Owoeye: This government needs training on modern economics

Dr. Taiwo Owoeye heads the Department of Economics, Ekiti State University (EKSU) Ado Ekiti. In this interview with MUYIWA ADEYEMI, he spoke on the implication of the inability of the government to have an economic direction, the contradictions in the campaign promises and the global economic realities.

Is there any document that shows the economic direction of this government, if not, are you not concerned?
We are yet to see any document or blueprint of the economic agenda of this government, almost two years in office. And this calls for a serious concern by those who know why there should be a framework or such document to guide all the operators. But the truth is that, this government prepared very well to win the election, but there was no preparation for governance. It is also obvious that they did not have a full grasp of the economic challenges facing the country and how to confront it.

And this is funny; funny in the sense that as at middle of 2014, everybody knew of the southward trend of the prices of oil, declining by the day from 140 or 120 dollar per barrel to about 40 or 60 dollars, that’s a signal for the in-coming government to brace up for the challenges. Oil price moves in cycles and since 1999 when Obasanjo came in, it has been moving up except the recession of 2007 and 2008, after that it began to move up again. We had the cycle again in the 80s when President Shehu Shagari was in the saddle, that was tail end of his administration before Buhari/Tunde Idiagbon took over and met low price regime. So, the cycle came back when President Muhammadu Buhari was campaigning to take over, so what economists were expecting was that he ought to have prepared for it and have a coalition of policies to confront the falling oil price, but sadly, that didn’t happen.

What you have is socialist intention without any sound strategy to finance it. That is why we found ourselves in this situation.  The point I was trying to make, is that there were enough pointers that we were heading for crisis, but instead of confronting it, it was more of noise, propaganda and promises of goodies without strategy of how to finance those campaign promises.

During the regime of President Olusegun Obasanjo there was NEEDS, a document, which the government used to bargain for debt cancellation and the documents also showed economic direction of the country, why is it difficult to have such a document now?
The thing still boils down to the fact that this government has not got economic direction. We all know NEEDS, despite the heavy criticism of Jonathan’s administration we can talk of his transformation agenda and what he did in agricultural sector and others; this government is yet to have anything like that. The only things we hear are still intervention promises of releasing money to stimulate the economy. The budget came late, it was a relatively large budget and 40 per cent of it was going to be financed by borrowing, even the reform programmes that were being implemented by the last administration were jettisoned.

And without any policy framework, the economy, as being experienced now will continue to lack direction. We don’t know where we are going now because there is no compass directing our movement. The whole thing boils down to the idea of Mr President that economy should run itself because of the generation he belongs to. He believes in what economists call ‘Interventionist Tendency’, that is, the government should play a major role in the economy, as against the market forces playing the major role in the economy. That is why when we had the biggest crisis of exchange rate. There was a debate on whether we should float it or we should fix it, even when the monetary authority, CBN said we should let it float, the President in an interview said he grudgingly agreed with them, saying he knows it will not work.

That shows how agencies of government are working at cross-purposes. The first thing is that the fundamental idea of the President, which is obsolete, has been determining the direction of the economy. It is not a new thing, during the first term of President Obasanjo, he appointed people like Mallam Adamu Ciroma as the Minister of Finance, and for a long time the man was sick and was not around, but you cannot compare our economic agenda at that time with when Dr Okonjo Iweala and her team came on board. We had a transition from an interventionist idea to a market oriented economy, and that is what this government has not been able to do. For all the noise about appointing brilliant people who know the dynamics of modern economics, once the President is yet to be convinced on the essence of free market, we may not get to anywhere.

Did you expect much from the Economic Team as presently constituted?
Not at all, it is unthinkable that the economic team of a country will be dominated by lawyers instead of economists. A lot of people will argue that lawyers could be economists, after all the late Chief Obafemi Awolowo was a lawyer, but you also have to look at their backgrounds. Vice President Yemi Osinbajo was Attorney General of Lagos State, he was not the one giving economic direction of Lagos State when he was there, Udo Udoma, who is the Minister of Budget and Planning is also a lawyer, he has sat on the board of so many corporate bodies but that does not actually substitute for a core economic knowledge. The whole idea is that for you to act effectively well at that level, you need the core knowledge, training and exposure with international organisations, and those experiences do not come cheaply.

And with due respect to the Minister of Finance, Mrs Kemi Adeosun, though she was trained as an economist but I don’t think she has enough experience to drive that office effectively well, being a Commissioner of Finance in Ogun State is not enough and her performance in office has not proved me wrong. I always tell my students, there is a wide gap of difference between being a Minister of Finance of a whole federation and being a Commissioner of Finance of a state. The way things are structured; commissioners do the bidding of their governors. If you are a Minister of Finance, that position automatically makes you a member of IMF, World Bank, you must have independent view about how to run the economy.

Are you saying she is not competent for that office?
I am not saying that, what I am saying is that her previous experience or exposure could not give us more than what we are getting from her now, whereas the country is not in short supply of more competent hands that have better understanding of a complex and developing economy like ours. But my concern again is that we have somebody who has been contesting to becoming a President for 12 years and he does not have idea of who and who can constitute his Economic Team. The current Prime Minister of India, Narendra Modi, six months before he was sworn in, everybody in India knew who is going to be his Minister of Finance. I am bothered about the President’s attitude and preparation for office, which reflected on those he appointed as members of his economic team. I am not sure we have Chief Economic Adviser as we speak, if we do and I don’t know him, which will tell you the person is not visible as he should be. We are facing our biggest crisis in 30 years or so, the last time we had this kind of crisis was in 1984 and this should tell us we needed to work harder to get out of this crisis and I doubt if the President is thinking in that direction.

Most of the campaign promises of the President tilted towards socialist tendencies; do you think such can work within the global economy being controlled by IMF, World Bank etc?
Those promises will remain promises and they have staredt explaining to Nigerians why they cannot fulfill those promises. Because the party just told Nigerians what they wanted to hear and Nigerians did not ask where and how they will finance those promises. Most of these promises are intervention programmes, cash transfer, subsidy here and there. But like former World Bank Vice President has said in her intervention, Mrs Oby Ezekwesili urged the President to change direction from this obsolete economic thinking. Yes, many people will be quick to criticize World Bank and IMF, I do agree they have their shortcomings but none of the developed countries got to where they are now without listening to them. All the emerging markets have borrowed a lot from them in reforming their market, in reforming their stock exchange, privatising public utilities; we cannot run away from that. And if the whole world is moving in a new direction, we cannot move in another direction. You cannot solve economic problem of 2016 with solutions of the early 80s. Things are changing everyday. It is not going to work. The government is working in opposite direction from where the economy should go. When the President was promising many social and welfare packages, the economists wondered where the money will come from, to implement all those things and when former CBN Governor, Charles Soludo warned against Interventionists ideas, he was called names and his candid opinion was given political colouration. The socialist economics tendencies, which we call statis tendency, of this government should be reviewed.

And it is possible, Obasanjo brought in those brilliant women then and they gave a robust economy. As Ezekwesili rightly said, Nigerian economy grew at 6 per cent consistently for more than ten years, it did not happen because oil price increased, it happened because there was a solid micro economic management, done by the government. Yes, the politicians in that government did unthinkable with that success, but this government is not yet on the path of success because of the obsolete idea that government should keep on intervening in the economy.

What is the way out of this economic doldrums?
The first thing is that government must change its economic team. They have to get people who understand the dynamics of modern economics. Fortunately, there are people within the cabinet that have the training and background to show a good direction. Put them at the forefront, I mean reshuffle your cabinet and put round pegs in round holes. Besides, the President, his team and the ruling party must realise that the world has moved, the world is a global village and we have to key in to current economic dynamics. It is very important that we change the narratives, President is fond of de-marketing the country by giving the world impression that Nigerians are corrupt, they are thieves, people now look at Nigerians as criminals and I wonder which country will want to do business with criminals or invest in the country of thieves. You can fight corruption without labelling all your citizens as thieves. But you can only fight corruption by addressing issues that make people to steal and we are yet to see that.

When you open newspapers everyday, what you read is very discouraging. Government must build institutions to fight corruption.

Unfortunately our leaders are illiterates when it comes to taking sound economic decisions and their knowledge of economy is low. Tell Nigerians the real situation of the economy and stop blaming past administrations. Our President needs to be educated on how to run a modern economy.