Total Pageviews

Wednesday, May 30, 2012

HISTORY OF INFLATION IN NIGERIA, REMOVAL OF CBN AUTONOMY, AND OTHER ISSUES



    It seems like efforts to bring inflation rate to a single digit by authorities are proven to be in vain. This is despite promises by the Central bank of Nigeria to achieve single digit within the target period. At the beginning of last year CBN promised that by 2012 it would be able to bring inflation rate to a single digit. Though, numerous factors can be pointed out as the culprit for this failure such as the January fuel price hike and huge liquidity injections into the economy by federal government, analyst tend to put aside the contribution of foreign exchange as insignificant. But, before I discuss that let revert back to the current inflationary condition in the economy. The current inflation rate is put at about 12.90% a much higher rate than what obtained at the same period last year. In an economy that grows at about 7% inflation rate of about 13% is not a sign that things are good. This indicate that profit and growth rate have to move at high momentum for investors to feel comfortable or the inflation rate has to come down, either way it looks like the Nigerian authorities are not ready for these scenarios as the contradictory government policies in the last five month has shown. Let compare inflation rate across emerging economies enjoying higher growth rate like Nigeria. Turkey 10.78%, South Africa 6.2%, China 3.4%, India 7.23%, Brazil 5.10%, and Indonesia 4.5%, all have lower inflation rate than Nigeria. The question is what goes wrong? Did Central bank lost it monetary independence or that it behaves as the politicians want it to do? The fact that election has come and gone with it inflationary spending gave hope that inflation is going to come down this year, but half way into the year that didn't happen. Right from the budget statement, federal government contradicts itself with its mantra about fighting inflation. But, inflation is every where in the budget. 


    History of inflation in Nigeria is filled with its own ups and downs. For example, in the middle of 1970s when there was an oil boom in the economy the rate of inflation went out of it way. The military government of that time did not help matters with its inflationary policies such as the Udoji awards that unnecessarily put money in the pockets of civil servants. The short spanned military government of Buhari tried to bring the rate of inflation down after the excesses of civilian administration of Shagari. But, the later introduction of structural adjustment program (SAP) by Babangida, despite it much popularized potential benefits left the macroeconomic environment destabilized. Despite the apparent economic benefits of return to democracy in 1999, the rate of inflation in much of this period has remained high, further undermining government efforts to entrench macroeconomic stability. The debt reduction policies of Obasanjo from 1999-2007 have to some extent help to reduce the hike in the inflation rate. But, Obasanjo's poor budgetary discipline did not help matters. Corruption and death of infrastructures throughout this period have seriously undermined efforts by few of his cabinet members to restore macroeconomic stability. One noticeable weakness of the present regime of Jonathan is it in ability to maintain fiscal discipline and bring down current increase in national debt. Already the habitual resort to domestic borrowing by this regime has help in crowding out private sector borrowing and makes cost of borrowing high due to the resulting increased in the interest rate in the economy. This year budget is the biggest in the history of this country. Most of the revenues for financing the budget comes through borrowing, further putting pressure on the inflation rate. Federal government has made this year budget look like budget of country in war. What you see during the second world war when Keynesian expansionary policies were adopted by European governments. Thus, inflation become uncontrollable. But, Nigeria is not in war. Therefore, this inflationary budget is not justifiable. 


   Currently, there is a motion in the national assembly whose objective is to cut the powers of the Central Bank and with it reduces it independence. Already, there are warnings coming from the IMF and the immediate past governor of the apex bank, Charles Soludo. They warned that removing CBN authonomy will affect the bank ability to perform it monetary functions and seriously affect the performance of the economy. One wonder what the national assembly want to achieve with this agenda. Are they envious of the central bank governor current independence, unlike other government institutions where the national assembly interfere with their functions as they like? Because of the independence of the apex bank both the executive and legislative arms of the government cannot unnecessarily summoned the apex bank governor and ask him why he does what he did. Unlike with say the chief of army staff or the inspector general of police, who does not enjoy such immunity. The history of central bank monetary independence did not start with Nigeria, it started elsewhere around the world when rate of inflation seem uncontrollable and politicians are tempering with it in order to achieve electoral victories. Today, most of the central banks in the world enjoyed independence in term of monetary policy implementation including the Federal reserve of the US and the Bank of England. My advice to the national assembly is that they shall leave the apex bank alone so that their personal interest and envy will not affect the longer term prospects of our great economy. No nation develop when it policy makers and others that matters cannot separate their personal feelings from what their professional ethics demand. If they are envious of Sanusi high highhandedness and aristocratic gestures, there are other ways of dealing with that. For start, they can wait until his tenure has expired, as Soludo found out later when his own tenure expired. The important position in government held by apex bank governors and how they are respected in society is not unique to Nigeria, the same is obtained in other countries of the world. 


    One of the clear lessons from the East Asian success stories was their abilities to bring inflation under control. This has help to spur private investments, as investors were able to count on relatively constant prices and interest rate. As the authors of World Bank THE EAST ASIAN MIRACLE observes, “low inflation is a corollary of fiscal prudence: East Asian governments never had to rely heavily on the inflation tax because their deficits were within financeable limits’.  Low inflation rate helps to keep the rate of interest low for these countries, thereby helping to spur rapid investments in the economies. Fiscal prudence and low inflation also help in controlling the movements in the foreign exchange rates in these countries in most of the period of their rapid growth. Uncertainty about the future of inflation and monetary authorities’ inability to fight it generally has negative effect on country’s macroeconomic stability. The earlier Jonathan administration learn to value the sanctity of maintaining low inflation the better for the economy prospect of making it to the league of 20 largest economies in the world. Policies such as run away expenditures only make matters worst, likewise continued build up of debt. Though, the financial sector of the economy has to some extent recovered, recovery in the Nigerian stock market is moving slowly. More need to be done in order to usher in high inflow of foreign direct investment (FDI). The rumored removal of the remaining subsidy on fuel will further increase the inflation level in the economy just like it happened during the last January increase. Nigerian authorities have a lot to learn from the Asian Tigers. First, let start with inflation control, is single digit inflation rate achievable this year? The answer to this depend on many factors not least of which is government commitment to fighting corruption in all it forms and reduction in wastages.



REFERENCE:
The East Asian Miracle: Economic Growth and Public policy, the World Bank, 1993

Thursday, May 24, 2012

AN ENCOUNTER WITH BUHARI- AN ASPIRING ENTERPRENUER FROM KANO


     It was Schumpeter, the great Austrian economist of 20th century, that popularized the term creative destruction, a term that “encompasses changes entrepreneurial activity makes every time a new process, product or company enters the markets”. In his theory of economic development, Schumpeter explored the role of entrepreneur in the capitalist economy. To him an entrepreneur is an innovator who brings out new ideas and applications- an agent of change.  The Schumpeterian entrepreneur, as a term is used to refer to the person who fulfills that definition, according to Braguinsky, Klepper, and Ohyama (2009),” introduces a new good or a new method of production, opens a new market or discovers a new source of supply, or carries out a new organization of an industry. He upsets the conventional way of doing things. When successful, he elicits widespread imitation”. Other scholars such as Robert B. Reich sees entrepreneur as a leader, manager, and team builder. Entrepreneur as a risk taker some one who brought factors of production such as labour, capital, resources together to produce physical goods or service; a lonely creature who sees where others failed to see, who volunteer to make a dip in a sea where others dare not to, an economic change agent per excellence. This is what characterized Buhari - an entrepreneur from commercial city of Kano. The story of Buhari is that of a young man who because of hard work, intelligence, determination and luck has achieved what others who are older than him could not achieved. 


   I first met Buhari some time in 2006 at a program organized by an NGO in British council Kano office. During the course of our discussion I came to realize that he was the kind of people who have tried their hands in different things. He was, for example, at one time a fish farmer, poultry man, book seller, computer mechanic, and a small retailer. He told me that his business life begun when he was just 13 years old, following in the foot step of his uncle who was a dealer in electronic equipments.  I asked him about his educational aspirations where he told me that he was not interested in having more than a diploma in Business, which he has already acquired by the time we made our last meeting. He also informed me about his business trips to many parts of Nigeria, more especially Lagos, Maiduguri, Port Harcourt, Yola, Enugu, and Sokoto. It was during many such trips that he learn the technique of aggressive marketing which has help him a lot in his business under takings. He is a very sharp man who notices a new business idea ahead of others which help him in his business of moving things across different geographical areas. For example, some times he will notice a new business idea in Lagos which was yet to come to Kano, through sheer determination and wit he would quickly introduced it to Kano and made a lot of surpluses before others entered the market. In all these he took a lot of risk, of his business not accepted in Kano or other places. He put a lot of efforts to achieve these fits, as it is not easy to move from idea to reality in untested waters. 


    My second meeting with Buhari was last April in Kano, another chance encounter. I was visiting a friend in Kofar Nassarawa, within the ancient Kano city, when I met him in the midst of friends. He immediately recognized me and called my name, “Malam Shafiu, where are you going?” I was elated to meet him for second time. “Alhaji Buhari, it is such a long time since we last met”, I answered him. When I asked about his current business ventures he told me he was into production of Sallawa (Quail) eggs which after doing market research, he found out that demands for the eggs is greater than supply. Therefore, he quickly entered the market to help close the remaining gap. He told me that he has acquired a large fierce of land which he used to house his poultry. On daily basis, he produced up to one thousand eggs. He said he had a very efficient supply chains through which he solds his eggs to various markets. On why there was such a high demand for the egg, he said, ‘it is because of some medicinal and nutritional values of the egg’, like the treatment of diabetes, skin ailments, etc. But, eggs production was not the only business Buhari was into. He was into real estate where he bought old apartment blocks, remodel them and later sold them off. He told me he had made a lot of money in this line of business. He said ‘the secrete to it is that one has to be very imaginative and put his ear to the ground’ in order to get good business deals. Some times he buys a whole old structure and demolished it down, in order to get the piece of land and build another structure in it place. So far he has a number of residential and commercial properties, which he has rented out.

 

  Alhaji Buhari is a man who over the years has built a very large network of associates who have played important roles in the development of his small business network. Like with any other businessman, networking is of significant importance in its development. That explains Buhari's networking prowess and ability to connect with people in both middle and high ranking positions. In Nigeria, the ability to make it big in the business environment depends on who you know. Even multi billionaires like Dangote owes their large fortune to networking and hobnobbing with those in corridors of power. There is no way you can make it  a lone over here. If  security officials did not get in your way, the rent seeking bureaucrat will surely do. Even simple bank loan is not easy to get without access to some one in the system, no matter the quality of your proposal. Banks prefer to give loans to organizations with big names and top government officials. If you take away the personal loans they give to individuals with regular salary accounts, there is nothing else. All government mantra about giving assistance to small and medium scale enterprises is mere campaign talks and propaganda. Even the Central Bank so called commitment to small scale industries has failed to bear fruits. The problems of small businesses do not stop there, there is the problem of power supply which makes it mandatory on businessmen to source their electric power through use noise making generators. Roads that you ideally make use of in moving final goods to various markets are not in good condition. Thus, adding to your existing problems. In some cases you must provide your own security, because of the level of insecurity in all parts of the country. That is why I commend the young Buhari for finding the courage to run two medium size industries that produces school chairs and varieties of juice.


   To most people, when one talk of innovation and entrepreneurship, the first thing that come to their minds is the creation of physical thing. Though, invention of a new product or machine is part of innovative entrepreneurship, that is not all that entrepreneurship is about. In fact mere invention of something does not make one to be an entrepreneur. What that makes someone to be is an inventor. Before an inventor can be called an entrepreneur he has to take his invention to the market and succeed. That explains the reason why many inventors in history are not entrepreneurs as they drop their invention after inventing it. That is left to real entrepreneurs to create market opportunities for the inventions. Though, Buhari has never invented any new product or machine, he is an entrepreneur in the real sense of the term. The fact that he created new marketing procedures to market his products makes him one. Likewise, his risk taking abilities and managerial prowess.  Among his leadership qualities that come to public notice, are his sound ethical compass, the ability to take unpleasant decisions, ambition, clarity and focus, as well as emotional self confidence. No entrepreneur in modern time can be worth his name without the ability to think outside the box. Due to my visits to his plants and business premises as well as my discussions with him on his future plan, I have reached the conclusion that Buhari is highly intelligent person. His adoptive nature and flexibility help him a lot in building his business empire. He is somebody who always emphasized the importance of time, he always said ‘time is money and I don’t play with it’.



REFERENCE:                                                                      

Braguinsky, S., Klepper, S., Ohyama, A. (2009) “Schumpeterian Entrepreneurship”, National Science Foundation, USA.

Hagedoorn, J. (1996), “Innovation and Entrepreneurship: Schumpeter Revisited”, Industrial and corporate change journal, Vol. 5 No. 3, Oxford university press

http://en.wikipedia.org/wiki/Entrepreneur

Saturday, May 19, 2012

SOME THOUGHTS ON THE BUSINESS OF ADVERTISING IN NIGERIA

       Last year, because of the general election in Nigeria, the amount of advertising coming from the public sector and by extension the political sphere increased considerably as is usual with any election year. Though, the volume of adverts from last year electioneering activities is bigger than any other election period before. But that can be explained by the dynamics that came to define the election as the most expensive ever. Though, the private sector has contributed a lot in financing these advertising campaigns, especially that of the governments in power, these kinds of adverts can be said to have less connection with the macroeconomic movements in the economy of Nigeria. Billions of Naira worth of advertising were carried by major Dailies, most of them coming from the presidential campaign office of President Good Luck Jonathan the candidate of the PDP. Thus, the determinant of who get what is not based only on newspapers circulation but how sympathetic that paper is to the political cause of the ruling PDP. And whether it is election year or not, the federal government and its parastatals remain the single biggest advertiser in the country churning out billions of Naira for adverts that range from tender notice, advertorial, rejoinder, public notice to mention just a few. The existing politics of advertisement require that a paper become answerable to the federal or states governments in order to get adverts on which its livelihood depends. That explains why nearly all the major papers in the country are, simply, a mouth piece of the federal government with the exception of very few hard-line papers. Early this year, many papers got billions of Naira for carrying adverts that support federal government subsidy removal policy, while papers that were perceived to be hostile to the ruling PDP government were denied the share of that advertising budget. Advertising such as that from the Federal Government that are not distributed on competitive market based parameters tend to discourage creativity in the industry and encourage sycophancy and with it decay in the sector.


  Other major sources of adverts in Nigeria outside the government and corporate sectors are congratulatory messages and obituaries; these are what some professionals terms elite advert, very common with the newspapers based in Lagos. The Nigerian elites are very desirable of placing advert in the major papers in the country for the purpose of congratulating each other which is seen as symbol of power and influence among the wealthy elite. Obituary of deceased rich people or their relatives is another very important part of this advertisement market. Billions of Naira are being spent annually on this type of advertisement. This segment of the advert market has some kind of relationship with the performance of the economy and the amount of money the elite make from the government revenues. For example, major politicians and public sector workers put hundred millions of Naira adverts to congratulate major political office holders in the country, in order to get favors from them. Last year during the awards of national honor by the federal government in Abuja, almost a billion Naira worth of advert was placed by individuals and corporations in the country, congratulating the awardees. All major dailies in the country laughed to the banks that day. Elite advert as it is called by some is not the type of advert that encourages creativity in the industry to me, as most of the adverts placed are base on recycle format and design. And to make matters worst, most of those that placed those adverts know little about advertisement to push for highly creative works like is found in the corporate sector. It is believed that the recession Nigerian economy entered in the 1980s was responsible for the newspapers in the country going into promoting the culture of elite advertisement that today provided the sector with billions of Naira in adverts. Obituaries and congratulatory messages have remained a very important source of revenue for the newspaper industry in the country that is only rival by the public and corporate advert.



    The corporate advertising world of Nigeria is concentrated in Lagos, the major hub of economic activities in the country. Lagos alone account for some 55-60% of all types of advertising in the country, making it the dominant location for sourcing and processing of advert. That explains why all the major advert agencies in the country are located there, as well as major newspapers and TV stations. According to some estimates, the total advert revenue in Nigeria increased more than four folds from 2001 to 2010, to about 98 billion Naira. Major contributors to this surge in advert are Telecommunication sector and banking industry, later on joined by food and beverages industry. As the economy grow at higher rate than it current rate of 7%, and the number of middle class increased, the total advert revenue will increase making the industry attractive for more foreign participation who are increasingly looking for more channels to put their investments. For example, the growth of middle class in China and South East Asia were responsible for the influx of Western advertising firms into those markets. Major global advertising firms such as WPP Group and Aegis Group of London have been looking around the emerging economies for suitable market to expand their business. Being the biggest advertising firm in the world in term of revenue, WPP has operations in about 107 countries and employed over 150,000 countries and still looking for more areas to expand. Some global advert firms that have operations in Nigeria include Saatchi and Saatchi, DDB, Lowe Hintas, STB McCann and Rosabel Leo Burnett. Some of the biggest corporate advertisers in Nigeria include such companies as MTN, Glo, FirstBank, Gtbank, Zenith, UBA, Etisalat, to mention just a few. But, as all kind of producers and service providers scramble to get share of the growing middle class income in Nigeria, the size of the industry is bound to increase. Already the industry is a billion Dollar market that employs thousands of people. Corporate advert remain the most creative and highly competitive segment of the advert market where major clients request for the best from any advert firm for it to win a contract. 

  But, for the industry to realize it potentials a number of structural changes most take place in the economy. First of all, the current dwindled fortune of power supply in the country must change in order for the economy and the advert sector in particular to grow without hindrance. Rapid growth in other sectors of the economy such as retail, agriculture, transportation, luxury goods, tourism and hospitality will make it possible for the client base of the industry to grow. A move away from the current unethical and unprofessional practices of some institutions in the industry toward globally accepted practices will do more to help the growth of the sector. Likewise, the continuous training of the available man power in the industry and the increased intermingling with colleagues from the more advanced countries. The industry is in need of individual talents with power of foresight and fresh thinking away from the state of recycling of stale and outdated ideas, as well as some borrowings from the very strong corporate culture found in the banking and the telecommunication sectors that represent the bulk of the clients of the industry. Like some big practitioners have observed, APCON, the regulatory body of the industry, is in need of some fresh thinking and overhauling; in the areas of encouragement of dynamism and reinvention. The industry need to adjust itself for the challenges of the digital age or be consumed by it. Already the internet has shown the traditional media like print media and television, that it alone is the future of advertisement. Advertising as part of marketing communication has played an important role in the development of key brands in Nigeria. And, the future of the industry in Nigeria is bright looking at the current potentiality of the economy, as it moves to enter the league of 20 largest economies in the world.

Monday, May 7, 2012

FIRST QUARTER RESULTS AND RECOVERY IN THE NIGERIAN BANKING INDUSTRY

 
       After about three years of confusion and financial lost that were at the heart of the Nigerian banking sector crisis, the industry is finally recovering declaring profits of billions of Naira in the first quarter of 2012. At the peak of the Tsunami in 2008 and 2009 Nigerian financial sector was in turmoil that it has never seen in it history; while the successes of Soludo banking sector consolidation were what you continued to hear from the official public relation machines, the inner rot in the system was never echoed. The about 24 banks created by Soludo reform at that period of time were more concerned with becoming the largest banks in Africa in this or that by dolling out loans to any individual with salary account or a business of some sort. The thought of concerning themselves with the risk that would come as a result of that never entered their heads. The concerned with risk management and corporate governance was of later period, after the crisis has nearly finished the industry, leaving Zombie banks with hundreds of billion Naira of bad debt. Banks such Erastus’s Intercontinental, and Ibru’s Oceanic that were some of the biggest banks in the country at that time had to go, due the level of fraud and shenanigans committed by their chief executives that later put those banks in the red. Other banks such as Afribank, Finbank, Sterlin Bank and Bank PHB were also found to give out huge amount of debt that later turn out to be bad debt and which their balance sheet cannot accommodate; and because of that they had to go the way of intercontinental and oceanic. Some analysts at that time were of the opinion that Nigerian economy cannot absorbed the trillion naira of that bad debt without going into a serious crisis with wider repercussions on the other parts of the economy. And, to a large extent they are right, as all the major indicators such as the index of the Nigerian stock exchange, the amount in the country’s foreign reserve, Naira exchange rate, inflation rate, foreign direct investment, and unemployment rate in the economy all became worst.
    The past weeks profits declaration by Nigerian banks is a clear divergence from the trend of the last three years. The result yet out has shown that Nigerians banks have returned to profitability from years of lost and making of provisions for bad debt. If these trends continue, all the major stakeholders in the Nigerian banking industry from shareholders, regulators, customers and employees are going to smile as the industry has finally returned from the death. The recent declaration of positive results by the Nigerian banks has boasted the performance of the banking stocks on the Nigerian stock exchange. In fact the performance of the banking sub section on the Nigerian stock exchange was responsible for the recent high performance of the all share index of the Nigerian stock exchange. After years of write down of bad non performing loans, Nigerian banks have started lending out to the real sector in anticipation of the growth in the Nigerian economy. Foreign investors have already started showing interest in the Nigerian banking sector, in some ways more than even the domestic investors, who are yet to recover from the in fact of the financial Tsunami that hit the sector. As the external reserve recovers for the first time in about one year and the value of Naira against foreign currencies appreciates, the financial sector is on the way out of trouble. Already, the regulators have started celebrating telling the world Nigerian banking crisis is over. Recently, the managing director of assets Management Company of Nigeria (AMCON) was quoted to have said that Nigerian banking crisis is over and the public should await the coming of positive results in term of profits. It seem like AMCON is finally paying up following the rescued of the banking sector by the CBN that cost the apex bank about $4 billion dollars.  At the time when the ministry of finance and the central bank proposed the idea of establishing AMCON, many saw it as a wishful thinking something that will not achieved much. But, we can see that, today, those skeptics have been proven wrong, the institutions have purchased bad debt from almost all the banks in the country helping to boost their balance sheet.
      The next phase of the reform envisaged the privatisation of other nationalized banks which will finally brought the era of unhealthy banks to an end. Already banks both local and international have started showing interest in acquiring the remaining banks in order to expand their present in the Nigerian banking industry. With the expected acquisition of the remaining banks now under AMCON management, the number of banks will come down to a few numbers less than when Soludo’s consolidation was finally concluded. One of the out comes of the banking crisis is the way structure and leadership in the banking industry have changed. While after the Soludo’s consolidation the banking sector was led by First bank closely followed by new generation banks such as Intercontinental, Zenith, Oceanic and the new UBA, today the landscape has undergone transformation. Guarantee trust bank, the obvious beneficiary of the crisis that engulfed the industry from 2008 now lead, closely followed by others such as First bank, zenith and UBA. Banks such as Ecobank and Access bank that acquired the former giants, Oceanic and Intercontinental, respectively, formed another group with greater potential to reduce the competitive advantages that old generation banks such as First bank and UBA enjoyed. Other national banks like Wema Bank which before was granted a national license is now a regional bank that concentrate it activities in the South West of the country. New entrants such as the non interest Islamic bank Ja’iz have already started business at the beginning of this year with branches in Kano and Abuja, with the hope of opening many more before the close of this year. The future potential of the industry is going to be positive as the Nigerian economy expanded. Already Nigerian banks like GTBank have been making headway in the continent, competing with some of the most efficient and profitable banks on the continent. One other trend that has started making impacts on the Nigerian banking landscape is CBN cashless policy. It is manifesting bit by bit that some banks have already started reducing the number of their branches and work force; because of the impacts the policy is expected to make on physical branch as transactions move to the internet.

Friday, May 4, 2012

AZAZI, BOKO HARAM, AND N1 TRILLION DEFENCE BUDGET


      To start with, Nigeria is not the only country in the world (of it size) that is facing serious internal security challenges; others such as Indonesia, Russia, Pakistan, India and even china has faced one insurgency challenge or the other. While all these countries faced the situation as it is and proffer formidable approaches to deal with them, Nigeria is lost in defining what the problem is. Because of that billion of Dollars are been squandered without attending to the root cause of the problem. While, for example, in Pakistan the authorities have evolved religious, ideological, and to some extent socioeconomic ways of dealing with their situation, here in Nigeria the authorities are thinking only along the line of using military forces to crush the insurgency. The use of brutal force has never solve any security problem any where in the world, if at all it only succeeded in keeping the problem low but not eliminating it as the US found in Iraq and Afghanistan. Top military spenders in order of size of their budgets in billion dollars term are United State ($ 711 Billion), China ($143 Billion), Russia ($71.9 Billion), United Kingdom ($62.7 Billion), and France ($62.5 Billion), it can be observed that US share is more than that of all the other four combine. In term of share of their respective GDPs, the US allocated 4.7%, China 2%, Russia 3.9%, UK 2.6% and France 2.3%, this compare to Nigeria with about 2.5% of it GDP this year allocated to defence spending call for concerned, looking at the unique position of Nigeria among these high spenders. Many are of the view that this outrageous budget will not achieved much taking into consideration the level of corruption among top government officials, the history of Nigeria’s government poor budget implementation, and the apparent lost of priorities in the government scheme of things.
    Boko Haram has become a thorn in Jonathan’s throat; so far he has failed to solve the current security riddle facing him in the face, despite the huge security expenditure. If increased spending is the barometer for measuring the success of any security measure Jonathan would have score high. But the fact that money allocation is not the indicator of the success of any government policy in Nigeria, the about $5.7 billion dollars allocated in this year budget to security has done little to bring the security situation under control. Last week all newspapers in the country reported that the national security adviser Gen. Andrew Azazi has made statements during the South-South Economic summit pushing the blame of his office inability to solve the Boko Haram problem to PDP. In the opinion of Azazi the insertion of zoning clause into the constitution of People Democratic Party was responsible for current state of violence in the country. The NSA is really clever, instead of Nigerians blaming him for his office failure to deal with the current problem, despite the about N1 trillion budget given to his office, he is now quick in pushing the blame some where else. In case Jonathan relieve him off his appointment, Nigerians will say that it is because he told the true to PDP which they do not want the world to hear, and no one will care to look the other way to see the fact that is staring at him in the face- the fact that Azazi sector received the highest allocation which he failed to show satisfactory return to justify the expenditure. It was Johnnie Carson, the US assistant secretary of state, who was quoted to have said that the problem of current security challenges in the northern part of Nigeria is attributable to economic factors and not necessarily political and religious as some in Jonathan want the America government to believe, thereby coming to the aid of Jonathan government.
     Like the Americans, I myself (too) believe that the solution to some of the current security challenges facing the North can be found in the chronic poverty that ravaged the region. The earlier the Jonathan administration understands this, the better for it and some of its policies. Instead of allocating Billion of dollars to security the federal government should have used part of that amount to directly address the economic problems facing the North. The Americans even suggested that Jonathan created the ministry of Northern affairs like its counterpart the ministry of Niger delta, but is like some people in the Jonathan administration do not like the idea, hence, the forwarding of different conspiracy theories to explain American government apparent reluctant to come directly into the aid of Jonathan in this matter. Though is not all the security budget that was allocated to tackle the insecurity problems in the north, the fact that Boko Haram is the main security problem of this government made the allocation to look like budgeted for that purpose only. For example, substantial amount of that money was allocated to maritime security mostly to do with the Niger delta coast. The sum of N6.78 billion was allocated for the purchase of two offshore vessels from China in addition to N2.2 billion means for the purchase of patrol craft for the Nigerian navy. In total the Nigerian navy was allocated about N69 billion in this year budget, the army who are shouldered with the responsibility of confronting Boko Haram N122 billion, and the Air force N64 billion. The rest of the money that went into hundreds of billions dollars goes to the office of general Azazi and other security agencies such as the police. But, like with many other countries facing security challenges as we do, the best option is to start developing our own domestic defence industry. Countries such as China, Pakistan, Iran, Brazil, and South Africa have their own security manufacturing firms that supply substantial amount of their defence needs. Pakistan has developed her domestic security industry to the extent that it has already started exporting defence wares into other countries. Pakistan produces a range of defence products that includes Airplanes, war tanks, missiles, drones and even submarines. South Africa export war tanks, helicopters, military vehicles, and other security wares.
      At the centre of the current American deficit and domestic economic challenges is the over bloated defence expenditure. Since after the September 11 attacks, the United States has spend trillions of Dollars in the name of fighting terrorism out side the US land. Currently, the US is a net borrower from the rest of the world because it cannot control its security budget that went out of hand. In my opinion Jonathan government cannot afford to go the United States way; first the economic premises of the two countries is not the same, America is a rich developed country, Nigeria a poor developing one. Looking at the poor infrastructures on the ground in Nigeria, spending a quarter of the annual budget on security do not make economic sense provided there are other alternatives to tackling the security challenge. Deficit in budget is not desirable, especially in a country that is not at war. And, if this regime were to spend a quarter of its budget in the next remaining three years on security, am sure we are going to be in a serious budgetary problem and the regime will not achieved anything. Pakistan domestic economy and global competitiveness has been seriously affected because of the country involvement in the war on terror, as billions of dollars of GDP has been lost. Currently, the economies of Sudan and South Sudan are feeling the impacts of the current war that is going on between the two countries, likewise in Syria. The earlier this regime understand this the better for it, including embracing other options that include dialogue, because economic progress is only attainable in an atmosphere of piece not war.