Unlocking the Economy is No Rocket Science

Simon KolawoleLive By Simon kolawole; simon.kolawole@thisdaylive.com, sms: 0805 500 1961

Are you like me — highly excited by Nigeria's potential but intermittently despondent about our development chances? We talk so much about our petro-centric economy, high unemployment, over-bloated public service, inefficiency of government and poor governance, but, truth be told, it is not hopeless for Nigeria. We cannot deny the fact that everything to make Nigeria great is here with us. We do not have shortage of human and material resources. That is settled. Maybe we need some foreign experts, but definitely not as much as we think. Or maybe we don't even need outside help at all. Maybe all we need do is tinker with our preconceived ideas.

The ridiculous potential of this country was demonstrated when we decided to share the $1.6 billion dividends from our investment in the Nigeria Liquefied Natural Gas Company Ltd (NLNG) as part of an economic bail-out package. You know what? Once upon a time, we were simply flaring the gas. We came to our senses sometime in 1989 when President Ibrahim Babangida set up the LNG, in partnership with oil majors, to gather the gas. Between when the first train left our shores in 1999 and now, the investment has earned over $85 billion. It has paid taxes in excess of $30 billion. The $1.6 billion is just one year's dividend for our 49% stake. We still have $4 billion in the piggy bank!

But you know what? We are still flaring gas like hell, no pun intended. We are literally burning billions of dollars every day of the week. There are billions of dollars in revenue, billions of dollars in taxes and billions of dollars in dividend that we are unable to tap into. We have been so schooled to think that crude oil is all there is to this life. Now, for Pete's sake, do we need Barack Obama to tell us to stop flaring gas? It is for us to sit down, ask ourselves simple questions and reform our mind so that we can see how we can set this economy on the "explosion" mode by simply making use of what we have to get what we want.

There are several ways of unlocking our huge economic potential. Today, I will discuss outsourcing non-core and non-security sensitive government duties. How can the government begin to shed unnecessary weight? Does government need to be clearing refuse and patching potholes? Are these duties better left to private hands, thereby freeing the government of personnel liabilities, procurement scams and maintenance costs? Won't this allow the government to focus its energy on governance through making policies and enforcing standards? I'm not even talking about the bigger picture of privatisation. Just talking about scaling up concessioning and outsourcing.

In the private sector, big companies are increasingly outsourcing non-core functions so that they can concentrate on their primary areas of business. Why should a bank employ cleaners, security guards and have an in-house advertising agency if it can outsource these jobs? Why should a newspaper house own a printing press when it can print at a commercial press, thereby outsourcing all its printing headaches and focusing its energy on journalism? Why should a telecoms company be running call centres when there are companies that specialise in providing this service? In the end, you will be creating and enriching a new economy.

It is estimated that there are new businesses, worth billions of naira, waiting to be unlocked through outsourcing in the private sector, and you can double or triple that if you throw in the public sector through a comprehensive restructuring of government business.  In addition to allowing businesses to invest more in improving their own capacities in their core areas, outsourcing has the potential of developing a new job sector and delivering new, improved skills. Small and medium businesses, the engine of any economy, will benefit both directly and indirectly. Foreign companies engaged in business in Nigeria can also transfer skills and invest in latest technologies.

In the public sector, the same model of outsourcing — which, thankfully, is already in place at many agencies — should be pursued more vigorously as we seek to unlock our economic potential. I have seen this model at work in advanced economies, especially in road maintenance, and it is actually not rocket science. There is the added benefit of having less government involvement in our lives as it concentrates on law and order. Nevertheless, there is an argument that outsourcing can lead to job loss. But this argument not only encourages the government to keep carrying dead weight, it revels in the inefficiency. What service does the government really render well in Nigeria?

Indeed, the job-loss argument further ignores the fact that outsourcing actually creates employment in the private sector. Disengaged government workers who really have something to offer will be in a good position to float companies and provide the same services to government, but this time as entrepreneurs. Government overheads are reduced, while the new business entities will pay corporate and personal taxes. Those idle civil servants who sell fish and shoes in the office can collect their terminal benefits and rent shops at Dugbe, Wuse and other markets to engage in proper trading. We desperately need a fit-and-trim civil service.

I will randomly cite three areas to illustrate my argument: road maintenance, waste management and PR. Let's start with road. The big jobs will always go to the Julius Bergers, but what about routine road maintenance? Nigerians should be setting up engineering companies knowing that thousands of road maintenance contracts are there to be executed every year. They should be the ones buying or renting bulldozers, not the government. They should be responsible for equipment maintenance and fuelling, etc. So the government awards the contracts, specifies the standards and collects the taxes from them. Procurement, as we know, is a major drainpipe in government business.

Two, why should government be clearing refuse and budgeting hundreds of millions of naira to purchase trucks, fuel, pay workers and all that every year? This should not be the primary job of government. It can be outsourced. New businesses will automatically spring up. Efficiency is a more likely outcome than when government is the provider of the service. In Lagos State, for instance, we have largely overcome the refuse collection problem with the public private partnership (PPP) model. Private companies do all the dirty job, pardon the pun, under government regulation. Value is created in the chain. Job is created. And refuse is properly cleared.

My final witness. A few years ago, I saw the staff audit report of the PR department of a government agency which had like 20 members of staff! What do they do? One of them simply collects newspapers from the vendor in the morning and his job is done for the day. Most of them list the same job description: reading and reviewing newspapers. Only one was actually involved in anything PR! They while away their days by watching movies on their computers. If government outsources all their public relations, imagine how many more PR firms will come on board. More jobs will certainly be created. There is a better chance of value being delivered.

My point exactly is: maybe all we need to reboot our economy and spark it into life is to re-examine our government business model. I am talking about something as simple as outsourcing. It is not as complicated as privatisation. I would like to challenge the federal and state governments to commission a study on the cost benefits and efficiency savings derivable from outsourcing. I have a fair idea of the likely findings and conclusions. We must put on our thinking cap. We were flaring all our gas before NLNG. We are still flaring billions of naira on excess weight in the public sector. The private sector understands the benefits of outsourcing and is taking full advantage of it.

And Four
Other Things...

MUSICAL CHAIR

Am I the only Nigerian who is never moved by new appointments at the NNPC? The GMD position is one of the most coveted appointments, more coveted than the governorship of some states. The dancing that comes with new appointments is often obscene. To be honest, it is not always about national service but an opportunity to consume the national cake voraciously. What the oil industry needs is complete reform: the government must focus on regulation while the national oil company should be a pure economic entity seeking to compete with Petronas and Statoil — as contained in the PIB. Change.

PROBE THYSELF

Governor Ayo Fayose of Ekiti State has started a very interesting debate over the anti-corruption war of President Muhammadu Buhari: he has challenged the president to probe those who financed his campaign. We all know Fayose is Buhari's sworn enemy but we cannot dismiss everything he says. It has some value. However, Buhari himself has gone on record to say he would probe any member of APC indicted of corruption. Hard as it may appear, I don't think it is impossible for Buhari to probe his campaign financiers. After all, former President Olusegun Obasanjo did not spare his associates. Gauntlet.

NAIRA YO-YO

Isn't it incredible that we think the best way to improve the value of the naira is to ban deposits into domiciliary accounts? And am I surprised that the results are, at best, mixed — with naira gaining and losing in equal proportions almost every hour of the day at the parallel market? In the absence of a finance minister or chief economic adviser, the CBN has saddled itself with the responsibility of solving a problem that needs to be addressed with a combination of monetary and fiscal policies. I don't know how far these ad-hoc policies can take us. Mystifying.

PREMIER JOY

And so, the new English premier league season is upon us. My weekends are never the same when the world's most exciting league is on. It is arguably the most multi-cultural, multi-national of all the elite leagues. Some critics are irritated that we seem to love the English league more than our own — but you cannot legislate against personal taste. You can't order me to love Majek more than Marley. Last season's Top Four — Chelsea, Man City, Arsenal and Man United — will likely end up the Top Four again. I, however, tip Chelsea and Arsenal as the hottest bets for the title. Thrilling.