By Henry Boyo
Public discourse recently focused on the charge by Dr. Obiageli Ezekwesili, a former Minister of Education and Solid Minerals in President Olusegun Obasanjo’s administration, that the Yar'Adua and Jonathan regimes had frittered away accumulated reserves of about $67bn since the change of baton in 2007.
The government stoutly quickly countered the accuracy of the alleged reserves balance of $67bn with statistics purportedly obtained from the Central Bank indicating total reserves were barely $43.13bn in 2007!
Incidentally, after the revelations of the fuel subsidy scam, Nigerians do not require any overt confirmation of the appalling level of wastefulness and corruption in public service. The stupendous income of legislators and the effrontery with which the public treasury is looted are also patently apparent.
So, Ezekewsili’s charge does not really bring fresh information to national consciousness; however, in defence of her allegation of mismanagement, the immediate past Vice-President of the World Bank could argue that, in view of fairly steady crude oil revenue over time, reserves should have now risen above the ‘authenticated’ 2007 CBN balance. In reality, this may be so, but then, Ezekwesili would need to provide detailed and incontestable evidence of mismanagement of such fortuitous dollar inflows.
Undoubtedly, the over $12bn Paris Club debt payment and over $13bn paid out to upgrade the power generation and transmission capacity certainly became easier to accomplish with the fortuitous event of prevailing crude prices often in excess of $100/barrel pre 2007. Curiously, however, in spite of Obasanjo’s promises, power output probably increased by less than 500mw in eight years, and the power sector still remains epileptic six years after. Furthermore, the expectations also that the Paris Club debt exit would similarly attract increased foreign investment, with lesser national debt burden and greater infrastructural enhancement have regrettably also remained largely unfulfilled.
In fact, in an article titled "2006 Budget, Debt Management and VAT" it was noted as follows: "The burden and impact of the current national domestic debt is worrisome; these domestic debts which total N1,500bn ($11.5bn) consist mainly of contractors’ debts (about N300bn), pensions, salaries, and treasury bills and bonds, which account for over 70 per cent of total domestic debts. Indeed, our domestic debt of N1.5tn almost equals the total 2006 total budget of N1.570tn… Incidentally, the debt service charges increased by 18 per cent from N186bn in 2005 to N220bn in 2006."
Consequently, it was observed, "It is an anomaly for almost 70 per cent of domestic debts to comprise treasury bills and bonds with coupon rates in excess of 15 per cent for such risk-free sovereign debts."
Incidentally, after the Paris Club debt exit, there was little or no debt to manage, until the establishment of the Debt Management Office (read as Debt Creation Office) in 2000. Thereafter, domestic debt inexplicably galloped without anything to show for these loans!
We condemned such reckless monetary policy strategy, and in the article under reference, noted that the protocol of unending liquidity mop-up had become a perennial obstacle to the operation of a conducive economic policy with socially-inclusive growth.
It was no accident, therefore, that with such a misguided economic strategy, both inflation and lending rates remained in higher double digits, while government continued to borrow money it did not need at over 15 per cent interest rates, with disastrous consequences on all facets of our economy. Furthermore, in spite of the avalanche of dollar revenue reinforced by fortuitous high crude prices often in excess of $100/barrel, and our relatively healthy reserves, the naira exchange inexplicably also weakened from N80/$1 in 1998 to an average of about N115/$1 in 2007.
Paradoxically, Dr. Ezekwesili found nothing wrong with these shenanigans in our economic and monetary policies, and surprisingly acquiesced to their perpetration between 2000 and 2007.
An increasing rate of unemployment in spite of an incomprehensible systemic cash surplus and other abundant resources did not also unduly worry Ezekwesili, nor did she express any indignation regarding the lopsided nature of budgets, which often accommodated less than 30 per cent for capital expenditure. Indeed, one may rightly conclude that the seeds of our current horrid economic predicament were sown and nurtured in the years that Ezekwesili and her other celebrated indigenous co-travellers from the World Bank served in Obasanjo’s administration.
Nigerians are accustomed to the culture of sitting public servants, who see nothing wrong with bad governance, but who quickly turn around to decry the same policies they condoned, once they left office!
The Obasanjo regime could never mirror the fabled Court of Camelot, where the Council of Knights designed and assiduously implemented exemplary policies that would enrich the people, as Ezekwesili and her comrades would want us to believe; the impact of Obasanjo’s policies on critical areas of health, transport and agriculture have yet to become visible, and hundreds of billions of naira allocated to these sectors remain largely unaccounted for! The reality, of course, was that poverty actually deepened between 1999 and 2007. Regrettably, there may also be no enduring positive legacy from Ezekwesili’s stints as Minister for Solid Minerals and later for Education. The unyielding decay in these sectors is probably indicative of her inability to make positive change, when presented with the chance to do so. She obviously failed to produce any visible impact with over N350bn allocated to education under her tenure.
The Due Process Office for which she was better known reportedly saved over N60bn from audit of hundreds of billions of naira government contracts; however, in view of the undisguised embarrassing depravity in public finance, the World Bank guru should probably have done much better.
Ezekwesili may have mischievously misled Nigerians into believing that the greater our reserve balance, the better it is for our economy; this may, however, not be so in a model in which the CBN always claims the lion’s share of reserves. In reality, the bigger the size of CBN’s share of reserves, the weaker will be the naira exchange rate, as the higher CBN dollar reserves distort naira/dollar rate of exchange in favour of the dollar, as less dollars are curiously auctioned by the CBN to chase the surfeit of excess naira created by the apex banks substitution of naira allocations for dollar-derived revenue. This weird payment system inevitably creates disastrous implications for inflation and consumer demand and ultimately deepens poverty nationwide, especially whenever there is a rise in 'foreign reserves'! The Jonathan administration has unfortunately kept faith with the failed economic strategies inherited from Obasanjo’s economic team.