Iwayemi: Paris Club refunds should not be spent on salaries, pensions

Prof Akin Iwayemi former head of Department of Economics, University of Ibadan (UI), told MUYIWA ADEYEMI that government should use the Paris refund monies for infrastructure.

As an Economist, are you satisfied with the way both Federal and State governments are utilising the refunds from the Paris Club?
This is my opinion. I believe that the refund was as a result of debt forgiveness Nigeria got from the Paris Club during the regime of former President Olusegun Obasanjo.

That money, I strongly believe should be used for something else apart from consumption, I mean, things that will improve the life of young people. But talking of using the refund for salaries, that means you are consuming it and you will not see the impact.

But I expect that it should be used for something productive that will take many jobless youths out of street. We have many youths roaming the streets after graduation and this spread across all the states in the federation. They needed to be empowered. We need empowerment programmes that will encourage entrepreneurship and this will leverage on the country and help them to be job creators, employ people instead of looking for job that is no where or roaming the streets.

So, I will rather prefer government use such fund to invest in the future of young people for a better tomorrow. I totally disagree with the way the fund is being used and the emphasis on consumption. All the states are in trouble because they have employed more people than they can cater for and they did not want to reduce the size of their workforce because of the political cost. All the state governments and the Federal Government need to downsize to a more efficient public service, which is well trained. Go to the Ministries, by 2pm or 3pm, you see them doing practically nothing, loitering around, it is only those at the top you see busy, but those at the lower cadre have nothing to do. States cannot continue to borrow money to pay salaries. They can also give some of these workers accelerated retirement and encourage them to go into farming, Small and Medium Scale Enterprises (SMEs).

Besides, I expect government to use this refund to develop infrastructure, many roads in the local communities are impassable, spending such money on such projects will have direct impact on the citizens, rather than consuming it on salaries and pensions, which will be spent within the capital cities. We need to do projects that will impact on the lives of the people in the rural and urban areas. My view is that we are not putting the refund into a better use that will have positive and long impact on the lives of the people.

So, you are not in support of the Federal Government’s order to states that certain percentage must go for salaries and pensions?
I am not in support of it because it is consumption and you won’t see anything you have done with it. But I think they have to think deeply to proffer fundamental solution and stop this firefight approach to solving serious economic problems that will not bring lasting solution. We have to consider this issue of fiscal deficit and deal with it, so that we can have resources for infrastructure. In this country we also shy away from tackling fundamental problems. but spend much time and resources on ephemeral issues. And one of the major problems again is lack of accountability, and this affects all the tiers and level of government.

With this refund, some have argued there ought to be enough dollars in the economy, to bring down the exchange rate, what is your take on this?
The issue of foreign exchange and what determines it is another ball game. To me, the way it has been managed is sub-optimal and the truth is that we are leaving the substance and chasing the shadow. We thank God that the value of Naira has gone up a little bit, but the issue is if that can we sustain the current system. Everything about development is about sustainability. We have to engage some polices that will help the economy to grow. You don’t bring all these shocks into the system, because our reserve has gone up, then pump dollars into the market to crash its price. The fundamental problem is still there. And the question is, are we exporting enough commodities to earn the dollar and sustain what we have.

Apart from oil, what are the other things that we export? We have some countries that import a lot of things, but they add value to such imports and export them to get more. The issue, is how did you use the import to improve the goods and services and return them to the international market. You can ask yourself why can’t Nigerian products be competitive in the West African market? Why can’t our refined petroleum meet the needs of other African countries? So, these are fundamental issues about our economy. The issue is that our economy is not competitive, it is being protected, yes, there is need to protect our industries, but there must be carrot and stick approach to it. Maybe, two or three years, we give you this leeway to deliver and if you do not deliver, we take off the protection.

There are certain structural issues we need to deal with across board to make the Nigerian economy to be number one and be sustained as number one. It is not enough to be number one, but we must sustain that leading position for years. And this is possible when you don’t allow few people to hijack the whole process and monopolise the system. You must have a level playing field for the economic players, those who know how to do things will be able to do it properly.