Former Dean, Faculty of Social Sciences and Head, Department of Economics, National Open University (NOUN), Abuja, Prof. Ganiyat Adesina-Uthman, in this interview with Andy Asemota, speaks on the implications of the alleged printing of billions of money by the Federal Government

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What is your take on the allegation by Edo State Governor, Godwin Obaseki, that the Federal Government printed and shared N60bn as part of the funds that accrued to the three tiers of government at last month’s Federal Accounts Allocation Committee?

Actually, when I saw that information, I shared it with my students who are working with the Central Bank of Nigeria (CBN). The three of them are top managers in the CBN. One said he was still looking out for any possible link to verify it, but the others expressed doubts over the governor’s claim. So, I have not been able to get the facts from CBN, knowing that if such currency was printed, the CBN must be a party to it. Unfortunately, we don’t know who is saying the truth.

What are the economic implications if such currency was printed?

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Actually, if it’s true that the government printed such money and shared, what is the target? If it is not meant to boost real sector projects, then it will have an inflationary effect because it will increase money supply in the economy.

It is not actually wise to use that money for frivolities, because we can hardly see the effect in real sector of the money that has been going to states. It will not be favourable to the nation’s economy if the government just prints money and shares it to increase money in circulation. A critical look at the economy shows that inflation is very high already; around 18 per cent. So, if you want to increase the money in circulation, perhaps for people to have more money to be able to buy things, there are other ways of doing it.

I have been wondering that interest rate has remained at 27.5 per cent, even under the COVID-19 period when most economies were even reducing interest rates to attract entrepreneurs who are the real sector’s players to borrow. This is because if you have lower interest rates, they will be encouraged to borrow and invest more, instead of laying off workers. If they are not able to increase the employment rate, they will not lay off workers, and that will increase output. If you are putting in more money to do that, fine. But if you are not, then we may be running into more trouble, especially inflationary troubles. Look at what happened in Zimbabwe, it could lead to hyperinflation.

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What are the experiences of some countries that have printed money and shared them out?

In Zimbabwe, their money was so devalued and part of what happened was that they also printed money and circulated into the economy. Germany also did that in 1923, and it led to hyper-inflationary effect in the economy. So, it (printing more money) reduces the value of the money actually. The cost of printing, for example, one Naira (note) is more than the value of one Naira (note). When you print money to circulate; just to share, then we may be facing hyperinflation in the near future.

Is it a crime for the Federal Government to print money and share?

It is not a criminal act, but as I said, it is the motive that is crucial. Of course, the nation still prints money, that is why we have money in circulation, but if you want to really print for real sector development, it is not a crime.
Printing of money and sharing with state governments will even discourage states from thinking outside the box in terms of investment and exploration of mineral deposits their states have been blessed with. Everybody is looking up to the booty from the Federal Government; that means the oil money is not enough for us to share, and the next thing is to be printing more money to share. That shouldn’t be the next thing.
If the oil revenue is not coming in as expected, or as it used to be, that should push us towards diversification. We should really diversify the economy and adopt true federalism; let local governments be autonomous; let state governments be autonomous and let’s adopt regional system, if that is what we want to adopt to ensure that things are working, and not just be waiting for booty and oil money, because when it is not available any more, what will happen? As many always say, hungry people are angry people.

What will be the political and moral implications of printing more money that is not meant for the real sector of the economy?

Politically, let me say that until the CBN becomes truly autonomous, not reporting to the presidency, because the politics of government on running CBN, there will actually be a problem. There is no way they will print money without the knowledge of the CBN. Even the ones they have been printing, who is transferring to the state governments accounts? It is the CBN; the CBN is the banker of the government. So, first, there is need for freedom for CBN in the economy; that is the only way to prevent this kind of thing from happening. Where the CBN is autonomous, even when government says do this, print money, it will advise the government on the dangers as it can even push the nation into deeper recession than we are experiencing now.

Morally, I don’t think that it’s good enough if government just wants to create money because its reserve is depleted. Our reserve is a function of export and import, so, morally we should think twice before we do such a thing as printing money. We should look at the implications on the Nigerian populace, because it is the poor masses that will be significantly affected in the long run. I don’t think that government should do what it wants to do when it needs cash. Let’s look at what will make our economy work and what will put food on the table of the masses.

If people are aware that government has resorted to printing money at will, it could encourage the bad eggs among us to resort to anti-social behaviour, especially among the poor, who will assume that if the government can find a short cut, they could also find a short cut of getting funds in the economy without working for it. So, we should link the real sector with the financial sector. The economy is a problem in itself which is affecting us; not to talk of printing money and sharing for purposes we do not know. Morally, it’s not good.

Some analysts believe that the country is broke. Is Nigeria broke?

If Nigeria is broke, there are a lot of other things that we can explore. Nigeria needs to cut down on the cost of its governance, beginning at the National Assembly. The salaries and allowances of our lawmakers remain a mystery. From what we glean as the total take home package of a senator, it can pay the salaries of about 200 workers in the country.
Why can’t we cut down the allowances of the legislators, or better still, harmonise their pay into the salary scale? You can look at a professor who goes home with a salary of about N300,000, after all tax deductions, while a secondary certificate holder at the National Assembly goes home with more than N15 million in a month. That will not encourage a knowledge-based economy. They need to cut down on the cost of governance. It is too high in Nigeria. People talk a lot about this when they compare the salaries of the lawmakers with their counterparts in the United Kingdom, United States of America, and in other developing economies.

The Finance Minister said Obaseki lied and he fired back, telling the minister to stop playing the ostrich. What is your take on the bickering?

I think we need a third party to clear this, and that includes the CBN, because the finance minister is speaking on behalf of the Federal Government. Also, other governors could be of help in resolving the issue by either confirming or refuting the allegation. The information is important to Nigerians that want to know whether the government actually printed money and its purpose. Is it meant for the real sector? If it is not meant for target projects, we can be looking at hyperinflation in the corner.

The last line
I want to add: why should we actually want to print more money if we know that it can cause inflation? When you look at the inflationary rate in Nigeria, it’s already high. So, why do we really want to do that? If the government actually took that decision and implemented it, it could damage the economy, when people are just striving to survive.

When you also look at the effect of printing money on the exchange rate, it devalues our currency, and the currency has been devalued already, though they will not come out and tell us they have been devaluing the Naira. When the nation reviewed the exchange rate last year from N360 to N380, they called it another name.

If the CBN, the policy makers and the managers of the economy know all these implications of devaluation and inflation, why are we doing this (printing money)? And if the nation is doing it, for what purpose? We need to really re-think. We need to pay attention to the diversification that this government has started. There are a lot of things that Nigeria can produce. It is not only rice that should be focused on.
There are other sectors, especially the mining sector, the real sector and a lot of others that need to be developed. I know they did something in Ajaokuta very recently. What is the progress? People need information on the economy. If people have information on every sector that contributes to the Gross National Product, government will also be quite sceptical to do things that they know that Nigerians will question. Information is also quite important to Nigerians as more transparency and accountability are needed.