Who has the keys to the National Treasury?

By Charles Iyore

Just to recap!

To effectively husband national assets, the treasury through its linkages with critical agencies of state, must do the following;

I. Ensure that there is reasonable certainty about the value of money

II. Establish reasonable engagements, to ensure that the pricing of credit (interest rates) continues to deliver productivity increases and hence economic growth.

III. Make the economy competitive enough in international trade, to maintain healthy balance of trade positions

IV. Strike a good balance between the young working population and the pension liabilities of the aged, to maintain the dignity of life from cradle to grave, which is the hallmark of human civilization.

V. That in its regular assessment of the economy and its components parts there-off, a positive ratio is maintained of output/input, as a basis for determining the efficiency of national assets’ allocation

The keys to the national treasury are what set apart the winner from the loser, in a political contest for power, at which point we (the electorate) hand the keys of our national treasury over to the winner.

This is why the buck(Naira) stops at the winner’s table, no excuses!

The critical agencies in our setting include the following;

*The Central Banker

*The SEC

*The RMFRC (revenue mobilisation and fiscal responsibility commission)

*The FIRS

*The DMO

*The Board of trade

The voting populace expect their leader to hope for the best, but also to prepare for the worst, –that way it’s easier for him (President) and his team, to anticipate scenarios and be able to deal with the unintended consequences that may even come out of their policy positions.

The government in assessing itself, must score itself against those standards, first in the period since assuming office, then against all time, in the life of nation.

The treasury through the Central Banker

The treasury through the DMO

The treasury through SEC

The treasury through the RMFRC

The treasury through insurance

The treasury through other MDAs

*The treasury through the Central banker

The first three points of this scoring are critical to the whole governance process and are open to political manipulation in a desire to influence outcomes, the agency responsible for these is the central bank which must be shielded from those machinations by its independence. With a military junta nobody is held accountable and life is run on the whims and caprices of the unelected leaders and you just have to pray for benevolent dictatorships.

The central banker may through his inability to set strategic vision and tactically deploy its control instruments weaken the economy, mainly through inflation, (otherwise a poor judgement of the money in circulation needed to accomplish trade and exchanges in the country). This is why he must with his political handlers, set inflation targets for each economic cycle as set by them, a failure to meet this target and the central banker should on his own take a walk. It gets more complicated, however, if the inflation targets are not met because of fiscal indiscipline. The central banker is then drawn into the fray, as he tries to offer monetary policy changes for every economic aberration, which treasury mismanagement causes. This is often referred to as throwing money at problems. There could be short term gains, but the long term economic effects could be catastrophic

*The treasury through the DMO

Just like the individual needs to borrow to conduct his business, the treasury needs to borrow to conduct government business, and its request should be scrutinized by the DMO. The DMO will want to know the capacity of the government to repay (means testing) and would normally set a ceiling against expected receipts. The DMO would want to know the savings available in the system and what the likely external inflows would be, the DMO would then limit the government borrowing, so as not to crowd out private sector borrowing, usually by its pricing mechanisms, in collaboration with the Central Banker, and Securities and Exchanges Commission.

*The treasury through SEC

The treasury needs to know the savings available in the system from which the government can meet its operational financing gaps. The attraction of the government’s offering is security (gilt) rather than  “super returns”, that way it is unlikely to crowd out smaller private sector borrowers who  do not have her(government) advantage of market size or established revenue streams. The SEC in straddling public and private sector borrowing demands has a better view of the investible savings in the economy.

*The treasury through the RMFRC

The revenue mobilization and fiscal responsibility commission is the closest parallel to the works and pensions department in the United Kingdom. It must constantly look at whether the production output of the working population can carry the pension liabilities in the economy. It may need to recommend a review of the retirement age upwards or downwards as appropriate. In our situation, for as long as oil revenue met our profligate lifestyle, there was no need to make this critical linkage. That period is over now and a critical review of works and pension is long overdue.

The RMFC must scrutinize establishment requests and ensure that the burden of governance is not crippling.

*The treasury through insurance,

The insurance sector takes premiums, from subscribers, in order to share life and working risks in the economy, with them. It will not be a sustainable business if every subscriber, except for those claims that come by way of death, make a claim.

The industry is made more liquid by laws which make certain categories of insurance compulsory, especially where third parties can sustain injury or loss, not of their own making. The tendency of insurers is to make claims difficult with what is often referred to as the small print. The global trend, however, is to mitigate losses and claims by working ahead of the subscribers. If there are rest areas on the highways, the likelihood of have vehicular accidents on the highways, due to diver tiredness will be greatly reduced and so will be the claims.

Many efficient allocations in this way will reduce the claims that become due, and significantly help fight inflation. If the inflation is runaway like it is now, then insurance is of no value at the point of need.

N4,000 may have been good money 40 years ago when Andrew or Monsuro  took life insurance, but the value today means he has very little purchasing power –all eroded by inflation.

Insurance is at the core of creating infrastructure funding, always at the green-end of asset creation which they can flip over to pension funds, when they are established and brown. Therein lies the profit, cultivated over time.

These actions are group collegiate and go far beyond the capacity of the Insurance Commissioner.

*The treasury through the board of trade

The board of trade is the cabinet, who through their various MDAs must create the conditions conducive to increasing productivity and economic growth.

1. How many man-hours do we lose because of poor health?

2. What is the skill-level and education of our work force?

3. Is justice delayed or totally denied?

4. Are our utilities functioning properly and reliable?

5. Can we effectively defend our territorial integrity?

6. Are there clear industrial nodes to lift the economy and increase our adsorptive capacity?

7. Do we have legacy projects to inspire our people?

8. Is there peace in the land, conducive for living and production?

9. Is movement and taxis, smooth in the economy, to connect the countryside with the urban centres?

10. Where are we, in the comity of nations, regarding geopolitics, economic development and trade?

Those institutions are the pillars that form the frame work of the national economy, the office holders have keys to the treasury handed over to them. These are not jobs for the boys, but for those who take the key positions they hold with a keen sense of responsibility. If the Lord of the Treasury does not hand over the keys appropriately, he will have to do the work all by himself, even as he is blinded by a lot of motion around him but no movement. Our choices are clear to we want to lift ourselves and the sub-region out of poverty and disease, or do we want to permanently pre-occupy ourselves with narrow ethnic rivalry and religious alignments?

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Principal partner Dion & Associates CTA dioncta@aol.com