Way out of Nigeria’s economic quagmire
Nigeria’s economy is without doubt in dire straits, but as investors try to keep optimism for 2017 alive, how can the country begin to rebuild its economy? Peter Obi, a former governor, Anambra State speaks to CNBC Africa’s Wole Famurewa.
I think there’s so much to reflect on. It’s great to have you in the studio today. We were speaking earlier about the power sector and I was thinking about the many challenges that this economy has, especially in this new world of protectionism, populism, a lot more countries are looking to protect themselves first. I see Nigeria as exposed. I see that this is a country that at the moment is importing billions to feed itself. This is a country that doesn’t have an effective power sector and therefore industrialisation can’t happen. In my opinion, they were totally unprepared for today. Do you agree with this sentiment.
Well, Wole, yes we’ve made mistakes in the past. The first thing to do is admit these mistakes. Look at where we are and how we got here. Our difficult situation today is that we’ve accepted that we’re in recession without being fully aware what recessions are about. Because I don’t think Nigerians actually know what recessions are all about. We have a worsened security situation where you have children out of school, farmers no longer on their farms, and like the army chief said, a resilient Boko Haram. We have a widening disunity among the various ethnic groups in Nigeria. We have again resilient corruption because while the government is dealing with corruption it’ll say that it’s over but it’s still there. And considering where we are, we need to have in all these sections crisis managers. We need to pull together; every party. It’s no longer a party matter. It isn’t even a political matter. It is a matter of survival because we are in a worse situation and when you’re in a situation as bad as the one we’re in, there’s no time to trade blame, or dwell on years past. But what we’re doing today if you look at the headlines in the media, it doesn’t seem like it’s at the top of the agenda. We’re still chasing shadows.
What should be at the top of the agenda in your opinion?
The economy! The security! How we can come together as one people, love each other, care for each other and be able to move the country forward. These are critical areas we have to face and we have to do it very quickly. It is no longer dealing with it like it’s normal. It is not normal and it’s getting worse by the day. It is something like a cancer of the body. If you don’t address it quickly it spreads. That’s why you’ll have a situation like the dollar for instance. Last year, it was three hundred and something and we said we were trying to manage it but it’s only getting worse. We need to deal with it. It’s time to address it in the manner that is required and that is what we are not doing. We need to take radical position.
I imagine that the government would usually take the reins with this but looking at the history of the country, I struggle to see a time when people came together and cast aside their differences to fix the biggest socio-economic issues in the country. The question I have for you is, what can galvanise us to come together?
Maybe that was the problem in the past. Maybe that’s one of the things the present crisis will help us to solve. We have to deal with this as a crisis situation. The political leaders of all parties have to look beyond where they are, and look to tomorrow.
My point is that is not happening. We’ve had National conferences in the past that were supposed to be avenues for galvanisation but obviously it hasn’t happened.
It’s not like the conferences didn’t achieve anything, but that what we achieved during all those conferences has not been looked at. It’s the critical things we discussed at those conferences that if dealt with today can help lead us to where we’re going tomorrow, but we seem to be trapped in the past. When you’re trapped in the past, it doesn’t solve anything. Also, it deprives you of the energy and thinking for tomorrow. We have a country where in 30 years time our population will double. Nobody is thinking of that. Nobody is thinking about tomorrow. And if you don’t think about tomorrow you’re finished. So we need to do something very quickly and there’s a lot we can do.
How can we bring the political class to this urgency? You’ve mentioned the Sovereign Wealth Fund being a clear example of a move that if we came together as a country we would have started saving and that would have helped us out of the crisis that we’re facing right now. The concern that many have is that we could wait another ten years and still those lessons will not be learned. So how do we move?
I say this everyday, people start saving in a crisis situation. If you look at most of the countries that save, they started when they were in a situation of crisis and that’s where we are. I’ve said this before, that if we had saved 5 per cent of all our oil earnings from 1960 till today which is about N1.2 trillion and considering a compound interest of 5% should have been about $150 billion dollars today. We won’t of course imagine what would have happened in that situation, and that was 56 years ago. I’m saying we have 44 years to our 100 years of being independent and if we decide today that we’re going to saved a small amount today we’d have about $50-60 billion dollars. And we’re saying today that we’re looking to borrow $30 billion from development agencies which is already coming at literally no interest. I was in government when Ngozi Okonjo-Iweala was crying in meeting after meeting, let’s save money. We need to save for the rainy rainy day. We said no. Some said this woman should not be in the country. We even went to court as a body to challenge savings, and look at where we are today. And instead of us to realise our mistakes today and start saving we have a constitution that says we can’t. What kind of a constitution is that? We should amend it immediately. The issue of saving should be included in our constitution today. Oil for example is a depleting asset and we don’t know know when it’s going to finish. But even with all that we’re not even saving for tomorrow. So we should amend the constitution to say we as a country must save from our natural resources. That’s how we begin.
Last year there was a conversation about restructuring the country, and some were saying, maybe out of frustration, that there should be some kind of change in how the system works today. What are your thoughts on that?
Well I support restructuring because if we take a look at what has happened in the past, where we had regions taking care of themselves, we fared better than today where we have this unimaginable situation that we’ve found ourselves. So if we had kept the structures the way the were when the north had huge bags of groundnuts and the south west had its cocoa and the south east had it’s oil palms, and the Niger Delta had the oil and each region was struggling on their own. I believe we’d have done far better because by now we would have been exporting the meat of cattle that they export in Australia. Every region would have been able to earn foreign exchange. The South East would have by now been able to develop cocoa and its value chain. But we collapsed them and it’s put us in this unmanageable situation.
If we look at the reality of many states in the North, if they were to rely less on the oil flows right now which is supporting many of them, how could they cope?
I disagree with you. You see, I believe that oil is part of our problem. There are so many countries in the world that do alright without oil. We need to discard oil and put up our thinking caps. Now we’ve found ourselves in a feeding bottle situation. Now everybody is thinking about how they can get a hand out from the national cake. Where we are now requires a critical attention to how we can save the country and the economy. Restructuring would bring the best together, and that’s when we’ll learn that our diversity is our strength. Today because we have one thing that we’re sharing everybody’s quarrelling about how to share it.