How profligate borrowing, spending landed Nigeria in recession, by Peter Obi
Peter Obi, a two-term governor of Anambra State and former vice presidential candidate of the People’s Democratic Party (PDP) in the 2019 general election, in this monitored interview on a national television, spoke vehemently about the current recession
Government must now do something; they must reduce this poverty; help to create jobs for the youth; reduce our dependence on oil as the only main source of foreign exchange. There are so many things we need to do as quickly as possible
Do you think PDP might be losing dominance in the South East with the defection of Governor Dave Umahi to the APC? This year 2020, two recent UN reports clearly show that Nigeria, one, has surpassed India as the world’s capital of under-five mortality. This is a country of 1.2 billion population. We have surpassed them.
The second report is that Nigeria is now the world’s capital, the highest in drug abuse prevalence 14.5 percent as against the global average of 5.3 percent.
This is notwithstanding that before the Covid-19 situation, we were the world capital of people living in extreme poverty; world’s capital of over 15 million of children out of school; with over 75 percent having not been in school at all, with the worst inequality of 157percent over 157 as well as youth underemployment and unemployment of about 50 percent. So, I think, it will be unfair, and I urge all politicians, leaders across the land to concentrate on discussing issues that concern the declining of this country now. Forget about the issue of defection; 2023 election and everything. Those things should be off the table now because we are in a crisis situation. We have millions of people not knowing where the next meal will come from. That we have come into recession again; I tell you, this particular recession will be worse. The country is becoming fiscally unviable. That is our focus now; not those who are leaving their party and those who are coming in. Our concentration now should be, how do we pull people out of poverty? How do we turn around this economy?
Can you please speak to the development in your party?
No. I want us to concentrate on the economy. Globally today, every nation of the world is concentrating on dealing with the issues that affect them. Look at the G-20 Summit; a club we should have belonged to since if not that we have always concentrated on mundane things that do not concern us. On the issue of politics, when 2023 election comes, all that Nigerians need to do is to reflect on the past and see how they can elect leaders who have track record; proven track records; of delivery, of competence, that have capacity to turn around the country. For now, our concentration is how to deal with this issue. 2016, when we had the first recession you’ll recall that on May 1, 2017, I was on The Platform
and I said we were borrowing a lot and that it’s not sustainable, and the then minister said we were going to spend our way out of the recession. What are we going to do in this second recession now? Every other country is discussing their economy and how to pull their people out of poverty. So, we cannot concentrate on issue of politics.
So, are you saying you are not concerned about how the country is governed?
I am quite concerned, but we will deal with that when election is nearer; when the elections come, because whatever we do now, we are not going to remove anybody from office. 2023 is still a long way. Are you sure the way we are going now we will get there? We had 90 million people under poverty before Covid-19. I can tell you that with Covid-19 that number has escalated. The number of collapsed micro and medium enterprises as a result of the Covid-19 is unimaginable. All over the world-first world; second world – MSMES are collapsing. So, you can imagine what must have happened to them in Nigeria. So, what we should do now is to concentrate on the monetary and fiscal policies to start pulling people out of poverty. Even if you look at the outcome or what happened in the recent protests, you could see that we are heading into a problem. And I want our energy to be concentrated on solving that problem. The politicians, the class where I belong, should do more, seriously, across party lines to be able to arrest the situation before it gets out of hand. For me, it is the discussing how do we put food on people’s table? That is the urgent matter of the moment. Election will come, the way other nations work, they look at people’s records; they look at people’s past; where they are coming from, and then see how they can elect the best. Election is in 2023 and we are having recession in 2020, let’s deal with the recession we have just entered.
You have always spoken against borrowing; give us your view on how Nigeria has borrowed as it relates to the issue of recession?
I am not against borrowing; but I am against borrowing for consumption. If you must borrow, and this is now critical that we must do that, you must borrow for production. The reason why we are in this mess is that the country is borrowing money and throwing at consumption. We must borrow strictly for production. The economy is not productive; that’s why it is not creating jobs; it is not putting food on people’s table. As a businessman, the more you borrow money and invest properly, the more your business grows. Nigeria is borrowing money, the economy is not growing; our GDP is not growing, then there is something wrong. We now have a debt of almost a quarter of our GDP, of about $100 billion (hundred billion dollars).
So, where is investment for $100bn? If you invest one hundred billion properly, I assure you, we won’t be where we are now even if we are because due to Covid-19 pandemic, a lot of nations that have not experienced recession went into recession; it would have been a different thing. It would have been manageable; but I can tell you, the money we borrowed and are still borrowing is not being properly invested; even the little earning we are having we are still not investing properly, that is why we are headed south. I am not against borrowing; borrowing is important, but you must borrow for investment. You must not borrow for consumption. What we do here is that we borrow money and waste it; because of it, you do not see the investment, and there’s nothing to payback; that’s why we are using about 90 percent of our revenue to service debt; because the money you are borrowing is not producing anything. People are making money without production. So, you are using your resources to service debt and because of it you do not have money for investment; to invest in critical areas. I told you about two recent reports that came out this year – the infant mortality is a health issue; Covid-19 is a health issue; look at the drug addiction – a health issue; why do you think we have high level of drug prevalence? It is because we do not have an economy; so, young people that should be in their productive sectors are now doing nothing, they are resorting to drug. They are resorting to crime and all sorts of things. And if you want to deal with this issue, that should be your concentration and it must be genuine. There must be properly articulated implementable and measurable policies. It is not just enough to say you are going to pull 100 million people out of poverty. The question is how?
If you say you are going from Lagos to Ibadan, you must be able to say, this is the route; this is the
vehicle; and people can measure, so they know where you are moving to.
How would you describe the management of resources under the Buhari administration?
I can tell you, it is wasteful. They preach about prudence but I have not seen it. It is not something you preach, it is something you must see. I have been campaigning about cutting of cost of governance. It is something that I know; something that I have practised. The cost of governance in Nigeria is unacceptable anywhere in the world. What is the GDP of Nigeria? The biggest economy in America is California. A
GDP of $1.7trillion; four times Nigeria’s GDP, the governor of California does not use four vehicles as convoy. Followed by New York at $1.5trillion, again, four times Nigeria’s GDP; Governor Andrew Cuomo goes to work by train. I am not saying we should go to work by train but I am just giving you example. The cost of governance here is unacceptable; there’s so much waste.
You have been in government before; in what areas do you think we should be very strategic in cutting the cost of governance?
There are so many areas that you can cut cost of governance. Every state in Nigeria today owns a lodge and office in Abuja. Every state in America doesn’t own a house in Washington. This is the biggest economy; they don’t own a house. The big counties of United Kingdom do not own a house in London. I can go on and on and tell you. I have been a governor; you know what it costs Anambra State to keep a lodge in Abuja; that we pay about one billion naira (N1bn) to buy. I shut it down and rented it out. We had the same thing in Lagos. This is just a state. It is the same thing all over the country with all the states. The cost of governance is very high. Conferences, meeting – people are spending huge amount of money going for conferences abroad. There are so many things that are happening that I cannot describe to you so easily.
Do you blame the recession that Nigeria slipped into now on the Buhari administration?
Who do you blame it on? You blame it on the people who are in charge. You may say that we have Covid-19 situation; we have this and that; yes; I believe that the Covid-19 situation might have escalated things that brought us to this level, but we have not done the right things in the past which would make it now that we have gone into it even more difficult to come out of it because if you borrowed our way out of the last one; now that it is globally, I don’t know where we are going to borrow the money.
But the Covid-19 global recession is a major on-going economic crisis which has caused many countries to go into depression. So, it could be said that it is not