Osinbajo shows his hand: Begins to unplug the plugs
Finally, it looks like we have a listening government. For long, it looked like the mind of this government was made up on certain issues and they were not going to shift, no matter what anybody said. We had long said that the main problem with our country was not just the drop in global oil prices. Indeed it is interesting to note that the average price of crude oil in 2016 at about $42 dollars per barrel exceeded the budgeted target of $38 per barrel in 2016. Yet we closed the year at -1.58% GDP decline.
One major factor that hurt our economy in 2016 was the reduction in the volume of crude oil we produced per day, which at a point was close to only one million barrels (about half of planned volume). Our production and export were severely challenged by the activities of the militant groups in the Niger Delta who had axes to grind with Nigeria. While we do not support sabotaging of national assets, we have remained consistent in insisting that the solution to the Niger Delta agitation was not going to be military. Just as we have also maintained that the solution to the Biafra agitation, which has been largely non-violent cannot be resolved by strong -arm and violent tactics. We believe that the ultimate solution would be political. And the first steps to this political solution is engagement with the people. Obasanjo’s strong arm tactics that led to the destruction of Odi did not stop the agitation. Yar’adua and his successor Jonathan adopted the engagement option and obtained virtual cessation. The next steps to the political solution recommended by the 2014 National conference was abandoned by this government and that led to the resumption of militant agitation.
Recently, Acting President Yemi Osinbajo (APYO) has fully activated the engagement option, whose foundation had been laid by Ibe Kachikwu, minister of Petroleum. He has visited, Delta, Bayela, Rivers, Abia and Imo states to engage the people of the Niger Delta. He has shown so much empathy to the situation in the region and even went out of the box to suggest novel ways of dealing with the problems. His suggestion for the establishment of official modular refineries in the region to help transform the current illegal and environmentally hazardous refining going on in the region into legal and regulated activity helped in no small measure to calm nerves. Amongst other grouses, one major complaint of the Niger Delta youths is that they and their parents are not involved much in the hydrocarbon chain in the country. They hardly own oil blocks, do not have contracts to lift crude and are hardly licensed to import refined products but are left to bear the full weight of the environmental degradation. Hence many have gone into crude oil theft, illegal refineries and illegal bunkering. But with the kind of moves made by APYO, it seems we are on the way to finding lasting solutions to the long agitation which even preceded Nigeria’s independence.
Beyond the easing in the Niger Delta, resulting in rise in crude oil output to about 2 million barrels per day, APYO has taken other actions to cause easing in other arrears of the economy. The first shot was fired when he led the national economic council to issue a kind of “marching orders” to CBN to do something quickly about the worsening situation of the Naira in the parallel market and indeed to re-jig the foreign exchange policy.
Soon after, the CBN took queue and issued a series of new policies which focused on increasing supply of foreign exchange both to the wholesale and retail ends of the market. By the sheer economic response to the increased supply, the Naira exchange rate in the parallel market retreated sharply in the last week. From a high of about 520 against the dollar, the week ended at about 450 Naira to the dollar. The economic and psychological easing that followed this development cannot be easily quantified. Those who saw the Naira exchange rate heading to 1000 Naira to the dollar saw the immediate positive impact of a sensible policy regimen.
On top of that APYO called a meeting of the competitiveness commission midwifed by the minister of Industry, Trade and Investment, Okey Enelamah and came out with a 60-day action plan to improve the ease of doing business in Nigeria. I understand that already certain low hanging issues like visas and company registration are already being dealt with. If we want to improve the inflow of foreign investment, making visa easy for people to do business in Nigeria as we find in Dubai, Doha, Singapore, Hong Kong and Rwanda, is an imperative. He is also pushing for the immediate implementation of the Nigerian Economic Recovery and Growth Plan (NERGP) put together by the Ministry of National planning & Budget.
Prof Yemi Osinbajo seems to be a man with his ears on the ground and looks like he is determined to move the economy forward. I am glad that he is not acting like a lame acting President but is taking steps everyday to make a difference. I urge him to continue in this direction and to listen to good advice. Every challenge Nigeria is facing can be sorted out through a proper policy option. The economy cannot run itself, people run the economy, adopting well reasoned policy options to direct the run of play. We must move to lift all limitations on capital importation into the country. Thank God, oil prices are firming and our foreign exchange reserves are growing but to sustain the current liberalized supply to the market which seems to have halted the unbridled depreciation in the parallel market we need to expand sources of supply. I also recommend that he takes immediate action on the full deregulation of the downstream petroleum sector which will give further spike to the economy. I also think that he can further reduce tension by releasing Nnamdi Kanu of IPOB as already ordered by the court. I believe that President Muhammadu Buhari (PMB) will rest more peacefully in order to fully regain his health if he knows that the economy has begun to show improvements and that ethnic tensions are being doused under his able deputy. That I believe is one of the best gifts he deserves.
Mazi Sam I. Ohuabunwa OFR