Renowned economist, Prof. Pat Utomi, says Nigeria can only progress if people who don’t know much about the economy are kept away from politics. He said people who have the right knowledge should be allowed to run the economy. He made this assertion in a Channels Television programme tagged: ‘Politics Today’. DAVID LAWANI and DEBORAH ONYOFUFEKE monitored the interview.
Are we in trouble economically, would you say Nigeria is broke?
We are not only in trouble, but we are also in serious trouble. Nigeria is not only broke but Nigeria is also broken and you cannot talk of the solution unless you talk about the background of where we are. There is only one moral law in Economics and that law is that it is not acceptable to tax a generation to execute something that they will not benefit from. That is just the same thing as saying it is not morally acceptable to take something that belongs to all generations of Nigerians and spend it in a way that future generations who are entitled to that do not get a share of it. This is what governing in Nigeria has consistently done for more than one generation now. I have spoken on this matter several times in the past and provided a template on how we should deal with these issues. It’s coming home to haunt us, in a way that generations of Nigerians, young Nigerians, who are already angry, will get even angrier if they know what is responsible for where we are right now in terms of the economy and what we are about to pass to them because of our wilful mismanagement of the Nigerian economy. In 1996, the economist of London interviewed me in the sense of exasperation about how we are mismanaging crude oil revenue use. I said in that interview which was carried out by Richard Dauda, who was then the editor of the economist. I said you know if we could manage to get our generals as friends and their politician collaborators and buy them an island and give them access to all of Nigeria’s oil, if they promise not to show their face or interfere with anything Nigeria, Nigeria will be much better off. The comment of the economist was fair. This has continued in the way we’ve mismanaged oil revenues. In the mid-2000s, two Colombia university economists wrote an IMF working paper that said, given the way the Nigerian government uses oil revenues, Nigeria’s total welfare as a result of oil revenues, will be better utilized if Nigeria did not have a government. They went ahead to suggest this distributable concept, that if you collect all of Nigeria’s oil revenue, that there are two million Nigerians, there’s $2m from oil, send every Nigerian $1. The welfare function, Nigeria will be better off than the way the Nigerian government spends oil revenue which does more damage to prospects of prosperity in Nigeria, than if people just got their money and spent it as they liked.
Why this concept?
There is a way a reasonable person thinks. If you are the head of a family, any responsible father will put away some money and ensure that he manages in a way that when the rainy day comes, he can pull from it. Nigeria’s political class has systematically plundered Nigeria, by depriving Nigerians of what belongs to them. When the concept of the so-called excess crude fund was been pushed by people like myself, in the (Olusegun) Obasanjo administration, I recall that I was challenged by many people. The thing is, the federal government was trying to take this money, and my friends in Lagos were like, how can you encourage the Federal government to take our money I replied you guys should be smarter than that. Like any mutual fund, if a portion of any money were to be taken and invested for future benefits, the quantum of that money that belonged to the state and what eques to profit or interest belongs to that state. It will be distributed accordingly. The idea that the federal government has taken your money does not make sense. I got pummelled till I argued them out of that conversation but what has happened, we have turned to that saving when it suits us. The crude oil, gold, or whatever was put in the ground by God for all Nigerians to enjoy and not for an irresponsible generation to squander it for the future of their children which is what we have done What has happened is that in the way we have spent money, we have even made creating wealth more difficult and that’s what we mean when we say production versus revenues and of course conspicuous consumption. It is irresponsible the way we have squandered the Nigerian economy
How would you describe the management of the economy?
Abysmal. That’s why we are not producing
But the APC government said they will fix the economy or is it that the economy has been badly handled or they just found themselves in a bad situation?
Just found? Are you kidding? The conditions have been rosier these last few years than they were for several years in this last part of our country. The first thing you do when you begin to site crisis, you begin to manage consumption, show me how the national assembly has saved on its budget in the last three years as recited when they saw things getting worse. Show me how the presidency has saved on its budget. Show me… we’ve been consuming like there was no tomorrow and that’s why we are in the trouble that we are in. If we only could have stimulated production and consumption to then push production, I will understand that. We are not producing so we are importing and we are consuming those imported things beyond our level of what is decent. Ask me why all these government agencies should be buying all these SUVs, brand new ones for all these officials who don’t know what they are doing. When Obasanjo was the head of state in this country and I was a young troublesome youth corper attacking everybody, he said look, crude oil prices have just dropped. You must go to a low profile and as a head of state, he reduced himself to a Peugeot 504 as the official car and if the head of state is running Peugeot 504, nobody could run on a car bigger, and its called low profile. Show me one signal that those who run Nigeria today have gone through any kind of austerity measures cutting down because Nigeria is in economic trouble.
How do we salvage the naira considering its free fall of it in the market? What does it portend for the economy?
The problem the naira is facing today was not caused in one week. And, we cannot salvage it in one day. Let me put it very clear to you. Markets are very important for progress. Institutions are critical wages that make markets work. The foreign exchange market was built with painstaking efforts over some time. The period that I talked about earlier in the 70s was a period where we had a blocked currency. Central Bank approved every transaction and it was a very tedious process. And, we knew that if the Nigerian economy was to resume growth, this was part of the problems of the structural adjustment program. We needed to go to the market for a variety of things including. And gradually and systematically with all the problems we started with a two-tier market and cost firm. We did all of these things and finally, the foreign exchange took place. But fairly stable and the Central Bank manages it very well and everyone gives confidence in the international market. And everybody aligns. But suddenly in the last 6 to 7 years, we began to play games. We began to have multiple exchange rates. It was inevitable for anybody who understands institutions and economic performance that what is happening today will happen. So, it has happened. It was predicted and it has happened.
How do we fix it?
It will not be a one-day fix. It is going to bring back the confidence that we will believe in the markets. First, we have to ramp up production. We have to reduce the consumption of non-essentials. We got to begin to do some austerity. Don’t waste this money that doesn’t exist. How do we stimulate people to produce? How do we begin to export? In an economy that is exporting, devaluation doesn’t necessarily mean the end of the world. It might be an incentive to many people that, in my time, the Japanese Yen was over 100 to a dollar. And, they built an export economy because their exchange rate was the way it was their exports were considered cheaper abroad. And, they continue to build their export portfolio. And, then the exchange rate gets stronger and better. When Yen crossed 200 I remember clearly, that there was almost mourning in Japan. That their exchange rate was getting too strong and it will negatively affect their exports.
What is the way forward for the economy?
So, the real issue here is that we are not producing and exporting. We are hit very badly by the fact that we so import dependent. And the prices of those imports are going to go crazy now that we are even so dependent on the importation of food. We should have been going for clear national security with food security, we didn’t. We were unable because we were importing everything. What we eat in a country that should be exporting food. We can fix this if we take ourselves seriously. Keep people who think politics is how to make money, keep them out of politics. And get people who want to serve to earn immortality for giving of themselves for the good of the common person and common good.