Addressing Petroleum Sector Crisis

Dr. Ahmed Adamu

By Dr. Ahmed Adamu

Today is the one year anniversary of the historic democratic revolution in Nigeria, when Nigerians cast their votes to install a new government headed by the new amalgamated political party. This was a remarkable turning point in the history of the country. Within a year of this development, people have so far seen changes in some aspects of their socio-economic lives. Even though, the challenges are enormous, the speed of the positive change may not catch up with the expectations immediately. One area that has been of serious concern to Nigerians is the petroleum sector, especially with the recent scarcity of the petrol.  This has affected the lives and wellbeing of the people, as the price of the blood of the world i.e Petrol is up to 117% higher than its regulated price.

The money that people would have used to buy food or to buy medicine or to pay for the bills, they now use it to pay for petrol, thereby denying them access to basic needs of life. People may become poorer as they could not provide for most of their needs, as their savings now go toward paying for the petrol. This most surely worry the government, and will require short term, medium and long term measures for it to be addressed. The government will always have to do better to maintain the trust and loyalty of the people, and people have to be patient and play their own roles, as change never comes easy.

Nigerians actually expect Magic from the ruling party (APC), and it appears it needs more than the magic to handle the complex issues facing Nigeria. And this is why the junior minister for Petroleum said the truth that he cannot perform magic in fixing the shortages of petrol, and that Nigerians shall be grateful for the little they have and endure the hardship. This confession made the leader of the ruling party (Senator Bola Tinubu) to blast the junior minister for Petroleum (Mr Kachiku) for his comment, and stressing that more can be done with much better optimism and better performance, which I could not agree more.

The current shortages of petrol and its erratic price is partly contributed by exploitation of the suppliers, who would rather maximise their profit at the expense of the poor. The government always has its limitation, and the citizens have their own leadership roles. Most of the hardship we go through are largely due to lack of sincerity, selflessness and patriotism from the citizens. Most of the major marketers now import petrol and sell at a price of their choice to maximise profit, and this profit maximization motives is transferred down to the retailers. People would have to accept any price, as Petrol has inelastic demand and it is a necessary commodity. Even though, some of the local marketers cannot access sufficient hard currency in the money market, and they still have to pay more Naira to acquire single unit of foreign currency, and this reduces their capacity to import. Nevertheless, if the marketers adhere to the regulated margins, the price of petrol won’t have reach this level high.

There is apparent disregard to regulation in the Petroleum Sector. If the Price of Petrol is pegged at N86.5 per litre, why is it sold at N188 per litre? Initially, the price was regulated at N97 per litre, but due to the drop in the crude oil price, the landing cost of the litre of petrol also reduced, which motivated the downward review of the price to N86.5. This was to allow the major marketers to make marginal profit. And since the price of crude oil has increased, there is need for the upward review of the regulated price, since there is no funding for subsidy. This will discourage the suppliers from unnecessary exploitations in the name of cost recovery. Therefore, there must be strict adherence to the adjustable and viable price of petrol across the country, and the regulated price shall be benchmarked with the most expensive crude oil market price.

As at last ten days, the landing cost of petrol per litre was N71.49, and the retailer’s margins was just N5/litre, and that of a dealer is just N1.95/litre. Now, one wonders what is the landing cost of the litre that was sold at N188? This shows apparent exploitations and profit maximization.

Fixing and building new refineries have been the critical propositions for fixing the lingering petroleum crisis in the country. Nigeria has the 10^th largest oil reserves in the world and is the 13th largest producer, yet it faces shortages of petroleum products. The investment cost of a refinery that can produce what Nigeria demands of petrol daily is estimated at around N800 billion. If this is too much for government to build, it can then consider a joint venture with the private sector, and by 2019, it will start producing sufficient petrol without the need to import any.

Providing sufficient and affordable petroleum products is the second highest point a politician can score after electricity. There is relative improvement in the electricity supply, the next big call is to ensure adequate supply of petrol and adherence to regulation. Mr Kachiku estimated that Nigerians will continue to suffer for the next two months, which I pray that should not happen, because, as a short term measure, we can use the recovered looted funds to adequately supply the petrol at the interim. The major marketers can even be incentivised to enhance their supply capacity.

The NNPC may not have sufficient storage and distribution capacity to meet the country’s demand, as such, the marketers must be encouraged to be selfless and patriotic and adhere to the maximum regulated profit margin. They should not quantify their profit based on the money that go into their pockets, but how many lives they put at ease, how many businesses they put back, how many lives they saves, and how fast they make the economy grow.  There is need for emergency meeting with all the major and independent marketers to address the crisis within a week.  There should be radical investment in the construction of new refineries immediately, in order to make Nigeria 100% fuel sufficient devoid of the costly importation.

In terms of leadership of the petroleum sector, we know how honest and active Mr President is, and he has the necessary experience in the sector, however, I would strongly advice Mr President to strip himself of the petroleum ministership and appoint a substantive Minister for Petroleum, who will dedicate 100% of his/her attention and commitment to the complex sector. The petroleum sector would require robust attention more than any other sector. We know Mr President is already faced with many daunting tasks. Mr President has been travelling outside the country in order to mend the image of the country and cement new bilateral relationship that would prosper the country, and this has been distractive one way or the other. He is also very busy trying to stabilise the security and economy of the country. As such, he may not has to be so burdened with another challenge that he could easily assign it to someone else.

Mr. Kachiku (the junior minister for Petroleum) who doubled as the Managing Director (MD) of the Complex Nigerian National Petroleum Corporation (NNPC) and who handles most of the Petroleum Ministry leadership roles is already overwhelmed with so many pressing issues in the Petroleum Sector. To make things easy for managing the Petroleum Sector, Nigeria needs a separate MD of NNPC, separate Ministers (Junior and Senior) for Petroleum. Mr. Kachiku should retain his earlier portfolio as MD of NNPC only, and some young competent Nigerians who are very familiar with the current global and local petroleum sector shall be appointed as Ministers for Petroleum.

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

Pioneer Global Chairperson, Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina,

Speech by Dr. Ahmed Adamu during the official Launch of N500 million Youth Entrepreneurship and Students Grant by NYPF in Lagos, Nigeria.

Dr. Ahmed Adamu presenting the speech during the launch
of N500 million YESGrant in Lagos, Nigeria.

Speech by Dr. Ahmed Adamu during the official Launch of N500 million Youth Entrepreneurship and Students Grant by NYPF in Lagos, Nigeria.

on Tuesday 22nd March 2016 at Four Point by Sheraton Hotel Victoria Island, Lagos, Nigeria

I am happy to be here to witness history in the making, it gives me great pleasure to see the dream we aspire comes true. Today, young people are taking the lead to help themselves by themselves. This is what we have been waiting for, to see young people not waiting for what someone or government can do for them, they are now doing something for themselves. This is the real leadership, where young people are saving and sacrificing from their income to help their colleagues and improve their lives through entrepreneurship and educational grants. This is not a loan, but a grant, we must therefore thank and congratulate the Nigerian Young Professionals Forum (NYPF) for initiating this grant. We thank the leadership of the NYPF, especially its founder, Moses Siasia, who has been a Young Politician and Young Professional (YP, YP) for the courage of launching this grant called “Young Entrepreneurship and Students Grant (YESGrant).

I have travelled wide across the world, especially among the Commonwealth Nations, where I have led the young people that numbered up to 1.2 Billion from these countries, and in all these countries, I have not seen this kind of direct youth-led entrepreneurship and educational grants. I am happy that this is coming from my own country. Congratulations once again.

This shall serve as motivation to other young people, so that young people can become real leaders. Like I keep saying, leadership is not about government positions, while other young people are out there spending their resources on sycophant political activities, here we have young people investing on their generation. This should be highly appreciated to encourage and inspire others. This project is exceptional, because it extends further to help students pay for their tuition fees. This project clearly showed that, it is not politically motivated, as no election is taking place right now, and no intention of using it to earn political advantage.

Having appreciated this achievement, I have some suggestions on how to effectively improve on the efficiency of this investment. Since our targets is to encourage young entrepreneurs, then we have to protect them, and make them compete with only local entrepreneurs. This can be achieved by banning importation of all kinds of products and services that Nigeria can produce, so that the competition will be between local producers, which will help enhance the quality of local products.

There is need for deliberate investment on the right psychology and cognition of young people. A self-motivated and productive minds engage in productive ventures even without support. So, the efficiency of this project depends on the cognition and perception of the beneficiaries. If the beneficiaries are after luxury or status, no matter how much they receive, they cannot get out of poverty/unemployment. So the beneficiaries shall develop passion and interest in productive ventures, so that with little support they can reinvest and grow patiently.

This also brings about the need to identify the interest and the choice of the beneficiaries. Without interest, there is no passion, once there is no passion, there is no sustainability. Therefore, before disbursing this money, there is need to engage in an independent survey without the participants knowing the purpose of the survey. This is the way we can have them declare their real business interest, their exact economic condition and their capital base requirement, and once we have this information, the disbursement will be made based on their interest, economic condition and capital scope of their chosen business. There is no need to restrict the selected types of businesses, the choice of the business shall be identified by the applicants themselves.

If this survey is conducted, we can then develop the indicators that we can use to evaluate the success and impact of this project. The emphasis shall not be on the number of beneficiaries, but the number of sustainable businesses created. Similarly, the rural poor applicants who cannot operate the computer or access the internet shall be accommodated. More than 60% of the unemployed are unschooled and from rural communities, so emphasis shall be made to the rural poor and uneducated youth, as they have less propensity to be employed and more likely to engage in crimes.

To beneficiaries, they should not think that this grant is aimed at making them rich, it is provided to allow them start now and grow in the future. They should never assume that they will be rich quick. It took perseverance to succeed. They shall not compete in luxury and status, they should not try to upgrade the standard of their living immediately, and they shall have the culture of reinvestment.

I would like to thank the Heritage Bank for believing in young people and for agreeing to partner with the young people in this project. I congratulate the NYPF for launching this N500 million entrepreneurship and educational grant. Congratulations, we wish you successful disbursement of this grant.

Thank you

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

Pioneer Global Chairperson, Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina,

Youth and Leadership: Necessary Ingredients for effective leadership

Dr. Ahmed Adamu presenting his speech during the inaugural
meeting of YCC-PRO in Abuja, Nigerria.

Speech delivered by Dr. Ahmed Adamu during the Inaugural meeting of the National Youth Centre for Change and Positive Re-Orientation of Nigeria (YCC-PRO), at Stonehedge Hotel, Abuja on Sunday 20^th March 2016.

For us to discuss leadership, we have to know what leadership is and what it is not. Leadership is not about government positions or authority, it is not about labels. Leadership is about action, creating way for others to live to the potentials, doing something to make better the lives of the people, and it is about serving others. So you do not need to be in government for you to be a leader.

It is disheartening that some youth nowadays confuses leadership with government positions, and that is why they spend so much on sycophant activities to acquire government positions. And that is a waste of resource and energy, if they really want to be leaders, with their resources, they can be effective leaders by taking actions to change the lives of people, and to even influence decision makings and institutions through democratic processes. Some may be motivated by the luxury of the government positions, and they become distracted of the real leadership roles when they eventually get there. So, first we have to believe that our leadership roles are not subjected to positions of authorities.

For us to be leaders, we have to go for actions, not positions; we have to go for results, not credit. We should not worry about whose name is mentioned or who took the credit, our aim is to see the objectives implemented. We have to channel our ego toward achieving the general ambition of our country/organisation. So, our country comes first, and once it progressed, our ego is satisfied. The youth should always be wanting to qualify, even if they think they have done so much. Never think you know it all or you are better than the rest, keep learning and then we can be effective leaders. We should forget about personal benefits, even if we have the chance, but we should be concerned about the benefits of our organisation or country.

There are some basic ingredients for youth to be effective leaders, these are categorised in 5 Cs:

The first C is Character: for us to be effective leaders, we have to have good character, we have to be modest, humble, honest, trustworthy, and keep to our promise. Some people think keeping time is exclusive to PMB, which is very wrong, we all have to keep to promise. President Buhari could not have earned the respect and followership if he does not instil the good character in himself. And so, if we have to enjoy the respect, we have to have the good character. Good character is developed, it is not inborn or exclusive to some. So we can start thinking how to develop the good character. We should not stand for personality and politicians, we should stand for the good visions and characters they stand for. We have to avoid being political sycophants, our actions and talks should be issues-based.

The second C is Charisma; Charisma is not about the size of your body or the beauty of your face, it is about how you were able draw or attract people toward you by focusing and working for them. It is natural that people will like those that care for them. So, the charisma is earned, it is developed, and it is not inborn.

The third C is Commitment: Your commitment attract people toward you and believe in you. The measure of your commitment is action. If you engage in positive activity, you are by extension telling people that you are committed, and they will buy into you. With this new national youth movement, we should attract people by our commitment.

The fourth C is Communication: Effective leaders are good communicators, people can only follow you if they understand your message. Therefore, our message has to be effective, simple and targeted to the relevant audience. We cannot talk about reorienting the society and engage in high level publicity to earn political credits, we have to engage in direct communication to our audience, no matter how small is the audience. The impact is what matters, not the coverage. The best way to effectively communicate your message is through action. Action speaks louder than voice.

The fifth C is Courage: Courage is about doing what you think you cannot do and believing in yourself. The limit to what you can achieve is limited to what you think is your limit, and if the decision is by your own thought, which you have control over it, then you have control over the limit you can achieve.

Finally, I want to advice the young people to work as a team, we don’t need thousand youth organisations to address single issue. There should be synergy and merger between youth groups, and this movement (YCC-PRO) has provided space for different youth groups to work together to achieve common purpose. It is important that youth groups are thematic-specific, we should not have so many objectives that we cannot achieve, we have to select a single issue to address. Youth should not form NGO or Civil Society just because they want to hold titles or get money, but to bring change they want to see, and they should not worry about taking the credit.

Thank you.

Dr. Ahmed Adamu

Petroleum Economist and Development Expert

Pioneer Global Chairperson, Commonwealth Youth Council

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina

UTME fees: How senate got it wrong

By Dr. Ahmed Adamu

Dr. Ahmed Adamu

The Nigerian senate last week agreed to review the Act establishing the Joint Admission and Matriculation Board (JAMB), recommending the reduction of its Unified Tertiary Matriculation and Examination (UTME) registration fees from N5000 to N2, 500. The senate also recommended for the extension of the validity period of the UTME result. No doubt, the senate did this with good intentions to enable the children of the poor afford the mandatory entry examination into tertiary institutions. However, this decision will not serve the desired purpose and would require thinking out of the box, which this piece attempt to do.

First, there is the need to go back memory lane on the need for the UTME itself. Forty years ago, precisely in 1976, there was no Joint Admission and Matriculation Board (JAMB) and then only seven federal universities existed, which individually administered their concessionary examinations before admitting candidates. The military administration under General Olusegun Obasanjo noted that there were some limitations and challenges for this kind of admission system, and there were wastes of resources especially on the part of the candidates during these concessionary examinations. The government then decided to create JAMB to address these limitations.

If JAMB was established to address problems that existed 40 years ago, did Nigerian government ever thought of addressing these particular limitations associated with university discrete admission system? The answer is no. Similarly, the creation of JAMB brought its own limitations and still cannot eliminate the concessionary university entry examinations and its associated waste of resources.

This means that those limitations that JAMB was created to address are still manifesting since Universities still have stake and administer the final assessment of candidate’s suitability for admission. If the limitations associated with the university concessionary examinations were addressed directly then, JAMB would have been scraped for long. Nowadays, for a candidate to go to a University, he/she has to go through numerous (at least five) examinations, and there are charges for each of these examinations, and paying for this charges still cannot guarantee one’s admission. This means, the waste of resources on the part of candidate which the JAMB was supposed to eliminate is even exacerbated now. If a candidate is to be admitted into a University, he/she has to pass his/her school continuous assessment, West African Examination Council (WAEC) or National Examination Council (NECO), UTME, and Post-UTME. This makes access to University extremely difficult and complex, and results to inconsistency in the assessments, and led to denial of access to the tertiary education.

Many believed that passing UTME is by chance. Being an objective test; it may not exactly test one’s depth of knowledge and suitability for admission. Many confessed guessing the answers and eventually getting the required result. Now, UTME has become relaxed to the extent that some candidates interchange computers during the examination, and there were many reported cases of inadequacies and malpractices. In some cases, those that scored higher UTME result do not score good results in Post-UTME and semester examinations.

So, the question to ask is, which of these examinations truly test student’s qualification? In many circumstances, students that acquired good grades in WAEC/NECO still fail in UTME, and there are situations where the reverse is the case. For example, there is a student who has a very good result in WAEC, but failed UTME six times, and had to end up in polytechnic. Similarly, a candidate may pass all the entry examinations, and then perform poorly in the semester examinations.  So, this inconsistency necessitated narrowing the entry examinations to few. So, it is better to select one or two entry examinations and make it efficient and adequate. And UTME should not be considered here, as the need for it does not exist anymore.

The reduction in UTME fees is a welcome development, because there are many students who could not join university because they could not afford to pay for the UTME, and with this reduction, at least half of these students can now pay for the UTME. However, it is not about sitting for the UTME, as in 2015 only 40% of the candidates that applied for first degree (under UTME) eventually secured admission.

This proportion will now reduce as the number of the applicants will definitely increase, as the admission capacities remain unchanged.  For example, in 2015, around 1.5 million candidates applied for first degrees under UTME and only 500,000 eventually secured the admission. With this reduction of UTME fees, the number of applications may reach around 2.3 million, and yet only 500,000 will still get to the university. So, this will add to the frustrations, under-studentships and overstretch of university capacities. Therefore, what we need now is to fix our universities education issues and expand their absorption capacities, so that all the qualified candidates can get into universities and acquire quality education. And UTME cannot truly test one’s qualification.

Some believed that, it is a deliberate effort to make the system complex and make it determined by chance, so as to reduce the number of qualified candidates, because the Universities do not have enough capacity to absorb all the qualified students. So now, by reducing the UTME registration fees, you are by extension increasing the number of people that may likely qualify for admission, and there is no immediate corresponding increase in the university absorption capacity.

So, this will eventually compound the entire issues. Apart from money, other factors play role in denying candidates access to higher education. The first call will be to improve the quality of the education, increase the university capacities, employ more qualified teachers, and then invite more applicants. Of course, the number of entry examinations have to be reduced and made efficient.

Therefore, secondary schools should be strengthened to efficiently examine and assess their students’ qualification at each level up to the graduation, so that, it will be expected that any candidate finishing from Secondary and passing the external examination from WAEC or NECO and passing the Tertiary institution’s concessionary assessment shall be qualified for University admission.

These three examinations (Secondary school’s continuous assessments, WAEC/NECO and University examination) shall suffice. The additional hurdle and extra charges (no matter how little) related to UTME should be eliminated, and this can only be done by scraping the UTME.

Ahmed Adamu, PhD, is a Petroleum Economist, Development Expert and Pioneer Global Chairperson of the Commonwealth Youth Council. He is a lecturer with the Department of Economics, Umaru Musa Yar'adua University, Katsina.

Re: President Buhari’s N5,000 Social Welfare promise

By Dr. Ahmed Adamu

Dr. Ahmed Adamu

During the 2015 elections campaign, President Buhari and his party APC clearly promised to pay N5,000 stipend to 25 million unemployed and vulnerable citizens monthly, and this was highlighted during the last Presidential media chat. Considering the enormity of this undertaking, in November 2015, the wife of the President, Hajiya Aisha Buhari appealed to her husband to keep to this promise in her response to the prompt withdrawal of a startling motion proposing the payment of monthly N5000 to unemployed youth by the opposition party in the National Assembly, who have no obligation to such responsibility. Surprisingly, the APC Senators, whose party made the pledge rejected the proposal. Recently, while in Saudi Arabia, President Buhari himself declared his resolve to not implement this campaign promise.  No doubt, many young people were tempted by the N5,000 promise and will definitely be disappointed by Mr President’s recent proclamation. As such I decided to write this little piece to convince the disappointed young people on why Mr President is right on his position.

First, I would like to remind us that we are only human, and we can never be perfect. There is difference between expectation and reality, and experience make one adjust and do things better.  There is a popular saying that, it is better to teach people how to catch fish than to give them fish. Similarly, Sociologists argued that welfare programmes are responsible for encouraging and supporting claimants into welfare dependency, and I believe that systems that disburse money in ways that are not compatible with producing social utility can create pathological cultures of dependency. Welfare programmes lead to negative incentive to not work and thus sustains poverty.

All welfare programmes are meant to address poverty, but the question is how many people will really get out poverty by receiving N5,000 a month? Relying on the N5,000 a month will mean N166 expenditure a day, which still won’t take the beneficiary out of poverty, and the cost on the government will still be huge. And if 25 million beneficiaries are to be selected, the government will be spending N125 Billion every single month trying to fight poverty, but instead, it will be encouraging or sustaining the poverty.  In addition, how many months would a person needs to benefit from this package to get out of poverty? It is not likely for any individual to get out of poverty by collecting N5,000 a month in the wake of 8% inflation rate. Even government workers that receive N45, 000 remain poor. Without access to free or affordable housing scheme, and without access to education, healthcare, energy, transport systems, one has to provide for himself all these and yet feed himself and his family. Then, how will N5,000 make a difference?

If at all social welfare system is to be considered in this country (sooner or later), I will recommend to go for quality not quantity, instead of investing the N125 billion a month on 25 million people, it is better to spend the money on only 12,500 people, so that each individual will receive N10 million once and for all, and in one year, you will have around 150,000 people receiving N10 million each. This is the sure way of getting people out of poverty if at all social welfare programme is to be implemented in the country.

So, it is clear that N5,000 cannot improve the standard of living of the poor, and if the beneficiary will risk migrating artificially to a higher social class for collecting this package, then he/she risks poverty traps. It was observed that, especially young people engage in extra spending upon receipt of social welfare or poverty interventions funds, and thereby making them enlarge their expenditure basket, and once they stop receiving such intervention, they will go back to being poor. They can even engage in crime to enable them get the free money that they have been used to, in order to sustain their upgraded social classes. Another inadequacy of the social welfare is that many people who may not necessarily need it, will pretend to be poor so as to benefit from the programme and thereby denying others a chance.

Therefore, it is not about giving the money, but how do they use the money. Some scholars believe that, some poor people are poor in managing resources, and if you give them money they will mismanage it. So, investment shall be channeled toward educating people to be good managers of resources so that with little resources they can access, they can make it count. Giving out money without corresponding economic value or output is an economic leakage. Even though, it might trigger expenditure, but that is not the optimal option, as the value addition is lost.

Many people would have been rich if basic infrastructures and provisions are provided, but now they are poor, because large proportion of their income is spent on providing such basic requirements, and yet not sufficient. So, it is a clever move to channel resources toward improving infrastructures and provisions in the real sectors of the economy, so that with little earnings, people can attain the required standard of living. This will also facilitate other economic activity, and any serious individual will take the advantage of this and become productive. If any money is intended to be spent for this purpose, it should then be channeled toward subsidizing education and health, being the basic requirements to prepare the labour force of the country. Therefore, Mr President is right to redirect resources toward providing an enabling environment and provisions for the productive sectors, so that people can catch their own fish.

Ahmed Adamu, PhD, is a Petroleum Economist, Development Expert and Pioneer Global Chairperson of the Commonwealth Youth Council. He is a lecturer with Department of Economics, Umaru Musa Yar'adua University. 

Why Poverty traps in Nigeria?

Dr. Ahmed Adamu during the paper presentation on poverty
traps in Nigeria, University of Abuja. More photos below.

Today(26/2/2016), I presented a paper on why poverty traps in Nigeria at a research conference organised by International institute for Policy Review and Development Strategy, which took place in University of  Abuja, Gwagwalada, Nigeria. This is one of many other papers we compiled with my co-authors. I am inspired by this paper to write the following piece. 

There were many poverty alleviation programmes initiated in Nigeria since 1960, and as a result, trillions of Naira were spent, yet close to 80% of Nigerians live below $1.90 a day without adequate access to other basic infrastructures and amenities required for a standard of living, making many trapped in poverty. The world have been pretending to fight poverty, yet 50% of the world wealth is possessed by only 1% of the world population. The rich class has wealth growth rate higher than the middle class by 10 or more times. In four years, there were $600 billion increase of wealth for the wealthiest (Oxfam 2015).

In Nigeria, the story is not different, and you could even have more share of the wealth possessed by the 1%. If you are to share the combined wealth of all the people in Nigeria among the country's population, every Nigerian is likely to get N7 million. This figure include children and old people, and if you are to share it among only the working adult population, you will have not less than N13 million per head, and if this happens, many will not be poor, may be never again. So, some sociologist hold that greediness of the wealthiest caused poverty, but the question you ask is how do the rich become rich? why were they not prevented by the then wealthiest?.

Some also believe that income is the only indicator to poverty, but it is not, other factors are in play. Some think that poverty propensity is more attached to certain tribes or cultures, which is not, as no civilization started rich, they all started poor. There are also people who are hardworking, energetic, skillful and educated, but yet poor. It is necessary to first comprehend what causes poverty and what does not causes poverty, and how these factors correlates. This is the first prerequisite for any effective poverty alleviation programme, which many of the poverty alleviation programmes failed to identify.

Many literature and indices have proved the ineffectiveness of the poverty alleviation programmes in the country. From our experiences, we identified that many young people that benefited from the poverty programmes eventually returns to poverty, and we are keen to develop new theory that explains what have been missing in the fight against poverty and how it can be effective.

Our experiences have shown that psychology, perception and action of the beneficiaries in response to any intervention against poverty play significant role in determining the success of the poverty programmes. Some of the poverty programmes capitalized on provision of only money. For example, YouWin programme, even though proposals were requested but, young people were motivated to get the money and they can temporary develop business idea and get a proposal and pass the exams, but they might lack the interest in the business (may be the business of their interest cannot be eligible for the programme), so the aim was to acquire the money by enduring the enforced business type criteria. After acquiring the money, many of the beneficiaries of these prorgammes might want to immediately upgrade their standard of living and engage in extra spending that were not possible before, and sometimes engage in liability expenditure to maintain the new social class they claimed for themselves. All these couple with inadequate access to facilities and infrastructures, will make the agent stretch his savings to maintain social status, and eventually return to poverty, and making him poverty trapped. This could be repeated in the same pattern over time.

There are external and internal factors responsible for poverty traps: the societal unnecessary celebration and recognition of wealth motivate ostentation to acquire social recognition. Inadequate access to basic infrastructures and provisions make individuals to spend higher to sustain a higher social class, making it easy to exhaust one's additional income. Wealth and status competition in society propel unnecessary extra and unproductive expenditures. The internal factors include the tendency of one thinking and believing he is poor and he can never be rich, and this is possible by believing in some of he mentioned myth about poverty. The dependency culture is common among young people, that is why we believe continuous social welfare might make some lazy. The quest for getting rich quick and thinking of only now are also responsible for poverty traps. Blaming government for poverty will always make one wait for the government to make it up for them, and not willing to act by themselves.  Therefore, training and knowledge development programmes should be designed to address some of the external and largely internal mechanisms that  trapped people in poverty.

Another recommendation is to avoid enforcing the choice of areas of productivity or investment for the beneficiaries, first, all poverty programmes should be able to identify individuals personal interest, and then develop such interest productively to provide economic benefit and then link the benefits to the immediate society and beyond. There are also choice and leverage points, where people trapped in poverty can be made to separate between the external factors and internal factors, and then strategic training and guidance provided to them to surmount the internal factors. People trapped in poverty might have idols whom they listen and respect highly either politically, socially or economically, and such goodwill shall be leveraged in promoting positive perception and attitudes toward exiting poverty traps. This will not require direct monetary involvement, but will help fight at least the internal factors. For example, President Buhari, can use his popularity and command of followerships to engage in repeated advocacy for self determinations and best practices toward exiting poverty traps. This will help reform individual psychology and perceptions, and enhance their productivity more than what the proposed N5000 social welfare package could produce.

This could be through repeated advocacy to suppress unnecessary quest for social class and importance, and promotion of productive investment rather than immediate asset possessions. People can only get out of poverty alone only if they think they can. Many individuals became rich without participating in poverty programmes, yet many remain poor after benefiting from these programmes. It is also recommended that, the targets of these prorgammes should not be the number of beneficiaries, but the number of people that the programme can actually take out of poverty traps forever. And this has to be inclusive and responsive to the beneficiaries' already developed interest. Poverty prorgammes should not be decentralized,  it should be local, it will then be easier to track and more accessible. People trapped in poverty are encouraged to reinvest every extra income in productive venture, and do not artificially migrate to a higher social status.

This is an ongoing research and the contributions from the participants at the conference were highly appreciated.

Dr. Ahmed Adamu

More Photos from the event

Should Northern Nigeria Explore Oil and Gas?

By Dr. Ahmed Adamu

Dr. Ahmed Adamu

The Nigerian government plans to spend N39.4 Billion to undertake geological and geophysical surveys in an effort to explore the prospect of oil and gas deposits in the Inland-Basin of Lake Chad and upper Benue Trough. This is provided in the proposed 2016 budget, presently awaiting National Assembly’s approval, and have so far provoked political reactions from some politicians. However, none have professionally react to it.

This is a ticklish issue as it involves investing huge amount of scarce resource on uncertain venture, and at a time when the oil and gas prices are below economic benchmarks. It will cost up to $15 million to drill a single exploration well, and you will need a number of them depending on the reserve spread. This investment will have to be recouped after development and production. What determines when to explore and recovery of investment cost is largely the oil price. Recently, Genel Energy PLC requested for extension of its exploration licence in Ethiopia, so as to put off the exploration drilling and save some cash due to the dwindling oil and gas prices, which makes the exploration unviable at the prevailing oil price.

This tells us that, it is not the right time to start new exploration, and Nigeria being heavily reliant on oil revenue would of course want to reduce the supply to help push the oil price up. Similarly, with the growing poverty and scarcity within the economy, the Nigerian government does not need to spend a single dollar to explore new reserves. The oil companies shall be able to cover the prospect risk and pay for the exploration costs. This is practiced in many countries, where oil companies fund the exploration cost as part of the joint venture agreement. So, in the joint venture or service agreements, if no commercial oil is found, the loss falls entirely on the oil company, and the government does not lose anything.

 Similarly, the global energy investments are projected and recommended to be channelled toward efficient energy resources to achieve the ambitious goal of keeping global warming below 2 degree Celsius and zero anthropogenic green gas emissions. This will mean that Nigeria will have to diversify energy investment toward renewable energies. With abundance of solar and wind energy, Nigeria would have radically invest and subsidise the use of these renewable energies especially in residential, transport and commercial sectors of the economy. It will help create jobs and reduce cost of production in the real sector of the economy. So the opportunity cost is the 156 MW capacity wind farm that can be installed using the same amount.

 Even though, there is still a promising future for the fossil fuels across the world, and in countries like Nigeria, it will continue to dominate the energy mix up to 50 years to come. Therefore, careful decision has to be made on what, where, how and for whom to produce the oil and gas resources. The oil dependence made Nigeria to currently suffer from Dutch disease, and investment has to be redirected toward the manufacturing, industrial, agricultural and technological sectors to offset the demand gap in the currency market and boost productivity and investment. 

It is not the right time to spend on uncertain explorations especially of a volatile resources, and the fact that oil exploration wells may not clearly provide exact estimate of commercial quantity of the deposits, which questions the oil investment viability. The market conditions may not be as expected, because oil prices are known to be extremely volatile, and new discoveries from the shale reserves have already saturated the market. Any further discovery will push the supply curve outward, which may not be good for the poor oil producing countries. Similarly, due to the long lead time in petroleum exploration and development, when an oil field is brought online for production, the oil price may be lower than expected. On the other hand, the costs could be higher than expected because of inflation in engineering and procurement of raw materials and equipment, which explains the cost run-up in the past several years. So, even if the Nigerian government will have to explore and produce more oil resources, it should not take the prospect and commercial risks absolutely, and should not explore at any oil price below $40 per barrel. The money should be redirected for diversification incentive, infrastructural development, and social welfare for the development of the real sector of the economy.  

Ahmed Adamu, Ph.D., is a Development and Petroleum Economist and the Chairperson of the Commonwealth Youth Council (CYC). 

2016 budget: How not to borrow

By Dr. Ahmed Adamu

Dr. Ahmed Adamu

Nigeria’s 2016 budget christened budget of change is critical to the country’s real economic transition and it is the framework that will define the real change citizens of the country have long clamoured for.

There is no better time to get the economic policies and direction right than now, and that is why the President needs to be well informed.

The Nigerian people have unprecedented hope on President Muhammadu Buhari to steer the country out of the woods. It does appear he is unlucky to come at a time when the price of crude oil-which Nigeria’s economy is hugely dependent- has crashed to lowest level in a decade.

The crude oil prices (hovering around $30 per barrel early this year) is still lower than the budget benchmark price of $38 per barrel, which means at this level, there is going to be around 22% reduction in the expected oil revenue.

Despite this apparent shortfall of expected oil revenue, the 2016 budget which is before the national assembly has a deficit of 36%, meaning that 36% of the money expected to finance the budget will come from borrowing.

The implication is that more than 50% of the revenue expected to fund the 2016 budget are not going to be readily available or obtainable. In other words, only N3 trillion (out of the N6.08 trillion budgeted) is likely to be available to implement the 2016 budget (without borrowing), which will come from non-oil taxes and independent revenue, and partly from the shrinking oil revenue.

Now the question is why should the government be so ambitious just to keep its political promises for now? If you are a worker, would you keep spending more than you earn? Or would you adjust to the level of your income? Sometimes, it might be good to spend more, even if it means to borrow, so as to provide and help the family members, so that they can be productive and earn more. But this has to be strategically thought out and decide when to spend more and when not to, and when to borrow and when not to.

The current Nigerian debt with World Bank’s International Development Association (IDB) stands at $11.8 billion as principal with obligation of around $6 billion (World Bank 2015). This means for this particular loan, the average ratio of the obligation is 0.51, meaning that for every $1 borrowed; $0.51 has to be paid as interest or as debt service cost. This analysis only accounts for the IDB’s credits to Nigeria. It does not account for other international and national lenders to Nigeria, which if put together, the current Nigerian debt stock (including those from states) stand at $64 billion (Debt Management Office 2015). This equals to N13 trillion.

The decision Buhari will have to make is to either reduce the spending and not to borrow, or borrow now and spend more. Each decision will have its economic effects. If he borrows now, it means there will be increase in aggregate demand and development in infrastructure necessary for economic growth. However, this will mean these spending must attract equivalent or even higher return to be able to pay back the total cost of the debt. It will mean there will be less money available for the more efficient private sector, as government has to collect money from the private sector to fund its expenditure, which the government might not be able to efficiently manage compare to the private sector.

It will also mean that the debt stock and cost of debt will increase, which may likely undermine future development, leading to future decline in government services and increased in taxes. It will make the economy fragile and independent due to external obligations.

Now, President Buhari intends to borrow $2.5 billion from World Bank, $1 billion from African Development Bank (ADB) and N984 billion internally. If he collects these debts, it means Nigeria has to fulfil the International Monetary Fund (IMF) conditions, one of which is to further devalue the country’s currency, which the president himself is not ready to do. This will further devastate the economy of course if he does so.

The Western world would at all cost collect back their oil dollars by making the poor oil rich countries devalue their currencies and granting them loans with expensive service costs. Already, Nigerians sensed this when Managing Director of the IMF, Ms Lagarde visited the country early this year.

So, I strongly disagree with respected economist Prof. Pat Utomi for suggesting that the naira should be devalued.

Our economy must pick up by itself, it needs to be strong, and investment promotion and diversification are the key priorities here. Many external spending (both private and public) must be reduced drastically; this may include reduction in unnecessary foreign scholarships and personal spending, so as to shift the currency supply curve inward. So, Mr President is perfectly right on the restrictions of foreign spending. However, we have to suffer for our failure to establish our independent economy, but scarcity brings about innovations and improvements. If the manufacturing sector is viable, cheap foreign investment due to Naira depreciation would have resort the currency market to equilibrium. Unfortunately, the manufacturing and non-oil sector is not viable in the country.

If Buhari chooses not to borrow, he will then have to reduce the spending and will reduce the interest rate, and by extension increasing investment, which will create more jobs and address the issues of unemployment and poverty. This will then create more chances for collecting taxes and independent revenues. He will then have the option of imposing proportionate tax systems, which will increase the government revenue to develop lagging infrastructure. This will not affect the future performance of governance, and will make the economy more independent and resist any external shock. It will enhance resilience, independence and productivity of the economy.

The appropriate balance has to be maintained, optimal government spending or budget deficit increases economic growth, but when it becomes constant or continues, it brings about reduction in economic growth. Nigeria had budget deficit for eight years in the last ten years, and the government was supposed to wait and see the effects and returns of the injections and provisions made so far through the government spending. If the government keep spending, the aggregate demand will continue to increase, thereby causing inflation. It will then reduce the purchasing power of the currency. It will also lead to higher interest rate which reduces investment (deficit hawks).

In my earlier piece, I advised Mr President not to borrow for the next four years at least. The easy way to go about it is to drastically reduce government spending, and reduction in the recurrent expenditures is the starting point. The recurrent expenditure constitutes 70% of the expected government spending in the 2016 budget. The involvement of private sector is critical in building the economy. We have to migrate from a government driven economy to private sector-driven economy.

The government should be responsible for policy and regulations. Most of the capital and recurrent expenditures can efficiently be delivered through private-public partnerships. The government would then concentrate on security, healthcare, and social welfare. I will advise the federal government to privatise primary and secondary schools, and government should use the savings to support parents that cannot afford to pay the regulated school fees. This will relieve the government of huge financial responsibilities and improve quality education (I will do a separate write-up on this). Private investment in non-oil sector has to be prioritised; the government cannot do it all alone. So, this is not the right time to borrow, it is time to control the spending and explore opportunities for generating revenue internally.


Ahmed Adamu, Ph.D., is a Development and Petroleum Economist and the Chairperson of the Commonwealth Youth Council (CYC).

UAE appoints 22-year-old Shamma Al Mazrui as minister

Shamma Al Mazrui, 22-year-old

Doha: Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister and Vice-President of UAE has appointed a youth minister in the new cabinet. He had earlier tweeted that UAE will be appointing someone under 25 in the cabinet and he has picked Shamma Al Mazrui as the Minister of Youth Affairs.

Shamma is 22 years old and hold a Master’s degree from Oxford University and a Bachelor’s degree from New York University. She will also be the President of the Youth Council which will “represent the aspirations and affairs of the youth before the government”, The National newspaper, published from UAE, reported.

Sheikh Mohammed said: “We will give the council prerogatives and we expect true achievements from her and her council.”

In earlier tweets he had said: “Youth represents some half of our Arab societies, so it is only logical to give them a voice and role in governing the nation.”

“Youth have hopes and dreams, issues and challenges; they are the reason why societies prosper or fail. They are our hope for the future. Our young country was built by the hands and achievements of youth. Youth is our strength and speed and is our treasure for the future.”

Culled from The Peninsula

Fear of Public Speaking

By Dr. Ahmed Adamu

I receive calls and messages from many of my followers and friends disclosing their weaknesses and fear in public speaking, which gravely affect their businesses, social and political endeavours. I gave them many advices which I would like to share few of them with you.

It is natural to have fear for public speaking. The Book of Lists mentioned that, many people fear public speaking more than they fear death. According to the book’s survey, death was ranked seventh in the ranking of the top worst human fears, while public speaking was ranked first worst human fear. So if you fear public speaking, you are certainly not alone, because 3 out of every 5 people have fear for public speaking. What you need to do is know why you have this fear and how to overcome it.

Every person can speak comfortably and effectively at least to his/her peers or juniors, which means they are in person good and effective speakers, it is only a matter of the environment and cognitive perception.

If you are comfortable talking to small group or your juniors or your siblings, then when you are talking to big audience, just imagine that the big audience are exactly the same ones as that of the individual or small group of your juniors or peers. Perception about your audience contribute 90% to your anxiety, which makes you absent from the place. Perceiving your audience as different from your peers or juniors makes you concentrate more on how uncomfortable you feel and how bad you might communicate, which will then distract you from the purpose and content of speech.

Sometimes you will be clouded by the fear of the fear itself. Sometimes you worried that you will look fearful, which makes you to fear that once the audience notices your nervousness, everyone will realise you don’t actually know your topic or you are not a good speaker. So don’t get distracted about what people think about you, but what they think about your message. Don’t get up there to impress anyone or to be better than other speakers or be reckoned as an orator, just go there to communicate a message. So your job is not to be an excellent speaker.

It does not matter how it was presented, but what matter is to get the message across. Assume that your audience know nothing about the topic and you are the only one to inform them about the new knowledge. So, you are there just to pass an information. This then relate to how much you know about the content of the message. That is why it is very good to know deeply and widely around the topic of your speech. Preparation is one of the best way to tackle obstacles of public speaking. Know very well the content of your speech, and prepare some guiding notes.

Practice your speech over and over if you have time, and practice it before your friend or your junior, this will prepare you establish the imagination and comfort that you will assume while presenting the actual speech. Public speaking is a learning process, there have to be times when you will do it badly, you will have to fail in some important speeches, so don’t let the fear of what happened in the past affect you now. Don’t let the past influence your presence. You are meant to improve and learn from your mistakes. The best speakers in the world had their worst moments too. Always dress well and breathe deeply when you come to public speaking. Be at your best possible personal and physical appearance at the moment. And when you come to the Podium, spend some few seconds to engage in some little acts, like touching the Mic, or rearranging your guiding notes, or any little act before you start talking, and then look your audience into the eyes for a second, and then you begin your speech. Try and start your speech with informal jokes or making your audience laugh, but that should be after thanking and recognising the dignitaries present. That makes you relax and create connection between yourself and your audience.

Advice to student graduate

By Dr. Ahmed Adamu

My students invited me for their graduation dinner, where I adviced them as follows:

Now you are graduating from University, and there is no guarantee for a perfect job for you, and now you fear that you lack competitive skills and experience required for the labour market. You may not be sure which industry you want to work in, you are full of thougth and facing uncertain life after University. So, I have 10 advices for you:

1.Dont let the world decide for you, pick a career of ur own choice and get a mentor to guide you through. Do have a career plan ranging from short term, medium to long term plan. Identify your strength and build your career on your strength.

2. Never get scared of job interviews, use interviews as a way of getting information and identifying whether the job is right for you or not.

3. Go for something you love over money

4. Education shall not end from University. You have been reading to pass exams, it is now time to start reading to learn. What are those your favourite areas of study? Identify them and broaden your knowledge. Read widely, and be above or exact reflection of your class of degree.

5. Always think positive and aim higher. Be dedicative, persevere and never give up. Best jobs are not suppose to be easy.

6. Dont expect much from government jobs, because only 1% of new jobs come from government. Think about creating jobs. You have choice to make, you can either be a job seeker or job provider. Be an employer not employee.

7. Dont compare your life with that of others, you are meant to be different and follow different path to success. Focus on your goal, identify what you want and concentrate on it.

8. Keep the network of your friendship (alumni) and inspire each other. Hear from the experience of each other. Find out about the career success stories of your colleagues so as to learn from them.

9. Most jobs out there require you to have experience, and if you are not given the job, how would you get the experience? I will advice you to get volunteer job or internship where you will work without or little pay. This will help you get the experience. While working as intern, ask for challenging assignment, and it will prepare you much better.

10. Be simple, humble and help one another.

I will miss you so much, and I hope none of you will be here next year to celebrate another graduation dinner.

Wish you alll the best. Till we meet again!

Commonwealth Youth Council Granted Funds to Youth Organisations: CYC Partnership Grants Initiative 2015

The Commonwealth Youth Council (CYC) has granted funds to the following youth development projects in four countries from three regions in the Commonwealth, i.e. Kenya and Mauritius from Africa, Pakistan from Asia, and Jamaica from the Caribbean.

1. Community Youth Apprenticeship Project to be delivered by the Kangema Youth Group, Kenya
2. Economic and Social Integration of Youth to be delivered by the Laureate Foundation, Pakistan
3. Dynamic Youth Programme to be delivered by the National Youth Council, Mauritius
4. Realize, Embrace and Achieve your Purpose – REAP Project to be delivered by the Young Women/Men of Purpose (YWOP/YMOP), Jamaica

Announcing the final beneficiaries and projects, Ahmed Adamu, the Chairperson of the Commonwealth Youth Council said this pioneer initiative is to ensure inclusive participation and partnership with the CYC member organisations.

“We are glad that these funds have already been disbursed, and implementation of these projects has already commenced. The distribution of the funds are regionally balanced, and we have put in place all monitoring and evaluation mechanism to ensure efficiency of these projects.” Mr Adamu said.

These youth development projects were selected by the CYC after thorough and rigorous application and selection processes. This aims to ensure that young people in their communities from rural areas to urban areas are empowered to become active participants in their societal development and to improve their well-being and in line with its overall mandate and strategic objectives, the CYC allocated certain amount of funds to sponsor youth-led organizations to implement youth development projects in their communities in partnership with the CYC. As a result, the CYC called for applications from youth-led organizations in the Commonwealth in May/June 2015.

The CYC received 32 applications together with project proposals from 14 countries of the Commonwealth, i.e. Cameroon, Ghana, Kenya, Mauritius, Nigeria, Rwanda, Seychelles, Sierra Leone, India, Maldives, Pakistan, Sri Lanka, Jamaica and Saint Lucia.

The received project proposals were in five thematic areas such as Education & Skills, Youth in the Post 2015, Employment & Enterprise, Youth Engagement & Governance, and Reconciliation & Social Cohesion.

The selected four applicants were the best project proposals from Africa, Asia, and the Caribbean. All these projects were in Education & Skills and Employment & Enterprise, some of the thematic areas to which high priority was given by the CYC.

These projects would mainly focus on capacity building, enhancing leadership, improving entrepreneurial skills and thereby reducing the unemployment rate especially among vulnerable, marginalized, and disadvantaged youth groups that includes youth living with HIV/AIDS, the disabled, internally displaced youth, the homeless, abandoned single teenage mothers, sexually and physically abused, drug addicts, and youth heading households.
 
The CYC has granted 2500 GBP to each of the selected four youth development projects, i.e. in total 10,000 GPB was granted. The Memoranda of Understanding (MOUs) between the CYC and the selected youth-led organizations were signed and in accordance with the MOUs, the youth development projects would be implemented by those youth-led organizations in partnership with the CYC.

The CYC believes that this is a significant investment and partnership in enhancing employability, leadership and thereby the life standards of those vulnerable, marginalized, and disadvantaged youth groups in Kenya, Mauritius, Pakistan and Jamaica.

From the CYC Secretariat, Commonwealth Youth Council on 19th January 2015

The Commonwealth Youth Council (CYC) has reacted to the 2016 Nigerian budget presented by President Muhammadu Buhari.

According to the outgoing chairperson of the youth council, Ahmed Adamu, who spoke with Naij.com, he said the 2016 budget proposal has further reinforced the confidence and hope of the Nigerian youth, as it was clearly designed to reposition the young people in the country as economic and national development partners.

“Despite the 4% reduction in budget allocation to youth and sports sector compared to previous year, the 2016 budget has proposed additional allocation to other critical development sectors that correlate to youth development, which include Education, Works, Housing and Power etc,” he said.

Speaking further, he added: “These economic sectors if fully developed will provide millions of jobs to the young people, and enhance their employability. We therefore commend and welcomed the 2016 budget as tagged “budget of change”. As this administration is committed to fighting corruption, we hope that the budget will be implemented beyond 70% and all financial leakages will be blocked. We also hoped that young people will continue to take the centre stage in the implementation of the change agenda"

Adamu raised concern over the merger of the youth development and sport ministries.
“Young people are concerned that the youth development sector may not receive the specific and robust attention it deserves. The ministry of youth should therefore be supported and complemented by a government department or commission that will specifically be addressing youth development issues. This government institution should be led by the youth and for the youth. The youth development work requires specific professional experience and it has to be youth led, therefore, there should be a structure that will optimise speciality and professionalism in the youth development sector."

“That is why the young people are solidly in support of the legislative bill that has passed the first reading at the national assembly, which proposed for the creation of the youth development commission. This kind of initiative will enhance sense of inclusion and participation of young people, as it will provide a systematic engagement of the young people, and ensuring that professionalism and relevant youth development policies and programmes are reinforced,” he stated.

Adamu added that the government should create a platform that will create and coordinate networks of young professionals that will volunteer in the implementation of the change agenda.
“The youth development sector requires synergy devoid of duplication and isolated intervention. There should be clear understanding of the context of youth development issues and from which specific youth policies and programmes can be prioritised. All youth development funds from various government institutions should be consolidated and coordinated by the competent and responsible government organisation responsible for youth development,” he told this newspaper.
https://www.naij.com/681513-commonwealth-reacts-2016-budget…