Former Central Bank of Nigeria (CBN) Governor Prof Charles Chukwuma Soludo at the weekend spoke on the economy and sundry issues of national importance including the President Muhammadu Buhari-led administration. In an interview culled from Premium Times, the ex-CBN chief foresees hope and opportunities for the new government.
•I’m not available for public service now, says ex-CBN chief
YOU promised not to keep quiet again and to ask more questions about the running of the economy after elections but you seem to have been very quiet since the elections. Can you now raise the questions?
Great to see you too! And I hope this will be a short interview please. Two quick points: The elections have come and gone but that was the easier part. The hard part now begins. Like most Nigerians, I am happy that Nigeria made history with the election. On your question, No; there was no need to raise further questions for the outgone administration. President Goodluck Jonathan raised the bar and set a new tone in his statesmanlike acceptance of defeat. That was noble. Last month, the government admitted that they were borrowing since January to pay salaries. What more do you want me to say? The two articles I wrote in January and February remain living documents and raised some of the salient questions, some of which may be bold markers for the new government. Our focus should be on the future and the new government.
How is your relationship with Dr.NgoziOkonjo-Iweala now?
Why do you ask? Of course, she is and will always be my dear elder sister and Madam; someone I deeply respect. We may not always agree, especially on public policy. The public spat was unfortunate. She felt she had an obligation to defend her government but she did so in a manner that I also felt an obligation to respond in equal measure. But all that is now history. There is nothing personal. Now without the encumbrances of government and its pressures, I look forward to our returning to the good old days in our personal relationship.
The economy is really bad; falling oil prices, dwindling revenue, debt, inflation, unemployment, collapsed naira, etc. Where does President Muhammadu Buhari start from?
I don’t envy President Buhari and his team. His government will preside over the transition to a post-oil economy, and it won’t be a tea party. If Buhari works eight hours a day, he has less than 7,500 hours left to bring about change in his first term in office or less than 9,700 if he works 12 hours a day, with three substantive annual budgets to go before the next elections. The clock is ticking already. But the Rescue, Stabilise and Transform (RST) Plan requires a 24 x 7 operation. There must be something in the President’s natal chart that keeps bringing him to govern us just when things are in shambles. But I see hope; I see opportunities. The president and his team have a historic opportunity to create a new Nigeria without oil; a Nigeria powered by competition and compassion. Fortuitously, Nigeria’s centenary was last year (2014). This year marks the beginning of the next 100 years. President Buhari and the new crop of elected officers at all levels must lay the foundation for the next Nigeria; a re-engineered Nigeria with the structures and incentives to move from cake-sharing, or consumption, to cake-baking, or production. Old thinking and ways of doing things won’t work. But an attempt to drive change from Abuja will fail. It will be akin to trying to clap with one hand. A coordinated national (not federal) response is required.
On your specific question as to where President Buhari should begin, let me say that I don’t want to join the new industry in town which is ‘agenda setting’. Everyone is grabbing the microphone to ‘set agenda’. That’s ok. I am aware that the transition committee is working hard on an agenda, and I believe that the committee is made up of eminent Nigerians. For me, let us wait for them to unveil their action plan and we would have something to comment upon or contribute to. I am aware that the African Heritage Institution (Afriheritage) is planning a session focused on the agenda after it is announced. So, I won’t join this fashion parade of the day. Not yet.
Let me be more specific. With the terrible condition of the economy, and the high expectations of Nigerians on the new government, what practical steps should Buhari take to create jobs speedily?
I told you I do not want to discuss specifics now. For sure, job creation should be the focus of the new post-oil economy. Nigeria certainly needs a job manifesto, with a target of eight – twelve million jobs over the next four years. This is easier said than done. We are diversifying the economy by-passing the manufacturing/industrial sector to the tertiary sector (services). Creating value-adding jobs in such an economy with one of the highest rates of urbanisation in the world will task our creativity to the limit. The agenda will require a kind of coordination between the federal and state governments in a manner never seen before. Luckily the All Progressives Congress (APC) states are in majority and I hope their party will rein them in. I have read some newspaper reports that solid mineral and agriculture sectors will be the new kids on the block to mint the jobs. That won’t happen! At least not in the manner it is being romanticised about. They would have very limited impacts on job creation over the next four years, and over the long-run agricultural transformation will actually reduce jobs. The prospects of the solid mineral sector will depend on the policy framework and even legislation, the dynamics of commodity prices especially given the apparent end of the commodity super cycle, and the nature of forward and backward integration with the rest of the industrial structure. Anyway, let us wait for government’s agenda before we can comment, please.
In your previous answer you alluded to changing the structures of Nigeria. What should President Buhari do with the report of the recent national conference?
It is up to him to decide what to do with the report. A fundamental point however is that you can’t create the new Nigeria, a post-oil competitive economy without fundamentally altering the existing constitution. The current constitution and the political-governance structures created by it are designed to share and consume the oil rent. A system designed for consumption cannot become efficient for production. Ours is a dysfunctional unitary-federalism, with a queer fiscal federalism and it won’t go too far. The federating units were created by the central government; it also created the local governments. Every month, both the governors and their local government chairmen are supposed to beseech Abuja to collect their allocations, each supposedly with powers to do whatever they like with the allocations. As oil stumbles, the fiscal viability of these creations is coming into question. Suddenly, states and local government areas designed to collect and spend oil money will be required to produce and create wealth to survive. We will see how the old order will give rise to the new without some creative destruction. The problem with the structure is that those who benefit most from it are required to dismantle it— the incentives are incompatible. We need to study the UAE (United Arab Emirates) model of competitive federalism – that created the incentives for Dubai and other prosperous non-oil regions to emerge. I have written a lot on this subject, and we can talk about this the whole day. The point is that the APC cannot deliver sustainable change to Nigeria if it does not go to the roots, and effect systemic change. Tinkering at the margins will amount to papering over a cracked wall.
That reminds me of the ongoing debate about local government autonomy and joint account with the states. Shouldn’t the local governments be autonomous?
Autonomy from who? I know that it makes for our emotional satisfaction to “deal with the state governors” and let the local government areas have ‘autonomy’- but only in the sense of getting their “allocation” directly and unhindered by state governments but with no incentive – sanctions regime that ties such grants to certain productivity and fiscal viability criteria. The mistaken belief is that such autonomy will ensure that resources get to the ‘grassroots’. It is a funny argument which proceeds from the old model of ‘sharing the cake’. We must decide whether we want a federal or a unitary system; not both at the same time. Are the states the federating units or both states and local governments? Funny enough, the same constitution gives the state Assemblies the power to create local governments and maintain oversight over them. At the same time, the constitution lists the local government areas created by the military as the ones to collect “allocations” from the Federation Account. I want to see examples of federal systems in the world where the local governments directly receive statutory allocations from the federal government and with statutory powers to spend as they wish without performance-based criteria attached to such receipts. The mind-set is rooted in the past, but the problems are unfolding in the future.When it comes to incentives and sanctions regime for creating prosperity and accountability, our current constitution is a funny document. It is even worse for effective macroeconomic management.
The contest is on for zoning and sharing of political offices, and there are fears of marginalisation by people from the Southeast and Southsouth because of their poor support for President Buhari and the APC during the elections. How should Buhari assuage the fears of these zones?
You have raised many issues at the same time. First, given the peculiar manner the election was done in the two zones, it is difficult to know exactly how the people voted. There is no question that a majority of people in the two zones preferred Jonathan but we know what happened during the presidential/ National Assembly election. Prof. Attahiru Jega and INEC did a great job but we still have a very long way to go. Second, the Constitution of Nigeria creates an absurdity in the name of federal character whereby a minister must come from every state. So, states in the Southeast and Southsouth must have ministers in the federal cabinet. Third, and more substantively, I believe that the clamour for offices is simply a power game by the elite, which has only a symbolic or emotional significance to the masses. Yes, for some reasons, people like to see someone that shares their interests or attributes in government—it has a ‘feel good’ factor. But if occupation of such office has any personal benefits, it is largely to the occupant of the office and his friends and family.
Our recent history has shown that it hardly matters where the occupant of a particular position comes from. I am not sure how the welfare of Ota/Ogun people changed because Obasanjo was President of Nigeria, or how the man in the street of Katsina or Otuoke/Bayelsa prospered more than others simply because their sons became President. The Southeast voted massively for ‘one of their own’ in 2011 as president, and also had Secretary to the Government of the Federation, Deputy Senate President, Deputy Speaker, Minister of Finance and Coordinating Minister for the Economy and a coterie of other appointments. Yet, the zone had the least capital expenditure in the five-year presidency, and there is hardly any motorable federal highway in the Southeast. For me, this bickering for sharing of positions is an elite game for their personal rather than national considerations. What the ordinary Nigerians want are institutionalised processes to guarantee their security and prosperity. They want services and don’t care who gives it to them. Our federal cabinet is nothing but a miniature United Nations (UN) whereby each minister represents his or her state but no one represents Nigeria. At this critical crisis moment, perhaps what Nigeria needs is something akin to selecting the best 11 for our national football team: no one cares which state or zone they come from; everyone wants Nigeria to come home with the cup.
Talking about positions in the government, there are rumours in town, especially on social media and even in some newspapers that you are being tipped to serve in the cabinet of the current government. Are you likely to serve in the government or am I speaking with the prospective finance minister as speculated?
Nigerians and their rumours! I am glad you said they are rumours and such rumours are normal. For sure, I wish the new government success and for the sake of Nigeria, everyone must contribute to assist President Buhari succeed. I will contribute in whatever way I can. However, everyone can’t sit in government in order to serve. Some will be there on full-time basis, others can contribute from outside. For me personally, and at this point in time, I am not disposed or available for full-time public service now; perhaps in the future, it could happen, but not now. For now, my hands are full with several other experiments I am involved with (especially abroad) in the private sector, charity, think-tanks, and the international community. I am part of a major initiative in Africa’s mining and solid minerals sector, and this takes me through several African countries, etc. I am having great fun exploring totally new vistas of opportunity that are central to Africa’s great leap in the 21st century. I read that President Buhari will give priority to solid minerals. We can provide free advisory services and perhaps assist to mobilise investment in the sector or in any other areas if our advice is needed. In effect, there are several ways we can assist the government to succeed but not necessarily to take up full-time appointment. No, not now!
So, who and who would you recommendto be part of the best 11 in the cabinet?
There are many eminent Nigerians who are not only bold, critical thinkers but also with high execution capacity that the president can choose from. I wish him and his team good luck.
Do you agree with the suggestion of the current CBN governor, Godwin Emefiele, that Nigeria should sell off its oil stakes and retain say, 25 per cent only?
I won’t comment on it in detail until I read the study. From what is reported in the newspapers so far, I will surely have many questions and I have hinted the governor on this.
Some CBN staff are currently being tried for alleged fraud regarding circulation of old notes, and the Economic and Financial Crimes (EFCC) says this has been on for years – apparently more people may have been involved. Were you able to deal with that kind of fraud when you were in charge?
First and foremost, I can’t imagine how such a fraud could be executed successfully given the architecture of controls and security at the CBN. Such would require the collusion of tens of persons from different departments and agencies, including law enforcement agencies and commercial banks. It is very unlikely to happen without someone blowing the whistle or leakage of information. I am particularly happy therefore that it was the CBN that discovered the fraud and reported to the law enforcement agencies. This is the important point.
Years after leaving the CBN, give us your assessment of the bank under your successors.
I still reserve my comments for now. When I was in office, I made it a policy never to comment on my predecessors, and after I left office, I also insisted on a self-imposed five-year gag order not to comment on my successor. Several times, I was under immense pressure to break it but I thank God that I kept to it. The five-year ban is now over, but it is not yet time to comment.
The National Bureau of Statistics recently came up with a revised methodology for calculating unemployment, with the claim that unemployment now stands at about six per cent. Are you as concerned as many Nigerians who believe that claim is baseless?
Integrity of our national statistics is a very serious issue. I don’t comment on statistics without serious scrutiny. Having not had a chance to thoroughly examine the reviewed methodology, I will not comment on its veracity or appropriateness. It is one thing to have a new methodology, it is yet another to have a comprehensive, credible labour market survey. I will need information on these two parts to make informed judgment. Already, the NBS/past government have created the baseline data for the performance evaluation of the Buhari administration in the areas of poverty and unemployment. According to them, unemployment is about six per cent and poverty is about 32 per cent. If true, then the Buhari government is challenged to beat these numbers. The government must support NBS to be independent and do its job without interference.
•I’m not available for public service now, says ex-CBN chief
YOU promised not to keep quiet again and to ask more questions about the running of the economy after elections but you seem to have been very quiet since the elections. Can you now raise the questions?
Great to see you too! And I hope this will be a short interview please. Two quick points: The elections have come and gone but that was the easier part. The hard part now begins. Like most Nigerians, I am happy that Nigeria made history with the election. On your question, No; there was no need to raise further questions for the outgone administration. President Goodluck Jonathan raised the bar and set a new tone in his statesmanlike acceptance of defeat. That was noble. Last month, the government admitted that they were borrowing since January to pay salaries. What more do you want me to say? The two articles I wrote in January and February remain living documents and raised some of the salient questions, some of which may be bold markers for the new government. Our focus should be on the future and the new government.
How is your relationship with Dr.NgoziOkonjo-Iweala now?
Why do you ask? Of course, she is and will always be my dear elder sister and Madam; someone I deeply respect. We may not always agree, especially on public policy. The public spat was unfortunate. She felt she had an obligation to defend her government but she did so in a manner that I also felt an obligation to respond in equal measure. But all that is now history. There is nothing personal. Now without the encumbrances of government and its pressures, I look forward to our returning to the good old days in our personal relationship.
The economy is really bad; falling oil prices, dwindling revenue, debt, inflation, unemployment, collapsed naira, etc. Where does President Muhammadu Buhari start from?
I don’t envy President Buhari and his team. His government will preside over the transition to a post-oil economy, and it won’t be a tea party. If Buhari works eight hours a day, he has less than 7,500 hours left to bring about change in his first term in office or less than 9,700 if he works 12 hours a day, with three substantive annual budgets to go before the next elections. The clock is ticking already. But the Rescue, Stabilise and Transform (RST) Plan requires a 24 x 7 operation. There must be something in the President’s natal chart that keeps bringing him to govern us just when things are in shambles. But I see hope; I see opportunities. The president and his team have a historic opportunity to create a new Nigeria without oil; a Nigeria powered by competition and compassion. Fortuitously, Nigeria’s centenary was last year (2014). This year marks the beginning of the next 100 years. President Buhari and the new crop of elected officers at all levels must lay the foundation for the next Nigeria; a re-engineered Nigeria with the structures and incentives to move from cake-sharing, or consumption, to cake-baking, or production. Old thinking and ways of doing things won’t work. But an attempt to drive change from Abuja will fail. It will be akin to trying to clap with one hand. A coordinated national (not federal) response is required.
On your specific question as to where President Buhari should begin, let me say that I don’t want to join the new industry in town which is ‘agenda setting’. Everyone is grabbing the microphone to ‘set agenda’. That’s ok. I am aware that the transition committee is working hard on an agenda, and I believe that the committee is made up of eminent Nigerians. For me, let us wait for them to unveil their action plan and we would have something to comment upon or contribute to. I am aware that the African Heritage Institution (Afriheritage) is planning a session focused on the agenda after it is announced. So, I won’t join this fashion parade of the day. Not yet.
Let me be more specific. With the terrible condition of the economy, and the high expectations of Nigerians on the new government, what practical steps should Buhari take to create jobs speedily?
I told you I do not want to discuss specifics now. For sure, job creation should be the focus of the new post-oil economy. Nigeria certainly needs a job manifesto, with a target of eight – twelve million jobs over the next four years. This is easier said than done. We are diversifying the economy by-passing the manufacturing/industrial sector to the tertiary sector (services). Creating value-adding jobs in such an economy with one of the highest rates of urbanisation in the world will task our creativity to the limit. The agenda will require a kind of coordination between the federal and state governments in a manner never seen before. Luckily the All Progressives Congress (APC) states are in majority and I hope their party will rein them in. I have read some newspaper reports that solid mineral and agriculture sectors will be the new kids on the block to mint the jobs. That won’t happen! At least not in the manner it is being romanticised about. They would have very limited impacts on job creation over the next four years, and over the long-run agricultural transformation will actually reduce jobs. The prospects of the solid mineral sector will depend on the policy framework and even legislation, the dynamics of commodity prices especially given the apparent end of the commodity super cycle, and the nature of forward and backward integration with the rest of the industrial structure. Anyway, let us wait for government’s agenda before we can comment, please.
In your previous answer you alluded to changing the structures of Nigeria. What should President Buhari do with the report of the recent national conference?
It is up to him to decide what to do with the report. A fundamental point however is that you can’t create the new Nigeria, a post-oil competitive economy without fundamentally altering the existing constitution. The current constitution and the political-governance structures created by it are designed to share and consume the oil rent. A system designed for consumption cannot become efficient for production. Ours is a dysfunctional unitary-federalism, with a queer fiscal federalism and it won’t go too far. The federating units were created by the central government; it also created the local governments. Every month, both the governors and their local government chairmen are supposed to beseech Abuja to collect their allocations, each supposedly with powers to do whatever they like with the allocations. As oil stumbles, the fiscal viability of these creations is coming into question. Suddenly, states and local government areas designed to collect and spend oil money will be required to produce and create wealth to survive. We will see how the old order will give rise to the new without some creative destruction. The problem with the structure is that those who benefit most from it are required to dismantle it— the incentives are incompatible. We need to study the UAE (United Arab Emirates) model of competitive federalism – that created the incentives for Dubai and other prosperous non-oil regions to emerge. I have written a lot on this subject, and we can talk about this the whole day. The point is that the APC cannot deliver sustainable change to Nigeria if it does not go to the roots, and effect systemic change. Tinkering at the margins will amount to papering over a cracked wall.
That reminds me of the ongoing debate about local government autonomy and joint account with the states. Shouldn’t the local governments be autonomous?
Autonomy from who? I know that it makes for our emotional satisfaction to “deal with the state governors” and let the local government areas have ‘autonomy’- but only in the sense of getting their “allocation” directly and unhindered by state governments but with no incentive – sanctions regime that ties such grants to certain productivity and fiscal viability criteria. The mistaken belief is that such autonomy will ensure that resources get to the ‘grassroots’. It is a funny argument which proceeds from the old model of ‘sharing the cake’. We must decide whether we want a federal or a unitary system; not both at the same time. Are the states the federating units or both states and local governments? Funny enough, the same constitution gives the state Assemblies the power to create local governments and maintain oversight over them. At the same time, the constitution lists the local government areas created by the military as the ones to collect “allocations” from the Federation Account. I want to see examples of federal systems in the world where the local governments directly receive statutory allocations from the federal government and with statutory powers to spend as they wish without performance-based criteria attached to such receipts. The mind-set is rooted in the past, but the problems are unfolding in the future.When it comes to incentives and sanctions regime for creating prosperity and accountability, our current constitution is a funny document. It is even worse for effective macroeconomic management.
The contest is on for zoning and sharing of political offices, and there are fears of marginalisation by people from the Southeast and Southsouth because of their poor support for President Buhari and the APC during the elections. How should Buhari assuage the fears of these zones?
You have raised many issues at the same time. First, given the peculiar manner the election was done in the two zones, it is difficult to know exactly how the people voted. There is no question that a majority of people in the two zones preferred Jonathan but we know what happened during the presidential/ National Assembly election. Prof. Attahiru Jega and INEC did a great job but we still have a very long way to go. Second, the Constitution of Nigeria creates an absurdity in the name of federal character whereby a minister must come from every state. So, states in the Southeast and Southsouth must have ministers in the federal cabinet. Third, and more substantively, I believe that the clamour for offices is simply a power game by the elite, which has only a symbolic or emotional significance to the masses. Yes, for some reasons, people like to see someone that shares their interests or attributes in government—it has a ‘feel good’ factor. But if occupation of such office has any personal benefits, it is largely to the occupant of the office and his friends and family.
Our recent history has shown that it hardly matters where the occupant of a particular position comes from. I am not sure how the welfare of Ota/Ogun people changed because Obasanjo was President of Nigeria, or how the man in the street of Katsina or Otuoke/Bayelsa prospered more than others simply because their sons became President. The Southeast voted massively for ‘one of their own’ in 2011 as president, and also had Secretary to the Government of the Federation, Deputy Senate President, Deputy Speaker, Minister of Finance and Coordinating Minister for the Economy and a coterie of other appointments. Yet, the zone had the least capital expenditure in the five-year presidency, and there is hardly any motorable federal highway in the Southeast. For me, this bickering for sharing of positions is an elite game for their personal rather than national considerations. What the ordinary Nigerians want are institutionalised processes to guarantee their security and prosperity. They want services and don’t care who gives it to them. Our federal cabinet is nothing but a miniature United Nations (UN) whereby each minister represents his or her state but no one represents Nigeria. At this critical crisis moment, perhaps what Nigeria needs is something akin to selecting the best 11 for our national football team: no one cares which state or zone they come from; everyone wants Nigeria to come home with the cup.
Talking about positions in the government, there are rumours in town, especially on social media and even in some newspapers that you are being tipped to serve in the cabinet of the current government. Are you likely to serve in the government or am I speaking with the prospective finance minister as speculated?
Nigerians and their rumours! I am glad you said they are rumours and such rumours are normal. For sure, I wish the new government success and for the sake of Nigeria, everyone must contribute to assist President Buhari succeed. I will contribute in whatever way I can. However, everyone can’t sit in government in order to serve. Some will be there on full-time basis, others can contribute from outside. For me personally, and at this point in time, I am not disposed or available for full-time public service now; perhaps in the future, it could happen, but not now. For now, my hands are full with several other experiments I am involved with (especially abroad) in the private sector, charity, think-tanks, and the international community. I am part of a major initiative in Africa’s mining and solid minerals sector, and this takes me through several African countries, etc. I am having great fun exploring totally new vistas of opportunity that are central to Africa’s great leap in the 21st century. I read that President Buhari will give priority to solid minerals. We can provide free advisory services and perhaps assist to mobilise investment in the sector or in any other areas if our advice is needed. In effect, there are several ways we can assist the government to succeed but not necessarily to take up full-time appointment. No, not now!
So, who and who would you recommendto be part of the best 11 in the cabinet?
There are many eminent Nigerians who are not only bold, critical thinkers but also with high execution capacity that the president can choose from. I wish him and his team good luck.
Do you agree with the suggestion of the current CBN governor, Godwin Emefiele, that Nigeria should sell off its oil stakes and retain say, 25 per cent only?
I won’t comment on it in detail until I read the study. From what is reported in the newspapers so far, I will surely have many questions and I have hinted the governor on this.
Some CBN staff are currently being tried for alleged fraud regarding circulation of old notes, and the Economic and Financial Crimes (EFCC) says this has been on for years – apparently more people may have been involved. Were you able to deal with that kind of fraud when you were in charge?
First and foremost, I can’t imagine how such a fraud could be executed successfully given the architecture of controls and security at the CBN. Such would require the collusion of tens of persons from different departments and agencies, including law enforcement agencies and commercial banks. It is very unlikely to happen without someone blowing the whistle or leakage of information. I am particularly happy therefore that it was the CBN that discovered the fraud and reported to the law enforcement agencies. This is the important point.
Years after leaving the CBN, give us your assessment of the bank under your successors.
I still reserve my comments for now. When I was in office, I made it a policy never to comment on my predecessors, and after I left office, I also insisted on a self-imposed five-year gag order not to comment on my successor. Several times, I was under immense pressure to break it but I thank God that I kept to it. The five-year ban is now over, but it is not yet time to comment.
The National Bureau of Statistics recently came up with a revised methodology for calculating unemployment, with the claim that unemployment now stands at about six per cent. Are you as concerned as many Nigerians who believe that claim is baseless?
Integrity of our national statistics is a very serious issue. I don’t comment on statistics without serious scrutiny. Having not had a chance to thoroughly examine the reviewed methodology, I will not comment on its veracity or appropriateness. It is one thing to have a new methodology, it is yet another to have a comprehensive, credible labour market survey. I will need information on these two parts to make informed judgment. Already, the NBS/past government have created the baseline data for the performance evaluation of the Buhari administration in the areas of poverty and unemployment. According to them, unemployment is about six per cent and poverty is about 32 per cent. If true, then the Buhari government is challenged to beat these numbers. The government must support NBS to be independent and do its job without interference.
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