The State Of The Nation
Nigeria’s Minister of Information and Culture, Lai Mohammed, recently sat down with CNBC Africa’s Didi Akinyelure to discuss the economy and the investment climate, corruption, insurgency and expectations for the country’s 2016 budget.
AKINYELURE: Honorable Minister, thank you for this opportunity. Let’s start with the diversification of the economy. Given that we are in a period of low oil prices, a lot of Nigerians feel that although the intentions of the government are good, the government needs to provide a more enabling environment where local industries can thrive and survive. What steps is the government taking to turn the talk into action?
MOHAMMED: When people talk about diversification, they need to understand that it’s a process. It takes time. With diversification, you stop relying on one product alone and you develop other sources of revenue such as agriculture, tourism, culture and solid minerals but you need the basic infrastructure to support those new sectors of the economy. By the time the 2016 budget is approved, it will be clear to every Nigerian that this government is committed to the process of diversification. We are spending about 30% of this budget on capital projects alone – power, roads and other infrastructure. It is the infrastructure that will support the diversification in other sectors.
AKINYELURE: Still on diversification, we know that the government has prioritised agriculture and is focusing on rice production. Talk about the steps the government is taking to diversify the economy through agriculture.
MOHAMMED: Our aim is to pick certain crops and one of the most important is rice. Today, the amount of foreign exchange that goes out for importation of rice is enormous. If we succeed in making Nigeria self-sufficient in rice, not only are we going to have food security but we are also going to save a lot on foreign exchange. We have given ourselves a deadline; we will stop the importation of certain crops but let’s remember that even agriculture has a cycle and that cycle must be completed before you start seeing results.
AKINYELURE: What about some of the other sectors? You highlighted the need for the development of the culture and tourism sector to provide an alternative source of revenue for the country.
MOHAMMED: One of the things I came to do in Lagos this week, is to seek the support of the Lagos State Government in our drive to make tourism and culture another revenue source for the government. The Lagos State Government has set an example. Anywhere in the world where tourism is successful, basic infrastructure such as security, power, roads and railways are available. In Nigeria we have tourist sites and for these to be converted to tourist attractions, we must provide roads, electricity, security. This is exactly what the 2016 budget aims for; providing access to tourist sites, working to preserve our heritage and monuments. Then, we can get the local communities involved in the local economy of tourism.
AKINYELURE: Let’s talk about corruption. Nine months in office, would you say that the government has been successful so far in the fight against corruption? And what facts could you provide to back that especially given that the people the government found to be corrupt are still largely unknown to the public and walking free?
MOHAMMED: I think the most important thing is that we have changed the narrative. We have succeeded in letting Nigerians know what corruption has cost us over the years in very graphic terms. About two months ago, I disclosed that between 2006 and 2013, 25 people allegedly embezzled about $6.8 billion. Now $6.8 billion in plain terms is the equivalent of the budget of four different countries. If you want to bring this home for Nigerians to understand, these funds will provide 635 kilometres of dual carriage roads and 20,000 housing units. There will be enough money left to construct one model hospital in the east of the federation, 183 schools and also educate 3974 children from primary school to tertiary level. We want Nigerians to know why they must take ownership of the war against corruption. We are taking steps to ensure that corruption is not as attractive and not as easy as before, that’s why we introduced the treasury single account. I spoke to the Minister of Finance and this month alone, we would be saving between N2 billion to N3 billion from ghost workers; about 23,000 persons have been detected to be ghost workers. So when you are able to block the loop and stop the internal haemorrhage, it will be impossible for people to be corrupt. Our campaign against corruption is not to victimise people. The good thing is that in fighting this battle, we have decided to go through the court. We have been accused of not adhering to the rule of law and my reply to that is, if we were not adhering to the rule of law, the accused will not have their day in court. The fact that they are in court means we are adhering to the rule of law. The rule of law is not a shield against corruption, nor a shield against their unlawful acquisition of wealth; it simply means there should be no arbitrariness and we are not being arbitrary in the way we are conducting this.
AKINYELURE: Many Nigerians have commended the President’s stance against corruption and insurgency, however, there has been some criticism on his methods of revamping the economy. Many say that he doesn’t talk about the economy enough and that in a way he doesn’t listen to the investment community. What’s your response to this?
MOHAMMED: A President must be focused and determined. Many who have come out with one solution or the other on the economy miss the issue. This is an economy that is dependent on just one product; any volatility in that sector is bound to affect the economy no matter how brilliant your economists are. Oil prices fell to a 12 year low, going under $30 a barrel. A year ago, the same product was selling for about $100 a barrel, which means we have lost about 70% of our total revenue. You do not grow other sources overnight; this is the underlying issue. How do you manage this economy when all of a sudden, your major flow of revenue and your major source of foreign exchange has dwindled? There are factors that determine the exchange rate of a nation. Firstly, your source of revenue, secondly, your source of foreign exchange, thirdly, your balance of trade. A President in turbulence must make a decision. We found that a huge percentage of foreign exchange is used to support things we don’t need. Unfortunately as a nation, we have developed very exotic tastes. This is a country where Louis Vuitton probably has the highest number of clientele; where companies that make champagne have the largest market. Things we can do without we spend our foreign exchange on. This government says No! Let’s look inwards. If there is less pressure, the naira will appreciate, and the only way there can be less pressure on the dollar is if and when we develop a regime of imports substitution or if we completely move away from things we want but don’t need.
AKINYELURE: Still, we have a situation where even local manufacturers are finding it difficult to access the dollar. The dollar hit N400 just last week and industry workers say large scale factories could close down as a result of the forex scarcity. Is the President concerned about this?
MOHAMMED: Of course. The government is worried about the inability of many industries to find necessary foreign exchange to import raw materials. Unfortunately, we are still working out the percentage of foreign exchange that goes to raw materials. The foreign exchange rate of a country is sometimes driven by emotional issues, based on scary news that is passed around which could lead to scarcity. Mr President last week decided that the Ministry of Trade and Investment should get involved in the allocation of foreign exchange for industrial use. This way, we will know the raw materials we need and we will know who is taking it. With the way things are now, we are depending on the honesty and patriotism of industrialist to use the foreign exchange they receive for the right reasons, for raw materials. If I can get the dollar at N197 at the official market and it costs about N350 to N400 in the parallel market, I can make a profit of N150-N200 on a dollar. There is no incentive for me to use that dollar for raw materials, and most people who are not patriotic would participate in round tripping. All in all, yes we are concerned because when industries fold up, we end up with more unemployed Nigerians.
AKINYELURE: Let’s move on to security. The President set a deadline for the army to end insurgency in the North-East, and while it is great to see that the army has been successful in driving out Boko Haram from some of the regions controlled in the past, a lot of people still ask if the root cause of insurgency has been solved in Nigeria?
MOHAMMED: We must understand the insurgency phenomenon itself. Insurgency has four phases. The first phase of insurgency happens when a group tries to compile its grievances and ideologies, telling the world that they want to impose their own views. Insurgency imposes its own world view, its own political structure, economic structure, and social structure upon a community. When they are successful, like in Iran, they are termed a revolution. When there’s a revolution settlement as seen in Guatemala and other Latin American countries, it becomes a negotiated settlement. When they are depleted, like in Nigeria, the consequences are different. As of today, we can say very clearly that the military has done its job in decimating the Boko Haram insurgence. In the past, Boko Haram was controlling over 70% of the North – in Borno state, Yobe and Adamawa. Today, they have been reduced and chased out of these territories. They have no sanctuaries but just like most insurgencies, once they are decimated and can no longer fight, they are disperse into communities; they form cells and they start attacking soft targets. This is the period where the government will increase surveillance, intelligence gathering and also enjoin people to be more vigilant. Until we address the issues that made insurgency attractive, we will not be able to solve the problem completely. These issues are unemployment, corruption, bad governance and lack of opportunities for the youth. These are the things that combine together to make insurgency attractive.
AKINYELURE: Let’s talk about Nigeria’s 2016 budget. Should we as Nigerians be concerned about the errors identified in the proposed budget and when exactly can we expect to see the budget come through?
MOHAMMED: I am happy you used the word errors, that is very important. There was a lot of distortion in the budget. The budget that the executive arm of government submitted to the assembly was distorted and tampered with by the bureaucracy in a manner that put the government in a very bad light, but I am happy for two reasons. First, it is a measure of our transparency that we decided to post the budget on the website so that people could see it. They came out and said we have seen this anomaly and the Minister of Budget and Planning admitted that errors were made. These errors were corrected and the executive arm and the National Assembly are working to ensure that the budget is passed before the end of March.
AKINYELURE: We heard that the major reason for the delay in appointing the county’s Ministers was the decision to review the activities of ministries with a view to block leakages. What exactly has been achieved in the cleaning up of the civil service?
MOHAMMED: First, we reduced the bureaucracy from about 29 ministries to about 19. This way we saved cost. With 29 ministries we had a bloated bureaucracy. Secondly, a lot of restructuring has been proposed within the existing ministries so that we have a lean government. We will use the available resources to run the government efficiently. Most importantly, it is not business as usual in the civil service. Even with salaries, we are finding out a lot of anomalies, and making a lot of savings. The flamboyant style of yesterday’s ministers and public officials has been cut down completely and the government is focused on ensuring that people are held accountable for their actions.
AKINYELURE: On to the investment climate. We know that the President recently visited Saudi Arabia and it was reported that some investors from the country were interested in coming into Nigeria. Is Nigeria actively chasing countries in the Middle East for investment? We know you have also recently made comments on investment from China.
MOHAMMED: We are chasing investors from all over the world. The investors want to know the cost of doing business in Nigeria. In the past, the cost of doing business in Nigeria was the highest in the world. With the fight against corruption, we intend to change that. People want to come into a country, invest their money and repatriate their profits. If there is any disagreement between the parties concerned, they want to know that they can rely on an impartial judiciary that will disperse justice fairly. With our plan to concentrate more on the provision of infrastructure and create an enabling environment for the industrialists and investors, over time, we would attract many investors to this country. Today, the former image of the state is slowly dissolving and disappearing and we are confident that we are going to see many investors coming in.
AKINYELURE: You have been very vocal in your criticism of the past government and some Nigerians feel that perhaps this government should focus on its own journey instead of constantly blaming the previous government for things that happened in the past. Why have you taken this approach? You are getting quite a lot of criticism in the media for it.
MOHAMMED: Once you start fighting corruption, corruption will fight you back. Corruption in Nigeria has a huge and strong following. These people own newspapers, television stations and radio stations. Thus, anyone who is vocal about fighting corruption should be prepared for corruption to fight back. There is no way you can discuss this economy without making reference to what happened a year ago. These are historical facts. Crude sold for $100 about a year ago. The question is, what did we do with the surplus? You cannot hold us responsible today for the situation with the exchange rate or for the weakness of the Naira, when you consider the fact that 90% of our foreign exchange comes from crude. Other countries of the world are experiencing the shocks that we are experiencing today. However, these countries are cushioned because they utilized the windfall from the crude to invest in infrastructure. If once in a while we make mention of the past, it is not that we are not looking forward. You cannot go forward without appreciating what happened in the past. You can fault me emotionally but you cannot fault me factually. All you hear or read is just corruption fighting back.
AKINYELURE: Finally, what is the communication strategy of the government going forward.
MOHAMMED: The most effective communication for any government is to continue to involve the stake holders in every community and this is what we have been doing. Each ministry has its own programme. In my ministry, I started by discussing with the Nigerian Union of Journalists, the Guild of Editors, the Broadcasting Organisations of Nigeria, the National Association of Women Journalists, Newspapers Proprietors Association of Nigeria, Publishers, columnists, on-air personalities, bloggers. I have visited private radio stations and newspaper houses. We must not allow there to be a gap between the government and the people. Nigerians must be briefed and informed. There must be a two-way communication between the government and the people and this is what we will continue to do in all the ministries. We will ensure that Nigerians are not left in the dark. We are receptive to comments and criticism from the people.
AKINYELURE: Honorable minister, thank you so much for sharing with us and for your time.