Dr Akin Ogunbiyi is the chairman of Mutual Benefits Assurance Plc and was a People’s Democratic Party(PDP) governorship aspirant in Osun State in the last election. In this interview with ZAKA KHALIQ, he spoke on the need for the country to address its trade deficit to resolve the forex market volatility.
Despite the opening of Nigeria’s borders last year, Nigeria is still recording huge trade deficit. Why is this still happening?
We are not a productive economy. We live virtually on import. Common tissue paper, little things that we can produce are imported. Before, we had industrial parks, even in Ikeja. How many industries are still functioning? I could recollect we had cotton industries that produced fabrics along Oshodi Badagry road. How many of them are still there?
So, the source of the problem is lack of productivity. When you don’t produce, what do you have to export? We talked of dollar scarcity. What do you think brings dollar scarcity? I learnt that vessels that came with tons of goods into this country, always leave empty because we have nothing tangible to export.
You have cargo aircraft, they come in daily fully loaded, when they are going, what do they take back? Nothing. It calls for a re-think. Nigerians are not lazy.
They can produce, why should everybody depend on only few companies to produce for everybody? People can be called entrepreneurs in their own rights but there is nothing like that. There is no incentive for anything. It is only the big boys who can get the incentives. They are the ones that have access to foreign exchange. We need to put value on productivity.
So, we will always be in deficit except there is a national policy that talks on productivity. Mention any sector of the economy in America or in Europe that you will not find a Nigerian among the blacks. The knowledge is there, but we lack one thing; we will not allow our people to apply the knowledge to generate productivity and without productivity, we always have negative balance of trade.
What is the solution to the forex scarcity in the country? Can unification of the exchange rate be helpful?
If you have something that is so scarce, why don’t you have a single conversion rate? They sell money to Bureau de Change operators at a different rate; you sell to importer at a different rate. When the Federal Government has something to do, they know how to go and take money at another rate from the central bank. All these things are corruption. Let us have single exchange rate. Something that is so scare, why will you give people the opportunity to choose their exchange rates?
The Federal Government has restricted the list of things that they use forex to fund. Make everything available. The singular reason to solve this problem is to have one single exchange rate so that anywhere you turn to, it is the same rate you get it. There will be some sanity. Everybody knows the right thing to do but who are the people running it – running our government. How professional are they? But they find themselves there; so, what can we do?
Government borrowing has been on ascendancy in recent times, and because of this, most of our revenues are used to service debt. What is the implication of this?
There is nothing bad in borrowing, but when you borrow and there is nothing to show for it and only one product-oil- is the means of paying back, then, that is a major problem.
Leveraging an economy is not bad, but when you leverage, you leverage to deliver on some things. What are they borrowing against? Is it for infrastructure, power or social infrastructure? But when you just borrow for the sake of borrowing, before you even bring the money, they have shared it. It is unfortunate.
Why are we borrowing? Borrowing, itself, is not a bad thing. The price of oil is good now. What is our oil reserves, our external reserves? Look at what dollar is to Naira. You don’t even find dollar to buy. We are not a productive economy; we are a rent economy. A rent economy should not be going out to borrow money.
When you borrow money, to do what? Look, Lagos-Ibadan Expressway has been there for about ten years now. It has increased the value of the contract; it has been doubled over and over again. It is unfortunate; we are not supposed to borrow at all. It is a time to do austerity measure. It is a time to live within our means.
I am not against borrowing, but I think the Federal Government needs to watch it. The country owe about N35 trillion; our external reserves today is just over $30bn. They don’t have money to sustain it. I am an entrepreneur; I know the value of money. I know what goes into making that one naira.
We are already over-leveraged, but if we must borrow, let us borrow for a specific project and let the people we are borrowing from certify the value of the project so that we know what we are doing.
All the loans that the states have taken, who regulates them? We have different agencies that are spending money here and there. The agencies are also part of the problem of the Federal Government. They budget heavily for them despite the fact that they are income-generating agencies. When they make the money, what do they do with it?