Our inflation is in excess of 20%, not 13%

We are a country of importers, not producers Economy to go into depression in 2021 until 2024 CBN shouldn’t be expected to remedy falling foreign reserves and also give value to the naira

I TURNED 60 AUGUST 17 THIS YEAR. It is most unfortunate that when Nigeria turned 60, nobody knew that Nigeria turned 60. A lot of people told me they were not interested in listening to the live broadcast of the president’s speech. Some said they didn’t read it in the papers. That shows that Nigerians are not happy, instead...

The Nigerian economy is largely dominated by crude oil, but which accounts for only about 10 per cent of the country’s gross domestic products (GDP); 70 per cent of government revenue and more than 83 per cent of the country’s total export earnings. With this, a handful of event has befallen Africa’s largest economy over the last five decades since she became an independent nation. Nigeria, still developing while on her 60th missionary journey on earth as a nation with great potentials, human and natural resources, is now faced with the problem of oil; resulting from operating as a mono-economy and over-reliance on imported goods. But what is the Nigerian government, obviously seen as a necessary evil in the current climate, doing to remedy the situation so that we consume what we produce? In this interview, BUSINESS A.M.’s CHARLES ABUEDE met up with OKWUDILI IJEZIE, a chief and the founder and managing director of Okwudili Ijezie & Co, and also I & I Investment Limited, an investment advisory company. Ijezie is a chartered accountant with over 25 years of cognate experience, a one-time chief inspector at All-States Trust Bank as head of internal audit department; the pioneer up-country manager of Zenith Bank, Onitsha, the first branch of the bank established outside of Lagos. He is an elder-statesman, a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and Chartered Institute of Taxation of Nigeria (CITN); management accountant professional bodies, and also an associate of the Chartered Institute of Marketing, and Equipment Leasing Association of Nigeria, etc.

Thank you for the opportunity to have this interview with Business A.M. What is your assessment of Nigeria’s current economic landscape? And what is you take on the Finance Act of 2019?

ITURNED 60 AUGUST 17 THIS YEAR. It is most unfortunate that when Nigeria turned 60, nobody knew that Nigeria turned 60. A lot of people told me they were not interested in listening to the live broadcast of the president’s speech. Some said they didn’t read it in the papers. That shows that Nigerians are not happy, instead, we are mourning. Nigeria turned 60, fuel price was increased. Electricity tariff was increased, the VAT was increased. It is painful and unfortunate that the president who thought that he was voted into power because there was no subsidy in fuel is now hiking fuel price.

Prior to this time, when GEJ increased fuel price, the opposition held the government down saying the price must be reduced; that the masses are suffering. But this time around, the masses dare not enter the road to complain about increases because the security forces will be after them. So, it’s a piece of the graveyard, I must say, that we are witnessing in Nigeria. Nobody is happy including some of the ministers, but they cannot voice it out.

[It’s] most unfortunate that, when GEJ was in power, Nigeria’s economy was growing at 6 per cent, but when Buhari took over, we have experienced economic recession and we are about experiencing another with the GDP recording – 6.1 per cent. So, it is two recessions under one administration. Earlier, I predicted that the inflation rate will hit 20 per cent by the end of the year 2020. Meanwhile, I’m off the mark as some international agencies have predicted just a few weeks back that Nigeria’s inflation rate is 31.1 per cent. Meanwhile, NBS said inflation is averaged at 12 to 13 per cent. It is a lie. Our inflation rate is in excess of 20 per cent.

Even the president had complained about the rising prices of food. It is unfortunate but expected. In the northeast region, no one farms there because, people are in the IDP camps, and the Boko Haram members will have their day to burn the houses, farms and nobody dares go to the farm. The same story writes for the North West with banditry. You get to the farm, bandits can come to kill or scare one away. So, nobody goes to the farm. No cultivation. In the north-central, the herdsmen have their fame there especially in Plateau, Taraba and Benue; and even Niger states. The herdsmen raid there; they visit people in their farms, rape women and kill farmers there. So, why would you go to the farm? So, the food prices have skyrocketed and there is scarcity.

Nigeria for the first time borrowed grains from neighbouring ECOWAS countries. Imagine, Nigeria, the giant of Africa and not West Africa, borrowing grains from silos. It’s because there is hunger in the country and unfortunately, our land borders were equally closed. So we can’t get foodstuffs from abroad. It is a great pity as the economy is in turmoil. Formally, we will be entering a recession this month because when you have two-quarters of negative output growth, it is a recession and as I have always said, by next year Nigeria will enter depression which we may not come out from until 2024. The word used here is “may not” because what we are doing currently is not an indication that we will come out of recession or depression.

Why construct a railway line to Maradi in Niger when we have the one started by the current minister of works, housing and power, Babatunde Fashola [in Lagos]. AKinwunmi Ambode came into power, nothing was done and now Sanwo-Olu is in power and nothing is being done. Lagos is part of Nigeria despite moving Nigeria’s capital away from Lagos. If the federal government can borrow money from China to build a railway line to Maradi, why can’t they use the money to develop Lagos? Lagos, I understand generates more than 55 per cent of Nigeria’s GDP. So why is Nigeria’s FG not concerned about Lagos to take over the railway or sign an MoU with Lagos State government so that they will take over the project and complete it instead of establishing a university of transport in Daura for political reasons, I guess.

I wonder if there are exigencies that would warrant citing a university of transport there. It should be set up in Lagos so that the louts in the states that can load but cannot hook containers can come there for capacity building by undergoing a diploma degree course that will teach the students the rudiments of transport management. Setting such up in the north might be a white elephant project as there are no traffic congestions like you would find in Lagos. This is synonymous to the alumajuris schools built by Jonathan. It was

understood that those alamajuris did not enroll in those schools and it became an abandoned project. We should not take risks by politicking everything in Nigeria.

Nigeria is faced with the twin shock of Covid-19 and falling oil prices as a result of slowed demand in the commodity, rising inflation, unemployment is on the rise, constriction in the GDP. As a financial expert, can we say Nigeria is in stagflation?

You have just said it, and though, as I have said, the statistician general told us that our inflation rate is between 12 and a half and 13 and a half per cent. That’s a lie and everyone knows it’s a lie. Food prices are high. I told you the VAT was increased by 50 per cent from 5 per cent to 7.5 per cent which became effective February 1 because of the Finance Act of 2019. I complained that the National Assembly should have a second look at it, and no one listened. The National Assembly is now a rubber-stamp legislative body of the executive and they are not hiding it. It is not like the 8th National Assembly like in the days of Saraki. The senate president once said anything that comes from the executive has been thoroughly checked and confirmed. So all they can do is pass it. A lot of problems exist in this country. Some are not caused by the government but their reaction is worrisome.

Before the advent of COVID-19 in Nigeria, we already had our problems and the pandemic has accentuated it because everywhere was on lockdown. Should we have been on lockdown? My answer is NO. What we should have done was to go on an effective nationwide lockdown of our international airports when the first carrier came into the country because COVID is an imported pandemic.

Secondly, climate change, which has gone viral where flood has swept away houses and properties from the north and as they say, will flow into the south probably this month or next month. So, flood everywhere and even the Zamfara rice hectares, you see flood washing them out, that’s another issue entirely.

But the major issue now is the price of crude oil, which is now low; prior to this time, our budget benchmark for crude oil prices was at $57 to a barrel, which came to $20 and then $30 dollars to a barrel and [thus] making the budget a moving budget. This current one for the 2021 fiscal year is $40 to a barrel. But the point is that when the pandemic started and the whole world as it were, closed down, the demand for oil went abysmally low. China that is seen as the world’s factory has no demand for oil as they were not working. When the pandemic extended to Europe, America, and other parts of the world, there was no demand for oil; oil was literally going for $1 but it’s all regaining its grounds now.

But why do we have this problem with oil? We have a problem because we are a mono-economy and our problem got accentuated because of that. Since birth till now, I have been hearing of diversification and politicians come to you that we will diversify the economy, the oil will play a lower role in terms of GDP percentage and foreign exchange earnings. But no government has done anything about it. Oil earnings still account for about 80 to 90 per cent of our foreign exchange earnings. It’s a problem. Nigeria has to know about agricultural practices and focus on it to make earnings also.

Just the recently founded movement called Akuluouno Ndi ‘Igbo Forum, which I founded June 13 this year and registered with the CAC, focuses on the development of southeast with agricultural proceeds. I remembered while growing up, M.I. Okpara was the premier of the Eastern region. The agricultural plantation was the drive for him all over the east; so at the just founded forum, we are doing a similar but more achievable goal than the Green revolution and Operation Feed the Nation of Shehu Shagari and Olusegun Obasanjo.

If we can have a massive-out-of-this-world-agricultural production across all regions, in the next 30 months, instead of borrowing grains from some ECOWAS countries, the government can visit these regions to borrow grains or the regions will export the product for more foreign exchange income. So, my advice to all public officers is to face agriculture; and when we face it, we should not just export the raw materials but also develop the value chain which can create employment. It is so unfortunate that our government from inception said they will mount diversification to increase agriculture but no budget for such. Capital expenditure will not be implemented and they will get moved into recurrent expenditure as salaries and wages and overheads year in year out. It is most unfortunate, but then, the masses, the populace should take it that we do not have a government again to do what should be done.

Poverty should be reduced by involving more people in the agricultural food chain from farm to table as it were. This can help reduce the poverty in the country as we have about 80-90 million Nigerians under the poverty line. The president said he will create employment for 100 million Nigerian in ten years; well, I wonder if he will still be in the office by then. We all need to learn from this COVID-19 and see ways to better the Nigerian economy.

The Labour Union had initially planned indefinite strike action for some reasons including fuel price hike, increase in electricity tariff, amongst others. Do you think the move was ill-timed or just right? What’s your take on the planned industrial action that got called-off on the eve of the strike?

The labour union wanting to embark on any strike was “Audio strike”- wanting something you do not believe in or something you will never do. So, the labour union strike was audio and trying to prove that they are with the masses and proving relevance. The TUC and NLC are irrelevant in Nigeria currently. And it is most unfortunate. Labour that mobilized members for a strike on Monday morning, they got called for a meeting on the eve by the government from which they read a statement the following day that based on government’s offers, they are postponing the strike by weeks. It is a political gimmick.

In the past, labour will finish a meeting and will tell the government that they will have to discuss with their executive council on the outcome before arriving at a concrete decision. Now, we see the government placating only labour whereas labour in Nigeria is less than 5 per cent. The government makes promises to labour to provide housing, buses and others. But if these are in place, what about the electricity? They said the electricity companies have decided to return to the status quo until after two weeks. Our democracy now is not like when Jonathan was around when he would not give a notice to your plight. Perhaps, with all these happenings, they are waiting for the year 2023 before they attack or come out smoking hot again.

By the close of September, the nation’s foreign reserves fell $35.7 billion. Can this amount take care of Nigeria’s import bill for the next 3-6 moths? What can the monetary and fiscal authority do to remedy the issues of depleting reserves?

How do foreign reserves accrete or deplete? It is when you keep importing; which is what Nigeria is currently doing. We keep importing and pay in foreign exchange instead of the naira and it keeps depleting the foreign reserve. Luckily for us, we buy fuel now and our four refineries that are supposed to be producing about 445,000 barrels a day are not producing up to 50 per cent of that. We were told that we utilize fuel in millions. What I am saying is that we import fuel and we pay with our foreign reserves. Hopefully, next year, Dangote refinery will come aboard and we won’t be buying fuel in foreign currency. The crude we’ll be using will be piped from the Niger Delta. It will be refined and sold to us; I wouldn’t expect him to say Nigerians should pay for the petroleum product in foreign currency.

So, it is not in the hands of the CBN to decide how fast the reserves get depleted. Instead, it will be a private sector, Dangote, as he will be selling the product to other countries across the continent and to the Middle East and Europe to earn foreign exchange. It is a two-way thing: one, we won’t expend foreign currency for the refined product; we will be saving what we should have spent. To some extent, that will help us solve some of the problems of foreign exchange in Nigeria.

Secondly, the agricultural revolution we are planning to embark on in Igboland, some people such as Cosmas Maduka of Coscharis Group has started it. He has farmland in

Nnewi, Anambra State which he says it is on 7 miles square where he cultivates rice and has the latest production equipment for a rice mill. So, the rice we were importing that has been depleting our foreign exchange can now be locally supplied by Coscharis. Even the Lagos State partnership of the Kebbi rice is also of very good assistance.

The CBN has the Anchor Borrowers programmes in which money was disbursed to the North-westerners for rice cultivation, and by the time it comes to maturity, we will be the net exporter of rice other than net importer of rice. And when you are exporting, you earn FX but when importing, it depletes. Though, the CBN is tackling it indirectly. The government and some corporate private organisations are also tackling theirs.

There is a need for Nigeria to diversify the economy in a bid to earn more foreign exchange?

In essence, what I am saying is the diversification programme being sung by the government is a way to go to reduce the pressure on foreign exchange which will result in the appreciation of the local currency. The naira today is above N400 in the parallel market; by the time all these come aboard, and the government is serious, the private sector players are serious, the Nigerian naira will regain its value. The naira was at a time, at par with the dollar. This was, until the IMF came, asking for a devaluation of the naira from every government until now when the currency is now like tissue paper.

The solution should be to produce these things instead of importing. Pat Utomi used to be the MD of Volkswagen of Nigeria which produced different lines of vehicles for Nigerian usage. In Anambra State, we used to have AnamCo that produced Mercedes Benz back then; in Kaduna, we used to have PAN that produced Peugeot motors. But now, they have folded up. Now we have Innoson Vehicles which produces at high pressure, yet no patronage from the Nigerian government. It’s a big shame that we shout made in Nigeria but we do not patronize our very own products. We should consume what we produce.

There should be a ministry of traditional culture which will give Nigerians orientation on the need to buy made in Nigeria in a bid to repatriate foreign exchange earnings in Nigeria.

In summary, the attention should not be on CBN to remedy the falling foreign reserves and also give value to the naira but to go to the remote causes of the problem – we are a country of importers and not producers. When we begin to produce, all these will come down.

There should be a ministry of traditional culture which will give Nigerians orientation on the need to buy made in Nigeria in a bid to repatriate foreign exchange earnings in Nigeria