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‘Why economy remains stagnant’

Nigeria Labour Congress (NLC) President Comrade Ayuba Wabba, in this interview with TOBA AGBOOLA, says the government’s efforts to diversify the economy, attract foreign direct investment and create jobs are being frustrated by systemic challenges. He also pledged to double efforts at protecting workers’ interest. A SSESS the economy and state your expectation from the government, especially in this second term? According to the 2019African Economic Outlook Report+- by the Africa Development Bank, Nigeria’s economy is expected to grow at 2.3 per cent this year. This would be an improvement on the Gross Domestic Product (GDP) performance in 2017 and 2018.According to the National Bureau of Statistics (NBS), the Gross Domestic Product grew by 1.81 per cent (year-on-year) in real terms in the third quarter of 2018. This seems slightly better than the growth of 1.17 per cent achieved in the third quarter of 2017. This is encouraging as it shows that our economy has made a rebound from the recession of 2014 -2016. This pattern of growth is expected to sustain Nigeria’s status as the largest economy on the continent, contributing about 20 per cent of Africa’s GDP.However, despite the promising nature of the economy, it is yet to be weaned from import dependency. Our economy remains essentially rent seeking, subsistence, non-inclusive, vulnerable to shocks from the global commodities market, fraught to unwieldy inflationary trends and unable to create sustainable mass jobs.The government’s efforts to diversify the economy, attract foreign direct investment, increase foreign exchange revenue and create more jobs are being frustrated by systemic challenges. The challenges include endemic corruption, institutional chaos, crises in our social sector, and disabling physical infrastructure – electricity supply, water, rail system, road network, inland waterways transportation among others. What is the way out of unemployment? A 2010 British Council Report on Nigeria identified unemployment, especially youth unemployment, as a demographic time bomb. Today, the bombs are going off in all directions by way of upsurge in crime and restiveness. The National Bureau of Statistics(NBS) reported in December 2018 that Nigeria’s unemployment rate stood at 23.1 per cent in the third quarter of 2018, up from 18.1 per cent same period in 2017. At the last count, the combined unemployment and underemployment rate in Nigeria was 43.3 per cent. Of course, we have noted the efforts by President Muhammadu Buhari to create mass jobs through the diversification of the economy, particularly through the Economic Recovery and Growth Plan (ERGP).My advice is that these initiatives be anchored on a strong commitment to industrialisation. We also call for the revival of the intermediate and capital goods production segments of the industrial sector, especially the auto assembly plants, the steel industry, the fertiliser and petrochemical industries in the context of a medium-term national development planning. We must develop a national consciousness and culture that frowns at exporting raw materials without value addition. All tiers of the government should try to provide incentives to drive and sustain the growth of labour-intensive industrial sector. There are millions of jobs locked down in the untapped value chains in our agricultural, petroleum and mining sectors. Now is the time to unlock them and provide decent jobs for our youths. Now is the time to reconstruct the sour narrative of exporting jobs and prosperity to other climes and importing joblessness, poverty and misery into the motherland.Also, the de-industrialisation of Nigeria, as already identified, is the reason for the plague of mass unemployment and poverty ravaging our country. Industrialisation is the key to delivering sustainable jobs and is crucial for the overall growth of the national economy; it is the foundation for good living standards. Unfortunately, the manufacturing capacity utilisation (MCU) in our country has fallen headlong over the years. Nigeria might be the largest economy in Africa but the contribution of manufacturing to our economic size is appalling. From 75 per cent manufacturing capacity utilisation in 1980, Nigeria has fallen to 54.6 per cent as at September 2018. For me, I think we should emulate the tested and proven prototypes elsewhere in places, such as Singapore, Argentina, Brazil, India and China to attract relevant production lines and labour-intensive industries to Nigeria. This would help to engage the teeming population of our country in industrial production, build the skills of Nigerians and place Nigeria in a progressive manufacturing trajectory. Similarly, the government should provide practical incentives and support to encourage large scale industries to develop networks of SMEs to be part of their production networks and supply chains. This is the most viable way to promote horizontal integration. The textile industry that used to be the highest provider of employment is moribund. What is the way forward? Yes, you are right.There was a time the textile industry was the highest provider of employment in Nigeria, second only to the public sector. The story of our textile industry has been reduced to a tale of tears. From more than 175 textile factories in the late ‘80s, we can only boast of less than 27 surviving ones. The greatest social tragedy in the near total collapse of our textile industry is the mass retrenchment of hundreds of thousands of workers and the attendant suffering that their families are exposed to. We cannot allow this sad state of affairs to continue indefinitely.We demand the recovery of the cotton value chain. The government must also urgently revisit the textile revitalisation fund.The Obasanjo administration and later the Yar’Adua administration, secured N100 billion intervention fund to revive our textile sector. We need to know what was responsible for the less than successful impact of this big fund invested to revitalise the sector and what needs to be done to avoid the pitfalls from that experience. Nigeria with almost 200 million people is a massive market for textile materials, and it is sad that we produce far less than 25 per cent of our peoples’ clothing needs. The infra-structural and other challenges that have continued to hinder the growth and development of the textile sector need to be addressed head on by the various governments of the federation.Furthermore, we implore the government to make it a policy that the Armed Forces, Police, Customs, Immigration, Civil Defence, Federal Road Safety Corps and all uniformed services personnel should be kitted with locally produced textile and footwear. Also, appropriate directives should be given that the uniforms of all school children in Nigeria should be made from textile produced by local industries. This same gesture should be extended to all locally manufactured goods in order to guarantee markets for them. Despite the privatisation of the power sector, the challenges are still far from being over. What is your take on this? On November 1, 2013, the Federal Government privatised power generation and distribution to address the following challenges: end darkness by increasing generation, improve distribution facilities, and reduce government financial burden on power. While it is expected that the private investors will build more plants and improve distribution facilities, many years after, the situation has not changed. GENCOs and DISCOs continue to be huge financial burden to the government and ruthless exploiters of consumers.In 2015, we were told that the Federal Government bailed out the private investors in the power sector with a lifeline of N233 billion. It is also being proposed that the government is going to take over the burden of providing pre-paid meters from incompetent DISCOs at extra cost. Consumers have endured debilitating tariff hike – the DISCOs want tariff hike every six months. Consumers are being tormented with crazy fraudulent bills that have no bearing with electricity consumed. It is sad that five years into the power privatisation programme, none of the key targets have been achieved.The Federal Government, GENCOs, DISCOs and even gas suppliers are locked in an endless buck passing over the failure of the system. Government blamed DISCOs for abysmal supply of gas and the DISCOs blame government for failure to implement tariff increase every six months. We are in a situation where no one wants to accept blame for the failure of the privatisation scheme in the power sector. It is clear that the power sector privatisation failed because incompetent investors were engaged.It is sad that the Nigeria Electricity Regulatory Commission (NERC) appears soft on operators and hard on consumers. We call on the Federal Government now that the tenure of the DISCOs is due for renewal to review the entire privatisation and come up with the best approach to deal with this challenge. Assess the agricultural sector given the government’s focus on it? I want to commend the Federal Government and a number of state governments for showing commitment to the revamping of the agro-allied sector. A few weeks ago, Nigeria was rated as the largest rice producer in Africa with an annual rice turnover of four million metric tons upstaging Egypt which used to be Africa’s number one. We believe more can still be done. We call on the government to focus on improving the agriculture value chain, especially agro-processing. We must now make the critical transition from primary production to secondary and even tertiary levels of production. It all starts with adding real value to our agricultural products. By so doing, we would not only unlock huge potential for the creation of decent jobs, we would also be creating more wealth for our people and for government.I also commend the plans to recapitalise the Agricultural Development Bank. This is a good step, but the Federal Government should extend the recapitalisation to all existing development banks. In fact, it is important to create new ones to fill identifiable gaps.The recapitalised development banks should work with a network of commercial banks to secure loan facilities of adequate term structures and at reasonable interest rates.  We are convinced that the prevailing double-digit interest rates and the wide interest rates spread are inimical to industrial development and should be comprehensively addressed. How are you handling the contributory pensions deductions by employers? Incidence of unlawful and illegal withholding of contributory pension deductions from workers’ salaries and not remitting same to their Pension Fund Administrators (PFAs) still abound. In Ogun State, deductions from workers’salaries were unjustly withheld for close ...Read more

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