·What President must do to salvage economy
Prince Adewole Adebayo, a lawyer and the Social Democratic Party, SDP, presidential flagbearer in the 2023 poll, in this interview, says there won't be light at the end of the tunnel soon if the Federal Government which is advocating for Compressed Natural Gas, CNG, for the citizens, has its vehicles run on petrol. He also bares his mind on the newly appointed ministers, the state of Nigeria's economy and other burning national issues.
Some are of the opinion that some of Tinubu's administration policies are not well thought out, there are counter-measures to manage the situation though. What's your take on this government so far?
I don't think their focus at the moment is about the economy but how to settle down and be a government. They have made two policies. The first is that they affirmed the policy of the Muhammadu Buhari administration and the All Progressives Congress, APC, that they would remove subsidies from petrol, which they have done, and the attendant inflation has come in.
Secondly, they harmonised the foreign exchange market. But in terms of focusing on the economy, they have not.
But the two policies bear so much on the economy
They bear on the economy with respect to public finance, inflation and foreign exchange stability. But they haven't really shown seriousness to focus on the economy. For example, during the ministerial clearance at the senate, none of the ministers, including the minister-designate for finance and economy planning, committed to any macro-economy target.
There is no policy pronouncement where they say that by this time next year, we push employment up and unemployment down.
How concerned are you about the intervention of this programme of the Federal Government given that the subsidy was removed three months ago?
Everything is off not just the timing. What are we discussing here? Is it governance, poverty, alleviation or how to handle industrial disputes or fall out of removal of subsidy? This is an endless discussion. I hope this is not how they are going to be for the next four years. On whose behalf is labour talking?
Is it talking on behalf of its members, NLC and TUC or it is talking on behalf of 133 million Nigerians who are in extreme poverty for whom there is a governor elected to represent them so the governor should represent them in their states or you are talking of the 774 local government areas chairmen across the country or you are talking about the councillors who live with the poor? What I see here is just bickering where policies are not clear.
There is no white paper, just mere announcements. I don't think this is how to run a government in this era. We didn't even run the government like this in 1953. I think what the government should do is articulate its programmes for poverty alleviation. Let them present a white paper and set a target so that we can monitor that.
There are three ways they can handle the impact of subsidy. They can provide alternatives, which is the Compressed Natural Gas, CNG, they are talking about . If they can focus on that, you can get one million conversions in one year. If that is what you want to do, you come out and focus on it.
Again, the first example one would notice is that has the government itself converted its own vehicles to CNG? If the government vehicles are still running on petrol and want the people to be on CNG, then there is a problem.
I don't want to be an arbiter between the government and labour because both of them agreed during the campaign that they are going to remove subsidy. Ask labour what their plan is. Do they have a blueprint that can be presented to the government apart from increasing minimum wage?
The government says the palliatives, particularly the N5 billion, is a loan. Do you think the money is encouraging enough, especially as the governors know that they have to repay the loan?
It is their method. Each time we try to intervene in a problem, we don't go back to method used successfully in the past. During the Shagari government when we had problems with collapse of our currency and our foreign earning, there was an agency set up by Shehu Shagari. What they did was to create a system, though they criticised it at that time, the system ensured prices of essential goods fell generally.
This idea of handout where you give one mudu of rice is not sustainable. What the government needs to do is to create a certain fund and go out and deal with how to bring the prices down.
It appears we are returning to the Jonathan era Where Ngozi Okonjo- Iweala was the minister of finance and coordinating minister of the economy.
All these decorative ministries don't move a needle for me. Ideally, the coordinating minister of the economy is the president assisted by the vice president, who is the chairman of the National Economic Council. All these naming ceremonies don't matter in economics. What matters is that there are policy choices, and there are alternatives we have to make that have consequences. I am not bothered about how you titled yourself. When Okonjo-Iweala was Finance Minister, she performed better than when she was called coordinating minister.
The government is already on a kinetic train.
If you are a minister, being sworn in is like a player brought onto the pitch when the game is already on. You only need a few seconds to gather the wits around you and know exactly what role you are coming to play. The numbers are already out there, so they can't say we don't know what is going on. The legacy policy they inherited and are adopting and the pronouncement the president has made on his own since he came in have already caused some dynamics on the streets on what they want to do.
So they need to make up their mind. Do you want to float the naira? In that case, you don't need a cap. Stop worrying about the cap. Do you want to leave that to the CBN to manage, and you agree with the CBN on broad outlines? Do you want to forget about the regime of subsidy, and if that is the case, then you need to forget about having a cap for the pricing.
Our reserves are on a single digit though, the CBN has resorted to threatening the speculators. What do you suggest the CBN should do since it does not have the reserves to influence the market?
The first thing you do when you say you are floating your currency is to do an appreciation of your environment.
For example, you say you welcome everybody who wants to trade in the naira and exit the naira in a free way to any currency of their choice since you say you are not regulating the pricing of your currency.
Therefore, the CBN needs to realise that it cannot control the dollar and it doesn't have the power to issue the dollar. When you say you are doing foreign exchange control, what you are saying is that you are controlling the naira, not the dollar.
If you capture the naira in your reserves and you don't want to be releasing it and be pricing it, that is your choice. Soon, they will realise you are stingy with your reserves and go to the autonomous market, which is actually the real market. But if you want to benchmark your own with that and have a uniform one, then the rule of the market would have to be that of the autonomous market that is independent of you.
The only thing you can do now is come in with your reserves and you can only influence the market if you have big reserves. If you look at other countries floating their currencies, you will see that they have a trillion dollars in foreign reserves, they have 500B dollars in foreign reserves. If you have 9.8B in foreign reserves, you need to be careful in floating your currency.
The presidential spokesperson said there won't be an increment in the pump price of petrol saying the government would look into some deficiencies in the system for greater efficiency. Your take.These were the options we offered during the campaign. Recall that during the campaign, the president, then the candidate of the APC, former Vice President, Atiku Abubakar of the PDP and Mr Peter Obi of the Labour Party, uniformly, agreed they were going to remove subsidy.
We told them that is not going to solve their problems. What would solve your problem is remove the corruption and your cost will go down. That's water under the bridge now as they have since started the policy. What worries me is the inconsistency because you are not in the business of selling petrol. You cannot be the guarantor of the price if you don't want to put your money into it. If it is deregulated then, you are supposed to take your hands off it and deal with the outcome of it.
What I think they should do is ensure that the impact of the deregulation does not fall on the people to end this ding-dong tussle between the government and the labour over industrial tension on price commodity, which neither the government nor the labour produce. Neither of you imports the product.
The government has realised they have taken a wrong economic position but they are not going to change it because it looks to me as an ideological position which they have taken in conjunction with some international concerns and private businesses. They try to create a market that is conducive to exploitation.
Since it is done with the mandate of the electorate, I can't fight them. It is good for the people to see the effects of the policy they endorsed so that next time, when we are campaigning, they will pay serious attention to where the mouths of these politicians are moving.
What do you expect the government to do with the issue of floating the currency as we are seeing reversal as it were of the deregulation policy? Shouldn't there be more efforts to manage foreign exchange?
Every country manages its reserves according to its macroeconomic targets. Foreign exchange management itself is not the deal but a tool. These monetary tools are not achievements in their own right. They are the direction of where you want your productivity to go.
For example, China is doing the opposite of what we are doing. China wants its currency to devalue. It has official reserve of about 3 trillion dollars. But when you look at it very well, its reserves are over 7 trillion dollars. Singapore won't tell you what their reserves are.
The NNPCL got a loan of 3b dollars from Afrexim Bank, is that act out of desperation or would it help to pull us out of the woods in terms of foreign exchange?
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No, it's a routine exercise, it is not worth reporting because the CBN knows its future earnings as the NNPCL is an asset of the government. It might be it's the CBN that is taking the money but using the leverage of the NNPCL. It's a routine of Central Banks across the world when they are in trouble.
Turkey just took 50b dollars quietly to shore up the lira. So, the borrowed 3b dollars won't have any effect on the foreign exchange because it is so small in the scheme of things.
It is just a matter of the government putting the right economic team in place who knows the international market and who can communicate long-term policies to the Nigerian people so that the government doesn't blackmail itself into reacting to short-term issues. The problems the government find itself in cannot be corrected until the 2nd to 3rd quarter of 2024.
One action the government isn't taking to take us out of the woods is the cost of governance, as seen in bigger cabinet, aides...
We have to look at the average cost of a minister and government and the value the minister brings into the government. Theoretically, it is good to cut down the cost of government, but in the case of Nigeria, what you need to cut down is corruption. Even if you have 37 ministers, what happens to you when they become contractors themselves and siphon government money or if you have National Assembly members forming companies and going to these NDDCs and MDAs, they are supervising and padding the budget?
Talking about the cost of governance, since the Orosanya Report came out, we may have added more than 100 agencies and parastatals to the big burden...
That is what I called establishment cost, which I have now upgraded to the establishment curse. It's a mistake we make all the time. When they discovered there is malaria in a particular River Basin Authority somewhere and they want to tackle that malaria, they create Malaria Control Agency instead of creating a unit within that River Basin Authority to do that temporary project and move on.
They create these offices and have everlasting life. It will be kept in the office of the Secretary to the Government of the Federation, SGFand anytime somebody fails an election somewhere or drop from the ministerial list, you go and put them in these agencies and the agencies start creating their own establishment, the DG, CEO and other directors, then there would pension fund and obligation, then they look for building somewhere and so it continues like that, yet, you don't see the impact of what they are doing. Those are the things they need to cut down.
