‘Leadership failure is fueling Nigeria’s economic woes’
What should be the centre of discourse in our national economy now?
That is what we are going to exemplify today (Monday) in our annual lecture. We should be thinking about peace and harmony in our country now. Dubai is the talk of the day. What happens to Dubai? It is their urbanisation strategy that has made made them the Centre of the world. So, how can we build this, I mean our own Dubai, a new centre of economic growth at will attract investors. What are the consequences of failed security, peace and harmony and job creation? Answers to these are what we should be looking for.
We are in recession, together with high inflation and interest rate. Where did the monetary policy get it wrong?
You have to be very careful when blaming monetary policy. What has happened to the country in recent time is that all the problems were loaded on monetary policy alone. It is not possible for it to fix everything. In fact, you need to be Milton Friedman, the ultimate monetarist. It is foolhardy to think that tweaking monetary tools will solve it all because it does not work like that. Where is the fiscal component? There is this argument on the poverty of the nations, but it has become more clear, particularly in Africa, that poverty is the outcome of wrong policy choices by leaders.
Again, you make good policies, but put weak institutions to destroy it. This has put Nigeria in recursive mode. The skills level and investment in human capital is low. Institutions needed to support entrepreneurial drive are not there or ill equipped to help. We have lost our value system, such that people are expected to work little and earn big. Unfortunately, the leadership, which shapes the societal value, is sick and leading wrongly. We must get these variables right before heaping blames on monetary policy tweaks.
The economy is biting harder and there is hunger in the land. Why?
This is the failure of our politics. We need a political class that understands that leading a people is about being visionary and thinking about tomorrow’s problem before they come. The nature of our political culture is such that does not allow for thinking. Besides, the general political class is not the thinking one, even the way they manage their shows that they don’t think. The Chinese are already thinking about how 100 years will be like. Here, they only stumble on issues and don’t care about thought-leadership that can help them. I was drumming it five years ago that we are headed where we are today. This is not because I was smart enough, but any person who remotely has a brain could have been able to predict where we are today earlier.
We deal with a wasting asset- fossil fuel. We deal with the fact it pricing is so volatile and historically, it has been up and down. Because we have coincidental growth in China and India, this upside stayed long before going down and a remarkably unintelligent political class assumed that it is a fortune and went into a stretch of waste that left us here today. It is documented that in the past 15 years I have dwelled on what the economy has been able to save, but it fell on deaf ears.
What is it about the economic restructuring being proposed?
Really it is now a case of how to move forward. The current structure of the economy is “collect oil revenue and spend it”. That has created a consumption economy that produces little or nothing. This is why we are very vulnerable to global shocks and anything that comes from the international system. There must be a concerted effort to rejig the monetary and fiscal frameworks to drive production. First, the dependency on oil and mindset to gather oil revenue and spend, have led to the ballooning of cost of governance and frivolity. The National Assembly should not cost the country what it is currently costing, even the executive arm of government too.
All these recurrent expenditures do not create incentives to people who really want to produce. The second and even more fearful thing is that people who don’t get into the apparatus of government to extract rent, now become obstacle to those who want to produce. Government does more to prevent economic growth than promote it by its policies. Just try doing business in Nigeria as an experiment. 70 per cent of the people who give up in business, do so because of the behaviour of government officials. They will harass and extort you, which is a contrast in other climes, where government would be begging entrepreneurs and asking for what to do to improve their ideas.
Here, before you lay the foundation of the factory, about 10 different agencies have come to tell you what you cannot do unless you give bribe. Unfortunately, we are a point where we have to produce or die. So, government must get out of the way to allow productive activities. How many people can borrow at 28 per cent and invest in long term production and make it profitable? You can juxtapose this with zero interest rate in some countries that are competitors in the same market.
My take is that we must start with the decentralisation of the logic of production and management of economy. Economic restructuring here will also mean political restructuring. This will ensure that sub-national governments will take of productive sectors, as was the case in 1960s. Every part of the country has endowments, but out of laziness, we have all become dependent on oil from one part. These endowments have potential to provide more than oil. Developing these is what diversification means, but it has been read yearly in our budget with nothing to show for nearly 30 years. This is because we have lazy and indolent political elites that do not want to sacrifice for the moment and save for the children.
Are these recently positive growth outlooks realisable?
You see, these excitements about one per cent or whatever growth is meaningless. In a place like Nigeria where 180 millions people with the sense of survival live, growth must actually take place. The calculation or permutation is not a rocked science or a thrill. The question remains the quality of growth and its impact on the people. You can be growing at even 15 per cent yearly, but the people are all miserable and in their lives you don’t see the growth. Is that what you call growth? The concern is not whether we will grow by one per cent, but whether that widow in Mafoluku would be able to feed her children? Until our growth numbers match with the standard of living of the average man, we are not interpreting history properly.
Granted, there is already a slowing down of the pace of the growth decline. But how much should we be growing at given our population? How far can we grow given on poor infrastructure? If we actually get the farmer to produce, where are the roads to evacuate the products? We have to contend with these. It is not a matter of loud talk by members of National Assembly who don’t understand what they are talking about, but a passion to redeem the future of our children.
I keep saying it, the culture of the political class, dominated by a class of 1966, with a mindset of state capture, has infiltrated the system so much. These mindsets are sharp contrasts to that of Suharto of Indonesia, who although corrupt, gathered a group of bright minds to build what is now the opposite of Nigeria.
Do you think Nigeria will ever get true patriots?
The challenge is that these bad leaders have cloned those are worse than them before they die. Nigerians need to understand what happened to Nigeria before we can find solutions. Malaysians once used to wish they were like Nigerians, but now the reverse is the case. But the struggle must continue.