Government must place value on productivity for economic growth, says Ogunbiyi
The Chairman, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, in this interview with BANKOLE ORIMISAN, speaks on how successive government policies have been discouraging entrepreneurship. He also stresses the need to have a policy that can improve productivity for Nigeria to witness economic prosperity, as without this, the country will always have trade deficits.
Despite the opening of Nigeria’s boarders towards the end of last year, Nigeria has still been recording trade deficits. What is responsible for this?
We are not a productive economy. We live virtually on imports. Very little things that we can produce, such as tissue paper, are imported. We used to have industrial parks around. There was one in Ikeja here. How many industries are still functioning today? Along Oshodi-Badagri road axis, we used to have cotton industries that produced fabrics. How many of them are still there? The source of the problem is lack of productivity. When you don’t produce, what do you have to export? We talk of dollar scarcity. What brings dollar scarcity? Vessels come with tons of goods into this country and leave empty. It is the same with cargo aircraft. This is because there is nothing to export. It calls for a re-think. Nigerians are not lazy. They can produce. Why should everybody depend on only a few companies to produce for everybody? People can be called entrepreneurs in their own rights but there is nothing like that. There is no incentive for anything. It is only the big boys who can get the incentives. They are the ones that have access to foreign exchange. We need to put value on productivity.
So, to answer your question, we will always be in deficit except there is a national policy that addresses productivity. Mention any sector of the economy in America or in Europe that you will not find a Nigerian among the blacks. The knowledge is there, but we do not allow our people to apply the knowledge to generate productivity. Without productivity, we will always have negative balance of trade.
Unemployment rate has remained high amidst worsening security. How can the nation’s unemployment problem be solved?
An idle hand is the devil’s workshop. If unemployment is worse than two, three per cent in America, it is headache. It is a major scoring point for any government in power. It is daily assessment for them. Here, many of those unemployed have gone through university. We produce them en masse. If we take care of this population, we will become productive. Do you know the main productive sector of America is the SMEs; that is where they get money from. There was a young man in my village, he made first class in architecture. Three years after he graduated, he had no job, no hope. His first job ever was as a senior lecturer at a university in the United Kingdom. I gave him scholarship to go and do his masters when I got to know. From there, he did his Ph.D. This is somebody who was wasting away in Nigeria. This is the story of Nigerians. We are brilliant; we are knowledgeable; but majority have nothing to do. We must create the enabling environment for our industries, factories and business entrepreneurs absorb all these people.
The government has been heavily dependent on borrowing to run the country just as most of revenue is used for debt financing. What is the implication of this?
There is nothing bad in borrowing, but when you borrow and there is nothing to show for it, there is no means of paying back other than that one product – oil, it is a problem.
When you borrow, you borrow heavily. Leveraging an economy is not bad, but when you leverage, you leverage to deliver on some things. What are they borrowing against? Is it to do infrastructure? Is it power or is it social infrastructure? But when you just borrow for the sake of borrowing, before you even bring the money, they have shared it. It is unfortunate.
Borrowing itself is not a bad thing. The price of oil is good now. What is our oil reserves or our external reserves? Look at the rate of dollar exchange to naira. We are not a productive economy; we are a rent economy. A rent economy should not be going out to borrow money. When you borrow money, to do what? Look, Lagos-Ibadan Expressway has been there for how many years now? Ten years. It has increased the value of the contract; it has been doubled over and over again. It is unfortunate. We are not supposed to borrow at all. It is a time to do austerity measure. It is time to live within our means.
How can the states reduce their reliance on federal allocation and focus more on internally generated revenue?
Our state governors don’t get to do much. How much is their internally generated revenue? And about 70 per cent, 80 per cent of the money they collect from the federation account is used for payment of civil servants’ salaries. How can you develop like that? Our state governments need to crave for independence. There is no part of this country that is not blessed for agriculture. In those days, when we had regional governments, they competed in terms of food production – cotton in the North, cocoa in the Southwest and coal in the East. These things are still there. Even if you want to borrow, borrow for a specific project. Let the project be viable; borrow money against viable projects so that when the projects are generating cash flow, they will pay back. The states need to think inwards by considering things that will make them independent.
When you create avenues for people to be entrepreneurs, to generate their own business, there is tax implication. And when they start business, don’t be in a hurry to make money from them. Get them to start and support them. Then, you can start to tax them. When you have a sustainable N5, it is better than taking N50 today and the business will not see the light of the day.
I am not against borrowing, but I think the Federal Government needs to watch it. The country owes about N33 trillion; our external reserve today is just over $30bn. They don’t have money to sustain it. I am an entrepreneur; I know the value of money. I know what goes into making that one naira. We are already over-leveraged. But if we must borrow, let us borrow for specific projects and let the people we are borrowing from certify the value of the project so that we know what we are doing.
All the loans that the states have taken, who regulates them? We have different agencies spending money here and there. The agencies are also part of the problem of the Federal Government. They budget heavily for them despite the fact that they are income-generating agencies. When they make the money, what do they do with it?
What is the solution to the Forex scarcity in the country? Can unification of the exchange rate be helpful?
If you have something that is so scarce, why don’t you have a single conversion rate? You sell money to Bureau de Change operators at a different rate and sell to importers at a different rate. And when the Federal Government has something to do, they know how to go and take money at another rate from the Central Bank of Nigeria (CBN). All these things are corruption. Let us have single exchange rate.
The FG has restricted the list of things that they use Forex to fund. Make everything available. The way to solve this problem is to have one single exchange rate so that anywhere you turn to, it is the same rate you get it.
Despite different reforms, the power sector is still challenged, with attendant negative effects on SMEs. How can the sector be revamped?
It is not an individual issue that you just raised. It is still a national issue. To start with, what is the energy policy of the government? What is the energy policy of the last four governments in this country? I had an interaction with one minister many years back on this same issue, and I said to him, ‘Why is it difficult to solve energy problem in Nigeria?’ He laughed and said, ‘Nobody is ready to solve power problem in this country. We are only paying lip service to it.’ I asked how? He said, ‘It is a simple thing. We have individuals, investors across the globe who can solve it without government getting involved. It is just creating an enabling environment.’
Why don’t we segregate Nigeria into six geographical zones, make each zone independent, and call each investor to come and understudy and let them provide power for each region and charge based on their viability. The way the telecoms service was liberalised, let it be done in the power sector too. Let there be a national policy on power from the Federal Government, and let us be sincere with it.
The agriculture sector is grappling with challenges that are worsened by security problems. And in spite of interventions by the CBN, food inflation persists. How can some of these challenges be addressed?
The greatest problem of Nigeria today is insecurity and it doesn’t look like we have a solution tomorrow. It is getting worse. Coming to the issue of intervention, the CBN has come up with various interventions for agriculture but what do we have to show for them? Before you say you want to intervene in a particular area, there has to be a detailed report, a business plan. If farmers are getting loans and are unable to repay, look into it. I am a farmer. I have several hectares of farmland; I have not got a kobo from the government. But people are using insecurity as an excuse. They see any intervention from the government as their share of national cake; that is the unfortunate thing. There is no genuineness in the so-called farmers who claim this intervention. That is why you have all kinds of agric associations everywhere. Go and check it. The real farmers, how much do they get?
Instead of intervening, use the money to buy it directly from farmers, then coordinate and export. I think that will be better than giving money to people who will come and give excuses afterwards.
We have mineral resources that are more valuable than oil. Why don’t we have a national policy on gold, diamond and any raw materials you find in any part of the country? Why is it only oil? All these mineral resources are thy in commercial quantities. What happened to coal? We have leaders who want the easy way out – oil. We should come up with a policy of taking from the farmers directly at an agreed price; it is better than giving them money ahead. And if you want to support farmers, find out how many hectares such have planted? Get agents who will give fertilisers, insecticides – physical things that they can see – and you determine the quantity you give them.
Most of those that collect the money are not involved in agriculture. Let farmers get direct benefits of their labour. The farmers are the poorest while the middlemen are getting richer. The truckload of the produce would have passed five to six layers of middlemen. The middlemen sell for more than 10 times the price they bought. Let us have a national policy so that everything comes in, then you can sell.