Bring back our Naira

Believers in the Miltonian school of economic thought said the solution was cutting taxes and reducing government spending to revive the economy. Economists from the Austrian school of economic thought believed it was too much regulation and government intervention, therefore to get the Western economies back on track, less regulation and government interference was needed. […]

Believers in the Miltonian school of economic thought said the solution was cutting taxes and reducing government spending to revive the economy. Economists from the Austrian school of economic thought believed it was too much regulation and government intervention, therefore to get the Western economies back on track, less regulation and government interference was needed.
In Nigeria, Ngozi Okonjo-Nweala, a PhD holder and MIT-trained economist and former managing director of the World Bank has decided to throw away her much-touted credentials and experience to transform to a founder of a new school, the Otuokean economics school of thought to deal with Nigeria’s daunting economic challenges.
The Otuokean school, as promoted by Goodluck Jonathan, embodies the failed economic policies of the PDP government in the last six years.  This school derives its name from a village called Otuoke, the hometown of President Jonathan, in Bayelsa State. The first and centre-piece theory of this new school is “The Blame Game Theory”. The concept of the theory is similar to a village market woman blaming all her non-business prospects on others instead of on her failed market strategy.
To Ngozi and the PDP government, this dramatic fall in oil prices was unforeseen. Ngozi knows that is not the case, but in her current field of expertise of the Otuoke economics, it has to be so. All other economists, including Ngozi, knew that the Quantitative Easing (QE) that was run for the last five years by the United States Federal Reserve, and currency manipulations in Japan and China would come to this: a fall of commodity prices, including oil. This is exactly what is happening. The moment the Chairman of the Board of Governors of the Federal Reserve, Janet Yellen announced the end of quantitative easing late October and the plan to raise interests, the global oil market started responding appropriately.
For most of us who do not know what Quantitative Easing is, in simple terms it is just a way of increasing money supply (printing money) by issuing bonds to investors and banks by a central bank. The US Fed Reserve kept interest rates low at below 1 per cent for almost five years to enable the US economy recover, and issued bonds running to trillions of dollars. During this same period, because of increase in money supply, the prices of commodities, including oil, went up due to excess liquidity in banks and stock markets. It was a great period for our dear country except that our economic manager allowed our excess crude and all earnings to be squandered, while showing up on TV  with wide smiles stressing how the fundamentals of the Nigerian economy are so strong. This is only possible from an Otuokean perspective.
Our problem in Nigeria is the mismanagement of our oil revenues and the massive stealing being ‘coordinated’. The Finance Ministry has failed to do a good job of tracking commodity prices and global oil production, and the impact on our economy over the years. There are no serious policy briefing and research papers on what is likely going to happen after the period of oil boom. The only thing Ngozi kept saying is the ‘fundamentals of the economy are strong’.  
I heard her say that it is a dangerous job to forecast oil prices; I would have to remind her that it is not dangerous; it is a lucrative job on Wall Street. Gary Cohn, President of GoldMan Sachs Group Inc, is forecasting oil prices may hit $30 per barrel in the coming months. Madam Finance submitted our budget with a benchmark oil price of $65 dollars to the National Assembly. How is the budget going to work this year?
With the falling oil prices and the massive looting that has taken place, Nigeria will have to be loaded with debt again as the only way to finance Nigeria’s budget deficits. There are reports by Bloomberg News of government’s plans to borrow money from the bond markets to even pay police allowances before this election. This is very serious. I hope the policemen will not allow themselves to be used to rig this election. It is possible that after the elections, the police may not get their salaries for months to come: use and dump tactics.
Because of the poor state of the nation’s finances, the yields on Nigeria’s bond is 7.58 per cent, compared with 6.82 per cent of Ethiopian bonds today. What that means is that investors have more confidence in Ethiopian bonds than in ours, and so we have to pay more interest to borrow money. Very sad indeed!  Nigerians are waiting for the audit report regarding the missing $20 billion. If the PDP goons will not allow the report to come out, the most honourable thing to do for the Finance Minister is to resign and move on. This government is not interested in solving Nigeria’s economic problems. Jonathan and his cronies want four more years of continuous looting even in the face of dwindling oil revenues and hardship for ordinary Nigerians.
There is no innovative way to drive the economy and diversify the revenue base despite our agriculture and minerals potentials.  In 2008, I experimented on the value of our mineral resources. I was told that there was a mineral stone of value in Nasarawa State called tourmaline which is used in making expensive jewelleries. I decided to buy a small piece the size of my fingertip, and I was told to pay N15,000. I thought the gemstone was expensive, but because I wanted to understand the market, I paid the young geologist to get it and send it to the USA. I made an appointment with a professor of Mineralogy so that I can learn about the gemstone. He told me to come with my gemstone for him to explain what it is and figure out its value. I went to his office, sat down and brought the gemstone out.
The next thing he did really surprised me; he went straight to a hidden safe in his office, opened it and brought out the same kind of gemstone, a little bigger than mine, polished and cut to shine. He told me the gemstone was a donation to the Geology department by an alumnus, and the price written on it was $3500! Not only that, the stone’s origin was Nigeria! Now that oil price is falling, is the price of gold not going up? Don’t we have gold in Zamfara and Ilesha, and what have we done with the deposits over the years?
Another theory from the Otuoke school is a shocking display of indifference and open support for impunity: “Stealing is not Corruption”. Who is in a better position to advance this new theory than the Dean of the School? The President strongly believes that corruption should not be punished, and he is on the campaign trail saying it shamelessly. We have massive cases of corruption such as the Malabu Oil deals, Stella Oduah’s bullet-proof jeeps, fuel subsidy fraud and  immigration recruitment scam which have not been logically and seriously dealt with. Why is it so? It is the president’s philosophical disposition to corruption.
The consequence of this is GEJ has presided over a period of oil boom never witnessed in the history of this country, but ironically all the economic indicators have deteriorated considerably. The unemployment rate is up, poverty levels are up, our growth rate is not commensurate with the revenues we have earned, and our domestic and foreign debt profiles are rising.
The Otuoke economics school has turned all well-known and tested economic theories upside down. It has stood economics on its head, and it is standing Nigerians on their heads too.
Unless one is a beneficiary of the missing billion dollars Sanusi was talking about, I do not see how voting for the continuation of these failed policies will benefit us as a country. To vote for continuity of these is choosing to walk with your head and not legs for four more years! The pains and awkwardness of such a walk are better imagined. That is why we need CHANGE! Nigerians cannot continue with this Otuokean economic theories and their painful prescriptions.
We have a choice to make: Walk with two legs on election day and vote out an incompetent government with our PVC or start learning the balancing act of how to walk upside down with our heads for four more years. Former CBN governor, Prof Charles Soludo, rated this government F9 in handling the economy, but the issue goes even beyond grade, it is about professional malpractice and mismanagement of an economy of a population of 170 million people.
You can follow Dr Hassan on twitter @kabirhassan