Tinubu’s govt inherited dead economy from micro-economic point- Soludo

Anambra State Governor, Prof Charles Soludo, speaks on the present state of the Nigerian economy, his proposed 2024 Appropriation Budget of N410bn to the state House of Assembly, and the long-awaited local government elections, among other sundry issues in this interview on Channels TV Politics Today, monitored by Cajetan Mmuta

You recently presented a 2024 budget of N410bn to the state House of Assembly, out of which N120bn is going to be sourced from borrowings to fund the deficit. Can you explain to the people of Anambra State what you intend to do with this borrowing and specifically which areas are they going into?

It is a N410bn budget with about 23 per cent of it accounting as recurrent expenditure. If you recall we have been in office now for 20 months and within this period we have been doing what we call foundational issues; issues of law and order. Eight local government areas were taken over by hoodlums before we came in and we have been fighting them to a standstill to take back our state. There are also the very severe issues of managing waste, law and order, rebuilding schools, ending the era of schools without teachers, and ending the era of hospitals without doctors. We are trying to pick up the pieces with a road crisis in the state, we declared a state of emergency. We have over 400 kilometres of road projects that are ongoing and we just awarded another 47 kilometres of road construction in all the 21 local governments of the state now we have reasonably taken firm control in terms of having our hands on the foundational issues we thought that next year 2024 is the time to change gears and begin fundamentally on our transformational agenda which has us focusing on about four new cities as it were and putting in place those foundational infrastructure that will turn Anambra state from being a departure lounge to becoming a destination choice, preferred destination to live, work, invest, relax and enjoy. And that agenda has to begin in earnest because ours is an agenda with a deadline. And so, the budget that we presented and that we said N410bn with 77 per cent on these investments in our future on health and education. Health is about 41 per cent and education has about 141 per cent increase. And of course, investment in infrastructure continues with over 100 per cent increase and so on. But put together as getting down to your question about the deficit of N120bn, let me put in context for that and that is that last year when I assumed office in the Seventh Assembly, we are now in the Eight Assembly; appropriated room for us to borrow N100bn to address the big infrastructure deficit. Up till this moment, we refused to borrow. Even this year’s budget has an assumption that we are going to borrow about N90bn to fund this year’s budget. Up till this moment, we still have refused to borrow a dime of that. The principal reason is as follows; we decided that we can only borrow on two grounds, number if the loan is concessional and number two if it is targeted at a project or projects that we can show to the people of Anambra how those projects will be able to pay back the loan over some time. We are not borrowing for consumption and as you can see in the statements we made in terms of the share of recurrent to capital is barely 23 per cent of the entire budget. So, yes, and as I said in my budget speech, even that N120bn we are not certain that we will borrow. We will only borrow to satisfy those two criteria. Number one is concessional and number two is targeted at specific projects which we have identified that will be able to pay back over time. As I said three new cities are in the pipeline and some of the foundational infrastructure will help Anambra become a preferred destination of choice.

When you came on board as Governor, you met a debt of N109bn, which you are servicing, and now you want to borrow about N120bn, how will you be content with this?

It’s a very legitimate concern and that’s why like you said I will probably be the first governor in the country that the previous parliament approved for him to borrow and he refused to borrow. And then that was for last year. I am now in my second year. I will complete my second year by March and they still authorised me in the budget to borrow N90bn and I refused to borrow. Twenty months down the line, we still have not borrowed a dime because, well, you know my background, I am very bullish about fiscal management, and ensuring sustainability, and one legacy I would like to leave is to leave a fiscally sustainable state. When we look at our numbers and see whether we are on the path of sustainability or not, you can also see the recent publication by the Budget Office about the budgets of the states. Anambra now ranks among the top five and part of it is fiscally because we are very austere in terms of the way we manage, cutting public consumption by elimination of waste almost entirely. Before I assumed office, for example, it was costing N137m to clean offices, and facility management a month. We have cut that with about N11m. As we speak we haven’t even bought a bicycle for the First Lady of Anambra and we are very, very austere in terms of managing the meagre resources that we get to keep Anambra on the path of sustainability. Also, we are working very hard on our Internally Generated Revenue so it takes both sides working hard on increasing revenue and then cutting waste to the barest minimum or almost near zero with an eye on long-term sustainability. And that’s why yes we are dealing with debt servicing no problem. We are also even some of the legacy debts including four years before I came in, commissioner had not received their gratuity. They are owed their gratuity; we have gone back and we are clearing that backlog and everybody who had retired under me had been paid their gratuity as at when due. They receive their salaries and pensions even with these palliatives; we are evening paying N12,000 to about 59,000 workers and pensioners for four months and so on. So, we have now brought our fiscal trajectory on a very sustainable path and that for me is very critical. While now we need to ratchet up, we need investments that will in the future generate the revenues to be able to continue to pay back the loan itself. And that’s a very fundamental point that I have made and I want you to take this important point and that is that we are prioritizing project financing. We are trying to ensure that when we borrow we can show where the money is going. And thinking through to understand that this particular project has a high probability of generating the revenue to be able to pay back, otherwise, you just put the state in an unsustainable position. So, now that we are on the list of top five in terms of fiscal sustainability we intend to deepen this going forward.

What about the local government election; was there an omission in your budget or is it that you don’t want to hold the local government election because there is no plan or item in your budget presented to Anambra State House of Assembly?

I think you must have been reading the wrong budget. I think you missed it. The point is that there is a commitment that we are going to hold local government elections. What we can’t tell you is the specific date. I am going to tell you that but we are actually and fundamentally restructuring the local government through a system to even put it on an even scale. I will give you an illustration. Part of what we inherited was that the arrears of gratuity to retirees from the local government system for four years amounted to over N14bn, but there are some foundational matters to put in place. We are now restructuring the local government and getting them to basic institutions to begin to deal with the grassroots, what you might call service delivery to the grassroots that are even participating in waste management, street lights, management in environmental matters, and so on. And in that budget, you will see some appropriations we designed to strengthen the institution of the State Independent Electoral Commission (SIEC) which we are going to do very strongly this coming new year and if we are satisfied that the basic pillars have been put in place of course, I will be glad to see the local government system strengthens even more so our communities as well. We are strengthening them in a way that hasn’t been done before.

How much independence are you giving them, are you allowing them to spend their money, and run their affairs as an entity that the constitution guarantees their independence?

Of course, what are they spending the money on, what is it being spent on the state government? If you look at the budget it has no appropriation there for the local governments. There is nothing in the budget where you have local government funds to fund the state government’s programmes. They have their joint allocation committee (JAC) that manages the joint funds of the local governments and that works on its own. The committee is fully constituted and they deal with their issues as it were. There are some advisories from us, and that is why we can pay the retirees- that’s why they can start clearing the backlogs of pension and gratuity arrears as the case may be that’s because the state doesn’t meddle in their affairs. We don’t need a dime of their own money.

You were a former CBN governor and as Governor of Anambra State, you are a member of the National Economic Council, the Godwin Emefiele era has gone and we are in Olayemi Cardoso administration, is there light at the end of the tunnel to economic recovery?

Let me sound a note of warning. No matter how you try, you are not going to drag me into the issues that you defined. To be clear, I am not going to be commenting about the Central Bank of Nigeria, that’s an institution that I was privileged to lead for five years, and having left that place, and have moved on. If there is anything that I have to comment on, it has to be bilateral to communicate my views, advice assessment, or whatever bilaterally to whoever is at the helm of affairs. And so, Cardoso has just come in and I can say from what I have heard or heard from him so far I think he has his mind in the right place. We now want to see all of those things in the coming weeks or months. As for the National Economic Council yes, the council is an advisory body created by the Constitution to advise the President and it is made up of the Chairman, who is the Vice-President, the governor of the CBN, and the 36 state governors and what we discuss there again is advisory because I was once the Chief Economic Adviser to the President and so I understand what it meant to be an adviser. We don’t advise in public. You don’t advise your principal on national television. The advice is a private thing and when you advice and your principal accepts your advice it’s no longer your own, it becomes that of your principal I want to believe that from what I have seen so far the National Economic Council is up to it, made up of very experienced, knowledgeable team.

Some speculators have said that if we are not careful about the exchange rate that has gone above N1000 per dollar it might head towards N2000 before the end of the year. What is your biggest fear about the manner the naira is shedding against the dollar?

Again, no matter how hard you try, you are not going to drag me into this. This is a very heavy question. Comments we make are not made in this regard. They have consequences for the market either way. It is not the kind of question that I could answer responsibly given where I sit and where I had sat before publicly.

The question is whether we are on the right track as a people.

Let me refer you to the fact that I was supposed to speak at the Nigeria Economic Summit Group and because of the topics listed there I thought it wasn’t proper for me to speak on this subject publicly and therefore I declined to be on the panel. No matter how you try or your listeners want to hear Soludo say something or the other they are not going to get it from me. But let me just tell you something that is very important context- context matters. I was the governor of CBN and I made the exchange rate at N138, I was the governor that presided over seeing the rate from N138 to N120, N118 and came down to N112 to the dollar before the global financial crisis of 2008 to 2009 and I made $10bn external reserves and built it to the almost all time $63bn that we had even despite payment of the $12bn external debt and going through the worst financial crisis in history, I still left behind about $45bn the day I left office. Now, I have seen it up and seen it down and I know quite a few things, but there is a note I will leave with you and that is- we must realise where we are coming from, that we sat here in this country and saw the monetary authorities literally and illegally printing money. I superintendent the drafting of the 2007 CBN Act and to prevent us from getting where we are today, that is why we had an explicit clause there that prevents the CBN from lending recklessly, granting Ways and Means and advances to the Federal Government and we explicitly put in the law that you cannot grant to Federal Government more than five per cent to the previous year’s actual revenue as Ways and Means and advances to the Federal Government and that that so granted must be retired but the end of the year in which it is granted. Where the Federal Government fails to retire that, the CBN is forbidden by that law from further advancing Ways and Means to it- that’s the law. By that law, I don’t think there was any time Ways and Means advances would have been more than N250bn at any time. We were very stringent in doing this and as a Governor I was very bullish in insisting that we remain within the ambit of the law. But we sat there, all of us Nigerians; we are all guilty of this, saw the CBN brazenly, illegally violating that Act year after year, and kept printing money literally. When you advance money that’s backed by nothing, just continue to credit the account of the Federal Government with trillions. One trillion people shouted, two trillion, ten trillion, fifteen trillion, twenty trillion and we kept going. My dear friend, I did say before that this government inherited a dead economy from a microeconomic point of view this government inherited a dead economy standing almost like a dead horse that was still standing but people didn’t know it was dead. Because you cannot pour drums of water on a rug and expect that the rug will not be wet. There are humongous challenges and I think it is important Nigerians understand this and that it is not a tea party. Cardoso and the Minister of Finance when I spoke with them, one of them I spoke with on their appointment, I said congratulations and also have my commiserations because I know what faces them. They need our support collectively, intellectually, and in whatever way that we can, but I want to believe that if we lock ourselves in a room for a day or two we can get through this. Nigerians are incurable optimists in the greatness of this country. That’s why I offered and applied for this job. If I don’t believe in the future of this country I won’t be taking myself through this what I call executive imprisonment. We must all work together to get ourselves out of this trajectory that we avoidably put ourselves through.