Published By The Nation Newspaper On November 27, 2014 Headlined: Obasanjo warns Jonathan: economy is in big trouble
Former President Olusegun Obasanjo delivered yesterday another blistering criticism of the President Goodluck Jonathan administration, saying the “economy is in the doldrums”.
The government has been celebrating the rebasing of the economy, saying it is Africa’s biggest.
But, to Obasanjo, the economy “is in the doldrums, if not in reverse”.
He said a drastic devaluation of the Naira – a step which will hurt Nigerians —was likely. The naira was devalued on Tuesday, exchanging at N168 to the dollar. Interest rate went up to 3% from 12%.
Obasanjo challenged the government to release records of crude oil proceeds to the public.
“The fourth issue I will briefly like to comment on is the economy. What the public know or see of the economy is not what the economy truly is.
“For quite some time, the covered and the hushed up corruption has had its toll on the economy. The non-investment and disinvestment in the oil and gas sector by the major international oil companies has added its own deleterious impact.
“Our continued heavy dependence on one commodity had not adequately prepared us against any shock in that one commodity on the international plane.
The former President’s stunning verdict on the economy – that it is in doldrums – drew a thunderous ovation from the full capacity Ladi Kwali Hall of the Sheraton Hotel and Towers.
Obasanjo added: “Our inadequate protection of almost all local industries with heavy cost of energy has dealt a hard blow on most indigenous industries. The economy is in doldrums if not in reverse.
“The often-quoted GDP growth neither reflects on the living condition of most of our people nor on most of the indigenous industries and services where capacity utilization is about 50 per cent.
“We had not adequately prepared for the rainy days in the management of proceeds from oil and gas resources.
“And with crude oil purchase by the US from Nigeria going down by some 30 per cent in the last three years as a result of shale revolution, things are not looking up in the oil and gas sector and hence, in the economy.
“The International Energy Agency (IEA) has predicted that the price of oil has not bottomed yet and that the price will continue to go down through the first half of 2015, if not for the whole year.
“With shale revolution and America’s self-sufficiency in energy and possibly becoming a net exporter as well as with the prediction of IEA, we must re-strategise.
“The position may be that, in future, we will have a budget that cannot be funded. We may have to borrow to pay the salaries and allowances. Revenue allocation to states and local governments has already drastically reduced. Capital projects at all levels of government may have to be drastically cut or stopped.”
On the devaluation of the Naira, Obasanjo said it will lead to horrendous disadvantage for poor Nigerians
He said: “Sooner or later, the Naira will have to be drastically devalued without any advantage to our one commodity economy but with horrendous disadvantage to already impoverished Nigerians.
“We will all sink deeper in poverty except for those who have corruptly stashed money abroad and who will start to bring such illegal and illegitimate funds back home to harvest more Naira. All the economic gains of recent years and the rebuild of the middle class may be lost.”
To the former President, “the political will, the discipline, the ability to take the hard measures to reverse the trend will appear not to be there at the leadership level, if the understanding is not there”.
He painted a gloomy picture of the future, saying: “In the end, more businesses will close down, business men and women, entrepreneurs and investors will incur more debts. Foreign investors may temporarily stop investing in a downturn economy.
“Because of the Naira depreciation, workers, particularly in the public sector, will ask for pay increase, which may be justified but will sink us deeper in the swamp.
“The scenario, which may sound alarmist, is hard to imagine but the signs are there and it would appear that those who should act are dancing slow foxtrot while their trousers are catching fire.”
Obasanjo described the National Assembly as corrupt especially the execution of constituency projects.
He said: “Today, every aspect of our national life is riven and riddled with corruption-the Executive, the Legislature, the Judiciary, the military, the civil service, the media and the private sector.
“The legislature which shrouded its corruption in the opaque nature of its budget had been encouraged through direct payment of money to the legislature to cover up wrongs done by the Executive thereby making the Legislature fail in its oversight responsibility.
“Apart from shrouding the remunerations of the National Assembly in opaqueness and without transparency, they indulge in extorting money from departments, contractors, ministries in two ways, on the so-called oversight responsibility.
“They do similar things in their so-called enquiries. But the Executive make it worsens when they pay members of the National Assembly slush money not to investigate or to cover up misdeeds of corruption and misconduct.
“Corruption in the National Assembly also includes what they call constituency projects which they give to their agents to execute but invariably, full payment us made either little or no job done.
“Most members of the National Assembly live above the law in their misconduct and corruption.”