult to see
where economic policy is headed to. My thesis is
that the Nigerian economy, if properly managed,
should have been growing at an annual rate of about
12% given the oil boom, and poverty and
unemployment should have fallen dramatically over
the last five years”. No one has credibly challenged
the above, except what the Financial Times of
London described as a “furious response by the
Minister”. But, the influential Economist Magazine
of London and New York Times agreed with us.
According to the Economist editorial (7th February,
2015):
“… as Africa’s biggest economy stages its most
important election since the restoration of civilian
rule in 1999, and perhaps since the civil war four
decades ago, Nigerians must pick between the
incumbent, Goodluck Jonathan, who has proved an
utter failure, and the opposition leader,
Muhammadu Buhari….The single bright spot of his
rule has been Nigeria’s economy, one of the world’s
fastest-growing. Yet, that is largely despite the
government rather than because of it, and falling oil
prices will temper the boom. The prosperity has not
been broadly shared: under Mr Jonathan poverty has
increased. Nigerians typically die eight years
younger than their poorer neighbours in nearby
Ghana”. I gave the Government an “F” grade on
economic management, and the Economist described
its performance as “utter failure”. The Economist
also basically agreed with me that the re-basing of
the economy and its observed ‘growth’ have nothing
to do with government policy. Again, government
has not credibly challenged the above or is the
Economist’s view also ‘all political ’? Government
simply waved it off. My point is that if Government
has to rely on the “impressions” of external bodies,
then it should be consistent and comprehensive.
4. In conclusion, let me re-state that I firmly stand
by my earlier statements. These are weighty
statements which I weighed carefully before issuing.
I appreciate that this is an election time and so
attempts would be made to trivialize, or either play
politics with, or divert attention from, them. In a
serious society, we should have had a good debate
on these matters as they could provide some of the
building blocks in trying to pick the pieces after the
elections. Part of our citizen duty in a democracy is
to raise such issues and demand for answers. In the
meantime, I grant that our leaders are busy with
campaigns but these issues won’t go away until we
have a transparent resolution. Be assured that after
the elections, we will be back with even more
questions!
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