AKIN OGUNBIYI is the chairman of Mutual Benefits Assurance Plc, a leading player in Nigeria’s financial services sector. In this interview with MODESTUS ANAESORONYE, he shares his thoughts on how government can address the problem of insecurity, unemployment, rising debt and provide a good life for Nigerians. Excerpt:
Despite the reopening of Nigeria’s borders towards the end of last year, the country has still been recording trade deficit. Why is this still happening?
We are not a productive economy. We live virtually on import. Common tissue paper, little things that we can produce are imported. Before, we used to have industrial parks, even in Ikeja here. How many industries are still functioning? Along Oshodi-Badagry road, we used to have cotton industries that produced fabrics. How many of them are still there?
When you don’t produce, what do you have to export? We talk of dollar scarcity. What do you think brings dollar scarcity? I was reading recently that vessels that come with tons of goods into this country, when they are going, they go empty. You have cargo aircrafts, they come in daily fully loaded, when they are going, what do they take back? Because there is nothing to export. It calls for a re-think.
Nigerians are not lazy, they can produce. People can be called entrepreneurs in their own rights but there is nothing like that. There is no incentive for anything. It is only the big boys who can get the incentives. They are the ones that have access to foreign exchange. We need to put value on productivity. We place emphasis on wealth and that is where we are missing it. If you have the knowledge, and the knowledge is adequate, with adequate knowledge and information, you can be able to create wealth and get power. We will always be in deficit except there is a national policy that talks on productivity.
Unemployment in Nigeria is high and insecurity worsening, what can be done?
An idle hand is the devils workshop. If unemployment is worse than two, three per cent in America, it is headache. It is a major scoring for any government in power. It is daily assessment for them. Many of those unemployed have gone through university. You produce them en mass. You can take care of these people if you are productive. Do you know the main productive sector of America is the SMEs. And that is where they get money from.
When somebody has no hope, why will they not recruit him into kidnapping? There was a young man in my village, he made first class in architecture, three years after he graduated, he had no job, no hope. His first job ever was a senior lecturer at a university in the United Kingdom. I gave him scholarship to go and do his masters when I got to know. From there he did his PhD. This is somebody who was wasting away in Nigeria. This is the story of Nigerians. We are brilliant; we are knowledgeable but nothing to do. If we have industries, factories, business entrepreneurs that can absolve all these people, why can’t we do it.
Industry statistics show that Nigeria is out of recession. But has the economy really improved to show we are out of recession?
We have to go by the statistics that is published. They said we are out of recession and they have statistics to back it up. Yes, we are out of recession. However, looking at COVID-19, I think we have been really very blessed in terms of its impact, its implications, especially, on the economy of our country. In fact, when COVID-19 was ravaging every economy last year, when all the economies of the world was closed down, I can virtually say that Nigeria still managed, except when government forced us to stay indoors, it is like COVID-19 is not existing in Nigeria. So if they say it has no such magnitude or multi impact, I will say the answer is yes because we are lucky, either God intervened on our behalf all through race, or through our inheritance or through whatever is it that we have been able to build.
The government has been borrowing a lot and most of the revenue is being used for debt financing. What is the implication of this?
There is nothing bad in borrowing, but when you borrow and there is nothing to show for it, there is no means of paying back other than that one product – oil, it is a problem. It is a major problem.
When you borrow, you borrow heavily. Leveraging an economy is not bad, but when you leverage, you leverage to deliver on some things. What are they borrowing against? Is it to do infrastructure? Is it power or is it social infrastructure? But when you just borrow for the sake of borrowing, before you even bring the money, they have shared it. It is unfortunate.
Look at what dollar is to naira. You don’t even find dollar to buy. We are not a productive economy; we are a rent economy. A rent economy should not be going out to borrow money.
How can the states reduce their reliance on federal allocation and focus more on internally generated revenue?
Our state governors don’t get anything doing. How much is their internally generated revenue? And about 70 per cent, 80 per cent of the money they collect from federation account is used for the payment of civil servants’ salaries. How can you develop? Our state governments need to crave for independence. There is no part of this country that is not blessed for agriculture. In those days, when we had the regional governments, they competed in terms of food production – cotton in the North, cocoa in the South West, coal in the East. These things are still there. Even if you want to borrow, borrow for a specific project. Let the project be viable; borrow money against viable projects so that when the projects are generating cash flow, they will pay back.
The states need to think inwards. They need to look at things physically – look at agriculture, industrialisation, even look at what people are using to make money, things that will make them independent.
When you create avenues for people to be entrepreneurs, to generate their own business, there is tax implication. But an environment that makes it easy for people to start business, when they start a business, don’t be in a hurry to make money before they start. Get them to start it and support it. When you support it and it starts to grow, then you can now start to tax it. When you have a sustainable N5, it is better than taking N50 today and the business will not see the light of the day.
What is the solution to the forex scarcity in the country? Can unification of the exchange rate be helpful?
If you have something that is so scarce, why don’t you have a single conversion rate? They sell money to Bureau de Change operators at a different rate; you sell to importer at a different rate. When the Federal Government has something to do, they know how to go and take money at another rate from the central bank. All these things are corruption. Let us have single exchange rate. Something that is so scare, why will you give people the opportunity to choose their exchange rates?
The Federal Government has restricted the list of things that they use forex to fund. Make everything available. The singular reason to solve this problem is to have one single exchange rate so that anywhere you turn to, it is the same rate you get it. There will be some sanity.
Power challenge is a thing of concern that is affecting SMEs in the country. Despite different reforms, the sector is still challenged. What is the way forward to revamp the power sector?
It is not an individual issue that you just raised. It is still a national issue. It is same Federal Government that will make a pronouncement and issue national policy. To start with, what is the energy policy of the government? What is the energy policy of the four last governments that we have had in this country?
Why don’t we segregate Nigeria into six geographical zones, make each zone independent, and call investors to come and understudy and let them provide power for each region and charge based on their viability. The way the telecoms service was liberalised, let it be done in the power sector too.
The agriculture sector is grappling through challenges, which are worsened by security problems. The CBN has introduced interventions but food inflation is still persisting, how can some of these challenges be addressed?
I agree with you; the greatest problem of Nigeria today is insecurity and it doesn’t look like we have a solution tomorrow. It is getting worse.
Coming to the issue of intervention, the CBN has come up with various interventions for agric. The question is: what do we have to show for them? Before you say you want to intervene in a particular area, there has to be a detailed report, a business plan. If farmers say they are getting loans and are unable to repay, look into it. I am a farmer. I have several hectares of farmland; I have not got a kobo from the government. But people are using insecurity as an excuse. They see any intervention from the government as their share of national cake; that is the unfortunate thing.
There is no genuineness in the so-called farmers who claim this intervention. That is why you have all kinds of agric associations everywhere. Go and check it. The real farmers, how much do they get? Do they even put it into production?
Presently, if you can go back to those old days, when you had the farm board, cotton board; let the farmers be sure of what they are going to get from the production of a particular crop. If today, you say you want to produce maize and there is a national policy, maize for this year is going to be sold at this. Don’t give them any money. They will go and produce. For that particular year you are producing maize, maize will flood everywhere.
If you have a formula that has worked in the past and you don’t have a better solution, the money they are using to intervene, let them put it down and say, ‘With this money, we have N250m to buy maize this year.’ Let them know, and the farmers will produce massively. Do the same thing for cocoa and others. Instead of intervening, use the money to buy it directly, then coordinate and export. I think that will be better than giving money to people who will come and give excuses. If you produce, you earn money.