Follow Us on Google
Throwing money at a problem is easy. What is not easy is ensuring that the money solves the problem. Sadly, making money work has become the Achilles heel of public policy execution in Nigeria. With this background, it is time to take a critical look at President Bola Tinubu’s money rain last Monday. There is urgent need to do this because the thing we need the most is to halt the economy hurtling downhill, with neither wedge on its path nor top-restraining rope to halt the slide. After two months of experimentation, it is now obvious to the Tinubu team that Buhari did not leave any tether strong enough to halt the slide, hence the resort to a N500bn wedge.
On Monday, July 31, President Tinubu announced a N500bn package of incentives to get the citizens out of the dire economic situation that country and citizens found themselves. He hopes the package will provide a temporary wedge by boosting productivity, providing palliatives to those engaged in nano businesses, flooding the states with low-fare transport vehicles, boosting business startups, and improving food security through the cultivation of rice, maize, wheat and cassava, in addition to releasing grains from the strategic reserve. Mr. Tinubu should be commended for a few things that arise from that broadcast while we watch for how the rubber will hit the road at the crucial execution stage.
It is commendable that he elected to speak directly to the citizens, barely two months in office. It shows a sense of commitment to doing the right things and a willingness to carry citizens along while he does them. One can only hope that this will be extended and sustained, including doing what he refused to do during the campaign – answer questions directly from the press on his evolving policies. There is no hiding place anymore for as long as you remain on the seat, Mr President.
A second commendation is for the programme unveiled in the broadcast. When Nigerians cried out that he was going to waste the N500 billion loan approved by the National Assembly, Mr. Tinubu listened and held back on its disbursement. Admittedly, Monday’s broadcast is a very smart and creative way to apply the N500bn loan to reflate the economy and ameliorate the hardship that families are facing. A simple summation will bear this out. The sums allocated to agriculture (N200bn), transportation (N100bn), nano businesses (N50bn), MSMEs (N75bn), and manufacturing (N75bn) equal N500bn!
The economic situation is such that both the President and citizens must resolve to succeed with the programmes on offer. Should it require prayers to change the attitude of policy executors – civil servants, political appointees, as well as private sector facilitators and vendors – we should get to it. They lay the hurdles along the implementation track, tripping target beneficiaries with the way they set the bar.
The highest bar is set by financial institutions that disburse public funds to programme beneficiaries as loans or grants. They are businesspeople first before partners in national development. And they take care of their business in many ways, the simplest method being to allow the deposits to accumulate interests that often do not show up in the financial books of government. The funds accumulate interest because of hurdles deliberately mounted to slow quick access by target beneficiaries. It is therefore in the interest of banks to slow down the rate of disbursement of public programme funds. Ironically, the institutions that will receive the N500bn for disbursement are the biggest beneficiaries because they suffer no risks whatsoever. Consequently, there is no risk to development finance institutions, commercial banks, and microfinance banks which will warehouse, disburse and manage the funds.
If our prior experience with such loans is anything to go by, the Tinubu administration will need to study the hurdles that these institutions mount along the way to frustrate similar programmes. It is also important to police the disbursement process so that beneficiaries do not end up accessing loans at prevailing market rates. Beneficiaries have in the past ended up paying between five and 10 percent of the loans and grants as service charges before accessing the loans if they ever do. I write from experience.
The only target beneficiaries without a risk are so-called nano businesses. About one million persons in nano businesses will apply for and receive N50,000 grants each to boost their businesses. Government will select 1,300 such people from each of the 774 LGAs in Nigeria. Nano businesses, for those who do not know, are businesses that engage in menial occupations such as handypersons (home repairs and maintenance), beauticians (manicurists, makeup artists), itinerant businesses (shoe repair services, roadside food sellers) and so forth. They run no risk with the N50,000 because it is disbursed as grants. They will not suffer the sort of anxiety that other target beneficiaries who operate high risk businesses such as farmers, transporters, and manufacturers do suffer.
Ironically, farmers, transporters, and manufacturers are the three most critical sectors for getting Nigeria out of the woods. If the Tinubu programme succeeds, as we pray it will, this will be because of the performance of these three sectors. Success of the farm component will make Nigeria self-sufficient in grains production and drive down prices of everything else in the market. A successful transportation programme will also drive down fares. Finally, families can afford to buy things in the market when manufacturers succeed in boosting productivity and creating new jobs. On paper, therefore, this looks like a good proposal. However, Nigeria has never been short on producing fantastic policies, programmes and projects. Therefore, as we share in the President’s optimism, there are hurdles that the Administration must surmount if the light we see at the end of the tunnel will not turn out to be from an onrushing train.
Mr. Tinubu identified four types of farmers, namely, those engaged in rice, maize, wheat, and cassava farming. Our farmers face familiar challenges, ranging from corruption at the loan receiving end, weather conditions in farm fields, the menace of weed and insects, fertilizer scams and, lately, devastation by cattle herds. If there is one thing that the Jonathan and Buhari administrations did right, it was designing and implementing great agriculture policies. How did these programmes achieve low to medium impact? Mr. Tinubu is yet to disclose the strategies to ensure that his own programme will succeed where others failed. He needs to answer this question so that he can come up with workable programme before disbursing the loans, otherwise politician-turned emergency farmers will thank him later for the largesse.
Similarly, transportation is also a high risk business. The proposed 3,000 units of 20-seater CNG-powered buses works out at about 4 buses per local government. One way this programme can succeed as a short term measure is to deal only with established transporters who will use the money to expand their fleet and reduce fares because of cheaper fuel. Those with good track records will easily provide the buses and ensure that the loan process does not add unnecessary costs that will be passed on to the commuters. In the long run, government can focus on sustainability by instituting a revolving loan for new entrants who are willing and able to provide creative modes of transportation. It is also a good thing that the emphasis is on CNG-powered buses. This is a good step to having our own assembly plant for solar and electric vehicles. And what about establishing a linkage with State Infrastructure Fund to enable the cars endure through better and consistently maintained federal and state roads?
Finally, manufacturers also facie peculiar challenges that recently led to business losses and fold-ups. We agree that doing business, any type of business, is a risky venture in Nigeria. The hurdles that businesses face are diverse and daunting. They range from multiple taxes and levies, poor infrastructure, absence of consistent utility services, poorly trained and ethically deficient workforce, and many more. Government is yet to work out the types of businesses from where the 75 lucky beneficiaries will be selected. The administration should keep in mind that there are very few businesses in Nigeria that can afford to return a monthly loan capital of N16m plus interest, after accounting for the prohibitive business running costs.
Let me end with a story I told before on this page about my first participation as a member of a State Executive Council. The governor’s lofty social welfare programmes intrigued, and I was keen to contribute to what I saw as serious commitment to bring succor to disadvantaged people in rural settings. Much to my shock, however, the four-point agenda was not anchored on any discernible strategic implementation plan. Mr. Tinubu hitherto refused to disclose his economic agenda, saying he did not want his opponents to copy from him. The policies he announced during his swearing in cannot properly be called a plan – they were more like a wish list. And now, he has decided to haul a lot of cash at the problem. If there is no strategic implementation plan (including clearly outlined monitoring and evaluation processes) to execute these laudable ideas, for goodness sake, hold on for a while. Get one. Otherwise, the elite class that he railed against in his speech may in the end laugh and thank him as they smile to the bank once more with a N500bn haul.
