On the general state of the economy, I agree completely with Soludo. - Prof. Pat Utomi

Renowned economics professor, Pat Utomi, in this interview with TOBI AWORINDE of The Punch, backs a former Governor of the Central Bank of Nigeria, Prof. Charles Soludo, who accused the Goodluck Jonathan-led Federal Government of plunging the country’s economy into severe crisis. 

Utomi raises several salient issues concerning the Nigerian economy and proffers solutions for the country’s political leaders to get the populace out of an economic logjam. It’s an interesting read, courtesy of The Punch. 

Do you think former Central Bank of Nigeria Governor, Prof. Charles Soludo’s argument, depicting the Federal Government as incompetent, was factual?

Absolutely. There are things I want to disagree with there, but there are many things I agree with. And this is really the nature of what political campaigns should be: to raise strong ideas that affect polity, in terms of the quality of life of the citizens. The truth is that there is no one solution in this world; perspectives on that issue can then allow society to find a more robust response. I do think that it is demeaning of the democratic process for people who are responding, instead of looking at the issues he has raised and providing facts to dispute or support, to then embark on ad hominem and personal broad fights against him. By making the whole thing emotive, rather than rational, they take away from quality democracy and this is part of fanning the embers of violence that is going on in this environment.

On the general state of the economy, I agree completely with Soludo. The economy is inchoate as it is. Even more importantly, I agree with him that we have showed no learning (desire), because what is happening now is a complete replica, as he suggested, of 1982.

I have, in fact, given at least five lectures on this subject within the last couple of months, and I said exactly this. Thus, he was not saying anything new. One of the things that strikes me is that in this age, we lack institutional memory to the extent that we repeat so completely mistakes of the past. If the (Shehu) Shagari administration (1979-1983) is blamed for not knowing, surely that mistake should not repeat itself later, because we should have learnt from it.

What are some of these mistakes?

I’ll give you a good example. When oil prices began to rise, we had a visit to Nigeria by the former Chairman of the Council of Economic Advisers to President Reagan, Joseph Stiglitz, who is also a Nobel Prize-winning economist. He gave a lecture at the Lagos Business School, which was attended by a significant part of the Lagos business community. I was a discussant at that lecture, at which I made the point that the way we were going about managing our economy in the face of this oil price rise was dangerous, unsustainable, and showed that we had not learnt from the past. I then suggested at that lecture that under no circumstance should we use more than $40 a barrel for our budget process.

Because the price of oil in those days was so volatile—rising and falling drastically—my argument was that if oil prices rise to $70, everything from between $40 and $70 should go into a stabilisation fund and not be budgeted. Whenever oil prices fall, we have all kinds of abandoned projects, so I said, ‘We don’t want to continue this kind of foolish way of doing things.’ Using that stabilisation fund, when oil prices fall to $10 as in 1998, our budget would remain funded at $40, even though oil price is as low as $10.

The reason is that we would have been saving $30 in the stabilisation fund when it was $70. If it were to then go above $70, as it did go to $130 and more, my proposition was that everything above that should go into a future fund and that this fund can be invested abroad so that future dividends will flow in or in long-term infrastructure because all the children that will be born in Nigeria even 500 years from now have the same right as us to the oil that is put in the ground by God for all of us. Unless some of that money is being used for infrastructure, which they (unborn Nigerians) can use in their time, then we have cheated them out of their own heritage.

Have you made these recommendations to government?

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, was present at the lecture, and she made her remarks when I finished. She said she agreed with me, but that even the small excess crude that they were struggling to release, the politicians were fighting against it; that even after warning them to save for a rainy day, the politicians kept saying, ‘Look, it is already raining torrents.’ I then said to those sitting with me, ‘We are missing the point. We have a duty to educate and teach these politicians. In ignorance and greed, they want to share everything immediately and cite as their basis the constitution that says it can be s hared.’

We should educate them that when you have these kinds of funds, it does not take away the share of any state government, because they will own their exact proportion of that fund and the management of the fund will be made up of people that will ensure that their portion is not abused. I also further said there that many of our technocrats that are going into government are missing an important point: the power of resignation, to send a message to politicians. I began to give the example of Malaysia. Malaysia would not be what it is today if one young technical medical doctor in government called Mahathir Mohammed did not see something wrong in the prime minister’s policy, which was then referred to as the give-and-take policy.

When he complained about it, he was not only thrown out of the government, he was expelled from the ruling party and he went to write a book titled ‘The Malay Dilemma’. His book literally generated uprisings in Malaysia and the prime minister had to resign. Eventually, he was reabsorbed into the party, became the prime minister and the story of Malaysia changed permanently. Malaysia, which was once worse than us, is now far better.

Why are our technocrats in government not realising this power of resignation to mobilise the public to learn the right thing and to force politicians who are adventurers to behave appropriately? This happened at the LBS. Half of Lagos’ elite business people were there. It is not a secret. All the things I predicted would happen have since happened. So, why should people attack Soludo for saying that it is like 1982? I have said this many times.

Are you saying that Okonjo-Iweala, Fani-Kayode and others in the Federal Government are in denial with their outright rejection of Soludo’s argument?

What do you expect? Some friends and I used to have a gathering around the late Dr. Stanley Macebuh in his house and Patrick Dele Cole would be drinking good brandy and be laughing at me for drinking Fanta. I would raise an issue about government and public office holders, and they would reply, ‘If na you nko?’ That’s my question to you: What do you expect them to do?

Soludo scored the Federal Government an F on economy. What is your assessment of this government?

I don’t want us to get into emotive discussions. I don’t think the management of this economy by this administration is worthy of praise. I believe there is a complete misunderstanding. Because they are not sensitive to people, there is something that has developed in Nigeria; I call it the new mercantilism. One of the biggest mistakes this President has ever made is to suggest that the ownership of private jets is an indicator of Nigeria’s progress. It is a terrible thing. I was praying hard after he said it the first time that he should realise he made a mistake; but he repeated it several times during the World Economic Forum and I was so embarrassed. I said, ‘Oh my goodness, we need help.’ That has been their orientation, they have not noticed that the Nigerian people are actually (poor).

The dynamic question during elections in the US is: Are you better off than you were four years ago? Forget the statistics that anybody may throw at you, because as they say about statistics, there are three things: lies, damn lies and statistics. Anybody can generate statistics to look good. The simple question to the individual citizen is: Is your life better today than it was when these sets of policies were put in place? My submission to you is that, as an individual, I am worse off today than I was four years ago. And I think most Nigerians who examine their consciences would say they are worse off today than they were four years ago. Forget about grades of A or F.

How do the issues you raised about economic mismanagement affect the electorate and the masses?

They are doing Nigerians a disservice by preventing the people from discussing the issues and learning, with this emotive abuse of anybody whose view does not eulogise them. The numbers are there. Soludo points to the Nigerian Bureau of Statistics’ poverty incidence figures. There is this nonsense going around now; I think it was (Femi) Fani-Kayode that said Nigeria was given an award of the biggest economy in Africa, as if it as an award that is being bestowed on them.

The size of an economy is a function of the number of the people in the economy and the productivity of those people, that is, output. If there is a huge population like Nigeria, and the people are producing seriously, it is only logical that the size of the economy of Nigeria should be bigger than the economy of South Africa, which is producing more per person with a much fewer number of people. But because there are more of us, our general output will be bigger than South Africa’s. So, what is the big deal about it? It is simply ignorance that is making people celebrate what they don’t know. I heard President Goodluck Jonathan two days ago (Tuesday) saying, ‘Is there anybody in Nigeria who understands economy better than the people at the World Bank and the International Monetary Fund?’

It is disgraceful for the president of a country to speak like that. He should be the first person to be proud to say his people are better than any other, even if they are not. But in this case, many of our people have worked in the World Bank, and we know that the boys in those places were not half as smart as us in class. So, why should the President make that kind of statement?

How then should Jonathan have responded to his critics?

In 1997, during the Asian financial crisis, I was on a study tour at the Central Bank of Malaysia, Bank Negara Malaysia. During my trip, I learnt that Prime Minister Mohammed refused to follow the IMF’s suggestions on what Asian countries should do. Indonesia chose to and Malaysia was the first to escape the financial crisis and begin to run as it did. The IMF was humble enough to admit that Malaysia made a better choice than they had advised Indonesia. I wish the young lady at Bank Negara, who was my tour guide, was there to hear our President’s statement; she would fall over and laugh to death. There are some things we should educate our politicians about. The problem with our politics is that we have refused to use it to learn.

Again, I had the privilege of being an intern as a graduate student in the Washington DC, United States. One of the things I learnt on Capitol Hill with the Indiana delegation to the US Congress—which at the time included people like Dan Quayle, who would later become Vice-President under George Bush Sr.—was that the average senator in the US, who had never studied banking in his life, after serving for four years in the banking sub-committee of the (legislature), would probably be as knowledgeable as a professor of banking, because they do serious work. But our politicians have refused to discipline themselves to understand that it is about serious work. They think it is about motorcades. So, we talk carelessly because we are uninformed and it is hurting our country.

President Jonathan says he has reduced poverty by 50 per cent, but Soludo argues that it has actually increased by 71 per cent and unemployment, 24 per cent. What are the facts about unemployment and poverty in Nigeria?

Based on a report released by Legatum, Nigeria is considered one of the most miserable places to be born on earth. Basically, it is even better to be born in some ragtag African country than to be born in Nigeria because of the quality of life—people dying at childbirth and so on. Look at the Human Development Index, which Soludo also quoted. I was asked to review the HDI a couple of years ago and if you isolated Borno State from Nigeria that year, it would be the poorest country in the world. So, there are many of those dynamics that we’re challenged by and it is one of the imperatives that politicians should go to town debating in detail—issues of poverty, incidence of poverty, why people are poor, etc.

One of the things I disagree with Soludo on very strongly is where he said, ‘Where is the money? Oil prices have fallen, so where does the All Progressives Congress or even the current government hope to find the resources to do all these things they are saying they will do?’

My reply to that is that today, all of us talk about Singapore. When, in 1965, Singapore’s only resource, which was oil, was what the British Navy was paying as rent for using Singapore’s natural seaport as a deep-sea terminal, the British made a decision, as part of the reorganisation of the Navy after World War II, to close down all their naval bases east of Eden. That meant closing the naval base in Singapore. So, the country was in the middle of its greatest adversity. It posited that the only way it could survive was by being attached to their neighbours in the North: Malaysia. The federation of Singapore and Malaysia was seen as its way out. But the leaders of Malaysia—primarily because of fear of the Singaporean Prime Minister, Lee Kuan Yew—decided to eject Singapore from the federation.

For Singapore, it was like ‘We have nowhere to go. This is the end of the world for us.’ Well, they rolled up their sleeves, chose to be creative, and 30 years later, that young rascal called Yew wrote a book called From Third World to First: The Singapore Story. They had, in one generation, gone from a country that had no resources at all to becoming the largest concentration of billionaires in the world on that small island. Thus, it is not about how much revenue you are getting. In fact, the revenue can be the problem.

Too much revenue can make a nation do foolish things, like it has made us do. I consider this moment in Nigeria, with oil prices crashing, as an opportunity and not a threat. All we need is serious-minded people who can sit down and construct a government that will be inclusive of all, because, as someone said, it is better for everybody to be inside fishing out, than to be outside fishing in. These people should be dedicated to an elevated immortality in terms of how history remembers them, not people who are looking for big bank accounts. Nigeria can, in the next 10 years, be the envy of all, with the low oil prices of today.

What are the opportunities peculiar to Nigeria, which you think the next government can take advantage of?

First of all, we’ve got to forget this business of waiting for oil revenues. They should take a low threshold of oil prices as our first savings to drive things forward. They should also take the many other factor endowments Nigeria has—sesame seeds, rubber, gum Arabic, mineral resources, and the like—and determine which six or seven of them in different geographic locations around our country we can develop to become the best or leading producers in terms of their entire value chain all over the world. Then they should educate our people to the best level to be able to develop those products and go to work. Nigeria will emerge an economy so strong that it will make the rising of the Rhine Valley in Germany seem like child’s play.

Source – www.ekekeee.com