Professor Mike Kwanashie is an economist and Vice Chancellor of Veritas University (one of the Catholic Universities of Nigeria). In this interview he granted Forefront in his office, the former don of the Ahmadu Bello University speaks on why Government should avert a violent revolution in Nigeria just as he bares his mind on why Nigerians do not trust the government when it comes to the issue of loans. He also speaks on the anti-graft war being waged by President Muhammadu Buhari, insisting that Nigerians are in denial of present realities, among other issues
We are in a recession, what are the prospects of Nigeria getting out of it?
The prospects are there, if we are willing to do the right things and face the realities of our time. If there is political will to do what we have to do to get Nigeria out of the recession. In terms of prospects, yes technically and theoretically, the prospects are there and we need to manage the situation well to bring us out of this recession. A lot depends on the government, the National Assembly and Nigerians themselves and they must be willing to make changes and make sacrifices in their consumption patterns and increase productivity in the economy. Government is still the big actor in our economy despite the claims that the economy is private sector driven.
When you say the government is still the big actor in our economy, what specific role do you want the government to play?
The government is the biggest spender and government in Nigeria is still the one whose spending pattern imparts across the boards, including monetary and fiscal policy. In Nigeria the centrality of government’s spending is crucial. If you look at the budget expenditure, it reveals how government spending pattern affects the economy.
The use of the Bank Verification Number (BVN) has led to emergence of unclaimed funds in banks running into billions of naira. Do you see the introduction of BVN to be in the overall interest of the Nigerian public?
This has been a topical issue. I want to make the distinction between public involvement in the financial system and private management of the system. It is true that government has the responsibility of ensuring that the private sector does not fail. In a capitalist system, your financial system is the vehicle through which the economy grows. For most market-based economy, the health of your financial systems is paramount and very important. The government has the responsibility of ensuring that the financial system is not used to siphon funds. Government must safeguard the system, but not at the same time harming the system. In a situation where some funds are been stored, then, that is not healthy. There is a risk in every policy you take. You must weigh the risks against the benefits. In this case, the government is right by sanitising the financial system.
Still on the issue of recession, the present administration of President Muhammad Buhari is known to be heaping blame on the past government over inability to save. Do you think it is proper to harp on the past, rather than working towards improving and tackling the problems at hand?
We have to be careful from both sides. This recession came about due to the collapse of oil market. The prices of oil plunged to $36 instead of over $100 per barrel. The second was the insurgency and the Niger Delta militant activities that physically reduced the quantity of crude to be sold in the international market. You cannot blame it on the past government because they did not cause the decline in crude prices. The issue is; what is the present government doing to tackle the problem? What the present government is doing is traditional, and resource-based countries should strive to stabilize their expenditure at a sustainable level. When the revenue goes above the trend, you safe, when it falls below, you dis-save. When we were getting over $100, we refused to save. The former Minister of Finance, Dr (Mrs) Ngozi Okonjo-Iweala, said during her time she resisted the spending of Sovereign Wealth Fund (SWF). Now that we are in recession, she has been vindicated. The governors threatened to take the Federal Government to court, insisting that all revenue should be shared as stipulated in the constitution. The governors insisted that the SWF be shared as they (states) were hungry. What is the result? The gross reduction in revenue is due to price decline. The fact that the state refused to save, all the money they were collecting, what have they done with it? The tax base in states is weak and we have never learned. Some of these states cannot even pay salaries to their workers. If in two years’ time, the prices of oil start shooting up, we will simply forget about it. It is more political than economy. Some states are collecting loans and are subjecting future governments to pay for such loans. This mindset is not developmental. In a typical capitalist economy, you must expect these downturns. That is how global and national economies work. Are we prepared for the downturns? For the past couple of decades, we have not successfully managed these fluctuations in the market economy. Where is the money we got in the past and how were they spent? We witnessed so many cases of alleged corruption and what has happened? We are still witnessing. Some people will say as poor as we are, can we really save?
But is Nigeria poor?
Nigeria is poor in the sense that 80 percent of the population cannot be guaranteed three square meals. But if you are talking of 10 percent of Nigerians, people who have been made billionaires, then, that is your own Nigeria. But the Nigerians I am talking about are millions who do not know where their next meals will come from. All the resources been realised is going to only five percent and these five percent of our population who have cornered the resources in this country live in opulence to the detriment of the majority. There goes the paradox and no one cares. You can see that so many people are being prosecuted by the Economic and Financial Crimes Commission (EFCC) and you will be surprised why some people take so much money and people dying, with Boko Haram almost overrunning an entire geo-political zone in the country.
President Buhari has requested the National Assembly to approve his request to secure $29.9 billion loans for infrastructural development. The request was temporarily halted by senators who insisted that the President should provide information on how the funds are to be spent. Do you think the Nigerian economy can absorb such a loan now?
For once the Senate did something that is commendable by asking the President to provide information on how the loan would be spent. Looking at it from a technical point of view, there is varying answers on the matter. Sometimes you ask a question and you expect a straight forward answer. That is not always the case. If you believe that our current GDP figure, as the International Monetary Fund (IMF) just told us that we are the largest economy in Africa, if we believe that, then our debt ratio is very low. That means we can still borrow. Now, the question is: What is the government going to do with the money? This government has said that there is massive deficit in infrastructural development and they need this money to tackle this problem. Technically, you cannot fault that. If you spend that kind of money and tackle the problem, then borrowing that money is justified and commendable for two technical reasons. First, you debt deficit is too low. Secondly, what you are going to use the money will open up your economy and enable you to grow. Some people are asking why is the government requesting to take such loans at this time? They are taking the money now because they want to spend us out of recession. According to the government, if they take the money, they will invest it on massive infrastructural projects, as people will be taken off the streets to be engaged in economic activities. When that happens new roads will be opened and other sectors of the economy will be revived and people will be paid salaries. That is a good reason technically. If you have not saved to do that, the only way you can do that now is to borrow. So, technically speaking, we need money to embark in massive development in infrastructure and also stabilize the exchange rate. Technically, it is difficult to fault that line of argument. Let us also look at it from another perspective. Historically, let us ask ourselves, this is not the first time we are borrowing. In the past have we been able to use borrowed funds to unlock the potentials of the economy? People will readily respond in the negative. So, why should it be different now, they will ask you. They are just going to increase our debt stock and also increase on debt servicing in the couple of years ahead and leave us empty handed. Why should we take the money? So, if the government now comes and tell Nigerians that all past government were not serious in using borrowed funds to unlock the potentials of the economy, but that the present administration is serious, do you think Nigerians will believe the government? Do you think Nigerians will give the benefit of doubt to the president and ask him to go ahead and collect the funds? I don’t know. I think technically speaking, there is nothing wrong to borrow in order to do good and remove the constraints of development. If you want to borrow to unlock the potentials of the Nigeria’s economy, then you can go ahead and do so, as our debt ratio is still relatively at a comfortable range and you can do that. But as I have said, our experience with borrowing in the past leaves many people uncomfortable. We are going to borrow and then borrow and then the debt profile keeps on rising and then returns us to the debt trap that Obasanjo regime negotiated and did some gymnastics and got us out of it. Of course, the international monetary organisations will always urge you to go and borrow. They are always happy when you are coming to borrow. It is like a drunken sailor, if you want to get him, give him a bottle of whisky. They are giving you more whisky, but Nigerians are saying that government should be very careful before accepting to borrow. Nigerians are also saying that the government should be sure they will use it effectively. They are saying that before government takes this loan they should be sure they will use it effectively. Unfortunately, Nigerians do not have any trust, any trust for governors in this country. They do not believe that the political class possesses the honesty and commitment to actually use the resources the way it should be used.
How would you assess President Muhammadu Buhari’s fight against corruption?
I think we have to start from somewhere. Let us give him that benefit since he has made that a central point. We should concede that to him.
What about the process being adopted in the fight?
Each country evolves appropriate actions and approaches to tackle the issue. Some people are saying that even if the hands of justice grids like a tortoise, all of us should sit down and watch because it is democracy and rule of law. I do not subscribe to that. I think it is taking Nigerians for a ride. Four years and another administration will come and go, and nothing will be achieved in this fight against corruption. Our problem is that we do not want to be held accountable. The judiciary must work to ensure things go smooth; just as members of the National Assembly must make laws that will ensure the success of the anti-graft war. Yes, this is not a military regime, but we should ensure that all of us come together and make the system to work. The fight against corruption should not be seen as the exclusive vision of Mr President only, every arm of government must be part of this anti-corruption war. If various arms of government do not want to be part of it, and they think that it is only Mr President that should do it, then, we are in for a joker and it will never happen.
That brings us to absence of strong institutions to embark on the anti-graft war. Are you not worried over the absence of strong institutions to fight corruption?
Yes, we need to build strong institutions to fight corruption and everyone agrees on that. But why have we not been able to build the institutions? Those who are benefitting from the institutions not working will never agree to build the institutions, why should they build the institutions? They do not want to be held accountable? They have no interest in building the institutions?
So, what is the way out?
The way out is for everyone to rise up and say enough is enough. We should not wait to witness the North African experience. If we allow it to happen, just as it happened, no one will predict what this revolution will head to. The middle class simply talks and simply says nothing will happen. Millions of Nigerians have their backs against the wall and sooner or later they will react if nothing is done. The Middle class, people like us, are simply sitting back and keeping quiet. There are millions and millions of Nigerians whose backs are against the wall. The day they will react, you and I will not be sitting back here and asking questions. We will then see everything on the street.
Do you think that Nigerians someday will react? We have seen the worst and the citizens never reacted?
Some of these where revolutions took place, people once said they are culturally cohesive and that it was impossible to have such revolutions. If you take the Tunisian case, one man burned himself because of some injustice. He was fed up that he burnt himself. If the elite of this country cannot sit down and allow that protest to start, all of us sitting here would not know where it would end. That is why it is incumbent on us to speak out now. We are seeing shocking revelations and some people are screaming, “They are simply trying to witch hunt my people.” And the evidences are there for all to see. We are all living in denial, we are all in denial. Things have happened, but people are hiding under a party to allege that they are prosecuting a particular set of people because of their membership of a political party. We are in denial. Until we have a threshold of a set of people who will come and say, “We don’t care what has happened; we need to extricate corruption out of the fabric of the Nigerian society.” What is the difference between PDP and APC? It is just some politicians changing parties, but they remain the same set of people pursuing their interests. It is the same political elite trying to sort out themselves. I do not care which party they belong to. It is same class of people who have a stranglehold on the citizenry and they are using ethnicity and religion. These are the two weapons of colonisation in this country. These are the two methods of enslavement in this country. You have a situation where the majority of this country is enslaved by the political elite. But we must realise that the slave one day shall rise. That is what I am predicting that this slavery will stop someday.
How will you describe current signals of implosion in both the PDP and APC?
I do not waste my time talking about these parties. There is no any difference between the two parties. They are now talking of a new political party. When that party is finally formed, the same politicians will chose where they will go and that is the end. What you end up doing is simply changing the name. Whatever name you give a snake, it is still a snake. I have no comments. They can do what they want, but they will still continue what they are doing. Let them continue with their shenanigan, but they remain the same in pursuing their interests.