IT’S TIME TO RETUCTURE AND GO REGIONAL
(Thread)
“This is the time for the country to start talking about going back to regional government and slashing all the costs of a federal system which it clearly cannot afford.” 1/
(Thread)
“This is the time for the country to start talking about going back to regional government and slashing all the costs of a federal system which it clearly cannot afford.” 1/
“A country with a developmental agenda cannot go anywhere with over 500 federal MDAs, 36 state governments, 36 state houses of assembly and a unrepresentative national assembly all financed by crude oil money.”(FN) 2/
I believe the above viewpoint (which now ought to be the prevailing sentiment in the country) represents the best opportunity out of Nigeria’s current difficulties. What makes it so? It’s simple. The country is broke and the prospects for recovery are not fair. 3/
In the interim, PMB is on a borrowing binge accumulating liabilities that would remain beyond his tenure.
Recently he approved the withdrawal of $150 million from the Nigeria Sovereign Investment Authority (NSIA) Stabilization Fund to support the June 2020 FAAC disbursement. 4/
Recently he approved the withdrawal of $150 million from the Nigeria Sovereign Investment Authority (NSIA) Stabilization Fund to support the June 2020 FAAC disbursement. 4/
A large debt overhang.
New debt liabilities acquired in the last one week include
a) $3.4 bln IMF facility
b) N850 billion loan request approved by the Senate
5/
New debt liabilities acquired in the last one week include
a) $3.4 bln IMF facility
b) N850 billion loan request approved by the Senate
5/
The context of these liabilities include
a) Collapsing oil prices (analysts do not project prices to rise above $40 in the medium term - 12-18 months projected for global industrial capacity and general economic activity recovery from the Covid-19 crisis)
6/
a) Collapsing oil prices (analysts do not project prices to rise above $40 in the medium term - 12-18 months projected for global industrial capacity and general economic activity recovery from the Covid-19 crisis)
6/
b) Declining IGR. At present 60% of all state revenue goes to debt servicing but the general economic activity that enables this source of revenue has been wobbling and is expected to fall drastically given the recessionary implications of Covid-19 on the domestic economy. 7/
Numbers! Numbers! Numbers!
What does it all mean? Well, middle class person, let’s assume you borrowed N10m from various lenders to fix your shop, purchase inventory (capital stock) and pay your staff (O&M). 8/
What does it all mean? Well, middle class person, let’s assume you borrowed N10m from various lenders to fix your shop, purchase inventory (capital stock) and pay your staff (O&M). 8/
Your loan pay back plan includes profit from shop sales and rental income from your other asset: a 10-room hostel in Oworo. This is a good plan but there’s a big catch: many tenants have lost their jobs and area boys have since closed off your neighborhood
9/
9/
and people are unable to visit your shop. You still owe Oga for your lavish wedding. You also owe contractors heavily. (Ask your lawyer friend to explain “contingent liabilities”).
But you still live lavishly -drink Moët, fly first class, many cars and side chicks to boot. 10/
But you still live lavishly -drink Moët, fly first class, many cars and side chicks to boot. 10/
These financial difficulties will mean that the 2020 budget will remain (for the most part) unfunded mandates and capital projects + their multiplier effects a pipe dream.
The naked truth is that the govt’s 5-year economic management has not met with success 11/
The naked truth is that the govt’s 5-year economic management has not met with success 11/
This is no time for propaganda or recrimination however. To navigate our way out of this economic morass we must come together as a nation. PMB must use his soft power to build a national consensus
Lets do what is best for the country: RESTRUCTURE
12/ End
Lets do what is best for the country: RESTRUCTURE
12/ End
*RESTRUCTURE
