Lucky Fiakpa
6 October 2008
With crippling power crisis, failed basic infrastructure and rising cost of refined petroleum products, it is agitating to the ears to hear the President say that the economy is growing at seven percent.
"Fellow Nigerians, our economy is on a strong footing with an average growth rate of about 6.9 percent, a single digit inflation rate, external reserves of about $63 billion, and the Naira appreciating steadily against the major currencies.
This is a consequence of our policies aimed at maintaining relative stability and predictability in Nigeria's macro-economic environment."
This was the high point of President Umaru Musa Yar'Adua's Independence Day broadcast to the nation as it relates to the economy. The indices highlighted by the President are very critical to the growth of any economy. But some Nigerians have said that the strong economy probably exist in the books of the government alone as it is not reflected in the economic welfare of the people.
Some have even argued that it is simply miraculous for the economy to be growing at almost seven percent and inflation rate in single digit when the key determinants of an economic growth are not in place.
State of Infrastructure
The country state of infrastructure is an apology, the roads are simply in deplorable state, and electricity supply which is taken for granted in most countries is not just there. Some $16 billion was said to have been invested in the sector by the Obasanjo's administration with the situation getting from bad to worse. Unemployment rate is at ease heading upwards even as companies that could not cope with the harsh operating environment are closing shops.
Crippling power crisis, failed basic infrastructure and rising cost of refined petroleum products are of serious concern in the Nigerian manufacturing sector. These are said to have driven down capacity utilisation in the sector to about 38 per cent. All of these, Jide Mike, director general, Manufacturers Association of Nigeria, recently wrote have added to place the Nigerian manufacturer at serious competitive disadvantage position in the global market place leading to huge dumping of goods from countries with lower production cost.
There has been a report that many manufacturing industries have closed their production lines while not a few others have had to relocate to smaller African countries with better infrastructure and stable power supply. Even Nigerian entrepreneurs are also relocating their industrial concerns to these other African countries while they maintain liaison office in Lagos or Abuja. Michellin, a household name in tyre manufacturing in Nigeria had since closed shop and thousands of Nigerians laid off.
Dunlop Nigerian Plc, the only surviving tyre manufacturer, on August 23, 2008, laid off over 300 workers in the wake of its recent downsizing of operation. According to the company's public relations manager, Abiona Babarinde, the affected workers did not lose their jobs on grounds of incompetence or any other factor but due to the present circumstances of the company.
Dunlop's problems are traceable to two critical issues: power and tariff. The company spends an average of N150 million every month to generate its own power and in the light of the high cost of diesel at N150 - N160 per litre, producing at a competitive price had become difficult.
In addition, the epileptic supply of gas, price of which was hiked by 300 per cent recently had worsened the company's energy problem. The power problem had greater effect on the production of radial tyres being a heavy power consumer. And for most manufacturers, electricity from the Power Holding Company of Nigeria (PHCN) serves as back up.
The company's second major problem has to do with tariff. According to the public relations manager, before the company went into radial tyre production, tariff on imported truck tyres was 40 per cent. But at the time the company was entering the market with its truck tyres from its new N8 billion radial tyre plant, government reduced the tariff to just 10 per cent, making the locally produced tyre uncompetitive.
Available statistics have that Nigerians spend about N16.408 Trillion or $140 billion to fuel generator annually. Broken into sectoral details, the Telecom sector spends N6.7 Trillion per annum to purchase diesel; Filling stations spend N43.98 billion; Factories spend N43.98 billion; the banking sector spends N11.7 billion; Insurance companies spend N80 billion; Residential households spend N7.812 trillion and; commercial enterprises, N1.57 trillion.
This it is said amounts to 300,000,000 litres of petrol per day. These are funds that would have been deployed for better use in other vital sectors of the economy to create jobs and improve the standard of life of Nigerians.
However, the President appears to be aware of these ugly developments plaguing the economy and he acknowledged this in his speech. "We are aware that our physical infrastructure deficit cannot sustain the level of economic development which we envision for Nigeria. This brings to the fore the imperative to rapidly rebuild, maintain, upgrade, and expand our critical infrastructure. In our quest for practical solutions to our endemic energy problems, we have set in motion far-reaching reforms which have started to yield some positive results," he said.
How soon Nigerians will start to see and enjoy these "positive results" from the energy sector as stated by the President is left to be seen. The Nigeria Labour Congress (NLC), however believes that if the country must make progress economically, then President Yar'Adua must adopt a more decisive approach to governance. In a statement issued by NLC President, Abdulwaheed Omar, during the Independence Day celebration, the labour union noted that for a country that aspires to be amongst one of the 20 leading economies in the world, there must be dynamism in the leadership style of the administration.
"Organised Labour shares the frustrations of a majority of Nigerians over the patent lack of progress in virtually all aspects of Nigerian life, relative to the outstanding accomplishments of other countries, with which we started the journey towards nationhood. Those other nations have accomplished remarkable feats in governance based on sound ethics, first class technological and industrial development, excellent infrastructures and high standards of living. To explain the Nigerian backwardness, we must again engage the vexing issue of poor leadership," the statement read.
But President Yar'Adua believes his hands are on the plough and he is sure to take the country to its expected destination. "We have evolved a holistic strategy for the development and rehabilitation of the nation's transport system. We intend to concession the most economically viable roads across the country, while aggressively pursuing a road sector development and maintenance programme estimated to cover 5,700 kilometres.
"With the railways, we plan to concession some existing routes including the Western and Eastern rail lines as well as the uncompleted central line, while rehabilitating and expanding the existing rail system. Notably, the Infrastructure Concession Regulatory Commission, ICRC, is expected to commence work shortly," he stated.
In the Agricultural sector, he said, the government is resolutely pursuing a policy of sustained support for small-scale farmers, and structured development of medium and large-scale agriculture. "We intend to utilize the National Resources Development Account to boost domestic production of food crops and development of agro-allied industries. Our goal is assured food security," he noted.
The President also stated his administration's determination to ensure security of lives and properties and this, he noted informed the seriousness with which the government intends to implement the recommendations of the Police Reform Committee aimed at enabling the "Nigeria Police effectively and efficiently meet their constitutional mandate of ensuring public safety and security, as well as the enforcement of law and order in every part of this country."
Reforms in Government
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