CBN and private sector donations to the war economy | The Guardian Nigeria News

Another donation from the private sector aimed at tackling insecurity, if altruistic, is a welcome development that should be accompanied by an improvement in the dismal situation nationally. Fiscal data, however, suggests that defense and security rarely lacked funding, but lacked offsetting value for appropriations. Therefore, in addition to rallying the private sector to rail resources for a common cause, the Central Bank of Nigeria (CBN) and its donors should demand more results-oriented security campaigns to avoid throwing money at the problem rather than solving it.

An alliance of private sector actors in collaboration with the apex bank recently pooled the sum of 100 billion naira to support Nigerian security agencies in the fight against insecurity. A similar gesture was extended at the start of the devastating COVID-19 pandemic, with the coalition pooling more than 60 billion naira to provide interventions, food and vaccine support to mitigate the effects of the pandemic. . These private sector bigwigs, as revealed by United Bank for Africa (UBA) Chairman Tony Elumelu, have now decided to tackle insecurity by supplying security equipment to security agencies. With this intervention, the coalition hopes to open up the Nigerian economy again.

It is important to clarify that companies have a social responsibility towards their operating environment. In this sense, the new N100 billion investment, like other precedents, is commendable. However, there is a common tendency for CBN to defend high-roller donations in a way that betrays the altruism expected of social responsibility. The posture affirms rather than denies that the private sector is compelled to reinvest its resources in society. Such an underhanded approach is bad for the image of the CBN in particular, and the country, in general. The Robin Hood phenomenon, in part, suggests an unholy alliance or connivance between regulator and operators, all against the general public. This symbolism is easily expressed in Nigerian banks posting huge profit margins in a struggling economy! Yet, if the CBN is to clear the air, it should begin to play less of a leadership role in private sector donations, and more of its regulatory functions to drive a sustainable economy in the public interest.

Instead of a cash cow for free money, the apex bank and the federal government should instead start seeing the private sector as one of the main victims of the general neglect and administrative incompetence that is prevalent in the country. Besides the Nigerians who are being murdered daily by insurgents, private companies are the first victims of insecurity and bad economic decisions. Available data on the economic impact of violence on the gross domestic product (GDP) of countries, according to the Institute for Economics and Peace (IEP) in its 2021 Economic Value of Peace report, showed that up to 8% of Nigerian GDP or $132.59 billion (50.38 trillion naira at 380 naira/$1) is affected economically by the growing violence across the country.

Much of this estimate comes from the private sector closing businesses and breaking distribution chains. Disruptions to the agricultural sector, which currently accounts for around 26.95% of GDP, trade and manufacturing, paint a clearer picture of the ripple effects of insecurity on the economy and its recovery. All of these operators deserve more sympathetic political support to save their businesses and their economy than the compulsion to cough up handouts that barely count.

As patriotic as donating to the war economy may seem, the problem is rarely one of funding. It borders more on bad motivation, lack of accountability, corruption and complicit negligence on the part of the federal government to think out of the box for pragmatic solutions to the existential crisis. It is common knowledge that Nigeria has spent at least £6 trillion on security without making much progress over the past decade. In 2015, Nigeria’s gross military expenditure was $2.07 billion, down 12.39% from 2014. The defense budget saw a 16.57% decline in 2016, with an estimate of $1.72 billion.

This was followed by a 5.92% decline in 2017 with a budget estimate of $1.62 billion. 2018 saw an increase of 26.02% with an estimate of $2.04 billion. The defense budget in 2019, however, saw a significant drop of 8.95% with an estimate of $1.8 billion and an estimate of $1.2 billion in 2020. With an allocation of $31.97 billion naira, the Nigerian Air Force took the largest share of the ministry. of the total Defense capital expenditure cap of N120.04 billion for 2021. The Nigerian Army followed with N27.87 billion, while the Navy secured N12.04 billion. In 2022, defense and security got 2.41 trillion naira or 15% of the budget. Although budgetary provisions have exploded, far more than health, education and infrastructure combined, what is the dividend?

Notwithstanding the free will to give back for a better society, the private sector can also raise the bar to demand accountability and become more pragmatic in supporting a common cause. There is no justification for throwing money at institutions, while police and other security agencies are fighting almost barehanded and barefoot in local communities. The Lagos State Security Trust Fund (LSSTF) is an example of how to complement private sector donations with value for money. It is such examples that are needed at the national level to fight effectively and collectively against grassroots insecurity.

About Mark A. Tomlin

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