Government must let the markets work.

By Olu Akanmu

If there is any lesson the federal government must learn from the lingering petrol crises, in the unabated long queues at our petrol stations, it is that that a government cannot substitute itself for the market no matter the depth of its patriotic intentions.  From the management of the foreign exchange to petrol markets, we see an economic management paradigm that markets do not matter, that a government can take over the fundamental functions of markets from the supply of goods, to the determination of demand and the ultimate fixing of prices. Nothing illustrates the fallacy of this economic paradigm more than the current petrol crisis. When economic goods are mechanically and artificially priced below their true economic value, the effective and efficient functioning of markets are distorted, supply dries up and demand becomes over-bloated. This leads to secondary and parallel markets where economic goods will ultimately find prices closer to its true value. The few privileged elites who control supply benefit from unjustifiable rent, the market becomes inefficient and productivity and economic output ultimately decline. It will be useful to estimate the productivity loss and output decline occasioned by the current petrol crisis in all sectors of the economy including small business and the impact on the quality of life of Nigerian households.

If the economic and output implications issues of a fixed pricing of foreign exchange are not as clear, it should be clearer with the petrol product crisis.  Essentially, the fixed price of petrol below its economic value created little incentive for the private sector to participate in the petrol market leaving virtually the NNPC as the sole supplier. Despite all patriotic intentions and the best of logistic management, the NNPC alone has been unable to cope and meet national demand. If any government must be open to market logic, it should be the one operating in a time of heavy fiscal constrains like the current administration. In the period of fiscal abundance, a government might have the resources to call the bluff of markets, even controversially so but certainly not in the period of fiscal constrains where private sector resources need to be deliberately courted and mobilized to complement constrained fiscal supplies. From Venezuela to Nigeria, we see the same challenge of the anti-market economic policy and its negative effect on output and employment. A genuinely patriotic Hugo Chavez could call the bluff of markets when oil prices were high in his days in Venezuela but not the current Maduro government operating in period of low oil prices and heavily constrained fiscal state resources. Outputs have shrunk; inflation and unemployment have skyrocketed in Maduro’s Venezuela.  Shops are empty and there are typical long queues for basic essential groceries. Like Zimbabwe with the same unorthodox economic policies, we in Nigeria are now beginning to queue perpetually for fuel, queue for forex and queue for electricity.   

As it affects petrol and forex markets, the same issues affect the infrastructure and power markets. The Works and Power Minister has lamented  that while his ministry needs two trillion naira to complete just the road projects inherited from the previous administration, his ministry will at best have just about N400billion from the budget, which is expected to finance road construction, including investments required to radically upgrade our power infrastructure. It should be obvious that if we do not get our power markets to work with the right pricing of economic goods that provide sufficient incentives for private investments from home and abroad, we should say good-bye to serious improvement in our electricity situation. Babatunde Fashola despite his good track record may be potentially demystified by the current government economic policy.  

 It is not that markets are always perfect and cannot fail. There are in fact critical instances where markets fail and their dysfunction necessitates the intervention of the state to protect the poor and the socially vulnerable. In the case of public goods like education and health, where the social benefits of investments are far bigger than private returns to capital, when private capital will not sufficiently invest in public goods, the state must intervene to correct market failure to ensure the protection of the socially vulnerable, the poor and the larger society.  The state will achieve this by driving public investments in social services including the provision of subsidies targeting the socially vulnerable.  Such public investments and social subsidies especially in a fiscally constrained state must be appropriately targeted to ensure that they are going to only those who deserve such subsidies, those who cannot afford to pay commercial prices.  Designing such social subsidy program can be very challenging as we see in the petrol subsidy program as well as in the current forex allocation program, which is effectively a social subsidy program to buy the dollar at prices below its true economic value. The true economic value or price of the dollar is the equilibrium price that balances demand and supply in the forex market. This price given parallel market rate today is clearly above the official fixed exchange rate.

The distortion in the current forex subsidy program is obvious. The subsidy program is benefiting the rich and narrow elites more than the poor. The poor do not buy dollars. They do not process letter of credit nor buy dollars for capital investments in their companies and their subsidiaries abroad. They do not pay overseas school fees neither do they pay mortgages abroad using our dollar commonwealth. They do not travel overseas and certainly do not buy Personal Travel Allowances at official rates. And, there is certainly very little trickle-down effect of this heavy subsidizing of the dollar consumption of narrow elites as production inputs are priced at near parallel market rates, in the determination of market prices, even among businesses that are privileged to get the dollar at official rate.  The evidence of rising inflation confirms that the current non- market, fixed forex pricing policy, despite its good intentions has not delivered low prices of goods for the poor.

The same distortion also happens in the petrol subsidy program. The wealthy consumes more petrol with several fuel guzzling cars per household compared to the low income that uses mass-shared public transportation. The wealthy benefit from petroleum product subsidy more than the poor.  The petrol product market will be more efficient if prices reflect their true economic value at equilibrium prices that balance demand and supply. At true economic prices, demand will reduce to match available supply. This will solve the lamentation of the State Petroleum minister that thirty percent of our fuel imports are ferried across the border to Cameroun and Chad where petroleum product prices are closer to their economic value.  In a market driven pricing regime, the arbitrage margin between local price and cross-border price of petroleum product shrinks eliminating incentives to smuggle petrol across the border. Fuel imports and demand for dollar for fuel import will crash; the naira will appreciate with positive spiral effect on social welfare. Private sector supply of petroleum products will also increase at market prices, reducing the pressure on NNPC to supply and fulfil virtually most of national demand. We can then save resources from NNPC and plough them to fund social investments in infrastructure, public transportation, health and education.

Our argument in essence is that a fiscally constrained government such as we have, cannot afford to distort markets in area where they are potentially efficient and create inefficiencies by its commission or omission. The social cost of such market distortions is high on society, the economy and general public welfare. While the anti-corruption stance of the Buhari government is commendable, it must embrace real economic pragmatism and allow markets to function if it will make a difference in reversing the economic downturn. There is very little evidence, even if nascent, that the anti-market economic policy orientation of the government is working. Growth rate is at its lowest in decades, unemployment and inflation are rising. It is now time for change. It is time for the government to let the markets work.

Olu Akanmu publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com

 

NIGERIA’S FIXED EXCHANGE RATE POLICY: LIKE AN OSTRICH THAT BURIES ITS HEAD IN THE SAND

By Olu Akanmu

Whereas the Nigerian monetary authority fixed the official exchange rate at N196 to a dollar, there is today a near 50% differential in the parallel market rate to the official rate.  The fact that the exchange rate is not market determined, that the price of the dollar is not determined by the equilibrium of demand and supply means significantly that the dollar is officially priced far below its true market value. The incentive for rent seeking and price arbitrage, given the increasing differential has never been stronger. We are back in the days of essential commodity or import license where you don’t need to work hard anymore to make huge fortunes. All you need is to have the connection to be allocated dollars in the guise of a legitimate transaction. A manufacturer can potentially make a quick 30% return in one month on her dollar allocation and do not then need to go through the trouble and risk of running a factory, importing raw materials, producing and distributing her goods,  all which will give her a 15% profit margin at best in one year. Meanwhile factories are closing down, as genuine businesses who need the forex cannot get dollars and the lucky ones who get forex allocation are quietly changing their business model from manufacturing to round-tripping their dollar allocations.

The net effect is that the economy has slowed down and nearly grinding to a halt. Companies are retrenching staff as they cannot produce. Unemployment and social misery is rapidly compounding and will compound in an accelerated fashion if the current policy is not reviewed. Unlike the good intention professed by the President, Nigerians are not the ones benefiting from this current fixed exchange rate policy but few Nigerians who are privileged to allocate or get dollars at official rate who are making huge fortunes on dollar price arbitrage. It should be emphasized that unlike President Buhari would have wished, that even those who get the dollar at N196, if they ever really do any manufacturing or trading, are not pricing their inputs and final products at N196 to a dollar. Every business is pricing their input at close to parallel market rates to determine their final shelf and market price. Imported inflation is skyrocketing and may continue to do so in accelerated fashion.  In essence, the federal government good intention of taming imported inflation by legislating an exchange rate has not materialized. Our current fixed exchange rate policy is therefore like an ostrich that buries its head in the sand or can be described as an attempt to hide behind a finger. The ostrich that buries its head in the sand does nothing really to manage its danger but engages in a self-delusion that it is doing so.

The indices of the test of the current policy are clear. It is not working. Output is down, inflation is rising and unemployment is beginning to accelerate as companies close down or rationalize operations. Investment confidence has been eroded leading to massive capital flights. In a country that need foreign direct investment to support its low capital formation and national savings, current monetary policy flip-flops and uncertainty have not helped investor confidence. The negative trajectory of the growth of our foreign reserves now at USD28billion, its on-going rapid erosion due to attempts by the reserve bank to artificially defend the naira at its overpriced value further erode investor confidence and increases uncertainty concerns of investors who will either wait for the dark clouds to settle or fly with their capital. It should be emphasized that investors are less concerned about exchange rate or value than with the uncertainty of where the exchange rate will be tomorrow. No-one does anything when everyone is uncertain. The economy slows down and unemployment accelerates. Meanwhile, speculators continue to bet against the currency of a country with eroding trajectory of reserves, front loading and amplifying demand for forex and further driving up differential between the official and the parallel market.

We join the call for the naira to be floated but with some exchange controls that ensures that short term arbitrage players have little incentive to bet against the naira. A dollar that is priced close to its equilibrium price and market value will reduce artificial, speculative and front –loaded demand. During a fuel scarcity problem, every car with a half tank who can still run for another week goes to queue up for fuel, amplifying demand and compounding the fuel scarcity problem. A floated market determined naira-dollar rate that ensures that “anyone who can pay will get” will eliminate speculation and front-loading. A floated exchange rate policy will also mitigate significantly the uncertainty concerns of investors reversing current capital flight while stemming the erosion of foreign reserves. The national treasury will also be boosted by a dollar that is priced at its true market value to the naira. The rent seeking and arbitrage margins on the dollar sold through official market will be eliminated as this arbitrage differentials comes directly into the national treasury boosting government revenue at this critical time of fiscal constrain. A floated exchange rate policy will improve output and get more people back into jobs. A floating exchange rate policy supported by prudent fiscal management including the privatization of refineries to bring investors who along with the Dangote refinery in pipeline,  will produce petroleum products locally, will eliminate the huge pressure on the dollar by petroleum importers , which could even strengthen the naira.

What are the downsides of a floated exchange rate? A floating exchange rate policy may imply that the naira to the dollar rate will become significantly higher than the current N196 in the near term. The fact however is that only few privileged elites and their businesses get the dollar at current official rate. Most Nigerians buy and price their production input at parallel market rate. The Nigerian economy cannot loose what it does not presently have in real terms in a strong naira. A floated naira with exchange controls that mitigate against short term arbitrage incentives, where speculation and front-loading are eliminated may actually settle at a rate better than current parallel market prices.  The choices before us are simple. An illusory strong naira that only few privileged Nigerians get at official rate with declining output and rising unemployment or a naira priced at its relative real value with increasing output, investment and rising employment.

It is important to stress that there is no painless monetary policy option on the table for Nigeria at current low oil prices, especially for a country that has squandered its previous oil windfall savings. A Buhari government with its strong patriotic credentials and integrity has the goodwill to take tough economic decisions and get the buy-in of the Nigerian people.  As it dilly-dallies however running away from tough economic conditions, with declining economic output and rising unemployment, it begins to inevitably loose the goodwill that it seeks to protect. This government or ruling party has only a two year window to fix the economy and present its economic management credentials to Nigerians as it seeks re-election in the last two years of its administration. It risks boxing itself into a corner as current monetary policy are largely palliative, attempting to provide symptomatic relief for a patient whose fundamental underlying condition is rapidly deteriorating. The patient does not have to get into intensive care before the right medicine is administered. It may be too late. There is a “fierce urgency of now” to act with more flexible economic policies. We wish President Buhari well.

Olu Akanmu publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com

One World, One Prosperity or One Poverty

By Olu Akanmu

One world, one prosperity or one poverty. That is the lesson of the migrant crisis now in Europe. In a globally integrated world, we all have a shared destiny on the long run. Syria looked so far from Europe but now it is now so close. Europe, the US and the OECD must do more to support democracy and good governance in developing countries, support the building of strong institutions but not by being confused and indecisive as we have seen in Syria. From Iraq to Libya to Syria, Europe and the U.S must learn the lesson of how not to intervene in a country to entrench democracy, whatsoever is the objective of their Syrian or Libyan adventures. The West’s intervention in Syria and Libya has been disasters leading to even more fragile and collapsed societies than the ones they sought to replace. Libya has virtually become a failed state like Somalia, after Gadhafi was removed. Syria is nearly a failed state due to the Western sponsored proxy war against Assad.  The near failed nature of the Syria state is what has made it easier for an ISIS to over-run parts of Syria and create along with the Assad regime, the human catastrophe and genocide in their part of Syria. Meanwhile, the jury is still out whether life is better in Iraq today than before Western intervention.

The events in Syria and Libya begs the question if it was not right for Army to intervene in Egypt and Abachalized the Egyptian revolution and truncate its emerging democracy. Western confusion and indecisiveness in Syria and the mess in Libya will make the Egyptian Generals tell the Egyptian people that they are better off under their jag-boot government because they could perhaps hold the state together and prevent it from falling apart. Would Egypt have gone the way of Libya if its strong national army had not intervened in its politics? This is an interesting debate. It is a dialectical contradiction of history that dictatorial regimes had sometimes held the fragmented, fragile and weak societies together better than democratic governments. This is a worrisome pattern for democratic political science as events in Libya, Syria and the Balkans after the collapse of Yugoslavia seem to suggest. The consolation in all these events is however in the progress of democracy in Tunisia where the Arab Spring and Middle East democratic revolution was sparked. Tunisia’s democracy is marching forward with two democratic elections since the Arab Spring. The Tunisian society and its governance have become more inclusive with even, a very high level of women participation in government. Tunisia holds the beacon and the hope that the Arab societies even in Saudi Arabia shall yet be democratic one day. On the long run, even in weak, fragmented and ethnically diverse societies, only a true plural and federal democracy holds the enduring key to stabilizing society as we see even in complex states like the Democratic Republic of Congo.

One of the lessons the West must learn from the failure of its Syrian policy and the success of democracy in Tunisia is that nothing ultimately substitutes for will of the people, finding a way to organize themselves in true mass movements to change their society. The true mass movement of the people for democracy is stronger than arming thousands of guerillas by proxy to fight dictatorial and genocidal regimes, the type that we have seen in Syria. The second lesson is the need for a truly moral high ground beyond economic interests, in supporting democratic resistance in developing countries. Whether the West likes it or not, it lost a significant moral high ground when it could not find nuclear weapons in Iraq, the basis of its intervention to remove Sadam Hussein. American intervention, losing a moral high ground, in its Iraqi intervention created a new wave of anti-west and anti-imperialist sentiment in the youths of Islamic countries which terrorist organizations like Al-Qaeda and ISIS harnessed to establish their franchise across the Islamic world. Was the war in Iraq really about protecting oil and American interests but presented to the world as war against the dictatorial and genocidal regime of Sadam Hussein?

The imbroglio surrounding post American Iraqi intervention, the fact that the Iraqi state seemed weaker than it was even before its initial intervention and the political backlash against American politicians at home made it dither, unclear and confused about how to approach Syria. It was not clear what American policy was concerning Syria. Whichever way, President Barack Obama must take responsibility as the leader of the Western world for the human catastrophe and migrant crisis going on in Syria and across Europe. A Yoruba proverb says that “Orisa bi o ba le gba mi, se mi bi o se ba mi”. It means” if you cannot deliver me from my trouble, at least leave me the way I was, don’t leave me worse than you met me”. This is what the West, led by the US have done in Syria. Its intervention by proxy through the Syrian armed resistance has made the people of Syria worse than before. No-one could have imagined that hundreds of thousands of people facing war and deprivation at home will be determined to march across seas, continents and countries from the Middle East to Europe to survive. The mass migration across Europe that we see on television can only be likened to a second Exodus of a deprived people marching to Germany that now carries the aura of a new Canaan. The sad picture of the dead body of a three year old Syrian boy, lying face-down, swept ashore, in an attempt to cross the sea from Turkey to Greece, has become the most touching symbol of the human desperation and the failure of Western policy in Syria.

There is a third and bigger lesson. It is that the world is ultimately one village on the long run. The West cannot insulate its prosperity from poverty of the rest of the world. Somehow, one way or the other, either through a migrant crisis, piracy or terrorism, poverty and human deprivation in other parts of the world will impact Europe, America, Japan and Australia. The leaders of Europe especially Angela Merkel and David Cameron must accept this reality. It therefore beholds on the leaders of the Western World to re-strategize on policies on how to spread prosperity and good governance across the world, support investments to alleviate poverty, invest and support the education of people of developing countries, support the strengthening of governance and market institutions in those countries to promote prosperity, forgive debts where they are unreasonable as in Greece and achieve a world where prosperity is shared across nations and continents.

Olu Akanmu (@Olu Akanmu) publishes a blog on “Strategy and Public Policy” on http://olusfile.blogspot.com

On Buhari's Counsellors, Character and Competence

By Olu Akanmu

It is important that President Buhari should not squander his political goodwill early in his administration. He will need that goodwill to manage and navigate through complex and difficult economic conditions ahead. This is one of the governance lessons from the failure of former President Jonathan. The President clearly by the lack of clear fiscal action on the economy, his attempt to revamp the national airline, revamp the NNPC refineries rather than privatizing them seem to be economically oriented to big and populist government in a period of constrained fiscal resources.  Inevitable painful decisions are ahead on petroleum subsidy because they are not sustainable at least at present levels. We consume petroleum products far less as a nation than what we import. It has been estimated that at least thirty to percent of petroleum products get smuggled across into neighbouring countries due wide cross boarder price differentials. Yet, the Nigerian government pays for these huge subsidy. We are essentially subsidizing significantly fuel consumption in neighbouring countries at huge cost to the national treasury.  The other collateral effect is that the naira is perpetually under pressure as a very significant portion of foreign exchange available is used to support importation of petroleum products. The naira will positively appreciate to the dollar with positive collateral economic effects if we import less petroleum products or if we could keep our petroleum products at the level of our actual national consumption.

We support and commend the new transparency and anticorruption stance of government. Resources previously unavailable such as the LNG dividends are now being discovered to be made available to the people. These liberated resources are however meager compared to what is required to fix the infrastructure challenge and the rotten decay in social sectors like education, health and create jobs. The President will need to ask the nation to sacrifice at a point and negotiate the reordering of government fiscal commitments given meagre resources. It is in this context that the President would need all the political goodwill when he would have to take inevitable difficult economic decisions. The outcry against the President’s perceived or real sectionally lopsided appointments, which could potentially squander his political goodwill should therefore alarm or give the President serious concern. President Buhari needs to ensure that he does not by commission or omission confirm the fear-mongering by opposition during the Presidential elections that he would be a provincial President. This is another lesson to learn from the failure of former President Jonathan. He failed to remember consistently his national mandate and largely governed as a provincial President with “it is our turn” mentality screaming boldly out of his actions and inactions.

Wise kings surrounds themselves with wise counsellors. They know what wise counsel is and know where and how to find it. President Obama surrounded himself with the very best of political and economic brains in the United States taking a leaf from Abraham Lincoln by appointing even his rivals like Hilary Clinton. His executive team had strong public, private or academic sector pedigree. The only thing you could disagree with was the ideological orientation of his appointments and that is if you are republican. President Obama even appointed his mentor in John Kerry, who gave him his first national speaking platform at the Democratic convention, as his Secretary of State. Obviously, President Buhari is justifiably concerned with widespread integrity and character issues in our national leadership cadre. He is putting integrity and character as key qualifying criteria for his political appointments. The President should however recognize that he needs women and men with a combination of character and competence and not just character alone in his government. Despite the public relations script of the Presidency especially on his latest appointments, the merit or technical competence in those appointments are largely debatable. Character and competence are not mutually exclusive in leadership or public service. They should not be a substitute for each other. President Buhari must find people who combine both and appoint them into his government. Public servants or leaders with competence and no character will steal us dry while those with character and low competence will largely run a confused government with technically competent but corrupt elites and civil servants running rings around them. Good intentions does not guarantee good governance. A public servant must know and understand policy issues and know what to do to perform. 

The President also must show political savviness to hold together the “coalition of good” that brought him to power. He will need that coalition to govern in a democracy of plural interests where he does not hold absolute powers.  This will call for being politically pragmatic without compromising his core values of integrity. Political pragmatism combined with good values is equivalent to political wisdom, that which is necessary to build contingent pro-active coalitions and consensus and also knowing when to exert uncompromising executive authority in order to move the nation forward. While the President must “belong to nobody” so that he is not held captive by vested interests, he must build a broad level of trust with the “coalition of good” that has brought him to power by sheer political pragmatism and  savviness.  This trust is critical to hold his political coalition together.  President Buhari must develop personal and emotional touch with his various constituencies while keeping them publicly and privately focused on the larger ideals of “greater good of the nation”, selflessness and good governance.  The national assembly crisis of the President’s political party suggests that he must raise his ante significantly in this area.

Finally, we address the subject of defeating corruption on an enduring basis. Values set at the top matters and we commend the President on this. Suddenly, the anti-corruption agencies woke up from a deep slumber and electricity is now more available without an additional dime of investment. Beyond values however, we must strengthen the institutions meant to fight corruption to ensure they continue to live up to their purpose after President Buhari’s tenure.  The first task in this regard is to prevent the institutions from being captured by narrow and corrupt elite through the appointment of their lackeys into the leadership of those anti-corruption and law enforcement institutions including the regulators, the judiciary and the police. The President must be vigilant about nominees into his government, their nominators and their motives to ensure that these vested and narrow interests do not capture his government and critical state institutions even at policy level.  The second task is to strengthen our electoral process and institutions to ensure free and fair elections and ensure that people’s vote truly count. There is a clear correlation between corruption in a country and its level of free and fair elections. Every round of free and fair election purifies our national leadership and purge dishonest men and women from governance.  Good and evil produce after their own kind. We must elect good people who are likely to appoint their own kind to lead critical state institutions and set the right values in those institutions which over time may ossify into an enduring institutional culture fit for their institutional purpose.  President Buhari must therefore revisit the Uwais Electoral Reform Panel recommendations to strengthen INEC, criminalize electoral offences, promote internal democracy in political parties and reform political party financing. The third task is to review the enabling laws of the anti-corruption and law enforcement institutions to make them more transparent, publicly accountable and less susceptible to political interference. The Presidential Advisory Committee on Corruption should note this and take forward. We wish President Buhari well.

Olu Akanmu (Twitter @OluAkanmu) publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com

 

A Citizen’s letter to General Buhari

By Olu Akanmu

Dear General Buhari,

Congratulations on your well earned election victory. You were dogged and stayed the course over the last sixteen years from the ballot box to the court room and back to the ballot box. As our incoming President, who I believe will like to be in touch with the citizens, please allow me to share a citizen’s perspective of the challenges ahead.

First, it is important to recognize that while it has been tough to win the elections, it might be actually tougher to govern. Winning the elections might be a far, more easier task than governing and fulfilling the expectations of the people. Your victory has been near euphoric, at least for a broad section of the population. Some have even said that it feels like a new Nigeria Independence. Expectations of the dividends of democracy are high yet you are taking the rein of governance of the country at a very difficult time, where the treasury is nearly empty, the reserve have fallen below USD30b, an all- time low that can barely cover few months of imports. Oil prices remain down, excess crude account is nearly depleted; states and even the federal government occasionally are unable to pay salaries.  Unemployment, underemployment and social inequalities are at an all time high. Our young people want jobs, they seek a country that will truly liberate their great potential with good education and skills training and a buoyant industrial sector that will employ them.  The infrastructure deficit of power and transportation to support small and big business and aid a good healthy living of the people are very huge. Essentially, the resources of the state at this time may be fall far short of what is required to fulfill the expectation of the people.

The first task of governance may therefore be to manage the expectation of the people, to present the reality of government revenues to them with honesty and integrity, ensuring that government expenditure profile places the people above the self-interest of narrow elites who I am sure are gathering quickly around you as the new locus of power and resources.  You may need to ask the people to make sacrifice and trade-offs. Your government will however succeed in doing so only if it can maintain the high moral credibility with which you are coming into office.  If you must ask the people to sacrifice, the people will need to see that you have applied the same rule to yourself, to the members of your government including using your presidential leverage to stretch this sacrifice to the legislature.  A prudent government under the current situation is critical. You will need to resist the tendency to blow up the size of government. Rather, you will need to rein-in the diverse ethnic, political and business interests that are gathering around you to ensure a small and prudent government.  We do not need forty ministers and hundreds of special advisers and assistants. If you run a prudent executive, you will have the moral credibility to publicly ask the legislature to act responsibly by cutting its unjustified over-bloated allowances. As the President and leader of the majority party, you should also ask your state governors to follow your example of a prudent and small government at the centre and cut down their commissioners and hundreds of special assistants.  Whatever is saved from government prudence can then be ploughed into social services that will improve the health and well being of our people.

A small and prudent government does not imply a state that abandons its social obligations to the people. It is rather a state with an efficient government that encourages and incentivizes the private provision of social services to cover its resource gaps but provide a safety net for the poor and socially vulnerable in public provision.  It ensures that no citizen is left out of social and economic progress.  To this extent, the privatization program in sectors like power must be continued but it must be made far more transparent, ensuring that we do not replace public monopolies with private monopolies, and that the people get real market value for the sale of public assets.  Policies that subsidize the economic cost of few hundred oligarchs in the privatization program at the expense of the state and the people need to be reviewed. Putting a break on the privatization program will imply a return to a big and non-prudent government which we cannot afford.

Some of our Niger Delta brothers may feel a sense of emotional loss of state control with your coming to power. It is important to specially address them and assure them that more of them rather than a few narrow Niger Delta elites with access to Abuja, will prosper under your national leadership. Dear General Buhari, you cannot be uninterested in the governorship elections coming in the next few days in the Niger Delta.  With the relative huge resources including derivation, of the states of the South-South, the quality of life of our Niger Delta people could be much better. We need governors in the South-South who will recognize that good governance is not about building Las Vegas type stadia and swimming pools that have little impact on the lives of the people.  We need governors in the South-South who will invest massively in the people, in world-class education and vocational skills program that will make thousands of our South-South youths employable or start their own business in construction and the oil industry value chain.  Without truly responsible and accountable governments in the South-South, where corruption is massively tamed, even special Federal schemes like the Amnesty program will make little enduring difference in improving quality of life of our Niger Delta brothers. 

You said it so brilliantly in your acceptance speech on corruption, that when huge funds meant for  public use finds its way into private hands through corruption, it creates an illegitimate group of super-wealthy who undermine  our democracy because they think they can buy government or buy the elections.  You assured that this corruption will no longer stand as a respected monument in the nation.  As you will not fight corruption alone, law enforcement and anti-corruption institution building will be very critical. You will need to be on guard against the self interest of narrow elites who will seek to capture institutions meant to fight corruption through the appointment of their lackeys.  No-one should be above the law irrespective of their status or relationship to power. Impunity must be tackled to the ground permanently. There must be real consequences for those who break the law through strong institutional enforcement of the law and sanctions against crime, to act as detriments to others.  Where wealth has been acquired illegally by corruption, the state should not shy away from recovering it to communicate to society that sooner than later, the law will catch up with those who commit crime. Finally, dear General, you will need to lead the nation to set new value standard of ethics and morality which has been debased by corruption. Just as debased words like “settlement” crept into our national lingo from the top, let’s have new ethical words like character, integrity and selflessness creep back and ossify firmly into our national value standard. You have an historic opportunity to make this happen and lead the nation back to more pervasive prosperity. Best wishes.

Olu Akanmu publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com

 

Disenfranchising us by Permanent Voters Card

By Olu Akanmu

Only INEC believes itself that 38 million Nigerians have collected their Permanent Voters card. The reality is different on the ground. A visit to many local government offices of INEC where there are piles of uncollected voters card in their little white boxes, yet with hoards of Nigerians trooping to the INEC offices to find their cards without success, suggest that INEC, if we are not careful may be about to mess up this critical election. And even if the INEC numbers are true, the fact that 16 million registered voters according to INEC, are yet to have the permanent voters card on their hands, just nearly a month to the elections makes it imperative to cry out, that this rule to use the Permanent Voters card for this election will mar the integrity of the electoral process.

The coming Presidential election is largely between two candidates, largely a vote to choose between continuation of the status quo and change. The expression of the true democratic aspiration of the people is critical to the path the nation takes at this momentous cross-road in our history.  16 million disenfranchised voters can change massively the total vote count, decide who gets the absolute majority and determine who will be our next President. Even a million votes of Nigerians counted can swing the Presidential vote in a potentially close-call election. It is therefore worrisome that INEC can be subtly thumping its chest by giving the impression that it has scored a pass mark of 70% because seventy percent of voters have collected their permanent voters card (PVC). INEC needs to be told very clearly that in a potentially close call election, every vote will be critical as even a few hundred votes may end up determining who will be our next President. 70% cannot be a pass mark for PVC collection for INEC.  The pass mark should not be less than 98%.  Anything short of this can potentially make INEC to bungle the credibility of the Presidential elections, its acceptance by the people and the peace and tranquility that should follow what should be a credible presidential elections.

I have been to my local INEC office in Lagos three times without success in collecting my PVC despite having voted in the last two Presidential elections. My name is definitely on the Voters register. I have confirmed by sending my details to the official INEC short code 20120. How come then my permanent voter’s card could not be located? There are many like me who keep coming back to same INEC office. Feedback around the country suggests that this experience is typical of millions of Nigerians. Even the official INEC figure confirms that there are 16 million of us who could be potentially disenfranchised because of the PVC.

We should doubt the claim of the INEC Chairman that 38 million Nigerians have collected their cards. What is the basis? A cursory observation of the card issuance and stock keeping process in my local INEC office does not suggest that there is a professional inventory management and stock-keeping system in place in the INEC local offices. With the ways in which rolls and rolls of boxes are piled on each other, opened, closed without any form of entry for card issued, there is no way the officials of INEC in my local government in Lagos can thump their chest and assert that they know accurately how many cards are collected and how many cards are left in their stores. Essentially, INEC seem to have a basic management problem where there is no organized inventory and stock keeping system in its local offices. So how did the INEC Chairman get his figures? Is it based on disbursement to INEC offices or actual card collections?

Integrity is not enough as a success factor in INEC. Management competence is also very critical. We need to worry about a critical public service organization that seems not to be capable of simple and basic inventory management system. Those in business know that the moment your store-keeper cannot account for his inventory, he either has integrity issues or he is managerially incompetent. Whichever way, he is not the kind of store-keeper that you need in your business. We need to be worried about the management competence of INEC. It clearly does not understand how to design a distribution channel that is attuned to the needs and behavior of its customers. Otherwise, how come anyone will expect that in this busy Nigeria, where millions are struggling to survive and running around in pursuit of their daily bread, that three days will be enough to distribute the PVCs in their polling wards? It must have assumed that only a marginal percentage will need to go to the now centralized local government INEC offices to collect their cards. This has not been so. INEC clearly does not understand its market and its customers and have designed a very inefficient PVC distribution system.

In the elections of 2011, INEC betrayed management incompetence in project and logistics management where elections materials could not arrive at most parts of the country on election day. Elections had to be postponed by a week. We need to worry loudly now about the way the PVC collection exercise is going before the credibility of the elections are bungled. It is cheering news that the citizens of Plateau state led by General Domkat Bali, the Speaker of the State House of Assembly, the Attorney General of Plateau State and the Gbong Gwom of Jos have gone to court to challenge INEC on the use of the PVC for the coming elections. That the PVC will disenfranchise the people of Plateau state from fully exercising their democratic right to vote. We need more people and communities to sue INEC in our courts before it disenfranchises millions of our citizens and bungles the Presidential elections.

If 98% of Nigerians cannot collect their Permanent Voters card by two weeks to the Presidential elections, INEC must allow the use of the temporary voter’s card for voting.  The credibility of the last Presidential elections was not in doubt despite the use of temporary voter’s card. Why then this insistence on the PVC if rather than add value, it will affect the credibility and acceptance of the Presidential elections. INEC must not be allowed to disenfranchise 16 million Nigerians by its troublesome permanent voter’s card. INEC needs to reverse itself now on the PVC before it is too late. Jega must not be allowed to use the plea of good intentions to explain away the serious managerial incompetence of INEC. The credibility and acceptance of this critical election must not be put at risk. Every vote must count and every citizen must be allowed to make her vote count at this momentous period in our history.

Olu Akanmu publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com

The Descent into an Animal State

                                                            By Olu Akanmu

“To this war of every man against every man, this also is consequent; that nothing can be unjust. The notions of right and wrong, justice and injustice, have no place.  Force and fraud are in war the two cardinal virtues. Justice and injustice are none of the faculties neither of the body or mind “

-Thomas Hobbes

Elected representatives of the people are climbing high fences in agbada and three piece suits with their shoes falling off behind them. The hallowed chamber of the people’s representative is tear-gassed.  Elected representatives of the people struggle with handkerchiefs to clean their red and peppered eyes from police tear-gas inside their hallowed chambers. A judge is slapped by an elected governor with the police as spectators. Thugs invade a court and its judges take to their heels with their robes flying behind them like parachutes. Seven or is it nine legislators impeach a speaker of a twenty-six member parliament.  The Speaker and the legislators go into hiding. Journalists supposedly representing the free press, covering an event which the President would have attended in the Delta are kidnapped under broad daylight by war lords with the official security of the state as on-lookers and later negotiators. In the basins of the Benue river, armed bandits invade farming communities, slaughter the men and destroy farmlands.  No-one knows the armed bandits. They come, they go as they wish, marauding Nigeria’s north central region. Close to the Chad, armed bandits invade a town, behead the men, capture the women as objects of war and shoot the Emir.  The animal state is here.

The animal state is where the rule of law is suspended or no longer holds, where might is right. Anyone who controls the means of coercion whether legitimately or illegitimately can break the law, use the means of coercion as he or she wishes without recourse to the rule of law. It is the state of war of all against all. The self-interest of the controller of means of coercion is what matters. In non-animal states, where the control and the deployment means of coercion is legitimately delegated to managers of a state as a government, by the people as sovereign, the managers of the state must act not in their self interest but within rule of engagement or the law given by the people sovereign. It implies that the right to control the means of coercion and security forces can be abused by managers of the state if they act in their self interest outside the rule of engagement of the law.   

In non animal societies, where there is law and order, no-one else controls the means of coercion, which is largely arms or an armed body of men, except the government. A legitimate armed body of men and the state are so organically linked that Vladimir Lenin was famously quoted to have said that the state in the last analysis consist of armed bodies of men. Essentially, on the long run, state power is wielded by absolute use of force. It must however be done within the rule of law. The tragedy is that in Nigeria today, we have several armed bodies of men with means of coercion existing independently of the state such as the Boko Haram, and the diverse ethnic and riverine militia operating across the country. These private armies enforce justice according to their own rule and interest making the state look increasingly like a jungle where anything goes like an animal state.

While it was not palatable, we seemed over the last few years to have reconciled ourselves as a people to these illegitimate private armies and private police operating outside the control of the state. We tacitly accepted that ours in Nigeria is a state with failing security, law enforcement and judicial institutions where people largely have to resort to self-help in pursuit of their self-interests. Essentially, we tacitly accepted those who have invoked the law of the jungle on our collective psyche, that you can take the law into your own hands especially if you can build your own private means of coercion, your own private army and enforce your self-appointed rule on the larger society.  That is why until Chibok woke us up, we seem as a nation to no longer blink at news of kidnappings and the criminal mass murder of young children. We just move on especially if it did not happen near us.

If we tacitly accepted the marauding illegitimate private armies and private police, coercing us as they wish as in the jungle, the last we should accept is the capture of the legitimate security institution of the state by a narrow political elite using it to enforce its wish and will on society. This will be tantamount to a double jungle, a double jeopardy.  If Boko Haram, the ethnic and riverine militias are operating with laws of the jungle, we cannot afford our official security forces to act and operate the same way outside the rule of law. If they do, the double jungle situation akin to an animal state will quickly tear down our fragile social cohesion along the visibly open sectional, religious and demographic cracks.  It is therefore critical that the managers of the state act within the law and the rules of engagement in the deployment of the police and the army.  While the executive arm of government has a legitimate obligation to control and deploy the security forces, it must recognize that this obligation comes with a sacred moral responsibility to rise above politics and self-interest in the deployment of the official security apparatus of the state. If not so, it will breach social trust as a government of all.

Our political experience is showing that we need to strengthen the rule of engagement of our security forces, especially the police to prevent them from being abused by executive arm of government. The office of Inspector General of Police needs to be made more independent of the executive. The National Judicial Council should nominate the Inspector General of Police and his or her appointment ratified by the Senate for a fixed constitutional term. He or she should only be removed from office by a two-third majority of the national assembly just as it applies to the office of the Chief Justice.  As it has been canvassed severally, the office of the Minister of Justice and Attorney General of the Federation should be separated. Prosecutorial powers of the state should be taken from politicians and given to an Attorney General appointed for a fixed term who cannot be fired by the President except if he is so recommends to parliament and parliament accedes.

The legislative arm of government at federal and state levels also need to become more independent of the executive for check and balance and moderation of executive powers.  Our executive-legislative relationship at several levels of government has been rather too incestuous.  It is an open secret that because the legislative arm of government tends to be financially compromised or settled by the executive, it tends not to command executive respect. The tear –gassing of the hallowed chamber of the House of Representatives of the people show how low, how un-hallowed the executive and its organs takes the legislative arm of government. Whatever crises are in the national assembly, the executive and its organs should leave the national assembly to resolve it within themselves or with the courts as a de-facto independent arm of government.  The national assembly especially the Senate must take all necessary actions to reclaim its respect and independence after the recent national assembly events. If not, some day, in the future, an overbearing executive, using the precedent of recent events, will sack the national assembly akin to a constitutional coup, just because the national assembly refuses to kow-tow to it.         

Olu Akanmu publishes a blog on Strategy and Public Policy on http://olusfile.blogspot.com