Privatization Regime Has Crippled Electricity Sector, Says Nigerian Labor Congress Leader
by OLUFEMI ADEOSUN on Nov 5, 2014
Nigerian National Mirror
Dr. Peter Ozo-Eson, former Associate Professor of Economics, University of Jos and General Secretary of the Nigeria Labour Congress, NLC
Dr. Peter Ozo-Eson, former Associate Professor of Economics, University of Jos and General Secretary of the Nigeria Labour Congress, NLC, in this interview with OLUFEMI ADEOSUN speaks on the various policies of government and their implications on the national economy and employment generation.
The real sector of the economy is the hub of economic development globally. What is your impression about the performance of this sector over the last few years in Nigeria?
If we go by the available statistics, there has been reasonable performance in terms of growth in the key sectors of the economy. You will discover for instance that, the agriculture sector and more recently industry have become the main drivers of the growth which in the last decade has been averaging over 6 per cent . To that extent, we can say that there are some positive developments in the real sector. However, we need to disaggregate that data a little more.
However, when we talk about the real sector, we know that the main engine that actually drives the economy and capable of inclusive growth is the manufacturing sub sector. We, therefore, need to focus on the manufacturing sector.
The collapse of the manufacturing sector, following the Structural Adjustment Programme, dealt serious blow to our economy. It manifested in low capacity utilisation to the extent that our official figures came down at below 30 per cent. Even though there seems to have been a little pick, the rate of that pick up is not fast enough and we believe that this is the real reason why we are having the high rate of growth and not creating jobs.
One of the flaws that experts have identified has been the exclusivity of the economic growth. What do you think s fundamentally wrong in economic policies that allow for this worrisome trend?
When you base your market policies on market fundamentalism, you will end up with exactly what you have. It is not new. We know that there is a nexus of linkage that the economy must have to have true development. There should be linkages across sectors, but market fundamentalism will not lead to that. We need government deliberate policies that are geared towards the promotion of certain sectors identified as desirable.
They may not immediately be too profitable but they are desirable for true economic development. This also bring to the fore the role of the states in the whole process of development. Those who want to take the market purist position say that government does not have business in business. That is the type of economic that our policy makers subscribe to and that is why we always end up with what we have now in which we have high economic growth that is quite high by all international standards, but with little effect on employment generation opportunities.
In your own opinion, which sectors of the economy would you want government to concentrate on to drive the needed inclusive growth?
Let us look at the Iron and Steel sector, for example. It has the potential to galvanise the economy because of its intrinsic value across the different sectors. For instance, if you want to add domestic value to auto industry you must have a very solid iron and steel sector. We knew this in the process of our economic planning and over the years emphasised its importance and invested a lot of money into building Ajaokuta. But sadly, because of the belief in market forces, we abandoned it.
Not only are we losing from the huge potentials inherent in the Iron and Steel sector, we are also tying down the dynamics in the Nigerian economy by the fact that the sector is not functioning properly. If I were to advise government, I would to say forget “market”, enter into that sector you have already built a huge infrastructure, go into it and further develop it.
To eliminate bureaucracy, government could go into contract management partnership with the private enterprises to get the sector contribute meaningfully to the nation’s economy. The day we have a real functioning, dynamic iron and steel sector, that day we sow the seed of true industrialisation.
Also, in the area of transportation, government also need to get it right. For instance, you cannot drive the economy of a country as physically vast as Nigeria with 12-seater buses. It is a losing battle, it will never work. Rather than ameliorating the suffering of commuters and galvanising economic activities, the 12-seater buses merely are merely congesting our roads.
For me the rail sector is one sector government must get into. It is not just transportation, the huge amount that we budget for our highways every year is like a lost battle; before you finish it, it is bad again because you are using those roads to haul heavy equipment, containers, petroleum products and those weights ensure that those roads, even if they were of quality, will not be durable.
First step is to take some of those things off the roads and into rail haulage. While I acknowledge that there have been some interventions in the rail sector, they are not enough. Firstly, they have wasted so much time and resources in revitalising the old rail system, which to me, was no longer useful.
We should have scrapped that and start to develop a modern system. There are some standard gauge development through Abuja-Kaduna and some other areas that they are trying to do, but I think that we can do this more speedily.
If we develop a marshal plan in railway development, we can move and mobilise resources. It is not just government resources. I thought that what government should actually do is to first do a complete mapping and planning of what the modern railway system will be and then to merge them into sections to attract various investors.
Despite various statistics indicating marked improvement in the employment situation in the country, the number of unemployed youths has continued to soar. What is your reaction to this?
That is the paradox we are dealing with and I think this matter started when government was launching NEEDS which Soludo said it could create 7million jobs in two years. However, at that time, labour and some others regarded this as a wish list? This is because, we believed that for you to do a serious job creation scheme, you must have a verifiable mechanism of reporting what jobs are created and what jobs are lost. We advocated that a mechanism be built into the plan where all stakeholders would be able to have a reporting mechanisms to ascertain when jobs are created and when jobs are lost, but it was never done.
We left from there and we have been replicating the old story now as government is reeling out figures of the number of jobs created. This could be true especially coming from the Bureau of Statistics, the official agency responsible for data generation. However, there are different kinds of jobs.
Are these sustainable jobs or jobs in which some people would just do a quick thing here and the next minute they are back on the unemployment market?
We think that the Bureau and government generally have not created a platform where stakeholders can work together to actually determine whether jobs have been created or not. We have continued to demand that the way to do it is for government, employers, the private sector, organised labour along with the Bureau to have a coordinating mechanism so that everybody is able to identify where these jobs are coming from. Until that is done, the figures that they throw around, for many Nigerians, remain mere figures.
The recent GDP rebased placed Nigeria as the most successful economy in Africa. How has this status translated to better welfare for the people?
What the rebasing did is to say that we are the largest. Large does not always mean the best; they are two separate issues. We are the largest, but you are also aware we have always prided ourselves as the elephants in the continent but even those rats at times are able to spin us around so we need to be careful and understand that the rebasing is purely technical.
The result of the rebased figure has both positive and negative implications.
We have always been worried in the country about the inequality in income distribution that a very small minority of the population is holding the bulk of it. When we thought the size was this, we thought that distribution was skewed. Now that we recounted and discovered that the size of the economy is even much larger than before yet we are still having all these people in poverty, it means that income inequality is even more skewed than we were even worrying about. That is one negative implication of the outcome of the rebasing. Most people will not talk about that, we are merely celebrating.
The positive is in the potentials to attract Foreign Direct Investment, FDI, into the country. However, for this to be translated into reality, a lot of things have to be put in place. For instance while market may attract an investor, he may yet decide that although that is the largest market, I will prefer to go to this other market in west Africa where there is guarantee in security and stable power generation. We need to work on those things if we are to derive the full benefits from having a large market.
Despite this ranking, the power sector that is expected to stimulate businesses is still not working. What do you think government can do? Is the privatisation working?
Government has already taken a decisive step whether right or wrong. Those are elements of market fundamentalism and they have gone that way. But we all know that since the DISCOs took over, there has been virtual collapse of power. There may be a few places such as Abuja where it may not have gone down too bad, but there are places like Benin where they are back to before the 50’s. We do these things based on the ideology of the market without recognising certain hiccups that are in our own environment. If you use market properly in selecting those who won the various distribution places for power, you are most likely to select people and companies that are experienced in the power sector. Most of the names behind the various DISCOs have never had any experience within the power sector; some were in the financial services area, while others are politicians. They are grappling with what they knew nothing about. While people are appealing that we need to be patient and give them time, I am of the opinion that government should have involved those who would have hit the ground running because they had experience in this area.
Secondly the very saying that we see every opportunity as an opportunity for piracy; all the discos are fighting for is to be allowed to charge, they want to exert the maximum from the consumers even where there is no service. Situations where meters are not readily available to collect revenue correctly but prefer to use estimated bill that is a recipe for fleecing the populace because with a prepaid meter the consumer is protected to some degree.
I am not optimistic that the route we are going now is going to solve the power problem in the country.
What is your reaction to the proposed decentralisation of the labour movement?
As a country, it amazes me how we gravitate towards the negative direction always. Clearly, a national minimum wage is reality in more than 93 per cent of the countries of the world. We have taken an inventory on all of them including federal systems. The origin of minimum wage was simply to say they are of an organised labour, they are all these ones in the informal sector, and they need to be protected because if you do not set the bar, private capitalism in the quest for profit, will.
But because governors suddenly want more money to spend, they are looking to setting their own minimum wage; they even displayed the absence of morality because these are the same governors whose wages and allowances are set centrally by the National Revenue Mobilisation and Fiscal Commission. Even for the Local Government Councillors. Even a senator who comes from a village that has never seen a vehicle before he became senator is taking the same senatorial perquisite as somebody who is from Lagos and they have nothing to quarrel about this. It is labour the minimum wage that they are talking about. They have completely missed the point of what the essence of the minimum wage is actually supposed to be. Even beyond the minimum wage, some of them are even dreaming of removing all labour issues from the exclusive list. But what they do not realise is that the problem they think they are trying to solve, they are going to aggravate.
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| Dr. Peter Ozo-Eson is the General Secretary of the Nigeria Labor Congress (NLC), |
Nigerian National Mirror
Dr. Peter Ozo-Eson, former Associate Professor of Economics, University of Jos and General Secretary of the Nigeria Labour Congress, NLC
Dr. Peter Ozo-Eson, former Associate Professor of Economics, University of Jos and General Secretary of the Nigeria Labour Congress, NLC, in this interview with OLUFEMI ADEOSUN speaks on the various policies of government and their implications on the national economy and employment generation.
The real sector of the economy is the hub of economic development globally. What is your impression about the performance of this sector over the last few years in Nigeria?
If we go by the available statistics, there has been reasonable performance in terms of growth in the key sectors of the economy. You will discover for instance that, the agriculture sector and more recently industry have become the main drivers of the growth which in the last decade has been averaging over 6 per cent . To that extent, we can say that there are some positive developments in the real sector. However, we need to disaggregate that data a little more.
However, when we talk about the real sector, we know that the main engine that actually drives the economy and capable of inclusive growth is the manufacturing sub sector. We, therefore, need to focus on the manufacturing sector.
The collapse of the manufacturing sector, following the Structural Adjustment Programme, dealt serious blow to our economy. It manifested in low capacity utilisation to the extent that our official figures came down at below 30 per cent. Even though there seems to have been a little pick, the rate of that pick up is not fast enough and we believe that this is the real reason why we are having the high rate of growth and not creating jobs.
One of the flaws that experts have identified has been the exclusivity of the economic growth. What do you think s fundamentally wrong in economic policies that allow for this worrisome trend?
When you base your market policies on market fundamentalism, you will end up with exactly what you have. It is not new. We know that there is a nexus of linkage that the economy must have to have true development. There should be linkages across sectors, but market fundamentalism will not lead to that. We need government deliberate policies that are geared towards the promotion of certain sectors identified as desirable.
They may not immediately be too profitable but they are desirable for true economic development. This also bring to the fore the role of the states in the whole process of development. Those who want to take the market purist position say that government does not have business in business. That is the type of economic that our policy makers subscribe to and that is why we always end up with what we have now in which we have high economic growth that is quite high by all international standards, but with little effect on employment generation opportunities.
In your own opinion, which sectors of the economy would you want government to concentrate on to drive the needed inclusive growth?
Let us look at the Iron and Steel sector, for example. It has the potential to galvanise the economy because of its intrinsic value across the different sectors. For instance, if you want to add domestic value to auto industry you must have a very solid iron and steel sector. We knew this in the process of our economic planning and over the years emphasised its importance and invested a lot of money into building Ajaokuta. But sadly, because of the belief in market forces, we abandoned it.
Not only are we losing from the huge potentials inherent in the Iron and Steel sector, we are also tying down the dynamics in the Nigerian economy by the fact that the sector is not functioning properly. If I were to advise government, I would to say forget “market”, enter into that sector you have already built a huge infrastructure, go into it and further develop it.
To eliminate bureaucracy, government could go into contract management partnership with the private enterprises to get the sector contribute meaningfully to the nation’s economy. The day we have a real functioning, dynamic iron and steel sector, that day we sow the seed of true industrialisation.
Also, in the area of transportation, government also need to get it right. For instance, you cannot drive the economy of a country as physically vast as Nigeria with 12-seater buses. It is a losing battle, it will never work. Rather than ameliorating the suffering of commuters and galvanising economic activities, the 12-seater buses merely are merely congesting our roads.
For me the rail sector is one sector government must get into. It is not just transportation, the huge amount that we budget for our highways every year is like a lost battle; before you finish it, it is bad again because you are using those roads to haul heavy equipment, containers, petroleum products and those weights ensure that those roads, even if they were of quality, will not be durable.
First step is to take some of those things off the roads and into rail haulage. While I acknowledge that there have been some interventions in the rail sector, they are not enough. Firstly, they have wasted so much time and resources in revitalising the old rail system, which to me, was no longer useful.
We should have scrapped that and start to develop a modern system. There are some standard gauge development through Abuja-Kaduna and some other areas that they are trying to do, but I think that we can do this more speedily.
If we develop a marshal plan in railway development, we can move and mobilise resources. It is not just government resources. I thought that what government should actually do is to first do a complete mapping and planning of what the modern railway system will be and then to merge them into sections to attract various investors.
Despite various statistics indicating marked improvement in the employment situation in the country, the number of unemployed youths has continued to soar. What is your reaction to this?
That is the paradox we are dealing with and I think this matter started when government was launching NEEDS which Soludo said it could create 7million jobs in two years. However, at that time, labour and some others regarded this as a wish list? This is because, we believed that for you to do a serious job creation scheme, you must have a verifiable mechanism of reporting what jobs are created and what jobs are lost. We advocated that a mechanism be built into the plan where all stakeholders would be able to have a reporting mechanisms to ascertain when jobs are created and when jobs are lost, but it was never done.
We left from there and we have been replicating the old story now as government is reeling out figures of the number of jobs created. This could be true especially coming from the Bureau of Statistics, the official agency responsible for data generation. However, there are different kinds of jobs.
Are these sustainable jobs or jobs in which some people would just do a quick thing here and the next minute they are back on the unemployment market?
We think that the Bureau and government generally have not created a platform where stakeholders can work together to actually determine whether jobs have been created or not. We have continued to demand that the way to do it is for government, employers, the private sector, organised labour along with the Bureau to have a coordinating mechanism so that everybody is able to identify where these jobs are coming from. Until that is done, the figures that they throw around, for many Nigerians, remain mere figures.
The recent GDP rebased placed Nigeria as the most successful economy in Africa. How has this status translated to better welfare for the people?
What the rebasing did is to say that we are the largest. Large does not always mean the best; they are two separate issues. We are the largest, but you are also aware we have always prided ourselves as the elephants in the continent but even those rats at times are able to spin us around so we need to be careful and understand that the rebasing is purely technical.
The result of the rebased figure has both positive and negative implications.
We have always been worried in the country about the inequality in income distribution that a very small minority of the population is holding the bulk of it. When we thought the size was this, we thought that distribution was skewed. Now that we recounted and discovered that the size of the economy is even much larger than before yet we are still having all these people in poverty, it means that income inequality is even more skewed than we were even worrying about. That is one negative implication of the outcome of the rebasing. Most people will not talk about that, we are merely celebrating.
The positive is in the potentials to attract Foreign Direct Investment, FDI, into the country. However, for this to be translated into reality, a lot of things have to be put in place. For instance while market may attract an investor, he may yet decide that although that is the largest market, I will prefer to go to this other market in west Africa where there is guarantee in security and stable power generation. We need to work on those things if we are to derive the full benefits from having a large market.
Despite this ranking, the power sector that is expected to stimulate businesses is still not working. What do you think government can do? Is the privatisation working?
Government has already taken a decisive step whether right or wrong. Those are elements of market fundamentalism and they have gone that way. But we all know that since the DISCOs took over, there has been virtual collapse of power. There may be a few places such as Abuja where it may not have gone down too bad, but there are places like Benin where they are back to before the 50’s. We do these things based on the ideology of the market without recognising certain hiccups that are in our own environment. If you use market properly in selecting those who won the various distribution places for power, you are most likely to select people and companies that are experienced in the power sector. Most of the names behind the various DISCOs have never had any experience within the power sector; some were in the financial services area, while others are politicians. They are grappling with what they knew nothing about. While people are appealing that we need to be patient and give them time, I am of the opinion that government should have involved those who would have hit the ground running because they had experience in this area.
Secondly the very saying that we see every opportunity as an opportunity for piracy; all the discos are fighting for is to be allowed to charge, they want to exert the maximum from the consumers even where there is no service. Situations where meters are not readily available to collect revenue correctly but prefer to use estimated bill that is a recipe for fleecing the populace because with a prepaid meter the consumer is protected to some degree.
I am not optimistic that the route we are going now is going to solve the power problem in the country.
What is your reaction to the proposed decentralisation of the labour movement?
As a country, it amazes me how we gravitate towards the negative direction always. Clearly, a national minimum wage is reality in more than 93 per cent of the countries of the world. We have taken an inventory on all of them including federal systems. The origin of minimum wage was simply to say they are of an organised labour, they are all these ones in the informal sector, and they need to be protected because if you do not set the bar, private capitalism in the quest for profit, will.
But because governors suddenly want more money to spend, they are looking to setting their own minimum wage; they even displayed the absence of morality because these are the same governors whose wages and allowances are set centrally by the National Revenue Mobilisation and Fiscal Commission. Even for the Local Government Councillors. Even a senator who comes from a village that has never seen a vehicle before he became senator is taking the same senatorial perquisite as somebody who is from Lagos and they have nothing to quarrel about this. It is labour the minimum wage that they are talking about. They have completely missed the point of what the essence of the minimum wage is actually supposed to be. Even beyond the minimum wage, some of them are even dreaming of removing all labour issues from the exclusive list. But what they do not realise is that the problem they think they are trying to solve, they are going to aggravate.
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