• Thursday, June 13, 2024
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CBN must not overshoot its remit, but stay within the monetary policy – Agbakoba

CBN must not overshoot its remit, but stay within the monetary policy – Agbakoba

Ahead of the one-year anniversary of President Bola Ahmed Tinubu administration, a former president of the Nigerian Bar Association (NBA), Olisa Agbakoba, spoke with some editors. He assessed Tinubu’s performance in 365 days against the standard set by a former president of the United States of America, Franklin D. Roosevelt. Agbakoba spoke on the roles of the Central Bank of Nigeria (CBN), the ministers, what was missed in the last one year and what should be the main areas of focus. Zebulon Agomuo, who attended the session, brings the excerpts:

One year is gone. The new administration came in with a lot of complaints about the challenges it inherited. Looking at what has been achieved vis-à-vis what was promised, what would be you thought?

In the context of the agenda of the President, one year is gone, so it’s a good thing that even the President himself got his ministers to address the press on their performances. So, we can see what has happened. I think the challenges inherited, and I think that’s something that every President always says. ‘I had a big challenge coming in; therefore, it limits my governance capacity.’ I don’t want to look at that as an excuse. President Bola Tinubu’s first year in office has laid the groundwork for significant progress, with notable achievements in various sectors. The right policy choices have been put in place, but implementation has been the challenge. To fully realise his transformative vision and deliver on his campaign promises, it is crucial for the government to focus on key areas that will make the most impact, such as security, power, and an emergency industrial revolution. If Tinubu can solve these critical issues, it will release kinetic energy and accelerate progress

In his first year in office, President Bola Ahmed Tinubu made notable progress across several areas outlined in his “Renewed Hope” campaign manifesto. Some of his achievements are as follows: Economy: Removed fuel subsidy and floated exchange rate to save costs and unify FX markets, despite short-term pains. Provided welfare palliatives, established bodies to facilitate consumer credit and student loans, set up a tax reforms committee. Security: Approved a committee on modalities for state police, invested in military equipment and food security measures. Governance: Signed a new Electricity Act allowing states and private players in the power sector. Infrastructure: Secured funding for major seaport, rail, road, and power plant projects. Foreign Policy: Positioned Nigeria as a stabilising force in ECOWAS, boosted FDI inflows over $15 billion, enforced bilateral air routes for Nigerian airlines. Oil & Gas: Rehabilitating refineries and incentivising new private refineries.

Can you take a look at the role of the CBN governor in the current economic challenges, what he is doing and what he should actually be doing?

What I think is the challenge, as far as I am concerned, is the imbalance between macroeconomic platforms of monetary policy and fiscal policy. So, in monetary policy, you see the Central Bank, in my view, taking a dominant position to correct the economy. That’s not their job. If you look at the key functions of Central Banks around the world, you hardly even know who is the Central Bank governor, but the Central Bank governor here, maybe by tradition, has become a regulator of the economy. He’s talking about inflation; he’s talking about monetary policy rates. He’s always saying something, and one of the things that has occurred is a complete mismatch of who should be doing what. Wale Edun should actually be doing more than the Central Bank governor.

The CBN governor is over-concerned with the numeric value of the Naira; so, it’s now N1,500 or thereabout. He shouldn’t be concerned about that. It is the Minister of Finance who, using fiscal policy, put money in the economy in order to stabilise hunger. Because why is it that in the US, during the COVID, the government spent about $3trillion feeding the economy in the context of the poverty in the land? We don’t see that happening, and I think that’s a big gap. So, I would be recommending in the context of the coming 365 days, to look at what President Franklin D. Roosevelt (FDR) did when he was in power in the 30s. There was a book called ‘Coming of a New Deal.’ If you read that book, you find similarities between American economy of the 1930s, very depressing, and the economy of Nigeria today, very depressing. The difference is that President Roosevelt had a sense of urgency. That, I think, needs to pick up here. I like the urgency of President Roosevelt; the hunger to do something. I flag that as something we need to see more. Strong leadership from the front. Passion and hunger; that’s what brings a result. The government needs to be more passionate, more urgent. If I were to hand a gold prize to the Federal Government of Nigeria, it would go to Minister Wike; he takes the prize. He is passionate. Whether you like him or not; whether you dislike his policy or not, he exhibits hunger; that’s what brings result. Mr. Trump is not someone I would say am a fan of, but he talks tough; he talks with passion. Mr. Biden does not. That’s why Mr. Trump is leading in the polls. In the next 365 days, I need to see more passion in the Tinubu administration. I need to see more urgency. I need to see more Wikes in government. If we had 10 Wikes, Nigeria would change because that’s what we need- passion and energy. And in the broadcast made by President Roosevelt upon being inaugurated, he talked about a sense of urgency. You don’t cook okra soup in one week; you cook it under one hour. So, I would Tinubu to bring in this urgency. If there is anyone in government who is unable to cross that mark of passion, he should not be there. Now, passion is not enough. The question therefore, is what is the policy? I’ve already said there’s a misalignment between the macroeconomic pillars of fiscal and monetary. There’s too much concentration on the numeric value of the naira against the dollar.

First of all, I even question the validity and legality of the Central Bank trying to fix values. Is that its job? No. The job of the Central Bank is financial system stability. That’s the job. I don’t know where this thing came in that it is the business of the Central Bank governor. Why are they not talking about fixing the currency against the Chinese currency? So, I would recommend that in the second year going, the CBN should depart from overshooting its remit and stay with monetary policy. Now, the fiscal policy issue is where we have a challenge.

In the President’s Renewed Hope agenda, there are a number of items he is pursuing; which areas do you think he needs to pay greater attention to, judging from what has happened in the last one year?

If you want the value of the naira to strengthen, there’s only one thing you must do. You must produce. So, the question is what is our manufacturing sector doing? The President ought to declare a state of emergency in the industrial sector because nothing is happening. For him to achieve all these, the agenda of Mr. President, which is Renewed Hope, needs to be focused. You can’t do everything. You can’t do 10 things. I would advise the President to focus on three important matters. The first is the security architecture. When I spoke to the President about a month ago, I said you cannot use conventional war to win an irregular war. Conventional armies fight against each other.

The war in Nigeria is not conventional. Anybody who reads Che Guevara’s book on guerrilla warfare will know that you can’t defeat any army that is using irregular means, which is why America lost to Vietnam. Now, the consequence of insecurity in Nigeria can be put in the way I asked my colleague here, suppose you are all businessmen, all of you sitting around here with millions of dollars. You are asking, Oga, where do we go and invest? I say, ah, I’ve got an idea of where we should go to invest. And you ask me, where is that? And I tell you, we shall go to Gaza. Will you go to Gaza? No. So, let us then ask, is Nigeria far from Gaza? Nigeria is a very unstable country in the context of insecurity-

killings, kidnappings, banditry, thuggery, unemployment, lack of funds- I think the government underestimates the issue of insecurity. Billions of dollars spent on insecurity hasn’t worked.

I think President Buhari borrowed about $3billion, if I’m right. About $3 billion. No result.

So, you see the Army and the Air Force, they are buying new helicopters, they are flying and landing. But there was an important point that the Presidential candidate of the People’s Democratic Party (PDP) made, because he’s from the area. He said, ‘I’m surprised that this is happening; because when the plane is landing into Yola airport, I can see everything. I can even see people running around in Sambisa Forest. So, how is they are not seeing this?’ How are they not seeing it? It beats me. So, why is it that this forest seems impregnable? It shows that the tools are wrong. I recommend to Nigeria what I called ‘The Treaty of the National Order.’ In the South East, for instance, we have Indigenous People of Biafra (IPOB)- rightly or wrongly. The question to ask is, is it a correct strategy to detain Nnamdi Kanu and so the South East uses it as an opportunity? I don’t think so. If Nnamdi Kanu says that the Biafra thing is hot, he has a right to say so.

But the question would be whether it would be something that would be endorsed in the South East. I would simply conduct a referendum. Now, if the referendum shows that Nnamdi Kanu is right, then that’s it. That’s why I’ve said that the theory of Nigeria’s indivisibility is wrong. We must stop this issue of every president saying that Nigeria is indivisible. It is not. You have to get the consent of Nigerians, and I endorse fully the definition of democracy set out by President Olusegun Obasanjo. We have to agree. So, it is that agreement or disagreement or lack of policy of the government that is causing the insecurity. So that’s the policy that needs to change for peace to occur. Now, if peace occurs, because you have dealt with the insecurity, it will unleash a lot. Agriculture will be one. Do you know that the North can sustain the entire Africa? So, we’ve locked down trillions of dollars in the North because of insecurity. That’s the first thing I would flag. Focus on resolving the insecurity problem in the first three months of the second year. The second one is power. Power must be fixed.

Power is like a ship in deep water that goes through and there are ripples. When there’s power, you create employment at different levels.

And the third is the one I first mentioned. Because if you tackle insecurity and resolve it, get Nigerians to buy into it, things will improve. I like what the late Herbert Wigwe said when he went to the university he was establishing, and he spoke in pidgin. He said, it belongs to you. Burn it down if you like. It’s yours. I’ve just enabled it. So, the people protected it. They didn’t see Hebert Wigwe; ah, that rich man from Lagos. They said this is our own. If you burn it, we’re in trouble. So, anyone who dares to go to steal anything, they would deal with that person. So, that’s what happens. If you generate the passion of Nigerians to be truly Nigerians, not just in football, you will see the energy that will come. So that’s the key point. With power resolved; insecurity resolved; business will flourish automatically because you have Nigerians who are very entrepreneurial. This issue of unemployment, look, for those of us who did the ‘Psychology of Crime,’ I did that as my Master’s thesis at the London School of Economics in 1980. The study showed that the psychology of crime is not an inborn thing. It is environmental (physical environment). Nobody is born a thief.

If you have hungry people, you can’t have a country. That’s a point that must be emphasized. Nigerians are extremely hungry. The poverty levels are deeper than we know. So, when the National Bureau of Statistics (NBS) releases their reports from time to time, I put them in the dustbin. The absolute report that judges what Nigerians are going through is given to me every Monday by who? By my driver.

I ask him, how was the day; how was the weekend? He says, ‘Oga things are tough.’ So, that is how I judge it. The government must leave statistical economists like the International Monetary Fund (IMF), the World Bank, and ask Nigerians.

I want to see the Minister of Finance engage in a town hall. And you see the British Prime Minister going around asking how you feel. Now that the campaigns are on, BBC and Co. are going around to say, what’s the biggest challenge you have? Is our government really aware, far off in Abuja, about the travail? Even we in Lagos, feel it. Have you asked your people how they are feeling?

So, how does government need to capture the statistics of the hunger in the land and say, how do we reverse it? That didn’t happen very well in the first 365 days. Because a hungry group of people are very angry and destructive. They will steal. If you want people to be productive, you’ve got to deal with the issue of insecurity.

So, the Central Bank, in its monetary policy, concentrates on the numeric value. Can we get the physical people to concentrate on the productive value and forget the rates? I’m not interested in the rates if I go to the market and I’m buying something which appears affordable. I’m not thinking, what’s the dollar to the Naira? All these market women taking advantage of that dollar, how much is the dollarised content in what they’re selling? But because the government has overemphasized the relevance of dollar to Naira parity, it has had a massive effect. The true value of the Naira to the dollar should not be anything more than 500. But everybody is increasing.

I will ask people, this thing you’re increasing, how much dollar is in what you’re producing? So, the government has unwittingly created a consciousness of, I can make money. That ought to change. What we want to see is the fiscal side of government controlling that process and driving the manufacturing sector with the correct regulatory, fiscal, and governance environment.

Now, what does the government need to do in concrete terms to encourage businesses/entrepreneurship. Some businesses think that the environment is not favourable enough, not because of insecurity, but government policies; what and what do you think need to change this second year?

If I thrive in business, it’s because the policy of government is correct. Aliko Dangote in Kigali made a very important point at the African Forum when they asked him, he said people think I’m as rich as they make out in Forbes Magazine. Every Naira I earn; 52 kobo is taken by government. Multiple taxes, inconsistent policies. The Managing Director of Total talked about Nigeria losing foreign direct investments to Angola because the laws and policies keep changing. So, another thing we need to see is stable policy, consistent policy and efficiency in government. I’ll give you an example of myself because I always like to speak because it’s that personal example that shows you the larger problem. The Land Registry was not digitalised. So, I’m holding a title that hasn’t entered the system. It’s when you trade that the economy works and everybody makes money. It has taken three years. How can an economy work? Another example that I’d like to give personally, my daughter has a property. It has taken nine years to regularise title in the land registry of Lagos. If you do not create title in a document, the building you’re looking at is dead. So, this building is fantastic. You can try to sell it.

The first question would be, where’s your title? Or you go to take a loan from the bank and you say, I have this property. But the bank manager says, do you want me to come to the place or the inspector? The only way I will know that is that you show me the title. So, the properties are referred to as dead. They are standing, but they do not count. They do not count for value because you must link the housing stock to the banking sector, that is what is done abroad. Someone said there’s a problem with land tenure in Abuja. But what he didn’t say is that not only Abuja, it’s across the country. So, if you measure the impact of the failed land tenure on the economy, it’s striking. That is something that I think the government ought to realise because there’s nobody in the government who has ever made any mention of connecting titles. Something so simple. It sounds very simple, but it’s not happening.

So, the banks would not give you anything if you don’t have a title. So, these are the areas that I see.

You commended just one minister out of about 46 of them; does it mean that others have not caught your fancy?

No. Another minister I would point out as having so far achieved his purpose is Festus Kayamo.

Since Sani Abacha era, Nigerian aircraft has not landed successfully in Britain under the BASSA Agreement. The British government has done everything to frustrate us. More aircraft will be able to go to the UK now. That was made possible by the minister. That will not only bring in foreign exchange, it will also create employment opportunities.

The Federal Government released palliatives to cushion the effect of the harsh economy. Do you think that’s the best the government could do in this period of hunger?

The first statistics that was released by the U.S. government is the employment figure after Biden came into office. And that employment figure raises the rating of a president. When it went up to 300,000, Joe Biden was boasting because people got employed. If you ask Nigerians generally what’s your problem; they will also add the fact of lack of employment. So, one of the things the government should do beyond palliative – I feel that palliative is not something we should be proudly promoting. We should be proudly promoting in the month of September that the government created the opportunity for 500,000 jobs. That didn’t happen in the last one year. So that’s a problem.

The Federal Government claimed that it saved a lot of money by ending the fuel subsidy. Many Nigerians say that there is no impact on public welfare. What do you think is happening?

What’s the point having money in your bank when your kids are hungry? That’s really the question you’re asking. So, where is the money that has been saved from the subsidy? I think the challenge is in misaligning what is the priority to be the Naira dollar parity. But that is not the problem. The problem is, if the government has saved whatever, you need to put it in the system. That, in economics, is referred to as quantitative easing. So, you make people bear less suffering. Some people don’t like spending. You see, the monetary people don’t like spending. So, they raise interest rates. When they raise interest rates, people rush to save. Because why should I worry to earn active income if I can earn passive income? So, if I have 100 million Naira and the NPR is 27%, so I could make about almost 20 million. But if I have 100 million Naira and I went active, agricultural, would I make the same? That’s what is happening.