Global Inequalities: Who is Developing Who?

By Dr. Ahmed Adamu

Do you know that the total world’s wealth is approximately $223 Trillion, and 43% of this wealth ($95.89 Trillion) is accumulated by only 1% of the total world population (70 million people out of the 7 billion people in the world)? About 80% of the world population (5.6 billion people) share only 6% of the total world wealth ( $13.38 trillion) who struggle to pay for child medical and education bills. We can also say that 300 richest people on earth have the same wealth as a poorest population of 3 billion (which is the same as the combined population of China, India, USA and Brazil). 

That was looking at the individual inequalities, now looking at the geographical inequalities where we have the rich countries (mainly Europe and America) and the poor countries (Africa and most parts of Asian countries). Two hundred years ago, the rich countries were only three times richer than the poor countries, but in 1960 (after the so called colonialism) the rich countries became thirty five times richer, and in fact today they are eighty times richer. 

This was the justification why these rich countries give assistance and loans to the poor countries as a compensation, which is about $130 billion a year, but the fundamental question to ask is why is the gap keeps expanding despite these injections. 

Here are some possible reasons: There are companies that operate in poor countries, who take close to $900 billion out of these poor nations inform of Tax Avoidance-Trade Mispricing, this is a leakage from the poor countries. Another leakage is the $600 billion debt services that these poor nations pay annually to the rich nations on loans that have already been paid off many times ago. Another leakage is the money that the poor countries loose from trade rules imposed by the rich countries to enable them get access their resources and cheap labour, this lost is estimated to be around $500 billion. 

So, the total leakage from the poor countries to the rich countries is $2 trillion annually, now compare it with the annual injection of $130 billion and ask yourself this question: WHO IS DEVELOPING WHO? You can now start to question the basic rules of the global economy as the wealth is continuously concentrating in the hands of tiny number of people, and turning the world to a quasi slavery. Do you think the rules of the economy shall change?

Dr. Ahmed Adamu
Petroleum Economist, Leadership and Personal Development Expert,

Brain Coach,

Lecturer at Economics Department of Nile University of Nigeria, Abuja,

First Global President of the Commonwealth Youth Council.
ahmadadamu1@gmail.com

@AhmedAdamu

08188949144.

Degree Grade: The Cause for Unemployment and Backwardness in Africa

By Dr. Ahmed Adamu

Each century has its unique challenges and requirements, and educational qualification and requirement must evolve as well. The 20^th century educational system was designed to prepare people to work in offices and farms, and unfortunately, we still run this type of educational system in 21^st century, when we have spaceships that go to the moon and electric cars. Each century supposed to have its own befitting educational system. Most of the work that human beings must do in 20^th century are now being done by machines and computers. The human intelligence has now turned to artificial intelligence, so the priority and the style of education must change.

In this era, education is not exclusive to school, for you to be knowledgeable, you don’t have to go to school necessarily, in fact, even those that go to school, what they learn from school become outdated. We now have access to smart phones, which gives us access to a more computing power and information more than the president of United State of America 20 years ago. So, access to education has never being so level as it is today. In a job market, “we no longer need workers who can retain and reproduce large amount of information, what we need are people who can sort through information and organize it effectively. We need new form of intelligence”. One of my mentors said. Learning must be reformed to enable us change the way we see and approach the world.

In 21^st century, we have google and internet, where we can store, consult and learn information and skills better than what we would do within classrooms sometimes. So, the requirement is not only how much knowledge you can keep in your head, but what you can do with it. Your ability to finish with a high grade in school is not a sole indication of your intelligence and abilities.

Once we peg employment qualification or competence to a mere school grade, then we are training people to be unfit in 21^st century. In this era, you don’t actually need the grade or the certificate to thrive. In fact, most of the billionaires don’t have a degree, and they are more successful than those with the highest grades from schools.

In fact, one might argue that school is the worst distraction to personal growth. Why would you stick your growth of knowledge and skill to a certain restricted or outdated curriculum only, while you have unlimited scope and boundless skills that you can learn in half the time. Schooling psychology tricks us into delaying every personal and skill development until we graduate, and eventually we have to start afresh, because 70% of what we learn in school are not applicable where we may find ourselves. In fact, most graduates forget more than 90% of the things they study in school.

What students eventually learned in school within 16 years, they can learn it in half of that time in this century, so the current school system waste students’ time more than we realize. Learning some of the subjects, professions or skills do not take more than five years, some even less, and with a levelled space for learning, one can go at his/her pace and learn more within far less the time, and keep updating his/herself timely.

Once you judge people by their grade alone, you are bound to hire people-like-robot, who only think and behave within the box, and they would not be able to adapt once you put them out of it. In fact, school system is not grading students fairly, because it subjected numerous learning style preferences to a single teaching style. It is like pairing fish and lizard in a climbing contest. You won’t be fair to the fish. Likewise, if you ask the fish and lizard to compete in a swimming contest, you won’t be fair to the lizard. So, even if one has the lowest school grade, it is not a case to condemn his intelligence and abilities, because he might have related to that fish in a climbing contest. He has not been tested in his best abilities.

Schools fail to teach students how to learn, it only teaches students what to learn, and by doing that students failed to effectively learn, and that’s why most of them forget what they were taught.

If we can subject our educational system to individual’s passion, style of learning and their chosen timeframe, we would be surprised by what we can learn within short time. If we can judge people by their skills, application, comprehension and motivations, we would have unemployment rate reduced drastically. People might have failed to score good grade, but they can be so creative and motivated to apply the skill.

Once we subject employment to grade, then everyone will compete for the grade instead of skills and comprehension, and without skills, people will have to keep waiting for the diminishing white-collar jobs, and more graduates are being produced daily, flooding the labour market, unemployment rate will constantly be on the rise.

The competition should be on skill acquisition and knowledge application, and to do this, you would need shorter period of time, and you don’t actually have to go to school all the time. In this century, certificates should not be recognized, but skills, creativity and ability to apply the knowledge should be the measure of competence and qualification. 

Technology has replaced human requirement for growth, so human beings must do what machines cannot do, and this cannot be achieved by just competing for who can remember facts better. Life skills have changed due to technological advancement, new economies and opportunities. So, schools curriculum must prepare students for these, otherwise, the students will remained unemployed. Most of the skills you would need on a job are not being taught in classrooms, and that’s why most job seekers are not fit for job. That’s why we have high structural unemployment. On the other side, we have people who didn’t go to school or do not rely on their certificates creating jobs, and even employing the graduates.

School grade is delusional, it deceives students into believing that they have it all, while they don’t have it. Those with higher grades tend to rely so much of their grades, and those with lower grades lose hopes on their grades, and as a result pursue real life skills and opportunities. That’s why I advise students to burn their certificates, I don’t expect them to do that, but the aim is to give them the impression that certificate is not everything and that they should not over rely on it.

In fact, when you know you don’t have a good grade that’s when you become creative and innovative. I know Farida Kabir who said that, she graduated with a third class degree, but she is now employing first class graduates. The first class graduates have this impression that they can get a job because they have high grade, and of course they will get it, but they will be working under the creative minds, who may not have gone to school at all. In this century, grades are not indicative of how successful you may become, it might be good for you to have a grade, but don’t expect anything from it, and that alone is a motivation for creativity.

Conclusively, schooling is an outdated system, education is the new system, and for education to take place, you don’t need conventional schools. So, to address illiteracy, we have to create education beyond school. Schools do not have space capacity to accommodate educational needs. In fact, most of the valuable education are not acquired in school. School learning system is not always fair, because it teaches us what we don’t need, and it only teaches us what to learn, but not how to learn. School grades makes us redirect our energy towards grade competition instead of skill competition, and as a result graduates become unemployable. There are no enough opportunities to absorb the graduating students, they have to be trained to create the opportunities for themselves, otherwise, we will forever have unemployment on the rise. So, we have to reform our school system and our perception about school. Anyway, some schools are adapting nowadays, and we should have more of these reforms.

Dr. Ahmed Adamu
Petroleum Economist, Leadership and Personal Development Expert,

Brain Coach,

Lecturer at Economics Department of Nile University of Nigeria, Abuja,

First Global President of the Commonwealth Youth Council.
ahmadadamu1@gmail.com

08188949144.

SPEECH DELIVERED BY DR. AHMED ADAMU DURING THE CONFERENCE ORGANISED BY THE NIGERIAN YOUNG PROFESSIONALS FORUM ON INTERNATIONAL ACTION ON ILLEGAL MIGRATION AND TRAFFICKING IN PERSONS, AT FRASER HOTEL, ON 10TH JUNE 2019.

Africa has to move with time to be truly independent and lead in civilization. We no longer live in a century of labour intensity, where how much you grow is dependent on how much labour you employ. We live in a century of intelligence intensity, where how much you grow is dependent on how much intelligence you apply.

We no longer live in a century where people are trained to work in offices and farms, we live in a century where people should be trained on creativity and innovation, so that you cannot succeed even in office or farm without creativity and innovation.

Labour was a great determinant of growth in 20th century, and that’s why some Western countries illegally invaded Africa and took Africans to their countries as labourers/slaves. Now, they realized that human labour is no longer desirable, because we have machines that can do human work, they closed their borders and created visas.

Now, they don’t need Africans, because with intelligence, creativity and innovation, they can achieve higher results. We live in an era where putting so much physical energy without mental energy cannot guarantee you success. People with mental strength and intelligence tend to succeed more than those with just the physical energy.

So, as long as Africa does not grow its mental intelligence and creativity, Africans will continue to be willing to be trafficked to the western world. Africa has to reform its outdated educational system that does not prepare students for modern skills, creativity, and innovations.

In the fast pace 21st century, you don’t have to spend 16 years to find purpose and to specialize in your chosen skill. In fact, competence and excellence is not strictly based on what you study in school. In the presence a huge database like google, and with amazing technological devises, how much facts you can retain in your head is becoming less required.

Sticking to the 20th century curriculums that teach students repeated and mostly irrelevant subjects is tantamount to producing unfitting graduates that will be competing with machines, leading to permanent and increasing unemployment, because no one will pay continues wages while they can acquire a machine that will do the same job without paying continues wages.

So, building minds is the way to go, no country can make people great, it is the people that make countries great, and that can only happen with great minds. As much as we spend money growing our bodies and making our faces, we should spend more to build our minds.

Africans should now realize that in a fixed technology and intelligence, adding population cannot guarantee their success. Even China realized they need to cut down population and invest more in creativity, innovation and intelligence. A job that 10 people can do in the past, now a single machine can do that, so, instead of competing with machines, we should be ahead of the machine. Even less populous nations succeeded more than the most populous nations, but only with the higher intelligence and creativity. To curb illegal migration and trafficking in persons, everyone must take responsibility of their personal growth beyond school, especially in mental, physical, emotional, spiritual and financial capacities.

The Northern Nigeria: Population and Insecurity

The Northern Nigeria: Population and Insecurity

By Dr Ahmed Adamu

If the world had begun in year 2000, Nigeria, would have been the most populous country in the world, meaning that there are more people born in Nigerian more than anywhere else in the world post 2000. But, is this an added advantage or a liability? When you add more of valuable assets, your productivity will increase, but when you add more liabilities, the reverse is the case.

It is not surprising the continuous killings and kidnappings in the country, especially in the north. North contributes higher proportion of the Nigerian population, and yet it faces lack of development, lack of education and insecurity. The region that produces the president and most of the security chiefs could not have peace.

At the moment, no one is safe in the north. This week the UBEC chairman was kidnapped, and according the audio of the telephone conversation I listened to, which was alleged to be a conversation between a relative of the chairman and the chairman himself, a ransom of N60 million was supposed to be paid for his release. Imagine this money was paid? Who are we empowering? Kidnappers?. They would have use the money to buy more arms and kill more people.

The bitter truth is that if northerners keep giving birth to children that they cannot cater for, leaving them on the street to scavenge for food, without educating and clothing them, and without giving them proper upbringing, discipline and religious knowledge, then in the next five years, north will not be habitable.

The inequality in the north is the widest you can obtain anywhere in the world; the desperation and frustration is too much, to the extent that people can do anything just to survive. People live a life that they wish they are dead. If people don’t value their own lives, how would they value other people’s lives.

Money has become the only means of survival, get it or you die, so the competition for money is so extreme. If a person who is uneducated, poor, desperate, and frustrated sees some kidnappers collecting N60 million per night, why won’t they join them, because they either get the money or they die, and they don’t care if they die.

The persistence of these kidnappings is worrisome, and now the elites are becoming the victims. One thing I observe is that once these elites are being kidnapped, they are being released quickly, and the kidnappers would be captured almost immediately. Maybe, the ransom is being paid immediately, unlike a poor man whose family would have to sell assets and contribute money to raise the ransom money.

There is a way we can trace these kidnappers, we can use technological and traceable chips, which can be pinned into the money, so that, the police can keep enough money with them and stick these chips on them. Whenever a case of kidnap is reported, the police will supply these kind of currency notes, and once the victims are released, the criminals would then easily be tracked and arrested. There also has to be capital punishment and to be executed within short time and in the public eyes to serve as deterrent.

Therefore, it is apparent that the northern population is a liability not a value at the moment. The north is the poorest with higher illiteracy and insecurity. There has to be a regional development plan and goal, where policy makers, investors, private individuals, schools and politicians will all center and commit to achieving the unified goals, among which is population for value policy. Every person added to the population must be prepared to add a value, not to become a liability.

Dr. Ahmed Adamu
Petroleum Economist, Leadership and Development Expert, and Lecturer at Economics Department of Nile University, Abuja.
ahmadadamu1@gmail.com

Fuel Subsidy: Where we found ourselves

Fuel Subsidy: Where we found ourselves

By Dr Ahmed Adamu

In 2016, Nigerians experienced one of the most difficult economic situations in more than a decade following the removal of subsidy by President Buhari. Surprisingly, there was no uprising or protests, unlike during the President Buhari’s predecessor, who was criticized and protested against for attempting to remove petroleum subsidy. Immediately after Buhari’s subsidy removal, inflation kept rising from 9% till it reached 19% within a year. Unemployment also increased from 10% to 23% in two years, and soon after that Nigeria was ranked world poverty headquarters, and recently the 6^th most miserable country to live in. The subsidy removal has seriously created untold hardships, and limited economic growth, and it was not surprising many businesses became unviable, leading to economic recession in the country. These hardships still linger, and no equivalent replacement was provided to offset the sufferings yet.

Now, from the news coming out this week, the Nigerian Finance Minister proclaimed that, the Buhari administration will remove petroleum subsidy gradually. This revealed to Nigerians that, the initial removal was not a total removal, and that they should prepare for more hardships once the subsidy is further removed. This time around, the hardship is likely to be the worst. Following the previous subsidy removal, we thought there would not be further hardships, but more hardships awaits us if subsidy is to be further removed.

The initial subsidy removal was not done properly, as long as fuel price is controlled, there will never be deregulation. So, prices have to be let free to float according market forces for us to have true fuel subsidy removal. And if that is to happen, then at the moment the market pump price in Nigerian is likely to be almost N200 per liter. Are we ready for that?

Since the initial subsidy removal, Nigerian government has not secured legal backing to continue subsidizing petroleum consumption, but reports showed that Nigerian Government spends N1.5 billion per day to subsidize petroleum consumption, this figure is very high especially when computing for a year or two. And now crude oil price is at its highest since 2013, which makes the subsidy payment higher. The higher the crude oil price, the higher the subsidy payment.

The recent discussion on subsidy removal is in reaction to the IMF call for countries to totally remove petroleum subsidies. Though IMF may not consider peculiar Nigerian context, they applied general approach. The IMF Motive is to make fossil fuels prices volatile and high, and compel rapid growth of renewables and alternative energies to the advantage of western petroleum resource poor countries.

Removing petroleum subsidy is good, but Nigeria is presently not prepared and not qualified for that. The failure of government to provide basic infrastructures and reduce inequalities make it dangerous for Nigerian government to further remove subsidy.

Unless there is a sufficient Public Transport System across the country, sufficient Electricity supply, single digit inflation and adequate Local Refineries, it will not be safe for Nigeria to further remove subsidy.  There has to be adequate cushions to protect the poor man from the resultant difficulties.

However, the government is now trapped, because subsidy is no longer sustainable (N1billion per day at least), and there is no money to protect the poor man from the effects of its removal. The Excess Crude Account (ECA) would have save he country by now, but it has been eroded, as at last December, the ECA was eroded to less than a billion dollar. The purpose of the ECA is for rainy days like these ones, this is the time we should have used the savings to build alternative energies and the conditional infrastructures, and implement demand conservations measures. But, it is not there, so, Nigeria is trapped. And, I would like to caution against further loans, the more we borrow the more we burry ourselves. The government might also resort to taxing people, this will not augur well too. At this stage, we should go for more injections, not withdrawal from the circular flow of income.

Oil’s reign has started to decline, because it is a largely a monopoly fuel in the transport sector, and now due to structural changes and innovations, the demand for oil even in the transport sector will be more elastic in a near future, which might bring the crude oil price down. And if that happened, it means low revenue for Nigerian government, and which means it will not be able to fund subsidy. So, even if subsidy is not removed today, time will come when it will be impossible for government to pay it.

Though, it is important to note that if the above forecast of low crude oil price comes to be, the landing cost will also be reduced, which might make the pump price low. However, if prices are low and with emergence of alternative energies, there will be less incentive for oil supply, going by the law of supply and going by the fact that even average marginal cost producers will not profit at certain lower oil prices. This will then reduce the supply of oil, and later push the price up. 

Whatever the situation, we should not be investing on consumption, we should be subsidizing economic activities that add value to the economy. The money spent in subsidizing petroleum consumption in the last 6 years is sufficient to build refinery like that of Dangote’s capacity. If individual person can do it, then government can do it.

No foreign oil company will invest in refinery in Nigeria willingly, their interests are not Nigerians. That’s why they rather invest in LNG than in domestic gas pipeline or processing plants. So, we have to do it ourselves, and the best option is to construct new refineries by ourselves.

Before total removal of subsidy, there should be a transparent auditing and tracking of fuel consumption in Nigeria. We should not rely on what officials tell us, they might collude to extort Nigerians. What if our consumption is just 30 million liters a day? and now we are told we consume 66 million liters a day. This will mean the extra 36 million liters subsidy will go to the pocket of some officials, which is N1 billion per day going to the private pockets in the name of subsidy. So, there is need for forensic auditing and tracking of fuel consumption to ascertain the true consumption, so as to reduce the subsidy payment before we become qualified for its final removal.

In terms of pricing template, PPPRA has failed to demonstrate the pricing template on their website, which gives room for manipulation. Nigerians deserve to know the responsiveness of petroleum landing cost to crude oil price, as well as the complete pricing template for transparency. Without this, there will be tendency for huge corruption and collusion.

Because 92% of our fuel consumption is imported, and refined petroleum products are the largest items in our import basket, the value of Naira reduces. In addition, crude oil export is not creating demand for Naira. So, we always lose currency value for petroleum importation. Therefore, we are trapped, naira kept depreciating and import bills becoming more expensive.

NNPC lacks the capacity to save the country, because, as at 2018, the Nigerian Petroleum Import Bill was N2.28 trillion (half of capital investment for a refinery like that of Dangote’s), and NNPC’s expected revenue contribution in the same year was N2.44 billion. So, no profit, what we anticipated to generate was equivalent to what we paid for importation. So, we are just consumers.

There are too much burdens on NNPC, being largely the sole importer of petroleum, and struggling to maintain N145 per liter price, NNPC will have no option but to allow marketers to sell for profit, which at the moment may shoot price up to N200 per litter, courtesy of higher crude oil price.

 It is all evident clear that, subsidy that we thought was totally removed, it is still being paid in an unsustainable way. We kept leaning on a weak and collapsing pillar and we don’t the money to construct new pillar at a dying hour.

We are lucky, Dangote might rescue us, because he can by 2020 refine up to 60 million liters per day, and until then no subsidy should be removed. We might also have to be careful about Dangote’s monopoly tendency, and based on his business model, he will work with expatriates and might adopt an international refinery pricing model, which the effect of exchange rate might affect its price.

Therefore, if this crisis has taught us anything is that, we have to explore unconventional sources of revenue to build infrastructure, refineries, and alternative energies. One way of doing that is by privatizing the NNPC, so that we can generate revenue and attract investment and competitiveness in the petroleum sector, and use the proceeds to develop infrastructure and new economies. At the moment, the country needs more injections into the flow of income, and this can be stimulated through government spending and benefits, investments and exports, and there should be less imports and more tax cuts. All these cannot be possible without unconventional sources of revenue. So, the final verdict is fuel subsidy is not sustainable, but don’t remove it further until all the set conditions are fulfilled.

Dr. Ahmed Adamu

Petroleum Economist and Lecturer at Economics Department of Nile University, Abuja.

Ahmadadamu1@gmail.com