By Sulaimon Olanrewaju
Mr Phil Aragbada is a former newspaper editor and a retired bank executive. In this interview with Sulaimon Olanrewaju, he expresses concern about the management of the economy and proffers way out of the nation’s current economic quandary. Excerpts:
What are your views on the economy?
I think you will give me the latitude to start from the historical perspective on how we got to this point. If you look at our economic trajectory, you know Obasanjo met $28 billion as foreign debt in 1999 but left $2.11 billion in 2007 after securing debt relief from London and Paris Clubs. Yar’Adua and Jonathan added $1.939 billion. While the current Nigerian debt stands at $94.2 billion, the country spends over 86 per cent of its total revenue to service external debt. What really bothers me is that South Africa spends 20 per cent of its total revenue on debt servicing and it has $261 billion as debt. Nigeria has $94.2 billion as external debt but is spending over 86 per cent of its revenue to service external debts.
What I’m saying, in essence, is that the debt we are currently servicing is too expensive, so that is where the argument usually comes from. If a country owes over $261 billion as external debt and is servicing it with 20 per cent of its revenue, ours is $94.2 billion and we are spending over 86 per cent of our total revenue to service it. Our debt is too expensive and my fear is that all these things will have a long term effect, not only on us but on the exchange rate. You see that the World Bank has placed Nigeria among the 10 loan high-risk countries and Nigeria is at number four. Over 95 million Nigerians live below the poverty line because most of the loans gotten by Nigeria are used for recurrent expenditure and consumption, unlike loans that are used for capital projects. Since those loans do not bring returns, I think that is one of the problems facing us in Nigeria.
Could that be because of corruption?
Of course. And you see, there are a lot of lenders all over the world that give out loans. It all depends on the rate, just like the banking industry. This means South Africa with $261 billion, which it is servicing with only 20 per cent of its revenue, must have had good negotiators that represented the country. So, the fact is that, probably, we didn’t have as good negotiators as South Africa or corruption crept into it. And you must realise that this servicing you are talking about is not the principal. So, when the principal now comes in, maybe it will be higher. I hope we don’t start borrowing money to pay debts. Our foreign reserve is about $34 billion. It has depreciated a lot — that is what we are saying. Our fear is that, if these debts are not paid, maybe children born in the next generation will be born with millions of naira debts hanging around their neck.
Unemployment is so terrible in Nigeria, especially among graduates. When we got independence in 1960, our poverty level was 15 per cent. Over the years, it graduated to 60-70 per cent. When Botswana got independence in 1966, its poverty level was 50 per cent. By 1976, it reduced that poverty level to about 20 per cent. For your information, Botswana is one of the most prosperous countries in Africa now, while Nigeria is one of the poorest on the continent, if not the world. Our oil is one of the best in the world, I think we are number six but the paradox is we are one of the poorest. So, it is corruption. As long as corruption is there, people will continue to be poor. The current unemployment rate is 33.5 per cent while inflation is about 17.5 per cent and you know when you add underemployment, it will get to 50 per cent.
You don’t think the current exchange rate is a factor in this?
You must have a strong economic base, and you know once your country is corrupt it will affect every sector. As a matter of fact, the low currency is no problem per se. Japan, in 1973, lowered its currency in order for people to export its goods. It increased export because they had something to export. They lowered it and it favoured them. The way they did, it is what we call dirty float. The government deliberately started buying dollars, so the dollar became scarce. When the dollar was scarce, naturally their own currency went down. It made people buy their cars and because the currency was low, it attracted people and people started loving Japanese cars. Look at Japanese cars all over the world now.
Even when our currency is low, it affects us because the only thing we export is oil and we have no control over the price of oil, so the low exchange rate of our currency is not to our advantage. It affects us because we import too much and we depend on foreign currency. Even the government is spending dollars.
Look at the recent primary elections, people preferred dollar to the naira to our own demerit but who cares. A lot of things are actually happening. You know the misery index of Nigeria is 50 which makes us number four in the whole world which is so terrible. Nigeria should be one of the buoyant countries.
Unemployment is going up and inflation is also going up. These things affect industries. So, if the products are expensive, the normal thing for a producer is to watch the inventory. Corruption is the most dangerous thing in Nigeria. Nobody even talks about human capital development again. In those days, they use income per capita.
Our human capital development has gone down. Nigeria. Our Human Capital Development Index is 161 out of 189 countries. Our corruption index is 154 out of 180 countries. These are the positions of Nigeria in the survey.
It’s so unfortunate this is what is happening now. In the 1970s when we were employed, it was 80kobo to $1. Then we were happy, our salary was about N4000. As a young graduate, I bought Peugeot 504 brand new because I got a car loan of N6500 then. The same Peugeot now is in the neighbourhood of N20million. So, things have gone really bad.
So how can we correct all of these?
Lots of things are really wrong. We have talked of the corruption index of which Nigeria stands at 154 out of 180 countries surveyed. That’s why I said corruption has become a religion. You discover people are now hopeless. I’m talking about the young ones. How can you stay in a country where a governor said he can’t pay minimum wage but when he retires he gets paid N10 million per month as retirement benefits. The state is to build two houses for him in two cities of his choice and he’ll be entitled to travel overseas for medical treatment and the state will be changing his car every three years.
Education has collapsed, and most youths are now handicapped in terms of choosing leaders. What we are practising is no more democracy. What we are practising is no more government of the people for the people and by the people but the government of the rich by the rich and for the rich and I have said that it is in the best interest of politicians to make us poorer. Is it not obvious? Politicians come to give us money during elections. It is their main interest to make people poor in order to sustain their leadership quest.
So, to take our country back to the path of progress, we have to take education seriously.
Is our case hopeless as a country?
I think it will take time. One of our bishops said when other countries were building industries to give their citizens employment, Nigerians were building churches. I am not saying our case is hopeless but I don’t know. I’ve been preaching this thing since the 1970s. Look at all the indices; we are bad in all of them. Tell me, a professor will spend so many years of study and his salary will be N500,000 by the time they take taxes it’ll now beN450,000. Nobody is now interested in education.
Look at our currency, it is so bad. I pray that before the year ends the exchange rate will not get to N700 to a dollar. It’s so frightening. In 2014, our oil was being sold at about $114 per barrel, we had money in the excess crude account. We had money then that is what other countries do to save money. Jonathan did well then. Do you know that most of the governors went to court to challenge him, saying it is their money and it was given to them and most of them used it to build government houses instead of using it to build something that will be yielding returns?
Where is our hope?
First and foremost, we have to really take education seriously. Look at the time students have wasted at home; nobody even bothers, nobody cares and it’s going to be like this. Then, we have to revive our textile industries; backward integration. If we revive the industry, thousands, if not millions, of job opportunities would be created.
Nigeria is endowed with good and vast arable land with over 750,000 sq kilometers of land space, including wide range of agro-chemical zones which will conveniently tolerate the cultivation of diverse crops and livestock production. So, we have to embrace mechanised farming. This will not only give us food security, it will also lead to creation of many job opportunities.
Then, whatever it is going to cost us we have to complete Ajaokuta and develop our steel industry. If we develop the steel industry, thousands of job opportunities would be created. The government also has to tackle insecurity. For as long as we allow insecurity in our country, investors will continue to avoid us like a plague.
Finally, we have to combat corruption. All our efforts to build a strong economy would go down the drain unless we are resolute about our fight against corruption. Nigeria is endowed with good and vast arable land with over 750,000sq kilometers of land space, including wide range of agro-chemical zones which will conveniently tolerate the cultivation of diverse crops and livestock production.
Originally published in Nigerian Tribune