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Economic Advisory Council: Rescuers Or Undertakers?



By Dele Sobowale

History has been made, whether it will turn out to salvage the economy or not is what remains to be seen. The political and especially economic consequences of this measure might remain fully unknown to us for years. It is unusual for a committee headed by the Vice President to be scrapped and replaced by another body without the VP’s knowledge that such a measure was being contemplated. Irrespective of the attempts to put a gloss over it, loss of confidence is clearly indicated. This article is an attempt to answer the two most important questions: first why this move and why now? Second what can be reasonably expected as a result?


“Government has continued to implement the Social Investment Programme. About N500bn has been appropriated annually for SIP since 2016.”

Vice President Osinbajo, at the Annual Conference of the Economic Society of Nigeria in Abuja, Monday, September 16, 2019.

 Osinbajo was represented at the conference by the Minister of State for Budget and National Planning. But, he was the author of the statement which serves as a metaphor for all that was wrong with the Economic Management Team, EMT, which Osinbajo headed. Since the last quarter of 2016, the VP had repeated over and over again that N500bn had been appropriated for the SIP – Buhari’s legacy project. The last time was at last years Annual Conference of the Nigerian Bar Association, NBA. This was a disservice to the VP himself because it was also deliberate half-truth. Nobody knows better than Osinbajo that while N500bn was budgeted in 2016 and 2017, only N350bn was budgeted in 2018 and 2019. Furthermore, in no single year had actual expenditure on SIP reached N130bn. This is a far cry from N500bn. In fact, the best effort was in 2016 when N120bn-plus was actually spent. Each year the FG had spent less than 25 per cent of what was promised on SIP.

 Because the VP headed an EMT consisting of mostly people who were not economists, he could not understand that economic management is basically a quantitative assignment and no figure presented stands alone. When government promises to spend N500bn on a project, it is simultaneously announcing an economic stimulus package which will eventually result in a certain level of Gross Domestic Product, GDP, growth. If in the end government spends only N120bn, the stimulus is less and the GDP growth expected will certainly be less. It is doubtful if the VP can see the correlation between the N500bn budgeted, but not spent in 2016, and the negative growth we experienced in 2016 – as well as the poor economic performance for 2017, 2018 and so far 2019.

 The SIP was under-funded for those years for the same reason other programmes and projects were. In no single year was the EMT able to get the FG to raise the revenue appropriated for that year. The shortfalls ranged from 28 to 32 per cent. Revenue generation in 2019 is running short by close to 38 per cent – which explains why the economy is again back in recession. The VP and his team, mostly economic illiterates apparently failed to understand that the first duty of the EMT is to ensure that budgeted revenue is raised before turning to disbursement. They allowed Ministries, Departments and Agencies, MDAs to remit whatever they wished instead of imposing targets for revenue delivery to the Federation Account.

 To be quite candid, the EMT, headed by Osinbajo was a clear case of “the blind leading the blind”. They simply did not understand how to execute budgets on a national scale. But, the fault was not entirely their own. The President, like a Team Manager, is the Chief Economic Officer, CEO, of Nigeria. It was his fault that the Captains band was handed to a poor player; who was then surrounded by even worse players. Nigerian economy is on the brink of disaster because Team Manager fielded a bad squad.

 It is not clear whether Buhari realised the danger by himself or somebody very close to him brought the imminent calamity to his attention and persuaded the President to make this drastic change. The truth is; the Nigerian economy was heading for a major crash with Osinbajo heading the EMT. A new approach is needed. And, that invariably calls for a new and more professional team. Osinbajo tried his best; but, that effort was not nearly good enough. The man had been given an assignment far beyond his level of competence. He had attempted to protect himself by making utterances such as the one quoted above without realising that he was actually eroding his own and government’s credibility and integrity. Severe damage has been done to both.


 “Advice is seldom welcome; and those who want it the most always want it the least.” Earl of Chesterfield, 1694-1773. VANGUARD BOOK OF QUOTATIONS

 Given the towering reputations of some of the members of the Economic Advisory Council, EAC, it is perhaps best to start this segment by also advising them to be careful. Apparently, they have a vital role to play because the nation is in deep trouble. One then should presume that the President actually intends to be guided by their counsel. But, philosophers have always known that what is apparent is not often real. They might have been selected to divert blame from government if in the end the economy collapses. Their recommendations might not even be accepted. If accepted, they might not be faithfully executed by Ministers and civil servants. Something tells me that they will regret accepting to serve. I salute their courage. “Courage is being scared to death, but moving forward anyway.” They need our prayers and as much support as we can give them. It won’t be easy. There are no painless options or quick fix solutions left for us. Whatever they advise will need a few years before big results will show.

 That said, I need to disclose that two of the appointees are my “old customers”. That means that we have had reasons to disagree when they were in office as Chief Economic Advisers, CEA, and Governor of Central Bank.

 Professor Chukwumah Soludo, was CEA to Obasanjo and in that capacity published the National Economic Empowerment and Development Strategies, NEEDS, in a 2004 document, a monumental report which prescribed several changes in the macro-economic strategies for the country in order to achieve sustainable growth. Most of the recommendations were directed at the National Assembly, NASS. That, to me was the major weakness in the proposals. The NASS then, as now, was not full of patriotic politicians only selfish individuals out for what they could grab. Most of the bills required to be passed to make NEEDS work were never passed. The initiative became an academic exercise – especially after President Yar’Adua mounted the saddle. To me it was clear that the entire thing was going to be a waste of time.

 Soludo’s next port of call was the Central Bank of Nigeria – where, as Governor, he rushed through what he called Banking Consolidation. Some 92 banks operating in 2005, suddenly shrank to 25 in 2006. I was one of the few who thought the Professor was rushing a good idea beyond reason. He went ahead anyway. But, by 2008, all the fears of “the prophets of doom” – as critics of Consolidation were called – started to be realised. In August 2008, writing under the title TURMOIL IN GLOBAL CAPITAL MARKETS AND LESSON FOR NIGERIA, I wrote as follows:

Very soon, however, a new race for size for its own sake started; soon advertisements were appearing in the media proclaiming one bank or another as the most capitalized bank in Nigeria. This was followed by the announcement that three or four Nigerian banks are now among the biggest in the world.

 Then consolidation, apparently successful in the banking sector moved to the insurance sector and another frenzy of activities followed the proclamation of a deadline for meeting the required minimum share capital to operate an insurance company. The Nigerian capital market was suddenly awash with issues and enticing prospectus promising unprecedented share value appreciations and hefty dividends. Two years after, some of the promises have not been kept. Most small scale investors have received neither share certificates nor dividends. Even, price appreciation which seemed on track at first has taken a dive since July in most cases. Investors are scared because many borrowed at 21% per annum to purchase those shares.

 By then Consolidation had blown up in our faces. The Banking sector was in disarray. Today, a good chunk of the over 75 per cent of the N5 trillion toxic debts held by the Assets Management Company of Nigeria, AMCON, were deposited by Soludo’s “consolidated” banks.

 Enough said about Soludo. This is not a payback time sort of thing.

 Professor Ojowu who replaced Soludo in 2005 when Chukwumah was promoted to CBN Governor and I also had our disagreement. Obasanjo caused that one. Ojowu was briefing the FEC and he had mentioned that “70 per cent of Nigerians lived below the poverty line.” OBJ flared up. He would have none of it. Unknown to Ojowu, Obasanjo had taken N10 billion expecting anticipatory approval from the National Assembly in 1999. The money was handed over to late Chief Anenih (“Mr Fix-it”) ostensibly for Poverty Alleviation Programme, PAP. Till today nobody can account for what happened to the money. I had carpeted Obasanjo in PDP: CORRUPTION INCORPORATED for the money because all reports pointed to no reduction in poverty. And, here was his own Chief Economiv Adviser confirming my assertions.

 Ojowu was stopped from reading his report. He was also ordered to go and do a better job. Read below in an article published in VANGUARD in 2006 titled POVERTY IN NIGERIA – A BROAD PERSPECTIVE.

Then in 2003, after the second election, the government again apparently got serious. The new economic management team released the National Economic Empowerment and Development Strategy, NEEDS, which among other things was designed to promote rapid economic growth and development as well as reduce poverty. Even in that document, the fact that 70% of Nigerians are poor was acknowledged. But, a year after, and under a new Chief Economic Adviser and on the prompting of an impatient President, the percentage of those living below the poverty level has been officially reduced to 54%; that is a 16% drop in five years. No other institution associated with measurement of poverty agrees with the government on this because the figures are simply incredible. In fact if it were true, Nigeria should apply to enter into the Guinness Book of Records because no other country in history has moved so many people so quickly from poverty. Given a population of 130 million, it would mean that instead of 91 million Nigerians only 70.2 million now are poor. How 20.8 million Nigerians moved up from poverty in six years is still to be explained by the government officials peddling these unbelievable figures. And where the lucky individuals are remains another mystery to be unraveled.

 Bullied by Obasanjo, the CEA released a new set of figures which made Obasnjo happy but got him into trouble with me. I wanted the Professor to tell Nigerians how the magic was done. He sent a reply – forgetting that I am never intimidated by Professors.

 Again, enough of Ojowu except to issue this caution: “He who fights and runs away lives to run another day”. I sincerely hope that Prof will not again be bullied by another President. We have tried everything else; what Nigerians need now are people courageous enough to tell Buhari the truth.

 And not only Prof; every member of that Council must recognise the need for us to plan and work with factual figures. Dodgy data results in GIGO – Garbage In Garbage Out. That will not get us out of this predicament. On the contrary, it will haste the fall.

 Some politicians on both sides of the APC/PDP divide have started to play politics with the appointments. One objected to the fact that Salami, Soludo and Ojowu had worked for PDP governments in the past. Meanwhile a PDP chieftain announces that their appointments prove that the APC is bereft of ideas. So, they need our people. Utter rubbish. Technical problems requiring expert solutions are non-partisan. We need the best hands on deck for this life-saving task. If Buhari is comfortable with them, I am too. We need them more than they need us – even those I disagreed with in the past.

“Economists are like theologians ….Every religion other than their own is the invention of man; whereas their own brand of religion [or Economics] is an emanation from God.”

Karl Marx, 1818-1883. VANGUARD BOOK OF QUOTATIONS, VBQ, P 48.

 Knowing the practitioners of our “dismal science” as derisive critics call Economics, and given the wide range of matters which the Council must touch upon the biggest fear we should entertain is that with so many giant egos packed into a Council there might be difficulties achieving consensus. For instance one member favours a strong currency; another a weak naira. There is no middle way and none of those recommendations stands alone. Other measures are needed to support them. For once I honestly believe prayers are needed to avert that possibility. Nigeria needs some answers and very quickly. For my part, I intend to withhold criticism until the final document is out; and perhaps not even after that. They have a monster assignment on their hands.

 Another fear I have is with regard to their antecedents. Only during 1984 to about 1990 were Nigerian economists in government called upon to manage real poverty of resources.  Nigerians alive from 1984 to 1990, and who were old enough then to know what was going on will recall that those were the days of “Essential Commodities or Essenco” – as detergent, geisha, infant milk powder, peak milk etc were called then. This experience was quickly followed by the Structural Adjustment Programme, SAP until relief came during the Gulf War and we had experienced another crude oil bonanza. Never before then or after can anyone alive remember the deprivations. The Economic Advisers to Military Heads of State at that time undertook thankless jobs. Many left office as almost social outcasts. Yet, their only sin was that they were the first set of economists called upon to manage poverty of resources – unlike those who served when “Money is not our problem but how to spend it.”(General Gowon). Buhari’s EAC members are the second set of economic advisers called upon to manage  extremely scarce and dwindling resources. Hopefully, they will prove equal to the task.


“Our ways are drunkard ways; drunk as a mouse. A drunkard knows quite well he has a house, but how to get there puts him in a dither.”

 Alexander Pope, 1688-1744. VANGUARD BOOK OF QUOTATIONS, p 43.

 Nigeria’s major challenge since the end of 2013, when crude oil prices dived below $100 per barrel had been inadequate revenue generation. For reasons still unfathomable, the managers of the Nigerian economy, including Dr Ngozi Okonjo-Iweala, had clung to the fantasy that Nigeria could or can export 2.3 million barrels per day of crude oil and earn the revenue budgeted as a result. As far back as 2014, I had consistently warned governments to desist from publishing this fallacy as budget. In no single month or year from January 2014 till now has the nation shipped 2 million barrels. Most of the time, it has been below 1.8 million.

 My experience with budgeting on a large scale was in the Financial Analysis/Budget office of POLAROID CORPORATION, a multi-national with branches in 140 countries and having to tackle 125 currencies in Cambridge, Massachusetts, USA (Col Tomi Asenuga (rtd) is my witness because his wife, the wife of Mr Tubman, son of the late Liberian leader and mine were friends in the 1970s). Later, I became the Sales/Marketing Director of some multi-nationals in Nigeria. Those experiences had taught me that the most important figure in any budget is the top line – the Gross Revenue or Turnover estimate. Get that extremely wrong and everything else is a waste of time because that is the figure that will largely determine how much will be available to spend on recurrent and capital expenditures.

 Granted an economic entity can always borrow to invest and augment its earned revenue. But, the bedrock of every budget should be what is reasonably controllable. There was never a time, since 2012, Nigeria could control delivery of 2.3 million barrels per day. Consequently, the FG, under Jonathan and now Buhari, had made my work of analysing the annual budget easy. Each time they announce that the year’s budget is premised on export of 2.2 or 2.3 million barrels a day, it is clear that that the budget had been designed to fail. All the budgets presented from 2013 to 2019 have failed. The EAC comes in at a time when another budget that will be “dead on arrival” is being proposed. The 2020 Budget is based on the assumption that Nigeria will export 2.2 million per day.

“OPEC deal: Nigeria agrees to reduce oil production” –

‘Femi Asu, PUNCH, September 13, 2019.

 The first question anybody with a modicum of commonsense (which is not common) should ask is: what justifies that estimate when the trend in the last six years argues against it? But, more alarming is the fact that the Ministry of Budget and Planning must have failed to consult the unit which is charged with producing and exporting the crude oil – the Nigerian National Petroleum Company, NNPC. If they had bothered to do so they would have been informed that: “Nigeria’s oil production rose to 1.91 million bpd in August from 1.83 million bpd….The country was given a new quota of 1.685 million bpd in December,,,,, overall conformity will be brought to record levels.”

 Even the village idiot knows Nigeria is a member of the Organisation of Petroleum Exporting Countries, OPEC. What even the sage in the village might not know is that Nigeria is also the weakest and most vulnerable member of the cartel. We must comply or risk dire consequences. So, why prepare a budget which presumes that you will earn revenue which facts at government’s disposal indicate is impossible. The quota given to us represents 77 per cent of what is in the budget. From what other source are we going to make up the negative variance? Obviously, the 2020 Budget is dead before arrival at the National Assembly. It will never be implemented as it is.

 Getting Buhari to also discipline his Ministers of Finance and Budget so that they present budgets as financial documents, instead of political instruments, must be the first assignment of EAC. Specifically, they should persuade the President to return the draft budget to the Ministry for rework. This one is a failure waiting to occur.

 The next most important urgent step is to stop the leakage of revenue from important revenue sources. The Nigeria Ports Authority, NPA, is dollar cash cow which is enriching others – not government. There are at least forty ways by which dollars are drained away into private pockets in the NPA. It could be as high as $2 billion a year. For a country in dire need of funds, N720 billion will settle ASUU and keep the universities open year round. NPA is not alone. MDAs rob the country of close to N1 trillion every year.


“Nigeria’s domestic revenue among world’s lowest – Bill Gates.

 One the three richest men in te world went on to observe that Nigeria’s domestic revenue is just six per cent of Gross Domestic Product compared to 15 per cent in other countries. That should tell us something; it should also point the direction we must follow if we want to escape ruin.

 Tax collection, in all its ramifications, has always proved to be a thorny issue. The Federal Internal Revenue Service, FIRS, under Mr Robert Fowler, who was enormously successful in Lagos, has reached a brick-wall at the centre. In Lagos, the LIRS Chief and the Governor were on one page and they could cooperate to resist powerful tax dodger. At Abuja, the number of influential tax evaders is bewildering. The promise to name and shame them had gone largely unfulfilled for obvious reasons. The biggest tax defaulters have created a network of fences reaching all the way to Aso Rock to shield them from exposure and to ensure that tax collection remains “business as usual”.

 Tax evaded constitutes a significant percentage of the domestic revenue we are not collecting. The EAC should liase with the FIRS; obtain the list of defaulters and simply place the list before Buhari and make that his own battle to fight. He alone can create a “Revenue Ranch” for the tax lawbreakers and discipline them like his cattle in the Daura Ranch. He will be pleasantly surprised how much more revenue the FG will have to spend as a result.

 Value Added Tax, VAT is already controversial since government approved increase to 7.2 per cent from the current 5 per cent. The usual “Know-Nothings”, led by the Labour Organisations have been peddling the same half-truth about how it will increase consumer prices – as if that is the only thing that will happen. They are mostly wrong for two reasons. First, none of the fastest growing economies – China, India and, in Africa, Ethiopia, has VAT less than 7.5. In fact, the VAT in those countries is closer to ten per cent. So, if VAT slows GDP growth, why are they growing at ober seven per cent and we are crawling at under two per cent? Second, at five per cent VAT now contributes between 12 and 17 per cent of monthly revenue allocation to the three tiers of government – averaging N90 billion a month. Remove that amount from monthly allocation to governments and a national riot will follow.

 Those opposed to VAT invariably don’t know its origin and I don’t want to prolong this article by taking readers down memory lane on it. I was on the trenches on the side of the promoters of VAT – Dr Kalu Idika Kalu and Dr Chu S P Okongwu – during the Babangida administration. Labour leaders, media commentators and others opposed to it announced that the Nigerian economy will die nobody will be able to afford anything. There are over fifty times more cars, lorries, tankers, trailers on our roads today than in 1989. There were no Marwas then; there are millions of them now; no private universities then, over 100 today. Those opposed to VAT were wrong then; they are wrong once again.

 The biggest challenge the EAC will face will be their Fellow Nigerians who invariably exhibit two disruptive characteristics. They are impatient for results and they abhor making sacrifices. If there is no significant improvement by December, those expecting a quick fix will take to social media to denounce them. If the government actually gets serious and goes after those withholding revenue, a campaign of calumny will start against them individually and collectively. They should not be deterred; nor lose focus. Every recommendation will be criticised by those who are affected negatively by it.


 Giving advice is a dangerous thing; even when someone asks for it. But, these are desperate times for Nigeria. So, here we go in the words of two sages.

“In a sick country, every step to health is an insult to those who live on the sickness.” Bernard Malamud, in THE FIXER.

 They have been called upon to fix a terminally sick economy; made so by a lot of people who live on its sickness. They cannot make progress without making recommendations that will touch those people.

 The second is allied to the first.

 “Nor should we listen to those who say, ‘The voice of the people is the voice of God’, for the turbulence of the mob is always close to insanity.’

 In virtually all universities in the world where cut-off points are used for admission, Economics invariably has the highest mark for admission in the Social Sciences. Sometimes it shares the same points with Law. Members of the EAC therefore represent the cream of the students in their sets. Furthermore, they have accumulated years of study and actual work experience. They should not allow themselves to be intimidated by relative “dullards”. Organised groups, claiming to speak for the masses especially should be ignored.

 I met an old Labour leader a few months ago driving a modern car, and I reminded him that he was one of those who claimed that Nigerian will never again be able to afford a new car when VAT was introduced in the 1980s. I asked him: “why are you not still driving your old 504?” He got the message.


 A long and tough battle for survival is certain. They will be remembered as rescuers if the FG and Fellow Nigerians give them total support. They will go down in history if they are not honest with their prescriptions and if the FG gives priority to politics over economics.

 We should also a brutal clash of ideas as we go forward. Given the difficulties they face, the EAC can list me, at least for now, as one of their supporters. They need all they can get.

 By December 2020 we should know whether we are on the right track or not.

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