THE 2016 FEDERAL GOVERNMENT BUDGET : WHAT HOPE FOR The Common Man

THE 2016 FEDERAL GOVERNMENT BUDGET : WHAT HOPE FOR The Common Man

IT IS HOPED THAT  AGRICULTURE AFTER SEVERAL YEARS OF BEING IN THE DOLDRUMS WILL FINALLY BE THE BEDROCK OF NIGERIA'S ECONOMY

As usual, the official presentation of the 2016 Federal Government Budget by President Buhari before a joint-session of the two Houses of The National Assembly, has generated heated public debate.  The debates that followed since then have been further complicated by the inauspicious visit of the Managing Director of the IMF, Christine Lagarde, to the presidency just a few days after the Budget presentation by the president.

The visit of the IMF Chief undoubtedly signifies the importance of the Nigerian economy to the global capitalism and most definitely signpost the support of the IMF for the economic measures being proposed by the federal government to revive, stabilize and stimulate  economic activities in the Nigerian economy.

The IMF Chief’s visit also serves a clear signal to allay fears in the mind of potential foreign investors on the downward slide of the Nigerian economy which would have significant negative    reverberating impact on the global economy, and particularly on the economies of Nigeria’s West African neighbours.  It is very clear therefore that economic failure is not an option for Nigeria policy makers.

However, commentaries on the 2016 Budget in the domestic scene have been most divergent and irreconcilable to most observers. Nevertheless, Nigerian economic policy-makers must have been better informed with the oversupply of suggestions and opinions generated in the course of the intense debate. It is fair however to conclude that the 2016 budget has been generally well-received by the Nigerian stakeholders, despite all its perceived short comings.

Nevertheless, the single major economic challenge facing the government presently is how to quickly resolve the unacceptably high labour-deficit cutting across all skills and professions.  In the 2016 Budget, government has proposed to resolve the unemployment issue by offering direct employment to 500,000 unemployed graduate teachers. In addition, government has committed itself  to creating additional 3 million jobs in the medium term through strategic private sector-led economic initiatives. 

Indeed, most commentators regard these twin objectives as “heroic tall dreams” considering the absence of accurate official statistics on the magnitude of Nigeria’s mammoth unemployment burden, The problem presently however is the general fears that government has again (as in the past) opted to pursue the same pedestrian policy paths that have failed woefully under successive governments since Independence.  Therein lies the danger in the proposed approach to Job and Wealth Creation in the strategic efforts to clear the high labour-deficit that has remained a potent threat to Nigeria’s socio-economic stability.

It is apparent that government is working on a set of over-simplistic assumptions about the character and nature of the Nigerian unemployment situation. The government has therefore been misled into undue optimism about the prospects ot the proposed Employment policy. It is extremely simplistic to propose to implement this employment policy measures via orthodox economic theory of the market in which the private sector is expected to play a leading and commanding role. The truth is that the Nigerian economy is yet to attain the level of economic sophistication in which the private sector, acting as the primary economic agents of fiscal and monetary economic adjustments, can be effectively induced by palliative incentives into creating enough jobs to absorb the large army of unemployed youths roaming the streets. Definitely this is not the best option to building wealth for the general prosperity of all Nigerians because the Nigerian private sector is economically too vulnerable to macroeconomic shocks to bring about required reduction in the presently high unemployment rate.

                                                                                                          Besides the Nigerian private sector is largely dominated by extremes of rent-seekers and profiteers who adds no real value to the Gross Domestic Product.  The success of  the proposed economic policy depends largely on the private sector attitude towards doing business on strong corporate ethics rather than the present practice of maximizing profits at all cost. Government has a duty to ensure that the common man is gainfully employed by selectively using its huge spending power in such a way that benefit only private businesses that are relatively more intensive in their operations.

There is also the fears that Nigerian private sector is pathologically import-dependent, globally uncompetitive and chronically surviving on obsolete technology.  In addition, operational constraints such as prolonged exposure to malfunctioning public infrastructure, high operating cost and relatively poor entrepreneurial disposition towards innovation, are challenges that have completely crippled the capacity of the Nigerian private sector to play any significant role in addressing the huge unemployment in the Nigerian economy.

Moreover, Government perpetual penchant for noisy-sloganeering about “Foreign Investors” has become an embarrassing misdirection of economic policies priorities.  Invariably, these so-called  “foreign investors” are no more than rent-seeking international portfolio capitalists. As usual these global ‘economic migrants’ would turn round to insist on the creation of a “conducive business environment” in the country.  The truth is that no such thing as “conducive business environment” really exist in capitalist economies.  The market will always function to the satisfaction of both buyers and sellers; any other consideration is completely irrelevant.  There is good reason for Government to suspect that the chants of “conducive business environment” is inimical to our national interest. In normal cases, genuine foreign investors are merely interested in the safety of their investment in an economically and politically stable economy.  The 2016 budget must not place to much value on attracting foreign investors who are exclusively looking for “conducive business environment”.

Again the budget objective to lay a solid foundation for the rapid industrialization of the Nigerian economy is as disturbing as the general tendency by Nigerian economic policy makers’ penchant for raising false hopes on the possibility of achieving “high growth rate”. In the face of current economic challenges  With collapsed infrastructure, shrinking productive capacity, high national debt burden, pathological import-dependence and rapidly  declining foreign exchange earnings and falling education standards, the projected two-digits growth is most unrealistic. Moreover, Nigeria does not yet have the requisite caliber and quality of technical and managerial manpower to achieve this, in spite of our huge human-resource endowment.

It is suggested Government can identify the strategic growth-centres of the domestic economy as a first step towards brightening Nigeria’s economic outlook as a potential ‘industrialized economy’ in the long term. Government can effectively achieve this objective by                                building a strong economic base in the light-industrial subsector and the agro-allied industries. There are also good prospects in the lower levels of Engineering and Construction that are largely labour-intensive sectors This strategy will facilitate rapid expansion in domestic production by creating a large derived demand for labour. Expansion of employment in these labour-intensive sectors is a more realistic path for laying the foundation for the long term industrialization objective.

             

Nigeria is largely a labour-suplus, capital-scarce economy.  The Nigerian economy therefore needs to put its active labour force to productive use in order to reduce the presently high unemployment rate in the country.  The Nigerian economy is thereby strictly constrained in the large-scale applications of labour-saving innovations and technology.  Nigeria should do-away with any policy measure that encourage unrestrained investment in labour-saving innovations and technology that potentially threaten employment.

Undoubtedly Nigeria is blessed with huge human and material resources.  The sad economic reality in Nigeria however is the existence of extreme poverty despite the endowments of a huge human and material resources. Labour-saving innovations and technology with harm rather than improve the living conditions of Nigerians.  The drive towards unbridled innovations in non-labour intensive economic sectors is more pronounced in the service sectors (especially in the the Financial subsector) in the last decades. The so-called “disguised benefits” have been more than harmful in terms of the large number of staff who have had to be disengaged as a consequence of the introduction of  labour-saving innovations in financial service delivery. For instance, This despite the massive labour-saving innovations being deployed in the Nigerian financial sector, most Nigerians banks have remained relatively weak, fragile and debilitative over the last five years.

Besides, the touted “benefits” of innovations in the financial sector are not even sufficient to compensate for the huge unemployment directly “induced” in other sectors attributable to the relentless financial services innovations.

Therefore there is the urgent imperative for government to shift emphasis to economic activities and job creation in the labour-intensive sectors of the Nigerian economy.  This may sound “old fashioned” economics to some people, but there is no doubt that it makes better economic sense in the present circumstances.

These labour-intensive sectors are easily indentified by the extremely low level of capital-labour ratio utilized in production and high wage-bill relative to investment in capital equipments.  Economic activities that fall within the category of labour intensive sectors include: Agriculture and Agro-allied (especially the food pressing chain), cottage industries (e.g. furniture making), road construction and production of light industrial and household goods. The hope of the common man is inextricably tied to the performance of labour-intensive production activities.