Jonathan’s Journey

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Notwithstanding his deft management of the constitutional crisis that erupted following the incapacitation of his predecessor, the jury was still out on President Goodluck Ebele Jonathan (GEJ) after he became President following the death of Umaru Yar’ Adua in May 2010.

What a difference a year makes; a landslide victory at the Party Primary of the ruling People’s Democratic Party (PDP) was followed by credible general elections and an emphatic personal triumph in the Presidential elections. It is clear now that there is more to GEJ than good luck. This time, he is the architect of his own destiny.

GEJ is not the first Nigerian Head of State to come from a poor family. The difference is that some of his predecessors very quickly forgot about the urgent need to work towards the eradication of poverty. GEJ’s obsession with fighting poverty appears to be unshakeable.

Those who fault GEJ for not taking tough economic actions immediately after his meteoric rise to President in May 2010 are not being fair. He needed to secure a firm personal mandate first. This was because many in his own party are caught up in a “feeding frenzy” (either as legislators or in executive positions). This entails fighting for a slice of the Federal Government pie. They team up with other vested interests and seek to block reforms that threaten to end their dubious game.

Nigeria’s Federal Government revenues (estimated at only N3.35 trillion in 2011) are too small and its recurrent expenditures (N3.33 trillion in 2011) are too high. In a nutshell, the cost of servicing the bloated government bureaucracy plus inefficient and wasteful maintenance spending consumes all the revenues. The Federal Government has to rely on borrowing to cover capital spending, most of which is aimed at improving Nigeria’s decrepit physical and social infrastructure.

Worse, a significant chunk of the capital spending that does take place is heavily politicised, poorly coordinated and often done in needless competition with the private sector. The entire system is riddled with perverse incentives which encourage over-manning, duplication and the initiation of new projects rather than the completion of unfinished projects.

Many politicians as well as sections of the trade union movement, the media and academia in Nigeria want a “free lunch”; they favour subsidised fuel and power, no consumption taxes, no road tolls, school fees or hospital bills, but believe they have a divine right to demand quality social and physical infrastructure. Politicians gleefully concurred in order to get elected.

A disaster waiting to happen? Hold your breath, for with its recorded GDP growth rate of 7.87%, Nigeria was still one of the fastest growing medium/large economies in the world in 2011.

The good news is that GEJ appears to be reform-minded. But then this also means that Nigerians may have to brace themselves for a string of long overdue corrective economic measures such as paying appropriate prices for fuel, electricity, healthcare and consumption. A clampdown on corruption and rent-seeking behaviour is in the offing.

Nigeria tore down its toll gates some years ago and so its motorists consume heavily subsidised fuel and pay a pittance in road taxes and fees on drivers’ licences. Compare and contrast this to German road fees which typically bring in more than 200% of the money spent building and maintaining roads. Unsurprisingly, Nigeria is unable to maintain even its most strategically important highways such as the Lagos-Benin road, large sections of which have long been in a deplorable state.

GEJ’s power sector reform road map encourages private sector participation and is based on the same sound logic that drove the rapid transformation of Nigeria’s telecommunications sector. If executed properly it should lead to the rejuvenation of Nigeria’s moribund electricity sector which generates only 4,000 mega watts currently.

The need to augment Nigeria’s non-existent infrastructure has driven up the cost of doing business making Nigerian businesses globally uncompetitive. Many industries have folded, pushing the unemployment rate up to 21.1% at the end of 2010.

This figure masks very substantial regional divergences. Some of the poorer northern states are now notorious breeding grounds for sectarian violence, which is often sparked by irresponsible and/or cynical politicians.

GEJ has signified that he is ready to embrace change. Positive change has been elusive in the past because Nigeria typically had presidents who lacked the knowledge and political will to lead the change effort. He needs to quickly identify and empower perhaps half a dozen “Change Agents”, who are knowledgeable, committed, sincere and courageous to work closely with him and take ownership and control of his economic transformation agenda. They can be Ministers, Special Advisers or whatever.

Ideally, they would constitute a “kitchen cabinet” or an “inner circle” that will have a lot more “bite” than the unwieldy Federal Executive Council which statutorily must have a minimum of 36 Ministers – one drawn from each State of the Federation.

There is change in the air in Nigeria. Jonathan’s Journey will begin in earnest after inauguration on 29 May, 2011.

Atedo N. A. Peterside is the Chairman of Stanbic IBTC Asset Management. He serves as a Honorary Special Advisor to the Executive Governor of Rivers State. Peterside served as the Chief Executive Officer of Stanbic IBTC Bank PLC from February 1989 to October 2007, which he founded. He serves as the Chairman of Stanbic IBTC Bank Plc and IBTC Pension Managers Limited. Mr. Peterside serves as the Vice Chairman and a Director of Nigerian Economic Summit Group.

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