Emergency Economic Powers For Buhari Must Not Fail

The Economic Team of the President Muhammadu Buhari administration, which is headed by Vice President Yemi Osinbajo, says it is working on a bill seeking to adjust the bottlenecks in the bureaucratic processes in several government agencies  in order to release more funds into the economy and cushion the effects of the current recession. Called […]

The Economic Team of the President Muhammadu Buhari administration, which is headed by Vice President Yemi Osinbajo, says it is working on a bill seeking to adjust the bottlenecks in the bureaucratic processes in several government agencies  in order to release more funds into the economy and cushion the effects of the current recession. Called the Emergency Economic Stabilisation Bill 2016, it is expected to be presented to the National Assembly in September for approval. The Bill would seek to:
•   abridge the procurement process to support stimulus spending on critical sectors of the economy;
•   make orders to favour local contractors/suppliers in contract awards;
•   abridge the process of sale or lease of government assets to generate revenue;
•   allow virement of budgetary allocation to projects that are urgent, without going back to the National Assembly.
•   amend certain laws, such as the Universal Basic Education Commission (UBEC) Act, so that states that cannot access their cash trapped in the accounts of the commission because they cannot meet the counterpart funding, can do so; and
•   to embark on radical reforms in visa issuance at Nigeria’s consular offices and on arrival in the country and to compel some agencies of government like the Corporate Affairs Commission (CAC), the National Agency for Foods Administration and Control (NAFDAC) and others to improve on their turnaround operation time for the benefit of business.
The endnotes to the above say, if the bill is passed, the procurement process under the Public Procurement Act (Amended) 2013 would be reviewed to enable faster execution of government projects. Since 2007 when the Act was passed, the processes of approval for government projects execution would take a minimum of eight months; hence government agencies have found it difficult to execute annual budgets, as funds are released two or three months to the expiration of the lifespan of budgets. Such delays in completing procurement process have been counter-productive, as projects are not completed before the end of the fiscal year.
Also, the Universal Basic Education Commission Act 2004, which provides for counterpart funding from state governments to access interventionist project funds will be revised to ease access to the funds. Some N58 billion of this money is said to be idle in the Central Bank of Nigeria (CBN’s) vault because states cannot access them.
There is no wisdom in detaining such funds when government needs to pump cash into the economy to cushion the effects of the current recession. Also, mobilisation fees for projects may be increased from 15 per cent to 50 per cent; Nigeria’s visas would be easier to obtain; the presidency could move funds from one project to another without necessarily seeking the National Assembly’s approval, and other measures.
This is not the first time a Nigerian president would seek emergency powers from the National Assembly in their attempt to battle economic downturns. In the 1980s when crude oil prices crashed after a prosperous decade in the 1970s, former President Shehu Shagari sought emergency economic stabilisation powers to reduce the pressure on the country’s foreign reserve. A highlight of the measures included the following:
1. Foreign exchange control, which reduced Basic Travel Allowance (BTA) from N800 to N500 per person of the age of 16 and above per annum, with no allowance for children under the age of 16.
2.Hajj forex subsidy: The government pegged the number of pilgrims permitted to perform the hajj in 1982 to a maximum of 50,000, with a BTA of N800 per person, against N500 for other citizens.
3. Reduction of business travel allowance from N3,000 to N2,500 per annum for companies registered in Nigeria.
4. Reduction of Form ‘M’ lifespan to six months, as against one year in the past, and all registrations were done at the CBN headquarters.
5. Reintroduction of pre-shipment inspection for spare parts, raw materials and books and the introduction of pre-shipment inspection for frozen and canned fish.
6. As part of the monetary policy, all interest rates were revised upwards across the board by two per cent from their existing levels, but later in the year in November 1982, they were reduced by one percent.
7. Frozen chicken and gaming machines were totally banned from importation and 29 other commodities were removed from open general licence and placed under specific import licence requirement.
8. There were tariff changes on 49 import items, with most of the changes being increases in the rate of duties while others were introduction of new import.
9. New rates of excise duties were raised to as much as 45 per cent on a number of commodities, including cigarettes, towels, fabrics, cosmetics and perfumes, and paper napkins, electric, fans, locks, bicycles and motor cycles.
10. More powers and training for custom officers and immigration reforms.
Those measures did not make any meaningful impact before the December 31, 1983 military coup by General Buhari.
We would like to remind the presidency that abridging the process of procurement and increasing mobilisation fees from 15 per cent to 50 per cent may, on the face value, allow more funds to circulate in the hands of local contractors and, by extension, the economy. However, in doing so, measures that could forestall abandonment of projects must be put in place.
In the 1980s,contractors abandoned projects after collecting huge mobilisation fees. Even in the contemporary history of Nigeria, after receiving mobilisation fees, contractors collaborate with government ministers, civil servants and even regulatory agencies to abandon projects, simply because contract funds are perceived to be contractors’ share of the national cake. Therefore, it amounts to a huge financial risk to release 50 per cent of contract sums, unless the president’s anti-corruption strategies are so water-tight that corrupt elements would not have their way. There is the need to match entrenched corruption in the system with a vigorous anti-corruption fight, else the measure will produce frustration.
On the relaxing of the counterpart funds required by states to access UBEC’s idle N58 billion, we would also advise government to be cautious on this. This is in the light of the fact that the bailout given to state governments in the last one year did not seem to have performed in some states. In spite of the federal government’s magnanimity to states, some governors were not so magnanimous to civil servants, as various categories of workers in some states are languishing in hunger and poverty over unpaid salaries, among them, emoluments for the period which ought to have been covered by the bailout.
In the light of the current recession, we call on the National Assembly to support the Buhari administration by passing the Emergency Economic Stabilisation Bill 2016 so that more funds could be released into the economy. But in implementing the policies, government should factor in elements that would ease the excruciating pains being suffered by ordinary Nigerians in the aftermath of the increase in fuel price and the devaluation of the naira.