Governor Nasir El-Rufai of Kaduna State

Mr. President, Sir
We must therefore take advantage of our large internal market, natural endowments and comparative advantages in agriculture, minerals and human resources to be self-sufficient in food and fuels within your first term of office. It is neither impossible nor unduly difficult to achieve both goals.

v. Unproductive and Expensive Public Sector: We spend too high a proportion of our national resources on public sector wage bills and overheads. Federal public service salaries increased from about N600bn in 2007 to over N1,800bn in 2015. The total budget of the National Assembly has increased from N59bn in 2007 to N150bn under Yar’Adua and slightly down to N130bn by 2015. Similar situations exist in most of the states and local governments, leaving too little for capital investment in human development, infrastructure and social services.

Our judiciary today is dysfunctional and generally perceived to be corrupt, with courts of coordinate jurisdiction issuing contradictory rulings and judgments, while the appellate courts appear unable to exercise supervisory and disciplinary control over the lower courts. Despite the successful introduction of a contributory pension scheme (CPS) nationally in 2004, the burden of the pay-as-you-go system remains a source of massive corruption and impunity. The CPS now has accumulated over N5,000bn and is considered a global model of a viable pension system. However, the funds are idle and are not being deployed as a source of reliable, long term financing for infrastructure, social development and housing sectors.

vi. Endemic Poverty and Widening Inequality: In the days when we were growing up, public schools were attended by the children of both the high and low. Public health facilities were equally patronized by both the rich and the poor. The quality of these social services and the attendant message of egalitarianism and social justice they conveyed, enabled people of humble backgrounds like you and me, Mr. President, to rise to the higher positions in life depending on luck, ability and hard work.

Today, the exact opposite is the situation. The danger of this current state of affairs is that we are inadvertently creating successive generations of poorer, barely educated, unskilled, hopeless and angry children of the poor, side by side with increasingly richer, privately educated, skilled and optimistic children of the privileged. It is a demographic and social time bomb waiting to explode as the poor and hopeless youths are easy recruits of insurgents, violent politicians and criminals. Only you, Mr. President will appreciate this danger and do something about it with the urgency it deserves.

vii. Failure to Sharpen Competitive Advantage in Service Industries like ICT, Entertainment and Sports: Time and time again in the last 50 years, Nigerians have excelled globally in athletics, boxing, basketball, soccer and weightlifting. Yet we have never developed a national strategy to encourage and deepen our God-given endowments in sports. Indeed, appointment as minister of sports is seen as less prestigious than others.

The same attitude applies to service sectors like Art and Sculpture, ICT, Nollywood, Kannywood, music and other creative sub-sectors. Nigerian movies are now selling our nation positively and negatively all across Africa and the Black Diaspora. This is an important component of soft power which we have failed to think through, articulate to exploit to create jobs, wealth and prestige for our country. It is not too late to close this gap.

viii. Fiscal and Monetary Policy Mismatch: Against the background of the aforementioned issues, we seem to consistently suffer from disconnects and mismatch between the Central Bank of Nigeria (that is in charge of exchange rates, interest rates and inflation management) and the Federal Ministry of Finance (that looks after revenue flows, custom duties, tax policy and debt management). The consequence of this is the nation suffering from high interest rates set by CBN in order to manage the exchange rate. Interest rates are also kept high to make it easier for FGN through the DMO to sell bonds and keep yields high. These have devastating impact on the real sector and job creation since no business can expand production (and employment) with the kind of interest and exchange rates offered by the banks. The banks also find it more attractive to mobilize public sector deposits, purchase risk-free FGN bonds and lend little or nothing to private sector. Mr. President, business activities are shrinking because the private sector is suffering from multiple whammies of deteriorating and unstable exchange rate, high interest rates and dwindling purchasing power of customers.

Mr. President, Sir. It is neither too late nor impossible to achieve higher levels of policy coordination and consistency. It has been done in the past with the right chemistry between key economic policy centers. It must be done now.

4. Governance Issues and Challenges:

Government performance depends on political legitimacy and administrative capacity. It results from sound political vision, courage and the will of the President and other appointed and elected officials, supported by the administrative capacity of the public service. The functions of the public service include analysis of problems and providing advice, coordination of dispersed actors to achieve joint action, the execution and management of policies, and the regulation of the private sector to adhere to the national vision. You have the vision, courage and will, Mr. President. The jury is still out whether your most senior appointed officials share these qualities, and this must change for the better, Sir.

Mr. President, Sir.
Our public service today is too expensive, aging, outdated and inadequately skilled to discharge its mandate of providing administrative support to the political leadership. The nearly 600 MDAs at the federal level (and smaller number of counterparts at subnational levels) consume nearly 90% of our national revenues. This is why the FGN borrows over 100% of its capital budget! This is neither fair nor just.

The 800-page Transition Committee Report (summarized to 80 slides by Bain & Co.) went some way in recommending the merger of Ministries but implementation has been uneven and selective. Prior to this, the Obasanjo administration had done seminal work in merging ministries, (available on request) while the Oronsaye Committee has done some significant work in reducing duplication between parastatals and agencies. There exists therefore enough raw materials to begin the needed restructuring of MDAs for optimal performance at the federal level. (Copies of both the Bain Summary and the Executive Summary of the Oronsaye Report are provided with this submission).

The Machinery of Government, the way and manner the President interacts with the State House, the Ministers and the Bureaucracy, including: the interaction between the Chief of Staff, SGF, Ministers, Special Advisers, Assistants and other aides needs further articulation and communication. It is clear, Mr. President, that the current system is delivering sub-optimal outcomes. A clear evidence of this is the lopsided nature of the appointments made so far, and the absence of any objective selection criteria other than pure chance and closeness to a handful of people around the President.

Another crisis is likely to be created if the current system (or lack of it) of appointment persists with the composition of boards of parastatals. I have had cause to register my concerns, which also mirrors the grievance of 23 APC Governors, about the way and manner this is being done (see Annex III attached). I am afraid that those that are tasked to do this, that are unwilling to be inclusive in the process, are those that neither knew who did what nor how you got elected, but now determine those who get appointed from the respective states.

With the greatest respect and humility, Mr. President, neither the Chief of Staff, nor the SGF, his Committee and National Vice Chairman North-West, of the APC know more than the government of Kaduna State, who contributed to our success at state level. For these officials to sit and decide the question of who gets appointed from Kaduna without our input is not only unfair, but likely to result in serious errors of judgment. Mr. President should reconsider and make the process more inclusive by giving the State Governors the opportunity to review what the political masters are doing.

5. Suggestions for Immediate and Medium Term Action:

Arising from the points made in earlier sections, I would like to summarize and restate the problems and recommendations for your immediate and medium term consideration. It is my humble opinion that our government appears to suffer from very serious perception problems on at least five fronts:

a) Mr. President, there is perception that our government has been captured by a shadowy public service/PDP cabal such that we have won elections but the country is still run largely by these elements that are hostile to you and to us all.
b) There is a strong perception that your inner circle or kitchen cabinet is incapable, unproductive and sectional. The quality and the undue concentration of key appointments to the North-East and exclusion of South-East are mentioned as evidence of this.
c) There is a perception that your ministers, some of whom are competent and willing to make real contributions, have no clear mandate, instructions and access to you. Ministers are constitutional creations Mr. President and it is an aberration that they are expected to report to the Chief of Staff on policy matters

d) Mr. President, there is an emerging view in the media that you are neither leading the party nor the administration and those neither elected nor accountable appear to be in charge, and therefore the country is adrift.

e) We are facing an unprecedented national economic crisis, but our administration has failed to roll out a coherent response and action plan, or even appeal to our patriotism with a rallying cry to unite and sacrifice in face of the adversity.

Mr. President Sir, it is the view of many informed citizens that while you are actively fighting corruption, the institutional weaknesses that enabled it to thrive under Jonathan, and the persons that participated in it, and oiled the system are still very much in charge, and many are around you. They also point to the recent appointment of key PDP apparatchiks of a few months back into important advisory and executive positions in the Presidency (National Assembly Adviser, NDDC Board and Cabinet Ministers) while enduring APC loyalists are ignored to make this point.

These troubling perceptions whether accurate or not must be addressed frontally by you Mr. President, and no other person. It is in light of all these points, arguments and perceptions, and with all sense of responsibility that I make the following suggestions for Mr. President’s consideration, early decision and action:

? The President must communicate actively and directly with the Nigerian public about his vision – the government’s plans, strategy and roadmap to take the country out of the current, dire economic situation. We need a five-year national development strategy and plan urgently.

v The President should speak to the nation – something akin to a State of the Union address on December 1 or January 1, preferably in a joint session of the National Assembly during which he will explain away some of the perceptions and lay out the national plans, strategies and roadmap above.

v Appoint as many of the current NWC members as possible to ambassadorial, executive and similar positions to give way for the restructuring of the party leadership ahead of the mid-term convention.

v Institute quarterly informal APC leadership council meetings in the State House to host, dine and consult with formal and informal party leaders to discuss and agree the restructuring of the party machinery after some of the actions above are done.

v Institute quarterly dinner with APC Governors and engaging them on party issues, executive and non-executive appointments and the like.

v Consider appointing a very experienced and nationally-connectedperson as your political adviser and bring in Chief Audu Ogbeh as an honorary political counsellor in addition to his executive functions.

v Constitute an informal task team of State Governors, National Assembly members and Party leaders to review the constitution of the party, assess financing needs, update the primaries system and task all State Governors to finalize the membership register in their respective states in accordance with pre-agreed guidelines, IT platform and biometric standards.

v Engage constructively with the NJC to impose quick sanctions on clearly erring judges, and appeals to the Judiciary to facilitate the expeditious resolution of landmark corruption cases.

v Initiate the process of replacement of the leadership and commissioners of the Federal Civil Service Commission, Police Service Commission and other central management agencies of the federal public service, and relaunch a federal public service reform program under the leadership of the minister of finance.

v Appoint a high profile economic adviser to the President, and constitute a two-level economic team – political level chaired by the VP and technical level consisting of key economic agency heads to do the more detailed technical analysis and present options for decision and action.

v Initiate sale of expired OMLs to India and China to raise at least $20bn to add to our foreign reserves, stabilize our national currency, and create a fund for future generations to be managed by the Sovereign Investment Authority. Our children must not inherit what the previous administration bequeathed to us, and you can pull it off, Mr. President.

v Consider the privatization of other non-productive or potentially valuable assets like NIPP, Ajaokuta Steel and Itakpe Iron Ore, the balance of shares in Gencos and Discos, refineries and depots to raise revenues and achieve efficiencies.

v Accelerate TIN registration to double the number of tax payers to at least 10 million in 2017 and reduce the levels of personal and corporate income tax, while effecting an increase of the rate for value added tax.

v Commit to a three-year reflationary budget with at least 40% of budget meant for capital projects, supplemented by robust PPP legislation to attract private investments in toll roads, intra-city rail systems, electricity generation and distribution, inland waterways, airports and concessioning of the narrow and standard gauge railway systems.

v Our entire investment environment and incentive structure needs a holistic review to enable us compete with our neighbors and peers. The investment policy review should prioritize encouraging local and foreign investors and fund managers to bring their capital and expertise to Nigeria.

v Develop an import substitution and export strategy taking one industrial sector, commodity or product at a time, similar to what was done successfully with cement. The key issue is to identify firms with potential and develop them into national, continental and global champions.

v Leverage on the fall-out of the padding scandal to scale down the budget of the National Assembly, put every MDA on IPPIS and begin the process of right-sizing the federal public service with the goal of drastically reducing the cost of governance.

v Constitute an implementation committee for the Oronsaye Report with the mandate to update and bring up modifications as necessary for the approval of the President.

v Institute a matching grants system that will encourage state governments to invest more aggressively in public education and healthcare to attack and slow the emergence of an inter-generational underclass and systemic inequality.

v Develop a national plan, strategy and roadmap for the ICT, entertainment, financial services and sports sectors, and appoint high profile ministers to drive the advocacy and implementation.

v Undertake a surgical operation on the leadership of the budgetary, fiscal and monetary management agencies to resolve conflicts between MDAs, replace tainted and incapable persons, and enable better coordination and policy consistency.

v Effect personnel changes in the Presidency, the ministries (cabinet and permanent secretaries) and constitute a small team to review all future appointments for competence, capacity, integrity, diversity and inclusiveness.

I am conscious of the likelihood that my memo may be misunderstood, misinterpreted and even perverted. I am willing to accept the usual accusations of arrogance and ambition, but Mr. President knows that none of these hold water. I ran for state Governor because you directed me to do so. From 2010 when we joined your team, I have no other interest other than your place in history as our President. I believe in your integrity, commitment and sense of duty to make our nation better. I am distressed that our government is seen not to be succeeding mostly due to the failures, lack of focus and selfishness of some you have entrusted to carry on and implement your vision. I am troubled that our own mis-steps have made the PDP and its apparatchiks so audacious and confident. It is time to act decisively, Mr. President. I hope this memo will contribute in some way in regaining our governance momentum.

Mr. President, Sir. You have both a crisis and opportunity in your hands to turn around our country in the right direction. We pray that Allah gives you the strength and good fortune to succeed. This is an honest, frank and objective view of an admirer, a mentee, and a loyalist. I hope it helps, and I apologise if it displeases you. My duty to you is to tell you the truth as I see it. I have no interest other than the progress of our party, our president, our government and our country.

Respectfully and most humbly submitted, Sir

Nasir Ahmad El-Rufai, OFR
Governor of Kaduna State
September 22, 2016