The NASS Just Passed a Bill that Will Make Job Creation Harder and Lose the Government Money. Here’s How.

The NASS Just Passed a Bill that Will Make Job Creation Harder and Lose the Government Money. Here’s How.

“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive because they lose their jobs or fail to find jobs when they enter the labor force.”

That quote, from my homeboy Thomas Sowell, is a reminder that the minimum wage for an unemployed person is zero; since if you don’t work, you cannot earn the N18, 000 our Government has decreed to be minimum wage. This is why the newly passed Pensions Reform Bill is a dangerous piece of paper; the authors seem to forget that only employed people can make pension contributions, but we’ll discuss this later.

The Good: Pension Funds Can Now Invest in Infrastructure & Development

The new law allows Pension Fund Administrators (PFAs) to invest in infrastructure, electricity generation & distribution, agriculture, solid minerals, and telecommunications. This means your pension funds can be used to build roads or improve electricity supply. So, when you pay toll on the roads or settle your utility bills promptly, your invested funds have a chance to appreciate. It’s almost like eating a good meal at a restaurant you own; you’ll usually pay the bill with a grin.

The Irrelevant: There Are Stiffer Penalties for Pension-Related Offences (if we can enforce them)

I have deliberately ignored the stiffer penalties prescribed for pension related offences for one reason; the usefulness of the penalty is greatly dependent on enforcement.  According to over N270 billion has been stolen from pension funds between 2005 and 2011. The number of people successfully prosecuted for these crimes? Z-E-R-O.

The Ugly: NASS will make it More Expensive for Businesses to Hire

The new law increased the minimum pension contribution to 20% (12% contributed by the employer and 8% by the employee). This is total madness, but what do I know. Nigeria has an unemployment rate of 26%, which should keep our government up at night. So you expect policies that aid job creation to be developed like instant noodles, right? I’m sorry to disappoint you. By raising the minimum pension contribution from 15% to 20%, the NASS just added 5% to the staff cost of most businesses. The exact opposite of what stimulates job creation.

Meanwhile, over there in Chile where we copied our pension scheme from, the contribution is only 10%. But this is Nigeria, where everything must be double-double.

More Ugly Stuff: NASS Continues to Keep More Businesses Out of the Formal Sector

According to the new law, companies with 3 or more employees have to comply with the new pension scheme. This is why our lawmakers need to read Hernando De Soto’s Mystery of Capital as part of their homework. It is almost impossible to get companies that don’t pay taxes to make pension contributions. And as long as pension contributions are as high as 20% of salaries, the cost of being legitimate will remain too high.

Can you see the common trend here? Ban on rice importation, ban on second hand vehicles, increase in pension contributions… they all achieve one thing, exclusion of businesses from the formal markets.

Funny Stuff: NASS is Going to REDUCE Tax Receipts and Non-Oil Revenue

This one is really funny.

All pension contributions are tax deductible, which means the government cannot tax any income contributed to the pension scheme. This means by raising pension contributions, government is actually cutting the share of income it is able to tax. This is a very strange policy for a government that wants to raise the tax revenue from 12% to 20% of GDP.

The funniest part of these tax cuts is effect on state governments. On one hand, tax exemptions affect Personal Income Tax, which is mostly collected by state governments. By increasing the minimum contribution, the NASS just reduced the income state government can tax by 5%. On the other hand, state governments are also a big employer of labour, so you know what this means, right? They contribute more of their allocation to the pension schemes of their employees. For an arm of government that already spends over half of its allocation on salaries, this is a burden it can do without. Anyway don’t be too surprised to hear PENCOM accusing state governments of not complying with the Pension Reform Bill anytime soon, the law was designed for non-compliance.

LAW OF THE DAY: NASS Also Amended the Law to Give ONE Person a Job

Finally, we get to my favourite amendment where the National Assembly actually amended a section of the act to give one person a job; how noble. PENCOM has operated for 17 months without a Director-General because the President’s nominee, Chinelo Anohu-Amazu, did not have 20 years of experience in pension matters. In our undying spirit of anyhowness, the National Assembly simply lowered the entry point for years of experience from 20 years to 15 years to ensure her confirmation is legitimate. You can bet her confirmation will be in the news anytime from now.


You will find thousands of articles on the internet celebrating Chile’s pension scheme. If you have nothing serious to do, please read and What I learnt from those articles is that increasing mandatory contribution is the least of our problems; instead our focus should shift to including employees in the informal sector and create structures for investing in more than one fund/administrator. Until we begin to elect smarter legislators, we’ll keep getting Janjaweed policies confirming Milton Friedman’s comment that “the government solution to a problem is usually as bad as the problem.”


José Piñera (Chile’s Secretary of Labor and Pensions under Augusto Pinochet) got the idea of privatizing the pension system when he read Milton Friedman’s Capitalism and Freedom. That book comes with my recommendation.

Taming Unemployment – The Abba Moro Edition

It is the very nature of the capitalist mode of production to overwork some workers while keeping the rest as a reserve army of unemployed paupers.” – Karl Marx, Theory of Surplus Value.

According to the Nigerian Bureau of Statistics, Nigeria’s unemployment rate is 23.9%, while the 2012 Baseline Youth Survey Report suggests 54% of Nigerian youths are unemployed. The bad news is the situation shows no sign of getting better. If you believe the numbers thrown around, 1.6 million jobs were created in Nigeria last year. The numbers look good until you realize that over 2 million Nigerians enrol with the National Youth Service Corps (NYSC) annually. This means Nigeria is adding at least 500,000 graduates to the labout market (if we assume that all the jobs created are taken by unemployed graduates), . 

How bad is this? During the Great Depression, unemployment in England peaked at 22%, while the United States of America and Germany saw unemployment rise to 25%. This tells us two things: (1) The future of our youth is bleak and (2) Current government interventions are not working. One of my biggest challenges with our government is the one track solution for unemployment – direct job creation. While direct job creation is perhaps the fastest way to reduce unemployment, in most cases it creates a fiscal strain on government revenues, and does not provide a sustainable solution to a structural problem. According to Professor Subramanian Rangan at INSEAD, the expense of public employment programs may undermine a government’s fiscal position, while the actual labor market impact may be to simply divert job creation to favored areas rather than increasing overall employment for young people.

This is why young people must start paying attention to the electoral process. The solutions to unemplyment will not come from exploitative government officials like Abba Moro, the Interior Minister who supervised that tragic recruitment exercise to hire 4,500 people for the Nigerian Immigration Service (NIS). Let us consider this again -a federal minister charged 530,000 applicants N1,000 each to apply for less than 5,000 jobs. The exploitative and poor planned exercise led to the deaths of Nigerians. The same minister comes on national television and says “we will not be distracted by what has happened and we will setup a high powered panel to ascertain what happened in these centres.” He is still a federal minister, paid from the taxes of those lucky enough to be employed. Nobody has apologised or been sacked for the deaths caused. If this is not a classic example of killing a man and dancing on his grave, I dont know what is. The solution to such blatant idiocy is not violence, or the type of “revolution” many have asked for. The solution lies in a silent revolution, one effected through the ballot box on Election Day.

It is our collective duty to remember the bitterness, helplessness and anger; and channel these emotions into selecting candidates that will improve the level of governance at all levels. For the millions of young people without jobs, we must listen to political parties and candidates that show a clear sense of how to stimulate job creation. From simple solutions like job search assistance programs, to more difficult ones like fiscal rebates, or specific policies that remove the barriers to doing business, our votes should go to candidates that demonstrate a clear ability to solve our problems. For example, according to Roland Michelitsch, Chief Evaluation Officer and Manager at the International Finance Corporation (IFC), Mexico has experienced a 2.8% increase in employment from measures that reduced red tape and taxes for businesses. In many other countries, employment has grown by 5% or more on the back of an improvement in grid sourced power supply. The problem is not without solutions, contrary to what the responses of our governments suggest.

Yesterday was a reminder that we surrendered our collective power to an inept political class. It is also a call to action – we must register and vote to prevent people like Abba Moro from getting into elective office or appointed into senior government positions. Until that happens, we must brace ourselves more for painful tales like this one:

Buy Sheep, Sell Deer, Make Profit.

For this post, let us assume you own Iya Eba, the popular food joint in Lagos Island. You love your customers, and to satisfy them, you devised a wonderful promotion called Amala and Coke. Here’s how it works: Coke is normally sold for N35 at your canteen, but you think customers should enjoy a discount. So you announce to all your customers that Coke (I mean Coca-Cola, not the other one NDLEA can lock you up for selling) now sells for N10 per bottle. How do you pay for this? You tell your shop manager to take money from the daily sales to buy 100 bottles of Coke (the number of bottles your customers normally drink). At the end of each day, you do some Arithmetic.

You ask: “Mary, how much did we make today?” She responds: “Madam, we sold 100 plates of Amala at N100 each, so we made N10,000.” You start counting the money, and notice there is only N8,000 in the tin of Milo. So you ask Mary, “how come there is only N8,000 here?” Mary reminds you she bought 100 bottles of coke at N30 each, which means she spent N3,000 from the money collected. Since you instructed her to sell the drinks at N10 each, she only made N1,000 back. You are satisfied and everyone goes home.

This continues till the day you get complaints from customers that despite your advert, a bottle of Coke still sells for N35 at the canteen. So you visit the canteen wearing a wig and big glasses, pretending to be a customer. To your dismay, a cold bottle of Coke is sold to you for N35 instead of the N10 advertised. At the end of the day, you return to the shop and order Mary not to sell Coke at N10 per bottle anymore. She asks why, and you say nobody pays N10 for the bottle so there is no need deceiving yourselves; Coke should now be sold at N35 per bottle. There are witnesses when you gave Mary this instruction, including your cousin who is being groomed to run the shop when you retire at the end of the year.

Fast forward this story by four years; you are now retired, living in a different country and your cousin is in charge. Mary is still delivering N8,000 per day, insisting she buys Coke at N30 to sell at N10. A waiter tells Mary he remembers your instruction to stop the discount, but Mary says she never heard you give the instruction. She asks him to show her a letter you signed, which formally instructed to her to stop. Let us pause here and wonder why Mary continues to buy Coke at N30 and report that she sells at N10.

This is what actually happens. Mary takes N3,000 from the money jar to buy 100 bottles of Coke. She sells each bottle at N35, so makes N3,5000. Instead of putting N3,500 in the money jar, she puts N1,000 and claims this is the amount she made (remember she pretends to sell each bottle at N10). She then goes home with N2,500 per day. In the last four years, Mary has made N3 million (N2,500 x 300 days x 4 years) from this scam, and established a canteen on the next street. Before you know it, she will steal all your customers.

This is what Sanusi Lamido Sanusi is accusing the Nigerian National Petroleum Corporation (NNPC) of doing. Despite a Presidential order in 2009 to stop the subsidy on Dual Purpose Kerosene (which we all know as Kerosene), the NNPC continues to deduct this subsidy from the Federation Account without approval. To worsen matters, nobody can remember buying kerosene at anything close to N50 per litre; everyone I asked buys it between N150 and N170 per litre.

This is what “they” say happens:
•NNPC imports a 30,000 MT vessel of kerosene at $30 million
•NNPC sells the kerosene on the vessel for $10 million to a middle man, charging a “subsidy” of $20 million to the Federal Government.
•The middle man sells the product at $37 million (full market price) and does not transfer the “subsidy” to the end user (you and I).
•The middle man makes a cool $27 million from the sales (buy at $10 million, sell at $37 million).
•This is shared by some people we don’t know at this time.

Now, NNPC imports an average of 9 vessels per month. At $20 million profit per vessel, that’s $180 million being stolen every month. We hear this has been happening for the last 20 months, so my arithmetic says Nigeria has lost $3.6 billion to this simple trick. For those wondering how $20 billion was allegedly stolen from the Federation Account, you now have $16.4 billion to account for.

As Nathan Rothschild once said, his secret of making money was to buy sheep (low) and sell deer (high).

Need more insight? This diagramKerosene_Subsidy[1] might help you

The Case Against Sanusi Lamido Sanusi

I do not come to venerate Sanusi Lamido Sanusi, for he is not a saint. As much as I admire him, there are flaws too obvious to ignore. But this is not a time for psychoanalysis; it is a time to set truth apart from fiction. When the (suspended) CBN Governor made his submission on how our nation was being robbed at the Senate, the response was predictable; ignore the message, and go after the messenger.

I read the Financial Reporting Council report that formed the basis of Governor Sanusi’s suspension and I thought it useful to leave a few comments. While most of the accusations in the report are ambiguous and unclear, some of the more sensational are easily explained.

1. The CBN paid N38.223 billion to the Nigerian Security Printing & Minting Company in 2011 to print bank notes, whereas the entire turnover of NSPMC in that year was N29.37 billion.

The CBN uses four companies to print notes; NSPMC and three foreign companies. If NSPMC recorded 75% of the total amount spent, it only means the other three companies got 25% of the business. Let us move to the more serious ones.

2. The CBN allegedly made rogue payments as air charter fees to Emirates Airways, Associated Airline and Wings Airlines for nationwide currency distribution. Emirates Airways do not operate a local charter service, Wings was unregistered with NCAA and Associated did not have records of the payments from the CBN.

The FRC is correct that Emirates Airways does not operate a domestic charter service. The only problem here is that the CBN did not contract “Emirates Airways” to move currency, it used a private charter company called “Emirate Touch Airways” instead. When you want to accuse someone, at least get the names right. If Associated Airlines does not have a record of the transaction, why is the CBN to blame? The CBN’s responsibility is to show proof of payments made to Associated; if it has done so, the rest of the discussion is between Associated and the FIRS. The final one is that Wings was an unregistered airline, I am sure the NCAA can answer this with clear evidence of registration at the time of contract award.

3. Legal and professional fees spiked in 2011 compared with 2012 – N20.2 billion in 2011 and N0.46 billion in 2012

2011 was a landmark year for banking in Nigeria; starting with the sale of eight banks that failed the 2009 special examination. Five of those banks were recapitalized via mergers & acquisitions, while the other three were nationalized. AMCON was established to acquire qualifying non-performing loans (NPLs) from all banks in Nigeria and inject equity into the rescued banks. These transactions needed significant legal services, which explain the N20 billion spent in 2011. To rationalize this, N20b is about 3% of the N620 billion spent recapitalizing the bank alone. The CBN was also sued by shareholders and owners of the recapitalized banks, and needed legal services to set AMCON up. Not so scandalous anymore? I think so too.

Promotional activities of N3.1 billion from N1.1 billion in 2012 despite not having a competitor in Nigeria.

What the investigators imply is you don’t need to promote your activities because you’re a monopoly. It means that EFCC (remember “Maga no need pay”), NAFDAC and other federal agencies who use the media to amplify their activities and sensitize the public might be acting recklessly. It is worth remembering that the CBN introduced a Cash Lite policy and continues to focus on financial inclusion and literacy. If you dont promote these activities, how will adoption improve? If you have an answer, feel free to charge a bottle of Guinness to my account at St. Bottles Cathedral.

N1.3 billion to feed policemen and pay for private guards

It is easy to see N1.3 billion and scream corruption. But let’s employ some logic. The CBN is one of the biggest employers of security, especially for the regular protection and movement of currency and security documents. The question we should ask is how many security agents did that amount cover. It is well known that organizations are often responsible for police officers attached to them. If the CBN employed 2,000 police officers and paid them a stipend N2, 000 daily (or N60, 000 per month), that will come to N4 million daily and N1.2 billion per annum. Not so scandalous anymore? Moving on.

6. CBN’s investment in the International Islamic Liquidity Management Corporation without obtaining a board approval.

This investment was approved by the President of the Federal Republic of Nigeria. If the approval of the CBN board was not obtained, why did the President assent to this illegality? If Governor Sanusi is held accountable for every document he signed, the same should hold for President Jonathan.

The CBN Annual Report is available here for anyone willing to read over 400 pages of boring stuff. If like me, you want to get a summary, skip to Page 21. There, you will find that the CBN reduced its overall operating expenses by 6.5%, and contributed N80.3 billion to the Federation Account in line with the Fiscal Responsibility Act. Before Governor Sanusi’s term, this amount was around N8 billion. Growing the CBN’s contribution to the Federation Account tenfold is the biggest indication of financial recklessness I found in the audited accounts.

I will conclude by saying that if you look hard enough at an organization like the CBN, you will find an infraction. If you don’t at the first attempt, some hair splitting will reveal something. Remember Professor Tam David-West was accused of corruptly signing the sum of $57m to an American company, Stinnes Interoil, for a wrist watch and a cup of tea. This is what we remember, conveniently forgetting Professor David-West was attacked because he criticized and exposed corruption in the oil industry.

Sanusi Lamido Sanusi might end up in prison. For taking a stand to protect the future of our children, he has my gratitude and respect.


It’s 4am on a Wednesday morning. All i can think of is how transient life is. I say this all the time, but never understood how true those words are – life is transient. Like everyone else, I’ve had my share of grief – said said “cheers” to a friend on Saturday morning, and attended his funeral later that day. A planned meeting with someone, but the aircraft bringing her home never landed. Still, I’ve never been jolted like this. Yesterday, I saw how fragile life is. The struggle, the arguments, the quest for self actualization; they all disappear in a moment.

One minute, she was with us, providing numbers to aid strategy formualation. A plate of chicken wings and gizzard was beside her computer, to refill for a final session before we closed. The next minute, she sought permission to go to the bathroom. Five minutes later, she was gone; only that we didn’t know. Just like that, a human departs. Gone without the dreams, the million dollar cheque, the laughter and squabbles with friends and foes alike; all left behind. There were days I put her under pressure, to deliver the numbers needed to run my business. She always came through, each time with that trademark smile. Even yesterday, her laptop remained open with dozens of excel sheets running. We wake up each day like robots, and assume the day will end with us as part of the world. One day it will not.

Elbert Hubbard said,”the graveyards are full of people the world could not do without.” Truer words have not been told.

My friend died yesterday. It taught me three things – Thank God (or who/whatever you believe in) for every day. Spend most of your time with those that love you. Do epic shit.

Peace and love.

Much Ado About M-Pesa

“There have been about 200 of these experiments around the world, and maybe only 4 or 5 have been successful.” This was how Michael Joseph, Vodacom’s Director of Mobile Commerce described mobile money to the Financial Times in 2012. When Michael Joseph talks about mobile money, you should listen. Until 2012, he ran Safaricom, the Kenyan company that launched M-Pesa (“pesa’ means money in Swahili). The quote is a reminder that mobile money remains a hit or miss initiative, and most adopters have struggled to show the type of traction seen in Kenya.

Why is Kenya seen has the standard measure of mobile money’s success? The answer is simple; M-Pesa’s numbers are staggering. According to this article, 17 million Kenyans (70% of the adult population) use M-Pesa through its network of 40,000 agents and an estimated 25% of Kenya’s gross national product flows through the channel. But it is useful to remember there are many reasons mobile money worked in Kenya and is struggling in similar markets. The biggest one is first mover advantage, which meant regulators allowed the scheme to proceed without hindrance, and ensured development led regulation, unlike in many markets where development lags behind regulation. But this only tells part of the story; the high cost of domestic remittances in Kenya meant a cheaper alternative was likely to grow, and some analysts suggest the violence in 2008 was a critical accelerator for the service. As the legend goes, during the post-election violence, M-Pesa was used by educated urband dwellers to send money to relatives trapped in the villages and slums. I left the most controversial reason last; the innovator (Safaricom) succeeded because of its status as a monopoly, which ensured the investment in technology and an agent network was protected, leading to an easy dominance of the money transfer industry.

Fast forward to India which is implementing mobile money with less success than Kenya, despite having a much larger rural population and all the necessary factors for a successful implementation. The Reserve Bank of India sees Mobile Money as a banking service, not a telco enabled money transfer service, and regulates it as such. It recognizes mobile money as an alternative currency, so there is emphasis on consumer protection. The RBI also believes regulation will ultimately allow for a much bigger scale than the Kenyan model, and says players will be able to offer more complex savings and investment products in the future, if well regulated from inception. The result of the regulation in India is that telcos that want to enter this market must partner with a bank. Apart from making it less attractive for telcos to participate, the regulation also means users need basic identification to open “accounts” and must go through some due diligence, which reduces adoption. The Indian regulator argues it is playing the long game, and suggests the reward will be a system that holds up decades from now.

As you might be aware, Nigeria chose the Indian route, and has faced similar struggles to gain traction. Critics of the model have pointed to the Central Bank of Nigeria as the villain, suggesting regulation is protecting banks and crippling growth. Here, I must admit my bias; I have spent some considerable part of my life in banking, and believe there are valid reasons for a regulated system. However, instead of joining the debate about the model we are implementing, it might be useful to highlight some hygiene factors necessary for success.

National Identification: The major reason Safaricom was able to navigate KYC concerns in Kenya is because Kenya has a national identification system. The only way to scale adoption is to reduce the KYC requirements to open accounts or transact using mobile money. Somewhere between the SIM registration exercise the NCC ‘completed’ this year and a national identity project, we must find a permanent solution to the identification hurdle plaguing Nigeria. It doesn’t matter who leads mobile money (bank or mobile network operator), if identification remains a problem, scale remains a dream. Once KYC requirements are easy to achieve, customer registration should take less than 5 minutes, making it convenient to sign up.

Security: The only platform that allows for end-to-end encryption is the SIM. This is the biggest shout to allow for MNO-led service providers, since the SIM is controlled by the MNO, it means only the MNO-led solution offers full security. To work around this, the bank-led solutions have set transaction limits to minimize fraud, but the bigger question has not been asked. Will telcos give up full control of the SIM in exchange for more participation in mobile money? On the back of this, providers must be ready to offer money back guarantees to early adopters. In markets where mobile money has worked, it was the early adoption by urban dwellers and salary earners that drove usage. If the offering is going to work as a domestic remittance channel, the initiator of the remittance must trust the solution, otherwise money will continue to move via recharge cards and bus terminals.

Costs: I believe transaction costs in Nigeria are too high, and the system can do with a lot more free loading. One of the attractions of mobile money is the availability of cheaper cash in/cash out options. For example, it will cost me N5 to send N1,500 recharge card to my relative in Ikole-Ekiti by SMS and N25 to the same via mobile money, so no prizes for guessing what option I will go for. The hockey stick for investment in mobile money will be steeper than normal, and investors must be ready to drop average revenues in exchange for scale. Until costs drop by at least 50%, small ticket transactions will continue to happen using airtime.

Government: Hey, some steriods from our good friends in government won’t hurt too. In Afghanistan, adoption grew mainly because the government used mobile money as a means to pay policemen, especially those in remote locations battling the taliban. According to this article, result was not only a reduction in ghost soldiers, but policemen thought they received a 30% increase in salaries because the middlemen had been cut out. There is no harm in government administering low value salaries and cash transfer schemes via mobile money. It will eliminate waste and help drive adoption.

Regulation: Mobile money will always start as a money transfer service, but expansion into a savings and lending service is inevitable. In Kenya, M-Shwari is already offering overdrafts to the unbanked. While I am fully in support of lending to the poor, it must be done in a way that ensures savings are not eroded. This is why regulation of mobile money is critical. We have seen the impact of having a loosely regulated financial industry, and must not make the same mistake with mobile money. The big hurdle is the unfamiliarity of financial sector regulators with non-financial institutions, but we can learn from Safaricom’s move to bring Susan Mudhune on its board. By getting the former chairperson of Kenya Commercial Bank on its board, Safaricom has started to bridge the language barrier between the telco and its future regulator, the Central Bank.

Agent Network: The spread of agents is a big factor in adoption. If consumers have limited options to cash in or out, it removes the convenience associated with mobile money. Apart from MNO agents, mobile money operators must use the extensive distribution network built by consumer businesses like Coca-Cola, Procter & Gamble, Unilever, Nigerian Breweries etc. This takes me back to the cost discussion. If the revenue sharing model does not create an incentive for the agent, sign up will be slow. Today, mobile money operators must be willing to lose significant revenues to drive growth, and until agents earn 75% of the transaction fees, the business might not scale.

In summary, Kenya is clearly an outlier with 46% of Kenyans sending a domestic remittance monthly, compared to 18-23% in the next set of countries including Nigeria. This is the biggest driver of mobile money, so we must common size our expectations. Also, the model employed will always be open to criticism; since both bank-led and MNO-led models have significant advantages and flaws. Nigeria has chosen the bank-led model which I believe is harder to scale, but could prove beneficial if full financial inclusion is to be achieved. The ultimate test of the model is not today’s numbers, but how the system grows when the hygiene factors are in place. It is clear that mobile money has all the tools to disrupt traditional banking systems, and will eventually happen.

Back to the Matter

Yes, I know; I promised no more ASUU related posts but this was impossible to ignore. Our big uncle, Professor Mobolaji Aluko was kind enough to share the 2009 FGN/ASUU agreement for transparency. and I couldn’t ignore one more post to discuss the matter.

1. Funding: The only part of this agreement that ASUU and the FGN agree with is the area I find most disagreeable; that funding should primarily come from the government. It is clear that the era of government funding higher education is disappearing. While I don’t suggest government should disengage from funding universities completely in the short-term, I think recurring expenditure should be self-funded by the universities. Somewhere in that report, ASUU suggests the cost of educating one student is about N1.3 million per annum, maybe that’s the answer for those wondering how much it will cost to attend a university under this arrangement. Of course, if you pay N1.3 million, it must be for decent education and consumers will select the universities that provide the best value for money. There’s your incentive for quality improvement.

Many of the demands made by ASUU will be solved by agreeing some level of financial autonomy. If that does not happen, we will be back here in 2017 arguing about another strike. There’s no indication ASUU is averse to this, simply because a smart offer has not been put on the table. What is uncertain is if the government wants to start a discussion that involves a significant increase in fees, less than two years to a general election.

2. University Autonomy: I’m sure I wasn’t the only one surprised that ASUU insists only degree holders should be appointed to the governing council of universities. The fact that it needed to be clearly stated in an agreement should be a cause for concern about the quality of governing councils today. It is also interesting that most of the funding (local and international) to Nigerian universities must come through the National Universities Commission. Apart from regulating the curriculum and maintaining standards, NUC’s job should be limited to setting the overarching strategy for higher education.

I agree that a national examination (JAMB) is not out of place, but universities should be free to determine additional entry requirements, and apply such as they deem fit. While we are on this JAMB matter, surely it is time to revamp that process. It is inefficient running such an important examination on ONE day every year, across Nigeria. Oh, and paper based testing must be on its way to the museum. India got an American company, Prometric to handle its Common Admission Test; today you can take that entrance examination once within a 20-day window. If you don’t believe American companies provide technology solutions to India, you might enjoy this. Someone should tell those JAMB people and universities that admission tests can be computer based.

3. Salaries: I totally blame the government here, and my reason is simple. It is the prerogative of ASUU to try to maximize what its members earn, and all of us will do the same if faced with that situation. At least that’s what I’ll do. However, when ASUU comes to the table using salaries in South Africa (GDP per capita of $7,500) and Botswana (GDP per capita of $14,000), then the government must have been snoozing. Oh, did I mention Nigeria’s GDP per capita is somewhere around $1,500? I’m sure you get the point. But it is also good to remember that if we agree on how higher education should be funded, we won’t be arguing about salaries.

4. Allowances: I don’t think the negotiated allowances are too high, and made a case for this in previous posts. If we want to raise the assessment levels of post-graduate study in Nigeria, we need to align our goals with incentives. My theory on reward is simple: if you pay peanuts, you get monkeys. If you want to minimize inbreeding, you need to incentivize external assessment of candidates and make it a compulsory part of the appointment process. Again, this is a problem financial autonomy takes away.

5. Fringe Benefits: Honestly, some of the requests here are hopeful, at best. Vehicle loans at 2% and Housing loans at a rate to be determined by the University Senate are impractical requests. The request for loans at rates below inflation and the risk free rate should have been deleted very quickly. Again, it makes me wonder, who negotiated this agreement on behalf of the FGN?

6. Pension and Retirement: There is no dispute here, I completely support a retirement age of 70 years for academics. The previous retirement age (65 years) robs the university community of 5 years per person. If you assume 5,000 professors make it to at least 70 years, that’s 25,000 years of teaching gained. No argument here. On the University Pension Fund, I didn’t get the reason for not aligning with the existing pension scheme. If the Universities desire, they should apply to run Closed Pension Fund Administrators (CPFAs).

7.Fun Fact: It is interesting one of the advisers at that negotiation is the current Minister of Power, Professor Chinedu Nebo. If he is not too busy dealing with the former PHCN staff, maybe he can share his opinion with us on how to fix higher education.

In the words of the good man that shared this document with us, there you have it.