Nigeria needs effective national policies on power, agric – Ogunbiyi
The Chairman, Mutual Benefits Assurance Plc, Dr Akin Ogunbiyi, in this interview with NIKE POPOOLA, speaks on how to solve major economic challenges in the country
Nigeria’s economy exited recession faster than was expected by many experts. Does the current reality show that the country is really out of recession?
We have to go by the statistics that were published. They said we are out of recession, and they have statistics to back it up. Yes, we are out of recession, but I think we have been really blessed when it comes to COVID-19, its impact and its implications, especially on the economy of our country.
In fact, last year, when COVID-19 was ravaging every economy, when all the economies of the world closed down, I can virtually say that Nigeria still managed, except when government forced us to stay indoors. It is like COVID-19 is not existing in Nigeria.
Yes, we had few individuals who died of COVID-19, and if you look at it, you will find out that they had one underlining sickness or the other. So, I will say, by and large, Nigeria has been very lucky; we have actually operated as if there was no COVID-19 except for the time that we were forced to lock down.
So, statistically, they said we are out of recession; I want to believe we are out of it.
Despite exiting recession, the government’s appetite for borrowing has been on the increase. The government has been using a substantial part of its revenue to service debts. is this something to worry about?
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. It is a major 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. Why are we borrowing?
Borrowing, itself, is not a bad thing. The price of oil is good now. What is our oil reserves, our external reserves? Look at what dollar is to naira. You don’t even find dollar to buy. 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 a time to live within our means.
The states are heavily reliant on federal allocation and can hardly do anything because of low internally generated revenue. is this appropriate?
Our state governors don’t get anything doing. How much is their internally generated revenue? And about 70 per cent, 80 per cent of the money they collect from federation account is used for the payment of civil servants’ salaries. How can you develop? 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 the regional governments, they competed in terms of food production - cotton in the North, cocoa in the South West, 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. They need to look at things physically - look at agriculture, industrialisation, even look at what people are using to make money. Things that will make them independent.
When you create avenues for people to be entrepreneurs, to generate their own business, there is tax implication. But an environment that makes it easy for people to start business, when they start a business, don’t be in a hurry to make money before they start. Get them to start it and support it. When you support it and it starts to grow, then you can now start to tax it. 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 owe about N 33tn; our external reserves 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 a specific project 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 that are 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 incomegenerating agencies. When they make the money, what do they do with it?
Forex scarcity is still a challenge. Can unification of the exchange rates help the situation?
If you have something that is so scarce, why don’t you have a single conversion rate? They sell money to Bureau de Change operators at a different rate; you sell to importer at a different rate. When the Federal Government has something to do, they know how to go and take money at another rate from the central bank. All these things are corruption. Let us have single exchange rate. Something that is so scare, why will you give people the opportunity to choose their exchange rates?
The Federal Government has restricted the list of things that they use forex to fund. Make everything available. The singular reason 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. There will be some sanity. Everybody knows the right thing to do but who are the people running it - running our government. How professional are they? But they find themselves there; so, what can we do?
CBN has come up with several intervention programmes for farmers, but many of the farmers suffer hardship of loan repayment due to herdsmen’s attacks on their farms, among other challenges. What is the way out to boost the agriculture sector?
I agree with you; 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 agric. The question is: 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 say they 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? Do they even put it into production?
Presently, if you can go back to those old days, when you had the farm board, cotton board; let the farmers be sure of what they are going to get from the production of a particular crop. If today, you say you want to produce maize and there is a national policy, maize for this year is going to be sold at this. Don’t give them any money. They will go and produce. For that particular year you are producing maize, maize will flood everywhere. If you have a formula that has worked in the past and you don’t have a better solution, the money they are using to intervene, let them put it down and say, ‘With this money, we have N250m to buy maize this year.’ Let them know, and the farmers will produce massively. Do the same thing for cocoa and others. Instead of intervening, use the money to buy it directly, then coordinate and export. I think that will be better than giving money to people who will come and give excuse. If you produce, you earn money.
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 there 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, how many hectares have you planted? Get agents who will give fertilisers, insecticides - physical things that they can see - and you determine the quantity you give.
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.
according to a recent report by the World Bank, Nigeria led other countries in electricity deficit. Several interventions by the government in the past have not produced constant power; what is the way out?
It is not an individual issue that you just raised. It is still a national issue. It is same Federal Government that will make a pronouncement and issue national policy. To start with, what is the energy policy of the government? What is the energy policy of the four last governments that we have had in this country? I had an interaction with one minister many years back, and we were discussing this same issue, and I said to him, “Why is it difficult to solve energy problem in Nigeria?’ And the man laughed, and he 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. And I said, ‘I agree with you.’
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.