“To save the economy, Nigeria should stop borrowing to finance recurrent expenditure” | The Guardian Nigeria News
Chairman of Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi in this interview with ONYEDIKA AGBEDO says that allowing states to control resources in their domains will pave the way for economic growth. He also cautions the federal government against borrowing to fund recurrent spending, saying borrowing must be tied to well-priced projects that should be able to repay their costs. Ogunbiyi also points out the exit from the incessant strike by university professors and the problem of brain drain in the health sector, among other issues.
Nigeria’s inflation rate has been rising for many months but has come down in recent months, according to the latest figures from the National Bureau of Statistics (NBS). Do you think the NBS numbers reflect market prices?
When COVID-19 arrived, economic activities were not what they used to be. But now we have some stability and I think it has a positive impact on economic development and the inflation rate. What was published by the NBS is close to reality when we look at how the country’s economic activities have improved. It’s not just government spending that has an impact. When you look at individuals and various businesses, you will see that economic activities have indeed resumed and that will definitely have an impact on the economy. Look at real estate, trade and commerce, even major cities in Nigeria, economic activities have resumed except in the North where we have insecurity issues.
Can you explain how insecurity affects the business environment, as today many Nigerians who need to travel for business are afraid to hit the road due to insecurity, and traveling by air is become quite expensive?
I am satisfied with the aviation industry every time I travel and see the activities at the airport, and the response index with the level of traffic; it’s phenomenal. Airlines are buying new planes. It’s not that they’re too comfortable, but they manage themselves and they react. Why will people abandon the roads and opt for planes? This is at a big disadvantage, I must say. What is the cost of a flight from Lagos to Abuja? It’s so high. But can you blame them? Insecurity in this country has affected trade and commerce. The customs officers even bother the few people traveling by road with their goods. Customs must secure borders. But today, if the goods have passed the borders and someone is traveling inland with the goods, they have to go through several checkpoints through customs, and for each point, they have to deposit something. This will only increase the cost of goods, apart from insecurity on the roads. And in fact, you must organize your safety if you go by road. Thank goodness for information technology (IT); services can be rendered online now. But anyway, some services have to be performed physically. Apart from the security challenge, we don’t have good roads.
Nigeria spends a substantial portion of its revenue on servicing debt and continues to borrow. How sustainable is Nigeria’s growing debt?
Let the government do an analysis of the profile of the debt and tell us what it used each debt it incurred? The National Assembly will not ask questions. There is nothing wrong with going into debt. America borrows but remains the richest country in the world. They go into debt to support themselves. If you are going to borrow money, tie it to a particular project. Let the project have its life, its cash flow and the project will pay for itself. If it’s a social project like education and health, let’s see exactly what you used the money for.
I don’t subscribe to Nigeria giving more credit because they are taking that money to gratify a few. How can you go into debt to meet your recurring expenses? is that how it’s done? How sustainable is it? It is unfortunate that you transfer debts to other governments after you. I will say that Nigeria should stop borrowing to fund recurrent expenditures. Project costs awarded in this country are mostly inflated.
If you borrow money, give it to the people who will carry out the projects, but do not overcharge the cost of the projects. How many billions have they spent? They are too complacent; no one asks questions. And when our young people rose up, they killed them. I just pray that in the next elections, Nigerians will vote correctly. How can you sell your conscience because of money?
Young people have the power to change leadership in this country. Let them come together and form a party. They have the population. I challenge our young people to rise up. We have no other country. Our country is a country of which we should be proud. I challenge young people; don’t just protest. There are better ways to do it. General elections will take place in 2023; they can organize now. Let them register online now. There will be holiness in the unity of Nigeria; we should not compromise it. We can do better.
Many states have very low internally generated revenue (IGR) and rely heavily on federal allocations to meet their needs. How to solve this problem ?
One thing affects the other. How many states are viable as they are currently run? This is why I support the idea of regionalization. Many of our states are not viable. If we manage federalism properly, the states should have control of all the resources that fall within their domain. Central power should be decentralized to the states.
For example, Osun State can provide resources that oil provides. We have stockpiles of mineral resources in Osun State, but what does the state get from the mining activities that the Chinese are doing there? If the federal government allows Osun State to take over the resources and manage them, you will see the development that will follow. The same applies to many other states.
It is the way we apply our federalism that is in question. We first bring resources to the center and the center takes care of it now. Look at the recent turmoil over value added tax? A state that contributes little receives more. Some states challenge the federal government. They are right! They should challenge this federalism. This is the beginning of the restructuring. States should allow the Supreme Court to rule because they are right. It takes boldness on the part of a state governor to challenge the federal government. If all can wake up and get the SANs to interpret the law, let them go challenge the FG and do the right thing.
Again, in terms of IGR, a lot of people cut corners. How many companies are registered in the states? How many companies pay taxes? Tax evasion is criminal. If you are a small trader, the business must be registered. Who enforces the laws? The laws are there. I wish and pray for good leadership to emerge in this country and in every state.
Doctors and teachers are still on strike in this country. In fact, the Academic Staff of Universities Union (ASUU) is currently on a warning strike as many home-trained doctors continue to move to foreign countries in search of greener pastures. How can the country get out of this problem?
The implication is capital flight, also known as brain drain. It is because of the insensitivity of our leaders. Tell me a hospital you can walk into and get the services you need? Is it a university hospital? They are glorified hospitals and we have a lot of people working there who wouldn’t even go to work. All doctors have their own private practices there due to the continued neglect of these facilities. You will therefore continue to strike after strike.
This is found not only in the health sector but also in the education sector. What is the budget allocated to education and health? Are the funds going to the projects for which they are intended? When you select incompetent people, they value the wrong thing. Someone spoke of knowledge, power and wealth; only a fool will go for wealth. If you have knowledge, that knowledge will give you power and you will use that power to create wealth.
We know that in the public service, when you retire, you receive your pension. The fund of the contributory pension scheme is around N13 trillion. The government borrowed almost 80% of the funds. How are they going to repay? Who cares about retirees in this country? If you retire today, you won’t even talk about a pension for the next five years and you might even be dead. It is regrettable. There has been neglect over the years, but there has to be someone who is competent to deal with it.
Until we follow the conventional path of seeking knowledge to create wealth, but just spend and spend, we will only be turning the circle. What do we produce? Isn’t it shameful that we don’t have a working refinery? Most of the funds taken overseas will be lost when the owners die, as many Nigerians do not disclose what they have to their children and wives. Even when they divulge it becomes a major problem because if you have huge sums of money and you want it back, the lawyers will want to feed you fat; and if you don’t have the money to pay the lawyers, what will happen to the money now? Many resources are lost.
In essence, you are saying that with good leadership, Nigeria will overcome all its challenges…
(cut) There are a lot of very successful business gurus. They went there to take leadership courses for this country. But the way leaders are selected in this country is a challenge. By the grace of God, I started with Mutual Benefits and we now employ over 5,000 Nigerians. The federal and state governments that are the largest employers of labor, what do they give? There are many officials who are totally unproductive; there are those who are corrupt. It’s not as if they have nothing to offer, but because the system does not encourage them. We need good leadership in this country. When you have these good qualities, you put them into practice to make this country grow.