Thursday, October 31, 2013

A thought on security

There have been suggestions that Boko Haram members are non-Nigerians who are recruited to wreck havoc on Nigeria. Proponents are yet to show what  the external architects of Boko Haram would benefit from the siege in Northern Nigeria. Yet, this line of argument is supported by the discovery of 1487 illegal entry routes earlier in the year. The issue is not that these routes were discovered but what is being done to address unauthorized entries into the country even at legal routes. My thoughts is nothing is being done

Here is a picture of the Seme border- the entry from Benin Republic to Lagos.
Seme (Lagos-Benin) border
At the border, Custom, Immigration and NDLEA officials (they either come into your bus if you are in a bus or you walk to the container-office that houses them) check you,your passport and yellow card. If you "pass"(smile well, play dumb or tip well), you fill a higher education note book with your details, your passport is stamped and you can proceed. If  you find this process stressful, you can pay a bike rider to carry you across after bribing the appropriate officials.  At the borders and airports, no biometric information is captured and you can be who you want to be. Yet, the country wants to tackle insecurity and Boko Haram. With this state of laxity at the commercially busy Seme border, imagine what other border posts look like.
Compare Lagos-Seme border with the Hilla Condji border (Togo- Benin border)

and the Bietbridge border (Zimbabwe- South Africa border) 

or Candian border
Finally the US border

The negligence towards the Country's security has little to do with corruption. It is inefficiency and incompetence. What would it cost to construct gates, train staff and computerize entry and exit points into the Country? Just wondering (and I am willing to learn), apart from smugglers, are there any other groups that benefit from this carefree approach of the government?

Sovereign Wealth Fund
On the 18th of September, the Nigerian Sovereign Investment Authority invested $200 million  of the $ 1 billion allocated to it in US bonds. NSIA is the organization that is responsible for Nigeria’s Sovereign Wealth Fund (SWF). Most SWFS are investments by countries and are funded by budget and/ or balance of payment surpluses. They have their origins in commodities (additional profits from natural resources. An example is Nigeria and the commodity is oil) or non-commodities (such as transfer of assets from foreign reserves). 
The  main purpose of a SWF is to act as a rainy day fund for countries.It can be likened to  University endowment funds. The difference is the source of funds. For University endowments it is donations but for countries, it is out of pocket. The objectives of the Nigerian SWF are to: receive, manage and invest in a diversified portfolio, save oil revenues, develop infrastructure that would aid growth, provide stabilization in times of economic stress and be a last resort for budget deficits. SWF was established by an act of the National Assembly in 2011. 
The fund is divided into: Stabilization fund, future generation fund and infrastructure fund. SWF is a good policy because it creates rules and structure around the additional revenue the government gets from oil. Presently, all excess revenues derived from oil go into the Excess Crude Account (ECA)  set up in 2004 by President Obasanjo. Usually, for a financial year, the government sets a benchmark price for oil. For instance, in 2013 oil would sell for $70 per barrel. If oil sells above that, e.g $200, the extra $130 goes into the ECA. In 2004, ECA had about  $5billion and grew to about $20 billion in 2006. That account now has approximately $3.6 billion. Earlier this year, the minister of Finance stated that about N606 billion from ECA was used to supplement the shortfall in the Federation account (account where all the tiers of government share revenues). 
There are 2 issues with ECA. The president set up the fund  without the consent of governors and the president exercised (still exercises) discretion on how the money is spent. i.e there is no transparency around the funds. The lack of transparency on how the ECA funds have been spent means that Nigerians cannot  pinpoint the benefits from the profits of crude oil in the past 9 years.  Therefore, SWF is a step in the right direction. 
SWF is also a good idea because it offers an avenue to use oil wealth to develop the nation before it no longer generates revenue. If funds are properly invested, are profitable and used for stated purposes,Nigeria may in for good times
However, the problem with NSIA is the nature of the investments made. If the country incurs losses on her portfolio, she is the poorer for it. For instance, Nigeria has invested $200 million in US bonds, if US had defaulted on its debts on the 17th October, Nigeria would have lost some money though the country would not have been impacted like China and Japan. Thus, the structure around NSIA should focus on the type of investments to be made and the country’s risk appetite. Other countries use their funds to create State Owned Enterprises but we have tried that before and it failed (remember Nigerian Airways and Virgin Nigeria).
For the fund to function properly, the Federal government needs to get the consent of State governors. Some State governors have kicked against the fund and are in court over it. The additional profits from oil belongs to all tiers of government. It is against the principles of federalism if States are “forced to save” and SWF may not get beyond the $1 billion initial allocation given to it if  the court agrees with the state governors.
The impacts and successes of NSIA/ SWF remains to be seen and hopefully it would be an agency that truly benefits Nigerians

Tuesday, October 15, 2013

Did you know?

I recently watched a documentary and learned that cattle is imported into Nigeria. Yes, rice is imported but cows? It was so unbelievable that I googled it and to my surprise about 30 percent of the cattle in Nigeria was imported from Chad, Niger and even New Jersey. I learned that the last time a census of our cattle population was taken was in 1992 and there was about 13.9 million cattle in Nigeria. Let us assume the cow population increased by 100% every 10 years, we should have about 56 million cows and if we subtract the 5.7 million cattle that was lost in 2012 due to the floods, there should be about 50 million cows. Yet, we do not have enough cows for consumption, reproduction and export.
Why should we care that we import cattle? First, considering the abundance of land in the North and that rearing is a prized institution there, is it not sad that we are not able to  enough provide cows for domestic consumption? Second,importing cows is another example of Nigeria's food security gap and our security challenge. Third, we are still a subsistence  economy where people who live under $2 a day cannot afford to consume beef, what would happen when we get to the Canaan we crave? All we produce apart from oil is for consumption. Is it not time we create an enabling environment for mechanized farming that would increase outputs?
Why do we import cows? We import cows because we do not have enough cows to meet demands. and the available cows are insufficient because:

  • Cattle rearers lack current rearing and cross breeding skills to reproduce healthy cows. Cross breeding is important because irresponsible cross breeding leads to losses of cattle.  For instance, cross breeding of two incompatible cattle breeds produces a weaker cow that would not survive. The solution to this is to teach cattle rearers how to breed cows
  • There is inadequate health care for cattle. According to government sources, inadequate access to vaccinations has caused the death of cattle
  • The culture of grazing, movements and accidents also lead to stock depletion.

My two cents is to start rebuilding our agriculture base by creating interest in all forms of farming- both crop and livestock. A cow is a gift that keeps giving. A cow gives beef, horns (for art), hide (for leather), manure (for energy and fertilizer), the intestines and blood (as food for  humans and other animals) and milk. An industry can be developed around cows.
State governments can partner with interested farmers and transform villages and towns into farming centers. Kwara State has a project along that line but willingness to follow through is hampering its success. Alternatively, governments can invest directly in agriculture by upskilling villagers in new farming methods (on planting/rearing, harvesting/ caring and storing) and provide tools for their use.
Financial Institutions also play pivotal roles in promoting agriculture. One factor hindering the growth of SMEs and by extention agriculture and the economy is high lending rates. The current rates of 25% and above is untenable for anyone who wants to run a business, let alone a group of rearers who might want to start a ranch.
We import a lot of items. Cows should not be one of them.


An outsider's view on the US crisis

Finally the  US shutdown began on the 1st of October after the near shut down of April 2011. The political atmosphere in the United States has been very divisive especially in Congress in the last four years. The activities of some US agencies  and departments are closed because Congress failed to pass  a resolution that would fund the government from the 1st of October. It is duty of  Congress to pass a  full budget by the 30th of September every year. This has not happened since 1997 but the Congress usually passed resolutions to fund the government.
The immediate cause of this shutdown is Senator Ted Cruz. He called for a shutdown if Democrats did not agree to defer and defund the Affordable Care Act (AKA Obamacare) which commenced on the 1st of October. ACA is a signature policy of President Obama and for all it flaws is a good policy that addresses America's health issues especially access to health care for the poor and working poor (aka uninsured). I have been unable to grasp why a country like the US lacked Universal health care till now considering that citizens of countries like mine want it but we don't have. 
The remote cause of the shutdown is partisanship, the inability to compromise and the rise of the vocal and resolute Tea party. If a group decides to have its way all the time, when push comes to shove, the other party would react.Funding the government should not be affected by a government legislation that was passed  by the House, though contentiously, and has received the backing of the Supreme Court. Since the Act was passed, Republicans have unsuccesfully tried to repeal it. 
States have a role to play in the success or failure of ACA. Rather than hold the Federal Government ransom, the GOP can take its battle to the States where  it currently controls policy and governance in 29 of the 50 states. 
Though the time for a showdown in Congress may be ripe because something has to give, it should not be at the expense of Americans and US's credit worthiness. Elected representatives seem to forget that the impact of their actions on the people who elected them. Like the Yoruba proverb that says "when two elephants fight the grass suffers", the effects of GOPs uncompromising stance affects Citizens and may have consequences they are not prepared for. 
The Shutdown has affected non-essential services such as National parks and other tourist attractions, NASA, Center for Disease Control, Bureau of Economic Analysis, Bureau of Labor Statistics,Environmental Protection, Commerce, Labour, parts of Transport Security Administration, Departments of Treasury and Energy. Fortunately,the impact of the shutdown has been more dramatic than economic.  The real problem would occur if the Debt ceiling (According to US Treasury, the debt ceiling  is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past) is not raised by the 17th of October 
The US would be affected because:

  • The full faith and credit of the US would be jeopardized, and lack of confidence in the US's government stability may cause a run on the dollar,
  • The dollar status as the world reserve currency would be threatened. This status has helped the US get lower interest rates compared to other countries, 
  • The government would be unable to pay Social Sceurity, Medicare and Unemployment cheques. 
  • If the US defaults and confidence is lost, mortgage and lending rates would rise and this would directly affect citizens
Historically, the US has been financed by debt  and since 1917 raising the debt ceiling was a routine decision by Congress until 2009 and 2011 where it became highly politicized. 
The lessons from the Shutdown and Debt ceiling drama illustrate  the ability of a few vocal people to cause unnecessary situations.Experiences should have taught Congress that investor confidence is key to the  survival of an economy like America's.The downgrade of her  credit rating after the near shut shut down in April 2011 and the world wide effect of the 2008 crisis should teach Republicans that there are times to be intransigent on political concessions and there are times to let things pass. It is  failure of Republican leadership to allow  a zealous few disrupt the activities of a nation. 
The United States is regarded as the embodiment of representative government. Elected representatives should listen to the people they represent and not cater to specific interests. 


Sunday, October 13, 2013

Let's invest in our future 

 In 1983,  a research noted that  the number of schools available in Nigeria was inadequate for primary school pupils. 30 years later, the story has changed. Education statistics for 2013 show that  10.5 million pupils are out of school (up from 4.7 million in 2005) . Of the population in school, 86700 took the common entrance examination  to Unity Schools in 2013, the figure was about 81,000 in 2012. This sad state of our education needs to be  addressed. Whilst other countries are investing in education and reaping the rewards, we appear not to care that our children are not getting educated. As the world evolves, Nigerian kids would be at a disadvantage because they are not equipped to match contemporaries from Asia and Europe. This disadvantage is important because  the World is becoming knowledge based where it is what you know and how you apply that knowledge that pays.If our kids are not able to think,apply and innovate, there is a problem. 
A negative effect of the lack of basic education  is uneducated kids  are on streets and are burden to the larger society. Imagine all the kids on the street were in school learning,we may not have our miscreant problem where these kids as they grow older  become tools in the hands of politicians.
Apart from children not getting sound education, the quality of teachers  intensifies this problem. When our teachers do not know and yet teach, the basis of education is flawed. LIke it has been recently said to me, no education is better than bad education. If the foundation ( primary education) is defective,  whatever is built upon at the secondary and higher education levels  amount to nothing. Today, we complain of half-baked graduates who cannot read, write  and be articulate. The primary  and secondary education they received should be blamed for that. At the University or Polytechnic, one should be able to apply what one is taught but if basic skills are lacking, how can one think?
This begs the question why we should care. We should care because if the future (children)  is not properly trained, then we have no future. That just 86700 children wrote common entrance is worrisome. It is worrisome because, Federal schools are inexpensive and if children did not write exams for Federal schools, it can be assumed that they are  not going to private schools.By 2023 how many illiterate adults would we have?
We should also care because  the impact of an educated mind is boundless, and this is not just in Mathematics, English and Science. The ability  to learn exposes the mind to think and develop. Like Nelson Mandela says "a good head and a good heart are always a formidable combination. But when you add to that a literate tongue or pen, then you have something special".
 What can we do?
 First, our teachers have to be motivated to teach. This is difficult in a country where systems and governments fail the people and teachers cannot wait for their rewards in heaven.One solution to this can be  access to housing and car loans or incentives that can help teachers live better lives
Second, Our teachers have to be upskilled and properly trained. There are numerous instances of  uneducated teachers who cannot teach.  A recent case is that of a  teacher who could not read an affidavit . How do we train the teachers? The internet offers an affordable means to do so. Teachers have to be internet literate. They can join teacher communities and share experiences and practices with colleagues in other parts of the world. High performing teachers can be rewarded with training opportunities abroad, coaches can be assigned to schools to show teachers how to teach. The resources for this are affordable if States and the Federal government deem it as priority. The Nigerian Union of Teachers should actually champion teacher training and certification rather than fight the government when policies around teacher certification come up.  
Third,  the Nigerian curriculum needs to be revised. Education is moving on from rote learning (2*2=4) to ( applied learning) I have N2, my aunty gives me N5, how much do I have? Nigeria's curriculum should reflect same, learning by memorization  is no learning 
What do we need to achieve these this:
1) Willingness of the government to fund  education especially at the primary level. It is telling that in the 2013 budget, only 8.67% of 4.9 trillion was allocated to  education by the Federal government. Note: this is for all sectors; primary, secondary and tertiary education. In 2012, it was  8.43 %.  Politicians and  senior civil servants in our ministries of education need to put their money where their mouth is. Across the States, education accounts for less than 20% of budgets.What manner of future would we have?
2) Infrastructure: the state of primary and secondary schools do  not encourage any learning. Schools should be properly built and maintained. This should apply to both private and public schools. Some schools are dilapidated that I wonder why parents allow their children near such buildings.
3) The buy in of teachers who should realize the importance of their work and be willing to carry it out diligently
3) Enforcement of the Child Right Act of 2003: the CRA guarantees free and mandatory basic education for kids. Parents and Wards who fail to send their kids to schools should be punished. Agreed, there are children whose parents depend on them but allowing these kids attend school from 8-2 would not kill this class of parents. The continuous circle of poverty is promoted by lack of education. When I see market women or hair dressers giving their all to ensure their kids are educated, I know hope is not lost. The CRA has to be skillfully enforced especially in the North where the current rate of insecurity and culture is against education. This act should also be used to address the problem of high drop out rates in primary schools.
The "ideal" Nigeria would not be built by mouth. Investments have to be made in creating the future we want.