Odilim Enweagbara is a renowned Developmental Economist, and political analyst. In this interview with CHIBUZO UKAIBE, he talks about the economic recession and debate over the sale of some national assets. He also gives his perspective on the raging debate over restructuring of the country.
We just marked the 56th Independence Day, do you think there is much worth celebrating?
It all depends how you look at celebration and on one’s concept of life. Some people celebrate being alive. Others can celebrate their material acquisitions. Yes we’re no way near the promise land. Mistakes have been made, huge mistakes of course. But, then, the fact that we’re still together as a nation, is something we should possibly say thank God we have seen 56 years of our nationhood. That’s why I would suggest that we better keep an open mind and heart. If we recognize our mistakes with the goal of making sure we never repeat them again, then I will assure you that the fallouts of our past mistakes can be resolved and put behind us. This is because no great nation ever becomes great without going through a series of mistakes from which it learns. Greatness in most cases involves taking risks and some of these risks are based on many trials and errors. We as a people must learn from our mistakes because a man who has never made mistakes can never be a successful man.
A recurrent theme in your explanation so far is our tendency to make mistakes, in your own estimation what are those mistakes?
The mistakes are many. After the civil war which ended in 1970, came the discovery of oil, which made us overnight superbly rich. The result was the entire nation relaxing and doing nothing other than waiting for petrodollars to flow in. The postwar free money led to concentration of economic and political powers at the center. In fact, the center was so attractive that people were fighting over how to share the cake, not how to bake the cake. Since the regions were made powerless, that quickly led to fierce ethnic rivalries over which groups should control the commonwealth concentrated at the center. This was not only costliest mistake made then, this mistake continues as we talk. Another was the long intrusion of the military which overtime institutionalized corruption and impunity. Rule of law, in such absence of democratic institutions, was left out. As a result, nobody cared about Nigeria or working to earn their income. Cutting corners became the norm to the extent that some powerful people could, staying in their houses, make money that those working could never earn working their entire lives. With everything now imported, agriculture which used to be the mainstay of our economy was destroyed. Consequently, the farms were abandoned and everybody was having fun.
Do you see the kind of solutions we are implementing today to be addressing these mistakes?
We are yet to put on our thinking cap. We are yet to transfer power currently at the center to the periphery. We are yet to decentralize something as simple as the police; to the extent that it is the centralization of the policing of the nation that is the cause of the current high level of insecurity and impunity in the land. Where else should development be pursued successfully than at the periphery, close to the people in a way that the people should have to develop in their own pace, without having to wait for others or others having to wait for them? We are yet to have fiscal federalism as it is commonly the case in virtually all federal systems of government. Even China that is not a federal system has a kind of fiscal regionalism, guaranteeing fiscal autonomy to its provinces. In fact they are so autonomous that they are allowed by Beijing to go as far as formulating their own foreign economic policies.
The irony today is that we have members of the elite class, who get into power and continue to encourage the system we have. So far this government isn’t keen on buying into the restructuring debate it would seem, how else can it be convinced about the essentiality of this process?
The blessing in disguise is as the center becomes weaker without the kind of financial backbone it used to have to go round, there is this natural tendency that the restructuring campaign will increase in intensity with even those currently reluctant being forced to join the campaign. The fear of separation if the center is made weak it mere fear mongering that hardly holds water. This is because we either restructure or we all get consumed by the potential consequences of a failed state.
So is that all that is required?
Yes. That is the best natural way to go about it. And you will agree with me that once the center is no longer attractive, those calling for the state of Biafra or Niger Delta Republic will no longer have a justification to continue with their separatist agitations.
In effect what you are saying is that our economic system is faulty because the political system carrying it is faulty?
Without sound and all inclusive polity, the economy will never be on the path of growth because those who believe they have been unfairly treated will do everything possible to undermine the economic system so that those who excluded them would regret their actions. That is the way we humans act or react. No economic grows or people prosper in the midst of constant economic sabotage, committed not by some foreign enemies but by citizens who operate freely within the system.
Let us take a look at the recent debate over whether to sell some national assets or not, as part of efforts to come out of the present recession. What is your take?
As it stands one is left with no other option but to ask, given that there’s no conventional economics insisting on the sale of a nation’s assets as an answer to its economic slump, to those calling for the sale on what basis are they making the argument that this is the solution? Why shouldn’t they provide us with some hard evidence of countries that recovered from recession quickly once they sold some of their national assets and invest the money in the economy? Also they should let us know what else we have once these assets have been sold. Also, those calling for the sale of the nonperforming assets should first ask themselves why those national assets are declared nonperforming.
Are they nonperforming because they are purposefully made moribund so that those targeting buying them could buy them as mere scraps? Wasn’t it the same thing that happened to most of the national assets sold as scrap, including the country’s Urban Development Bank, jointly owned by the three tiers of government, which was not only sold to some government fronts as scrap during the tail end of Obasanjo administration, but also these fronts wasted no time in renaming the bank the Infrastructure Bank of Nigeria? Was it not the same thing that happened to Nigeria Airways, the Daily Times, Obajana Cement, etc?
That is why without fully interrogating what brought us here today, it will be difficult to decide that the solution is in the mere selling of national assets. In other words, if we have to do so, shouldn’t we first fully diagnose the problem? Not doing so amounts to shooting without aiming at the target. Believing in mere chance of luck at this point is an endeavour we never contemplate about. That is why caution should be our watchdog. It should be if we don’t want to make the same mistake we made in the past, including handing some broad-day robbers who acted as cronies of governments in power. Since Buhari remains our only hope, should he repeat the same costly mistakes, no doubt, we should be finished economically as a nation.
In the absence of assets sales, what is your advice to this government to raise enough money to meet the current shortfall making the 2016 budget difficult to be implemented?
Rather than calling for another national assets disposal, we should be looking at other options of raising government revenues. With peer economies having national debts average of 55 per cent, our 14 per cent debt-to-GDP ratio makes us one of the nations with the lowest national debts. Since we are so creditworthy, particularly with regard to external debts, why shouldn’t we go ahead to borrow externally? Not only because they are far cheaper with longer-term flexibility, but also they hardly crowd out the real sector firms from our debt markets.
For most Nigerians who oppose more borrowing, they should agree that the problems associated with our past debts are twofold: One, we borrowed locally, not only at such cutthroat interest rates, but also based on short-term window. And this happened thanks to the past governments, particularly Jonathan administration’s Okonjo-Iweala-led economic management team who connived with the country’s unpatriotic commercial banks as the beneficiaries. Two, rather than borrow to finance critical infrastructure with the goal of reducing the country’s inherent high cost of doing business, they borrowed very unproductively for consumption—that is, to keep maintaining government’s bloated recurrent mostly close to 90 per cent of the budgets.
Since our accumulation of past unproductive debts with the burdening debt servicing that brought us to today’s recession, we should borrow wisely and invest wisely too. Let us also not forget so quickly that the nightmares we suffered in the hands of western imperialist multilateral financial institutions like the IMF, who used debt traps to enslave us in the 1980s, as fresh as it is in our minds, shouldn’t be enough reason why we should completely jettison foreign loans. Let’s recognize the recent changes in the politics of foreign loans along, a consequence of changes in global economic power. In fact, unlike tricking of nation by these western 419 foreign lenders, the new players, currently led by China, have since come up with some new international loan standards, which are based on a win-win goal. Little wonder, our present anti-foreign loan unpopularity is misplaced.
In fact, unknown to most Nigerians, the behind the scene promoters of this unpopularity are the same domestic lenders, who as the beneficiaries of our trillion naira in domestic debt servicing, and, who, increasingly are fronting the same western exploiters, are the ones leading this fierce foreign loans opposition. Also some local media along with some so-called national and international expert economists, on their payroll are equally its drivers. If it’s not, why should they be opposing foreign loans that are not only cheaper with some longer-term repayment windows, but are hardly crowding out our real sector firms from the debt markets?
Or, how should one explain why we should continue with such unheard-of high domestic fiscal deficit which in 2013 was at 78.27 per cent, 100 per cent in 2014, and 75.50 per cent in 2015, which is only reduced to 54.01 per cent in 2016? And notwithstanding how cheaper foreign debts are, still we recorded no much foreign loans in 2013, 2014, and 2015, with only 28.63 per cent in 2016 deficit? The preference to financing government’s high interest debts, using government’s own deposits, was it not why our commercial banks consistently refused lending to the real sector, notwithstanding that their primary role as fractional reserve banking?
No matter what the enemies of this country are telling us against foreign loans, considering our external loan creditworthiness, we should ignore them and go ahead to borrow during the next four years as high as $200bn externally. This will still represent less than 50 per cent of our GDP. But before engaging in such borrowing, care should be taken to ensure that such loans are targeted on capital projects, projects that by drastically reducing our current high cost of doing business should make ours increasingly a competitive economy in a way that prices out most imported goods and services.
But besides preferring borrowing, what about bilateral currency swaps this government was in the process of negotiating with the Chinese government during President Buhari’s recent state visit to Beijing? This question needs to be asked because had it been successful, that should drastically reduce the current pressure on our dollar reserves, which is now in an all time low. What about using quantitative easing to buy back trillions of government’s naira denominated debts? This should be another important strategy this government should quickly explore. It should do so without having to listen to the same enemies of our nation who as the beneficiaries of high debt servicing profits should do everything to oppose it, including hiring some domestic and foreign economic hit men and women. Pay off our present huge domestic debt will save us a trillion naira debt service cost this year alone.
Also, since this is truly a patriotic government, shouldn’t it go after those enjoying some illegally acquired oil blocks? The best and quickest way to go about that should be for the Buhari administration to send a bill to National Assembly to empower it to begin sequestrating all the oil blocks past governments handed to some local and foreign cronies and fronts.
This will bring in close to $300bn to the government, money these oil block-holders currently hide in many international banks and in other assets. The recovery of the billions of dollars discovered to have been made by virtually all the international oil companies operating in Nigeria who engaged in massive oil theft by either not declaring or under-declaring the amount of oil they took out of Nigeria should be pursued with all the rigors it requires. That too will bring in not less than $20bn. Hiring some international lawyers who should go after these roguery western IOCs should be the best way to force them into paying fully for the oil they stole and with interest.
The president has made a lot of foreign trips, going by this is your perception, do you think anything will come out of those trips?
Nations like corporations operate on the law of selfishness and are driven by their zero-sum game mentality—if we lose, they gain; if we gain, they lose. If the Chinese help us fix our economy to the extent of producing most of the goods and services we consume, then, their manufacturers who depend on exporting to our consumer market will lose the market which leads to laying-off workers. Now, why do you think that the Chinese government would like to shoot itself in the foot by allowing its factories to go bankrupt because they have helped Nigeria produce most of the things it once imported from China?
Why do you think the Chinese will do that? Should they be operating a kind of Mother Theresa trade policy? Or why should we expect America to come and help us fight Boko Haram when it is their bargaining chip with which they use in penetrating our national security and get all pieces of information and control they were looking for when they wanted to set up AFRICOM which Nigeria fiercely opposed? So, Nigeria’s problems are half solved when our leaders start thinking selfishly in our national interest. This is because rather than any external powers helping us solve our problems, they are only looking for the chances to make our problems not only more difficult but also to make sure that every possible solution depends on them so that they can make it more and more difficult for us to solve them. Nations are that way but individuals may not. So, nations are constantly in perpetual cold war with one another; they fight to undermine other nations so as to undermine potential competition. Mr President’s economic diplomacy should have taken this into consideration or else there would be positive results. That is why he ought to have done his homework to know what he will place on the table in order to get what he wants. After all, the people he is going to meet always have an army of best minds to study his demands and diplomatically to respond bearing in mind that it is about their national interest, their national agenda.
I remember that Obasanjo made several foreign trips, including the ones he made to America. I was at MIT then, and most of us did our best in hosting him and organizing businesses to join us. Of course, during his numerous visits after his long speeches people would clap for him and that was the end of. It was during those visits that I too learned it the hard way. I learned that the Americans have their own national agenda and interests. They pretended they sympathized with you but they could sympathize with you at the expense of those national interests?
On the economic recession, from your own perspective as an expert do you think this administration is taking the right steps to take us out of this situation; and how long would it take for a country to come out of recession?
Because we are now running a modern economy that is why we know that our economy is currently in recession. If not because we are focusing more on quantitative GDP growth than qualitative GDP growth which is all about spreading economic prosperity and inclusive growth, there is no way we would have been in recession at this critical time of our economic journey. Little wonder the urgency to see the GDP once again growing even when that could hardly improve the life of an average Nigerian as the earlier economic growths we were falsely sold to never benefited the poor.
By the way, Nigeria’s economy has been in recession as far back as 2012. Why it was not as obvious as it’s today was because those lacking the knowledge to understand how bad the economy was then, didn’t, because that Mrs Okonjo-Iweala was clever enough to make sure that the economy was put on one powerful but dangerous life support machine, which was unprecedented loading of the economy with some highly unproductive domestic debts, secured at unheard-of high interest rates, which having crowded out our real sector firms from our debt markets, most manufacturing firms either went bankrupt or left the shores of Nigeria.
Little wonder our domestic borrowing grew astronomically from N4.5tn in 2010 to N13tn by 2015, while at the same time we spent an unheard-of N3.1tn between 2011 and 2014 just servicing our debts. All these were happening at the same time when oil prices were at an all-time high of $140 per barrel. In fact, the wastage was so unbelievable that while the nation earned $501bn from oil between April 2010 and February 2015 (according to the US Energy Information Administration) Jonathan government borrowed N8.5tn and did so with recurrent as high 90%.
So, why should I have to now participate in criticizing the Buhari government that is doing everything humanly possible to clean up the mess by the past governments–from Obasanjo to Jonathan? It is not only unfair for PDP and friends of PDP to be shouting that this government is mismanaging our economy, It is also hypocritical of them to be engaging in criticizing the cleaners of the mess caused by them. I understand that most members of Nigerian elite class are clamouring for a return to business as usual. For me, if not politically motivated, why shouldn’t these Nigerians join me in my ongoing constructive criticism of this government whenever I see the government derailing?
Any cut and join solutions won’t solve our current economic problems. Fire brigade approach won’t solve the problem. As it stands, Nigeria has a domestic debt of about N13trn and this year alone we are spending over N1trn to service the debt. But why should we spend such huge amount of money when we would have easily used quantitative easing to settle these debts by buying them back. But why that can’t happen is because those benefitting from these overtly costly debts will do everything to ensure that government continues spending the very scarce revenue servicing domestic debts.
They will use the media and other powerful forces to explain why it should not be done. The president cannot do it alone that is why he needs patriotic experts advising him on what should be done. In 1864, during the American civil war, instead of paying gold to the Rothschild banking dynasty that financed the Civil War, which the banking dynasty also caused, President Abraham Lincoln instructed his treasury secretary Portland Chase to print the sum of $480 million and hand it to the Rothschilds insisting that since the debt was domestic debt it should be domiciled in dollars which his government had the power to print as it chose. Another step is to democratize the CBN so that the monetary policy of CBN will be pro-jobs, pro-investment and pro-growth. The MPR by the MPC rather than help has continued to make it difficult for real sector firms to access funds since they are out of their reach.
High interest rate during a recession will further drive the economy deeper into the recession rather than help it begin to grow and exit recession. You cannot use it to produce anything. It is only good for importers. That is why we must quickly amend the 2007 CBN Act so that it will allow the president to have the final say on the outcome of MPR, CRR as well as forex management policy. The 2007 CBN Act gave a lot of powers to CBN governor, including making the governor both the head of administration and as the head of governance. We must separate the watchdog from what it is watching. If the watchdog is made to watch itself it will never work. So the board of the CBN should not be chaired by the CBN governor. It should be an independent person who is not a member of CBN.
How much impact do you think the war on corruption has had since Buhari came on board?
Buhari is doing fantastically well for us. Do you know that during the last administration people were just stealing the country blind? That was how bad it was before Buhari became. President Buhari has set a standard. Let’s not forget corruption has more friend than enemies. But we know that Buhari is just only one person who no matter his good intentions cannot succeed in this war if these people who made Jonathan to derail are allowed to be now all over the place. These people who pretend to be the friends of his government are really the greatest enemies of his government who should be kept far away from his government.
It is not about PDP, APC, Labour Party or APGA because these thieves have common interest. Our common enemies’ common agenda has been to frustrate court cases against corrupt politicians and business moguls so that by 2019 they will all fight Buhari and make sure he doesn’t return. Who is it that they intend to put there? I don’t know. But I know one thing; their game plan, which is, to install a corrupt politician as president so that the corrupt president should allow return to the business of corrupt in Nigeria. That is their game plan. But Buhari has to be smarter than them. Or maybe he is smarter than them in this game. Maybe he is allowing them play this game believing he is naïve, when the contrary is the case. In any case, Buhari has to be mindful because some people who claim to be his friend are not.