Nasir El-Rufai: Nigeria’s Pension And Northern Nigeria Economy Reforms

CNBC Africa’s Wole Famurewa caught up with Nasir El-Rufai, Governor of Kaduna State on the sidelines of the just concluded World Pension Summit Africa Special on Nigeria’s Pensions reforms, driving growth in Northern Nigeria and the recently released list of ministerial nominees announced by Nigeria’s Senate president.

FAMUREWA: Give us your view of the ongoing reforms in Nigeria’s Pensions sector.
EL-RUFAI: I think it is quite gratifying for many of us that identified this problem- the unfunded pension liabilities back in 2001 and by 2004. We got this legislation passed to enact a contributory pensions system. I’m happy that it has worked, I’m happy that in ten years; PENCOM has grown and have a new law which is a much better version of the Pensions arrangement. The fact that the pensions system has accumulated the equivalent of 25 billion dollars in ten years is very encouraging and we are yet to capture the informal sector and many of the smaller businesses. With our population and demographic characteristics, I think we have a unique opportunity to create a huge pool of funds that can be used for infrastructure, housing and so on. I think that the biggest contribution that PENCOM can make to Nigeria at this point in time is injecting liquidity that is long term and will enable us borrow long term money at very low rates of interest to finance development. As I said earlier, no country can make progress when borrowing rates are 25percent. There is no business that you can conduct and make a return when the rates of borrowing are 25percent and this is the regime we have to deal with unless we do something about it. I have suggested that the banking system finds a solution otherwise the politicians will enforce a political solution of a lower interest regime. I think that injecting the 5million naira that PENCOM has which is growing into the financial system would help lower interest rates and enable organisations and some National governments to access long term funds which in Nigeria of today is completely liken.

FAMUREWA: Tell us a bit more about how you are coming to grips with the challenges in Kaduna State. What are your thoughts on driving economic reforms in your state?
EL-RUFAI: Northern Nigeria is recovering from insurgency and the bulk of employment opportunities in Northern Nigeria are in Agriculture. As Northern Governors, we believe that the future of the north is in developing agriculture and agro-allied industry, we believe that we can feed the Nation, we believe that there is no point for Nigeria to be spending a billion dollars per month importing rice when we have the capacity to produce it- wheat, rice, tomatoes and all the things that we currently import. 60percent of our foreign outflows are for the imports of food and fuel and we believe that Northern Nigeria can be the bed basket of this country and stop that inflow out of the country. In Kaduna state and most of the states in the North, we are collaborating very strongly to create a regime that will remove all the binding constraints that reduce the productivity of our farmers, we are working at ensuring that the 40 percent produce losses that we incur due to poor storage are dealt with, we are working at improving infrastructure so that produce can come to market quickly, we are looking at systems of incentivising farmers, low interest rates, subsidies to ensure that our farmers realise their full potentials. That is one aspect we are focusing on. The other aspect is mining. We have great opportunities in mining all over Nigeria, in Kaduna, we have gold in huge quantities, we have aqua marine and other minerals and we are working with the Federal government to remove the disconnect between licensing for mining at the Federal level and the control of land for mining at the state level, I think once we are able to sort out and get agreement that mining licences and land ownership go together, we will have a boom in the mining sector and we are working on that as well.

FAMUREWA: We have just seen the senate president unveil the list of ministers on the Federal level, how quickly do you think things will get going now that we are beginning to see some clarity in terms of the people that will be driving this economy forward.
EL-RUFAI: The first set of 21 nominees have been unveiled , the president is likely to send the balance of 15 ministers in the next few days or a week, so far, the quality of the people is encouraging, we have a solid cabinet and I think things will begin to move quickly, the president has taken the last two to three months to familiarise himself with the government and what is happening in each ministry so the president is in the best position to task ministers with the appropriate targets to achieve because he has had briefings from the permanent secretaries. I think from the beginning of November will begin to see very rapid movements towards addressing our economic and social problems in Nigeria.