The Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi said Wednesday that it had become impossible for the country to develop under the current constitution unless it is amended.
Speaking during the financial regulators' forum on "Deregulation, Regulation, Cost of Financial Services and Financial Inclusion" at the 18th Nigerian Economic Summit (NES), Sanusi said the present political structure was a drain on national resources.
The CBN governor also blamed high interest rates on the cost of corruption and leakages in the system, adding, however, that the current cost of borrowing was not responsible for the lack of credit to farmers.
Sanusi, while buttressing his earlier position on the need to address the cost of governance said: "The problems with some of these statements are that, first of all, they can be sensationalised but it doesn't make them any less painful.
"Salaries and wages are paid not just to civil servants... This is a country where we have 774 local governments, in each council you have a chairman and a vice chairman and maybe ten councillors plus their aides.
"Take for instance, Kano. Kano used to be one state but now it's Kano and Jigawa. When it was one state, you had one governor and maybe ten commissioners. The two states have become two governors, two deputy governors, forty commissioners; may be 80 legislatures and only God knows how many advisers and special advisers."
According to him: "This is not about the NLC (Nigeria Labour Congress), TUC (Trade Union Congress) or the President or the National Assembly. It is about us as a country, deciding whether this constitution, which we have chosen, makes sense.
"The constitution says there must be a minister from every state of the federation, but let me ask you, as intelligent and educated human beings, what is the connection between the number of ministries at the federal level and the number of states?
"So, if you have 50 states today, you must have 50 ministries? If you have 100 states, you must have 100 ministries?"
Continuing, he said: "Now the South-east says they want one state, so if you create one state in the South-east you would have one more minister or create a ministry for him even if you don't need it because you have created a state, the Federal Government must have a minister from that state?
"Let's be realistic, between 1999 and now, how many hundreds of ministers have we had? I am sure we've had no less than 200 ministers... But because they are so many and their jobs are so poorly defined and you cannot remember what they did, because you remember a man when you remember what he did."
The CBN governor stressed that the country cannot develop if it continues to spend so much of its resources on personnel.
"Why does government exist? Government exists to serve the people. Now, if the government is spending 70 per cent of the nation's revenue on itself, and leaving 30 per cent for the people, is that a sensible situation?
"So if you sack the governor of the central bank, does the situation become more sensible? Does it change? It is not the solution. The solution is to face this reality. So now that we are amending the constitution, let us amend all these things.
"For instance, why do we need 500 legislators? And let's ask ourselves why is it that no African country has adopted this political structure? Only Nigeria, not even South Africa."
However, commenting on calls to lower interest rates and make credit available to the real sector, particular farmers, Sanusi said there was no practical evidence that credit would become available to the real sector if interest rates were lowered.
He said: "I have heard things like the reason why farmers are not borrowing is because of current tight monetary policy and I have asked that when the interest rate was 7 per cent a few years ago, how much money went to farmers? How much money went to SMEs?"
He said: "If you ask any manufacturer, what he would say is he hasn't got power, infrastructure and he does not have skilled workers because they've not been given proper technical education.
"He also hasn't got access to markets. Now, those rank much higher, and in fact, the reason he does not get finance is because he doesn't have those things.
"Let's not exaggerate this transmission or the potential of lower interest rate to increased Gross Domestic Product (GDP), as 42 per cent of Nigerian GDP comes from agriculture. So if agriculture slows down, GDP slows down.
"But then again, the sector has never been credit intensive. We are trying to get credit into agriculture and if we get credit into agriculture plus other things that Akin Adesina (Minister of Agriculture and Rural Development) is doing in terms of irrigation, improved productivity and so on, we would get GDP growth."
Sanusi also recalled that a lot of the credit, before 2009, went to stockbroker but wondered how much contribution they made to GDP. "What they do is to create a lot of personal wealth when asset prices go up," he said.
He placed the blame on high interest rates in the banking system on corruption and leakages in the system.
Also speaking at the economic summit, the Director General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh said managing the issues bordering on moral hazard had become critical following the recent bailout for stockbrokers.
On some of the grievances expressed by some capital market operators who felt they had clean slates before the forbearance granted to 84 other brokers, Sanusi said the market must draw a line and move on after the crisis.
He said only those involved in criminal share transactions should be investigated because the crash of the market was beyond anybody's fault.
He said the limit of their losses should be restricted to the margin they lost, stressing that there were no rules on margin lending before the crash.
He added that now that there are stricter controls for the market, a line must be drawn and all participants should move on.