Nigeria needs to mobilise domestic resources to her advantage – Adesina
Akinwumi Adesina, president, Africa Development Bank Group, last weekend in Yola, Adamawa State, delivered a keynote address at the 12th Commencement Ceremony of the American University of Nigeria. (AUN). On the sidelines of event, he spoke to some editors and other senior journalists on a number of issues. ZEBULON AGOMUO, Editor, BusinessDay Sunday was there. Excerpts:
A major economic discourse in Nigeria today is food inflation or food security. You were the best Agric Minister in the country in recent history. What intervention do you think the government should make urgently in the Agric sector to save the people from hunger and starvation?
Agriculture is the biggest asset that Nigeria has. We have tremendous amount of lands, good lands; we’ve got cheap labour, and God has blessed us with a tremendous amount of sunshine, among others in our favour. It is the greatest honour of my life to have been an Agric minister of Nigeria. But I think the quickest means to turn agriculture around; I commend what the government is doing on agriculture; is what we bring to support it.
Read Also: Wheat production and the Nigerian Economy
So you continue to unlock it. So, what the African Development Bank is bringing to the table for Nigeria is what we call Special Agro-Industrial Processing Zones. These are special economic zones that are enabled with critical infrastructure – water, energy and logistics systems, production zones, everything that will make those zones to become where they have value chains, that you can process and add value to everything. You know, it doesn’t matter what you have, whether you have rice, cassava, cocoa, soybean, whatever it is; they are just simply primary commodities. You make money by actually processing and adding value to them.
So, these special agro processing zones are going to really help to transform Nigeria’s agriculture structurally.
We are going to invest everything necessary to achieve that. Our Mission is already here; and we are working very closely with the Minister of Finance, Minister of Agric, and minister of Trade and Industry on that.
We will be investing quite heavily on that. The second thing I need to say that is important and not to forget is access to finance.
Agribusinesses will continue to need access to finance. I am very proud what I left behind here; what is called the NIRSAL, which is the Nigeria Incentive-based Risk Sharing System for Agricultural Lending. It is to de-risk lending to agricultural sector.
That will continue to be very important because everybody has to have access to affordable finance all across the value chains.
The third thing is to continue to raise agricultural productivity. One of the things I really hope that we shall continue to do is to provide access to world-class technology to raise productivity. Because, if you can raise productivity your unit cost of production falls and then you become more productive.
I really think there are new technologies; breakthrough technologies that we need.
I was talking about the work we did here in respect to wheat in the North, particularly North East of Nigeria. At that time there was lot of crisis caused by Boko Haram across the north and all of that, but we were not deterred. I had some real great people working with me when I was minister of Agric. We introduced to Nigeria at that time heat-resistant wheat variety. Wheat is a temperate crop but we decided we needed to introduce heat-tolerant wheat variety into Nigeria because of the dwindling levels of the Lake Chad. Those wheat varieties we did it from Aleppo, Syria, we crossed it with lines in Sudan. We introduced them to Nigeria. Many people are not aware of it. So, you have a temperate technology in a very hot environment and I remember when we went to Kano, the wheat lines were so high that they could not believe those were actually wheat lines. I wanted to say this because the head of the wheat value chain I was working with at that time was Professor Banji Oyebanji because people always talk about your success but you can’t succeed without the people working with you and making sacrifices. Professor Oyebanji stayed in the Lake Chad basin with all the bombings going on, protecting, as like babies, these wheat and we were able to get those lines to work. Now, we need to introduce those lines in Nigeria, because I think Nigeria can make a dramatic turnaround in its wheat with those things. Why do I say that? In Sudan today, Sudan cultivates 800,000 (eight hundred thousand) acres on that wheat lines. The Prime Minister of Sudan was with me in Paris with President Macron and he said that they expect that in three years they would be self-sufficient just from those wheat lines.
Finally, we need to support women in agriculture because women are actually the ones that form the base of agricultural system.
So, we need to make sure they have access to land; access to extension and access to finance. I also want to say that malnutrition continues to be a big problem; stunting continues to be a big problem and these are of great concern to me because I can repair a bridge; I can repair a power plant, but the brain cells that we actually have, once they are affected because of malnutrition, they are gone. So, I think we need to begin to look at the fact that it is not just physical infrastructure, but we must invest in what I call gray matter infrastructure because the livelihood and future of any country depends on the quality of the brains.
So, if we have high level of stunted growth as a result of poor nutrition, that is not acceptable. So, we need to continue to do that.
Nigeria has borrowed extensively in the last couple of years for good reasons, maybe. There are worries out there over intensions and outcomes mismatch. What are your comments or advice?
Well, there is nothing really wrong about taking debts (loans) just to be clear. The question is what kind of debt are you taking? There’s what I call hamburger debt; so you take your credit card and you go buy hamburgers. That’s one kind of debt. The debt you invest in buying properties – housing debt that you invest to lead to increase in return for you overtime, that will enable you pay back your debt is a sensible debt. So, no nation should be taking debt for consumption purposes, that’s the point I wanted to make with regard to that. And I really believe that for Africa we must learn to develop by mobilising domestic resources. Africa is not poor; Nigeria is not poor by sense of it. We have national gas; we have oil and we have agriculture.
We really need to mobilise those domestic resources to our advantage; not just simply depend on debt at the same time. In the case of Nigeria, let me give you an example, if you look at the economy of Nigeria; I always hear people say, why not diversify the economy anytime there is an economic downturn; well the Nigerian economy is already diversified. Oil accounts for not more than 15percent of the GDP in Nigeria, but accounts for over 90percent of foreign exchange for the country and over 70 percent of government revenue. So, the issue is how do we raise the productivity of those critical non-oil sectors that account for the remaining 85percent of the nation’s GDP; raise productivity and the revenue streams of those sectors; that’s where the jobs are going to come from; not from the 15 percent which is oil. I think this is really critical that we must therefore, deal with the infrastructural barriers; get energy right; get the infrastructure right, and get the policy environment right to unlock the potential of that 85percent; that is where the real wealth of Nigeria is going to come from. I also want to say something with regard to, not just for Nigeria, but for everybody else.
Africa loses today over $65 billion a year in terms of illicit capital flows. So, if we’ve got to tackle corruption; we have to make sure that we tackle illicit capital flows; and we also have to make sure that pension funds and our Sovereign Wealth Funds are actually invested right here.
If you have a Pension Fund that is going to guarantee you annuity payment for the rest of your life, but you have no good hospitals; you have no electricity (power); you have no infrastructure; that’s a miserable retirement. So, the pension funds should actually be invested in Nigeria to close the infrastructure gap that Nigeria has, as opposed to simply investing in Money Market instruments that are generating to the negative real range of returns outside the country.
And I really think that the wealth of the country is ability to believe in itself and invest in itself.
So, I really think it is time for the Sovereign Wealth fund and Pension Funds of Nigeria continue to be invested to close Nigeria’s infrastructure gap; that is very, very important. I think on the public side, we need to continue to work on public financial management to also continue improve the efficiency of the public expenditures, but not just what you budgeted, how do you spend and what do you spend on? So, the quality of that public expenditure will continue to be very, very critical; of course, transparency, accountability – we must be accountable to the people.
People must see the impact in their lives. Somebody said to me, every time you people talk about GDP, but nobody eats GDP.
But, the thing is that GDP must translate into visible impact in the lives of people; and I think the way to ensure that is to hold government to account. Governments don’t do people favours; it is the taxes of people that governments around the world spend; so, citizens accountability is very, very important. When people talk about raising domestic revenues, they talk of taxes; I have them believe that the most important thing with taxes is accountability for the taxes collected; if you have taxes, then you must make sure that you are not raising what I call implicit tax rate which is people paying tax but they can’t find road; they can’t find water; they can’t find power, essentially they are providing those things by themselves. So, essentially it becomes implicit tax if you don’t deliver on essential things. I think having good governance over the tax system and making sure that the taxes being collected are actually being used to positively affect the lives of people in society. People paying taxes must be able to see the impact in their lives.
What opportunities are available for young women in AfDB?
I really believe that any economy and any society will go as far as what it does to support and empower the women. I never see a bird that flies with one wing; every bird flies with two wings. Nigeria and the rest of Africa will have faster growth and more inclusive growth when we fully empower women in all sectors of our economy. The second thing I have to say is, when it comes to the issue of finance, that is why when I became the president of AfDB, we launched with we call the AFAWA (Affirmative Finance Action for Women in Africa) to mobilise $5billion specially for women in business; because women pay back their loans 99 percent. We have that programme and we are also going to run it here in Nigeria.
The last thing I want to say about women as regards the opportunities that are open to them at the Bank in particular, is that we have what we call Young Professional Programme where we bring in young talents (you have to do your Master’s before you apply) which provides them the opportunity to stay at the bank for three years, at the end of which you can join the bank if you are found competent.
In your keynote address at the Commencement Ceremony, you emphasised the need to give opportunities to the youth. We have leaders in Nigeria that have no plan to vacate leadership positions; what is your advice?
I think at the end of the day we have to realise that the future and the present belong to the young people. As I go around Africa, I see a lot of programmes saying we are empowering the youth; sometimes, it is not the youth that are being empowered; I see the people saying they are empowering the youth, simply empowering themselves. I think the youth don’t need handouts, they actually need to have investment in them because that is the asset that Nigeria has; that is the asset that Africa has. But as I look at the banking system all across Africa, the banking systems are not meant for young people.
A young person comes to the bank and you ask him how much land do you have? What real estate do you have? What collateral do you have? How old are you? And you say, I am 21 years old. They say, go and bring your tax receipt for the last 20 years.
How am I going to do that? We must begin in Nigeria and in all of Africa to invest in the youth. You don’t invest in the older part of your population because it is going to be a declining part of wealth but the youth is a growing part of wealth for a society; so, we must invest in them; and we must show that by taking risks on them.
When the young people go to the banks what the banks see is risk, risk, risk.
But the young have great ideas; entrepreneurship capacity; they want to run great businesses.
Look at Bill Gates, how old was he when he started? Zukerberg was how old when he started? So, Nigeria must begin must begin to invest in its youths. That’s why the African Development Bank is working now to help to set up what we call Youth Entrepreneurship Investment Banks. They are going to be new sets of banks; run by young people; very talented, world-class banks that will help young people; take their ideas and turn them into bankable businesses and grow youth-based wealth. If you don’t do that, who is going to pay taxes in the future? We have to grow that.
But I think it requires a new financial eco-system to be able to do that. By 2050, Africa is going to have almost about 850 million young people; that will either be a blessing or become a problem. And our youths should not be a problem; we should believe in them and support them, and that’s why we are going to be supporting this youth Entrepreneurship Investment Banks, and we will be doing that also here (in Nigeria).
I think also that we must open space for young people, politically, economically socially and in all parts of our society; 70 percent of them are living on less than one dollar ninety ($1.90) a day. Sometimes, people say, you know, we have lifted them out of poverty – one dollar ninety ($1.90) a day. I cannot buy a hamburger with one dollar ninety. We must create youth-based wealth for our young people. I think for me that is very, very critical.
The Covid-19 has had a very serious effect on Nigeria, affecting over 30 million businesses, particularly small and medium enterprises (SMEs). What plan does your bank have for such businesses?
The Covid-19 really affected businesses. The GDP of Africa went down by -2.1 percent in 2020. That’s the lowest we ever had in more than 25 years. We project that that will grow to about 3.2 percent this year; but that is still low. Last year, 30 million people lost their jobs; another 10 million people fell into extreme poverty, and this year, if we don’t take care another 39 million people will fall into extreme poverty. The question to ask is; who are these people? They are those in the informal sector; they are largely women who depend on informal sector (small and medium enterprises). So, we have to do a lot to support those in the informal sector. At the African Development Bank, we were able to provide 288.4 million dollars to Nigeria to support its efforts in the recovery when the Covid-19 pandemic started. So, we have to do a lot in terms of supporting the private sector’s economic recovery.
You have been decorated all over the world; here you are at AUN in your own country being honoured. I just want to understand what this award means to you, and what is your impression of AUN compared to other Nigerian universities that you are familiar with?
First, let me say that awards are never things you go and hang just because you are glad you got an award. Awards are always things I see as additional responsibility you have because people are putting their trust, their confidence in you to continue to do better. So, the honorary that they gave me is Doctor of Humane Letters. I have devoted my entire life to making sure that my life is only as important as it is used to transform the lives of others. I don’t see any other thing as important as that; after all, the air we breathe is from God; God has it; and can take it away; but while we are alive, we must use it to transform the lives of people. So, what the award means to me, and I must thank the founder of the AUN, His Excellency, former vice president, Atiku Abubakar; Senator Ben Obi, chairman, AUN Board of Trustees, Madam President of AUN, Margee Ensign, and the entire community; it is a call to do more and I will. It is a commitment to live more selflessly and I will. It is a commitment to make sure that we transform the lives of young people in Nigeria and outside and I will. So, it is a call to do more. I want to thank you, and I will carry that with me. I will be a good ambassador for the university. My impression about the American University of Nigeria; I must commend His Excellency’s vision, tenacity and selflessness – because he has invested so much of his own life and money in the university.
So, what I see at AUN is not a school; what I see is a dream come true of a visionary who believes in the future of young people; I am just really inspired by his selflessness when it comes to education. So, my impression about the university is that it is a first-rate university; world-class faculty members, excellent facilities. In fact, I didn’t know a facility like what I saw existed in Nigeria. I was quite amazed about what I saw. So, my impression about it is excellent university for sure.
During your speech, I heard you say that AfDB was investing about $500 million in a digital project for the youth. Can you please, shed more light on that?
The AfDB is supporting the Nigerian Federal Government on Digital Nigeria Project. So, as l mentioned in my speech the importance of digital economy; that’s the future. So, having a right type of digital infrastructure; having people that have the right exposure to digital literacy and also have digital entrepreneurs is the future and where we need to make more investment. So, we are preparing the project; the project is half a billion dollars to support Nigeria to really transform her digital economy. I really believe Nigeria can be a global power house, and we want to be there for Nigeria.