Former Governor of the Central Bank of Nigeria and former Emir of Kano, Muhammad Sanusi II, in an interview on AriseTV spoke on current economic issues in the country as well as his activities in promoting the Sustainable Development Goals in area of providing qualitative education to the less privileged, especially the girl child. Dike Onwuamaeze and Nume Ekeghe bring the excerpts:
You have been involved in some human development activities especially promoting the education of the girl child. When did you have the desire to venture into this area and your source of conviction from?
We all need to understand that as human beings we are part of the wider society and our happiness, success and prosperity will count for nothing if we do not ensure that the vast majority of those around us share in our prosperity and success. Many societies that have achieved peace and stability have done that by lifting up those in the bottom of the pyramid. I grew up in an environment where my parents thought me that leadership is first and foremost serving people. Religiously there is this conviction that if you placed in leadership your worship of God in that position is to bring happiness to the people. So, it is not so much about showing piety and going to the Mosque, if you are in leadership it is all about showing gratitude to God by helping the less privileged.
For me it is always about how do I express thanks for the privileges I have had in my life by the family I was born into and the opportunities that I have had? About how do I express thanks by trying to give others that opportunity? I always tell my children, and I hope that they will grow up with that sense of values. I remind my daughters that for each of them that have gotten University degrees there are thousands of northern Nigerian girls that have not completed primary and secondary educations, who are in forced marriages, who are living in abject poverty. And for me if your education is something that only gives you a meal ticket then it is a wasted investment. I need you to think about how each and every one of you can help those that have nothing and how you can create opportunities for them and to alleviate their circumstance. How you can create a society that makes it possible for people who are not born into privilege to have access to opportunities to rise out of the conditions that they find themselves.
Let us into your activities to improve the girl child and your one million teacher's project?
I come from the perspective that if we are to look for one single silver bullet that has the greatest potential impacts on development it is educating the girl child. It reduces infant and maternal mortalities. It improves nutrition in the children, because with their education they are better enabled to give them good nutrition. It reduces poverty because they are not just figures on the dependency ratio but gives them opportunity to earn a living and stand on their own feet. It breaks the intra-generational cycle of illiteracy and poverty. It reduces fertility rate and therefore reduces the fast rate of population growth, which has contributed to a lot of the social problems we have. If you take northern Nigeria for example, with average fertility rate of eight or nine for girls that did not complete secondary school education to four for girls that completed secondary school. One of the reasons we continue to have poverty is that the rate of growth in the population out paces the rate of growth in the GDP. This is part of what drives me to focus on the SDG 5 and to fight on educating the girl child and empowering all women and children. With 1 Million Teachers, what we are trying to doing is to focus on improving the quality of teachers, which is the foundation for improving the quality of education. And we are fortunate to have the collaboration of the Queens University in Canada that have started online training programme for teachers. My interest is to provide qualitative education to the under privileged children. It is all over Africa... to launch this programme which is the SDG Challenge, which aims at providing equitable fair qualitative education to the under privileged with special emphasis on girls.
How will the 1 Million Teachers initiative be implemented?
The first thing is to understand that for long we have tried on bring ideas on education from the top while teachers who live in the communities might probably have the best idea on how we can improve education. So we want to empower the teachers. We are going to have a programme that will challenge teachers from all over Africa to come up with ideas on how education can be delivered cheaply, qualitatively and equitably to the less privileged, especially rural girls. These entries are going to be assessed by a team from the Queens University and we are going to select winners and once they are selected we will work with them to refine these ideas in things like stakeholders' engagement and project management and so on. Then, I hope to raise an endowment fund by inviting my friends to help fund these initiatives to deliver education to the powerless.
What are you doing to make it sustainable?
The endowment fund I think is the key and a sign that this is not going to be a one off. The endowment fund would be run by board of advisers with the one million teachers as the implementing partners. This will basically takes it away from me. I will attract funding and the 1 Million Teachers will be implementing and besides, we have a number of individuals and organisations who are concerned about education and girl child education. And this is one way of pulling resources together from these organisations and with competent partnership with universities like the Queen's to make sure that ideas that are tested are given the impetus. I think once we succeed, hopefully we will start this thing by October and in September we the closing dinner and launch the endowment fund and hopefully when people see the impact of this it will take off on a life of its own.
How are you seeing the effects of COVID-19 and the new normal it has brought?
One of the best ways to really understand economics is to transcend the numbers and look at human beings. Let me give you a simple example: Think of the Nigerian economy as one with $250 billion. One per cent of it is $2.5 billion then multiply that by the exchange rate. And divide that by say a minimum wage of say N30, 000, you will have about five to 10 million people that have been wiped out at the bottom of the pyramid.
For every one per cent drop in the GDP, that is $2.5 billion worth of goods and services taken out from income. That income could be profit. It could be rent. It could be wages. In Nigeria it is wages most likely. So, you can easily see how many more people have been thrown into extreme poverty with this six per cent drop in GDP. When you people talk that inflation and people say that it has increased by 200 basis points. When you look at the consumer price composite index and its breakdown and find out that the price of garri has gone up by 50 per cent.
Then think about the millions of people who buy garri who are no longer able to afford garri. What does that mean for them as citizens, for their families because that could very well be the difference between a law abiding poor but contented neighbor and a criminal? So when you hear in a poor country that the GDP has dropped by six per cent, know that it is massive. You and I may not feel that impact as much but those who are going to pay school fees abroad and medical expenses will feel the impact on exchange rate and so on. But in terms of being able to eat and feed your family and educate their children could be the difference between life and death for many people. It is what decides whether the child goes to school or be hawking goes on the street. It is what decides whether the father goes out every morning to his place of work or sits at home doing nothing and has to go into crime in order to feed his family.
The problem of course is that the economy already has pre-existing conditions before the advent of COVID-19. The rate of growth before COVID was just two per cent them compare it with the June 2016 crisis where on the eve that crises growth was between five and seven per cent. So we are already in slow growth mode; we were already spending 60 to 70 per cent of government revenue on debt servicing. We already had multiple exchange rates. We had already spent five to six years paying N1 trillion on fuel subsidies. We didn't have transparency in the NNPC. So were set up precisely not to be able to cope with an unexpected economic crises, which is why the only option for the government is to go and raise more money through borrowing because the revenue and the resources are not there. That is why the recent measures that were announced like the elimination of fuel subsidies, though painful, are the necessary structural adjustments we need to improve the revenue profile of the government.
We now have increased transparency in the NNPC that has remitted almost N2 trillion to the federation accounts, which is much more than the N1.2 trillion spent on subsidy. Just improving the transparency in the oil sector has substantial impact on government revenues. We also need to look at the quality of spending to make sure we direct them to the very bottom of the pyramid. How much are we spending on education, healthcare, nutrition and basic things like clean water, rural roads and access to markets as a nation compared to how much we are spending on beautiful bridges, fantastic airports, and skyscrapers and so on? The whole idea is that development is about those people at the grass root is something we need to be advocating.
What is your view on the school of thought that held that development is freedom?
You know the mistake we make is to see economics in terms of statistics and numbers, which is the worst mistake to make. Let me tell you something from my own experience. Take the banking industry, when I became governor of Central Bank of Nigeria (CBN), I met a number of banks at the verge of collapse. Should I say that these banks have failed and liquidate them and give some insured depositors some small amount? But what people do not see is that in most banks the shareholders have about 10 per cent of the value as its equity while 90 per cent of the money the banks trade with belongs to depositors who put their money in banks believing that that that bank is regulated and their money is safe. Now when a bank collapses nobody thinks of the poor 70 year old grandmother in Makaradi selling akara who has for 20-30 years faithfully maintaining a savings account and keeping money so that her grandchildren will not suffer.
People don't think of the human beings behind the numbers, they will just say the bank has failed. But with that failed bank, millions have died. And nobody knows them because they were just numbers of depositors. How they worked for their money, how they saved it, maybe they had borrowed money from others hoping to pay back from this savings and now their savings have gone and they still have to pay their debts. Now this savings has gone and they still have to pay their children's education and healthcare. The difference between being able to go for treatment when fatally injured or sick might be that the bank has failed and your money is locked up. So, the more we think of who suffers and who benefits from economic outcomes, the more we are able to see what our economic priorities should be. So, one of the key decisions I made was not to allow these banks to fail, which would have been cheaper on the system or do I save the banks and then hold the management and the shareholders responsible.
The shareholders could lose their money because they put the management that mismanaged their money. But I felt that depositors who put their money in the bank believe that I as a central bank was looking at those banks and I had a moral obligation to protect those depositors. So as expensive as that process was, my belief was that no matter what it cost, we should make sure that no depositor will lose one Naira. And that was because we don't know those human beings, what their condition is and what would happen to them if the banks failed. So, we removed the management, we persecuted those we could persecute and blacklisted those that needed blacklisting and also, we then set up an institution that would recapitalise the banks and then imposed on all the banks in Nigeria a levy which would ultimately pay for the bailout over a long term. On exchange rate, we have become a mono-economy as far as forex is concerned where over 90 percent of our forex earnings come from the oil sector and because it is a commodity, the price goes up and down. In addition, we set up the country to suffer.
You first of all fixed the price for petroleum products even though you are not refining your petroleum products. So, if crude oil price goes up, and refined petroleum prices go up internationally, we get the benefit of higher crude oil price but lose it immediately because we have to pay more as subsidy for importing refined petroleum products. We are the only oil producing country that does not see the benefit of rising oil prices. So, the central bank can only give us single exchange rate if the central bank has a steady flow of foreign exchange. Now look at the audited account of the NNPC of 2018, and take the NPDC, which is the production arm of the NNPC. It has over 570 staff and spends over $500 million on general expenses and $900,000 per staff in 2018. NAPIMS has a total annual revenue of N5 trillion and about N1.2 trillion was on general expenses, that is N100 billion a month and over N3 billion daily, and that amount is like 25 percent of total federally collected revenue. The great thing I must commend this government for is that this is the first time NNPC account has been audited and published in almost two decades. It is a good first step and now we need to go and look into those accounts and ask questions and force change, so that more of that money which is just being drained would get to the CBN to increase our foreign reserves and to protect the currency.
What is your view on the impact the COVID-19 pandemic disease on small businesses?
Part of the things we have to do is to be intelligent about how we manage the economy and the manner we manage COVID-19. The reason the SMEs are suffering is because of the shutdown in order to save lives. First of all, Africa as a whole has shown relatively low level of mortality compared to the rest of the world. But what I will like to see is proper scientific research that will tell us why fewer Nigerians are dying of COVID-19? This will help us to isolate the vulnerable and allow the rest to engage in economic activities. So that we will not require this long lockdown measure that hurt livelihood and keep people that live day to day away from working and earning income. Because people you protect from COVID may die of hunger and increased poverty. Let us isolate the demographics that are vulnerable, keep them safe at home so that the rest of us can go out and work. This is what that will help the SMEs to get back quickly.
You cannot keep on giving them loans without allowing them to go out to produce and sell and be able to pay back. Otherwise the CBN's money will become a grant and come back to its balance sheet as non-performing loans that wipe the capital of the central bank and the Ministry of Finance will recapitalise the bank. We should know that there is no long term solution or alternative to economic activities because you have to actually be producing goods and services. We can have temporary measures of CBN financing government palliatives because the government has nothing left after spending 99 percent of its revenue on debt servicing. Even the Economic Sustainability plan is just one per cent of the GDP while other countries have three to six per cent of their GDP because we do not have the money. And the only way the government will have money is if oil prices go up or if it borrows or taxes. But the government cannot at this time start increasing taxes on people when they are suffering. Imaging us going to the private sector for payroll taxes when inflation is growing.
If the government is running a huge deficit that deficit is a surplus somewhere. Now we know that the current and capital account is in deficit. So the surplus is on households and businesses. The only way you can deal with those deficits without borrowing is to go for the surplus on households and businesses. The government can retrench workers. It takes income from households and reduces government deficit. But, how many families has it thrown to poverty? Or the government can impose taxes on the private sector but again how many people will suffer. Are we ready for that at the moment? So let us have the structural changes that can attract investments. All we need is foreign and local investments in productive sectors.
What are the lessons you took from the financial crisis of 2007 to 2009, when you were the CBN Governor?
When I was approached in February 2009 that I was being considered as one of the possible candidates for the governor of the CBN, I had to prepare myself in case I was called upon to take on that role. It was a frightening moment. The entire world was in a crisis and if you take over the role of a central bank governor in the middle of a crisis you have the risk of being the person it will come down crashing on your head and you will go down in history in ignominy as the shortest serving governor and being accused of bringing down the system. I was fortunate to have a friend who works with the British High Commission in Abuja who had done her Ph.D around Asian financial crisis. And she gave me a copy of that Ph.D. There was a sufficient study on Malaysia.
So, even before I got to the CBN I had decided on the key things that I was going to do which was to go in look at these problems honestly without hiding it, take the steps that need to be taken that may be drastic and shocking to many people. Malaysia had three vehicles. One is to put money into the banks so that they will have liquidity and keep the depositors safe. Another had the task of putting capitals into the banks and later sells them after the banks have recovered and make a profit. Another had the task of taking away the nonperforming loans and restructure them and managing the collaterals and so on. What we did with AMCON, was to put in all those three functions into one company and this is the first time in the world anybody had done that. But we knew that we needed to do that by giving them life support, we needed to give them life support, capital and take care of toxic assets. The legislative process in Nigeria is that if we had tried to pass three laws, the banks would the banks would have died long before then. So, we went through a process of creating one body. And my thought to them was that after I left, the next governor or the governor after him might at some point begin to unpack AMCON into three separate entities where you have the toxic assets managed by somebody, have capital assets managed by somebody else and have the collateral that has been gathered by AMCON managed by somebody else.
So, you can have two companies that could potentially be floated on the stock exchange for the central bank to recover some of its money and then the government gets out. So, you would have like a sunset clause that after a while AMCON would no longer exist as it is. One of the greatest challenges we had was that there we these big holes in the bank and how did these big holes emerge. One we had banking consolidation where the CBN required the banks to have N25 billion. Some of these banks decided to set up Special Purpose Vehicles (SPVs), lent monies to the SPVs and then the SPV turned around and bought shares in the bank. Now because the money funding the shares came from the banks, all they had done was transfer money from liabilities into capital.
So, we had a bank for example that listed its stocks at N22 at one point and it owned 25 percent of itself. By the time the stock market crashed because you will bear in mind that the NSE has strong correlation to oil prices. By the time the oil price crashed the stock market crashed also. When oil price crashed and money flew out the markets and share prices of these bank crashed, it was not the shareholders who suffered but the depositors whose money had been taken to buy the shares of the banks. It was that breach of trust where someone had given you money to do normal banking business but you used his money to make him an unwitting shareholder in your bank. The second major problem was that you then had banks that were tightly controlled by individuals or families where depositors' funds had been used to create all sorts of loans that were never paid back.
Lastly, are you preparing for politics?
People have been talking to me about politics even when I was at the CBN in 2011, that they wanted me to be the presidential candidate. I have never had an interest in partisan politics. The nature of my family is that we consider ourselves as leaders of all people and politics can be very divisive. You can join one political party and then alienate yourself from others. All I can say is that this is not something that for me is an objective. I think there are many ways of being of service to the nation. If you look at my CV, I started off as an academic. I was teaching economics at Ahmadu Bello University and after just two years before I could complete my Master's thesis I decided to go into banking for just no reason. And I have made a success of my career as a banker, as a regulator and as an Emir. Maybe it is time to publish some collections of my articles that have no relationship with economics at all. They are about Sharia, identity, etc. I had written some of them between 1999 and 2005. It may come out in a few months. Then the book on central banking will come out.
I also will like to write a book on the impact of certain interpretations of Moslem family laws on the development of Nigeria. It will deal on the interpretation of the law and certain cultural practices around child marriage, child rights and how they have contributed to poverty and underdevelopment in Northern Nigeria. And in the process I am thinking that maybe I could get a Ph.D and maybe go back to my first career that I never concluded and just be a professor in different universities abroad. And the great thing with the life I have led is that if I complete that Ph.D, how many universities would have someone with a PhD who has been a bank CEO, Governor of Central bank and Emir.
So, it is a kind of CV that would give you any university in the world, whether it is Harvard, Oxford or Cambridge and anywhere you want because it is now about my entire life experience. I am going to take life as it goes. I am in no hurry. I have enough on my plate and I see my life as life of service and I don't think that public service is limited to elected office. Any opportunity I have to serve, I would take it if it is something I think I am capable of delivering. I have no immediate plans to go into politics.