Nigeria not broke, it’s all about priorities — Dr Okeke
Dr Marcel Okeke, financial journalist and former chief economist at Zenith Bank Plc, in this interview with Weekend Trust, said the federal government is prioritising its expenditures. Why is the federal government unable to fund budgets, pay contractors and other necessary payments as the they should despite the increase in FAAC allocations given to […]
Dr Marcel Okeke, financial journalist and former chief economist at Zenith Bank Plc, in this interview with Weekend Trust, said the federal government is prioritising its expenditures.
Why is the federal government unable to fund budgets, pay contractors and other necessary payments as the they should despite the increase in FAAC allocations given to states?
The money people are celebrating as increase in FAAC allocation is just an increase in volume and not value. For instance, a bag of 50kg cement in 2023 wasn’t up to N4,000 but now it is between N10,000 – N11,000. So, if as a state, you were getting N1 billion in FAAC allocation in 2023 and now you are getting N12 billion you have not gained anything, it is just an illusion.
This is because in terms of value, it is worthless. Look at the exchange rates, in 2023 it was around N500 to a dollar, today it is around N1,500 to a dollar. Take a look at the minimum wage which was N30,000 but now N70,000, what people could buy with that amount then is not different now because our exchange rates have gone down as well as our purchasing power. That is why the value of servicing debt has also increased.
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Why is govornment borrowing despite an increase in revenue?
Because the Naira has been floated, our debt obligation in terms of servicing has also increased which is why we have to keep borrowing, and they won’t stop borrowing despite the so-called increase in revenue.
So why can’t government pay contractors?
It is just a matter of priority. Don’t forget that 2027 is around the corner and the government is doing everything possible to ensure that funds are on ground for that.
Recently, they said they have earmarked billions for the Murtala Mohammed Airport in Lagos, then the Lagos -Calabar Coastal way which will cost trillions of Naira. Then you ask if that is in the interest of the people.
So, it is just a matter of priority. Anything that they deem as priority, money will come out for it but the real issues that will address concerns of the masses, government is not really willing to look into it.
The government has also come out to say the paucity of funds is behind the delayed appointments of ambassadors. Do you agree ?
It is not that there is no money, but appointing ambassadors is not their priority, which I still emphasise. If they want to appoint ambassadors today, they will. It doesn’t take the whole world to fund our foreign missions but the priority for the government now is not ambassadors.
We have had scenarios where the government had to make payments or release funds for projects for activities that it deemed priority for them. So, I believe appointing ambassadors is not a priority for them, if not they would have done that long ago.
Contractors recently protested at the National Assembly over non payment, isn’t this an indication of lack of funds?
Government knows what it is doing, if it were foreign contractors, do you think that they would owe them? They would have done everything possible to offset their bills and clear the the debt.
I am sure you are aware that the recently cleared the backlog of trapped funds from the sale of tickets by foreign airlines. So, that one can say is a priority for them because they know it will boost their image.
Because local contractors are not what they consider priority, they have left them hanging.
However, I can assure you that, if they keep making noise, the government will look elsewhere, even if it is to borrow domestically, they will do that and settle them.
You see that they are borrowing in government securities, be it treasury bills or green bonds, they have a way around their borrowing domestically so if they want to do that, they will surely do that to offset the amount owed contractors.
As such, I believe that the contractors are not their priority and that is why they are still owing them till date.
A major issue currently on the front burner is the threat of attack by the United States of America. What’s your take?
America is not likely to invade Nigeria. However, the impact of that pronouncement is the issue. It has a serious effect on our image.
President Trump now regards us as next to nothing, which means we have lost our prestige, because if the greatest country in the world is calling us all kinds of names, then we have lost our image and other countries are also watching.
So economically, the impact of the pronouncement alone is huge and may affect our bilateral trade with other countries.
Would you say this government is on the right track with its economic policies?
They are on the right track technically. I say technically because of the unintended consequences of their policies on the masses.
For instance, the removal of fuel subsidy meant that we had to spend majority of our foreign reserves to import that was why immediately after the removal of subsidy and devaluation of Naira, our currency almost went to N2,000 to a dollar, until now they have managed to stabilise it. Similarly, they have not done anything to refurbish refineries or even encourage local production. If Dangote wasn’t a powerful man, you can as well imagine what would have happened to his refinery.
The figures being called indicating that the economy is in good shape is only on paper and not does not reflect reality.
Recall that inflation was about 34.7 per cent in December 2024, after rebasing, the figures reduced but that is not the reflection of reality. Cost push and other factors also count.
In summary, I will say that although the policies are not bad, they have taken a toll on purchasing power and it is not looking so good for the economy.