Says $ 9.38billion external debt must finance viable projects
By Udeme Clement
The West African Institute for Financial and Economic Management (WAIFEM) has gained international recognition for capacity building targeted at economic growth and development within and outside the West African sub-region. WAIFEM is currently in the news for strategic capacity building programmes designed to foster growth and regional integration among member-countries.
Since its establishment on 22 July, 1996, by the Central Banks of five Anglophone West African countries, namely, Gambia, Ghana, Liberia, Nigeria and Sierra Leone, WAIFEM has trained over 14,000 senior policy makers from Central Banks in the sub-region, Ministries of Finance, Planning, Budget office and relevant public institutions involved in economic management. People often come from South Africa, Malawi and Latin American countries for WAIFEM’s training. The institute has also trained parliamentarians, members of the civil society organisations (CSOs), journalists in both electronic and print media, among other media practitioners in the region.
The Director General of WAIFEM, Akpan Ekpo, a professor of economics, spoke on the approval of a new five-year strategic plan for WAIFEM, the move by the Central Bank of Nigeria (CBN) to re-introduce service charge of N65 for withdrawal from other banks Automated Teller Machines (ATM) from September 1, 2014, N1.3billion National Power Sector Apprenticeship Fund, the economic implications of Nigeria’s $9.38billion rising foreign and $48billion domestic debts
Since you took over as the Director General of WAIFEM, what measures have you put in place to improve on the existing structures you met on ground?
Since I came on board in 2009, we have been able to bring in more donors, which include Economic Commission for Africa (ECA), a United Nations Commission for Africa based in Ethiopia. World Trade Organisation (WTO), an international organisation based in Geneva, and De-la-rue, based in United Kingdom (UK). We also signed a project-3 contract with African Capacity Building Foundation (ACBF), based in Zimbabwe. Aside from bringing in more donors, WAIFEM also successfully established two new Units, such as, Research Unit and Business Developing Unit (BDU). The Research Unit undertakes research on issues emanating from training programmes and BDU targets capacity building at the private sector.
Your scholar’s programme is also a dominant issue in the news. Can you give us more insight into what this programme entails?
It is a visiting scholar’s programme, where renowned scholars can attach themselves with WAIFEM for six months to carry out research on issues relating to regional economic integration. We also have what is called Doctorial Students Fellowship, for students doing PhD, to come to WAIFEM, spend not more than six months, to understudy what WAIFEM does and also present their own research papers.
Can you give us statistical estimate on the number of people who have benefits from WAIFEM’s capacity building programmes?
Our capacity building is strategic for economic growth and development within and outside the sub-region. For instance, WAIFEM has trained over 14,000 senior policy makers from Central Banks in the sub-region, ministries of Finance, Planning, Budget office and relevant public institutions involved in economic management. We also trained parliamentarians, members of the Civil Society Organisations (CSOs), Journalists in both electronic and print media, among other media practitioners in the region.
Going forward, the Board recently approved 5-year strategic plan, which will run from 2015 to 2019. So, from next year, WAIFEM without forsaking its core mandate will begin to offer Diploma and certificate courses for duration of between three to six months, in areas of Banking Supervision and Public Debt Management.
The method of delivery will be e-learning and face-to face approach. The programmes will be opened to all qualified persons within the region and outside Africa. WAIFEM will issue Diploma in collaboration with United Nations Institute for Technology and Research (UNITAR). It will interest you to know that all our independent and International assessors engaged by donors and Board of governors have rated WAIFEM as a centre of excellence in training and capacity building. In our training programmes, we collaborate with world class institutions like World Bank, IMF, African Development Bank (ADB), Debt Relief International (DRI), Common Wealth Secretariat among others.
What structures are you putting in place to ensure high level of success for the new 5-year strategic plan approved for 2015 to 2019?
WAIFEM has done a thorough research on the programme. We have already developed the models for banking supervision and public debt management courses. Some of our partners include African Capacity Building Foundation (ACBF), International Monetary Fund Institute (IMF), World Bank, African Development Bank, United Nations Institute for Training and Research (UNITAR), Commonwealth Secretariat (ComSec), African Economic Research Consortium (AERC), Debt Relief International (DRI)/Development Finance International (DFI), United Nations Economic Commission for Africa (UNECA) and De-la-rue.
So far, what are your challenges?
Finding how to reduce dependence on donors, knowing that at some point donors fatigue may set in. Trying to ensure that the BDU succeeds as a source of funding and bidding for projects (consultancies). Let me appreciate the owners of WAIFEM, especially the Central Bank of Nigeria (CBN), for tremendous and continuous support towards the organisation. They provided not just needed funds but positive direction for the Institute to follow. Our BDU is good for both private and public sectors development. The BDU offers short term courses in all areas of economy beneficial to private sector, at cost recovery rates. Our resource persons are of the highest quality and can stand globally. Aside from the sub-region, people usually come from South Africa, Malawi and Latin American countries for our training programmes.
Last year, Nigeria’s external debt was $6.7billion, but few days ago, the Debt Management Office (DMO), disclosed that external debt has increased by 40 per cent from $6.7billion to $9.38billion in 2014, while domestic debt stands at N8.9trillion ($48billion). What is your take on this?
My position is that there is nothing wrong in borrowing to finance viable projects provided such projects will pay the debt in the long-run. The country must have the capacity to manage the debts. At the federal level, there is the capacity to manage our debts. If most of the debts are to finance infrastructure development, then there is no problem, because of the positive multiplier effects of such expenditure on the economy both in the medium and long terms.
My worry is whether states have the capacity to manage their debts, because the issue of debt sustainability is crucial in debt management. It is also good to caution that though we are yet to hit the threshold of 26 percent external debt/GDP ratio, which at present is 12.51 percent, there is the need to encourage private sector borrowing. Government should, if it has to borrow to exploit windows in the African Development Bank and other multilateral institutions for concessionary rates. This again may become difficult given our present status as a middle income country. The funds from debt should be prudently utilised to finance infrastructure and other capital projects so that future generations do not abuse us when we are in our graves.
The National Economic Council (NEC), recently approved N1.3 billion for manpower development and training of 3,700 trainees under the National Power Sector Apprenticeship Scheme (NAPSAS). Do you think this will bring solution to the perennial power crisis in the country?
So much emphasis is placed on monetary allocation but the results are not coming. We see too much emphasis on commissioning of projects with very little results in terms of power supply. We hope that in the election year, there will be a balance between economic activities and politics. If politics dominate, even the marginal increase we have achieved will be eroded, that is why we need a balance.
As a Professor of Economics, how will you assess Nigeria’s economy currently?
Well, the economy has only achieved marginal increase, but as 2015, which is the election year approaches, government should manage the fiscal aspect prudently to avoid a rise in inflation rate. In terms of the economy, the problems of rising unemployment, especially among youths, poverty, epileptic power supply and dearth of infrastructure still persist.
The CBN has concluded plans to re-introduce service charge of N65 for withdrawal from other banks Automated Teller Machines (ATM) from September 1, 2014. Do you think this is what the banking public really expect from the current CBN’s management?
I support CBN on the move to re-introduce service charge for ATM on inter-bank transactions, because this is a common practice globally. When people use ATM of another bank for withdrawal, they should be made to pay charges. So, I believe the decision by the apex bank is a step in the right direction. However, lending rate is still very high and many people, especially investors are concerned about lending rate. The CBN should focus on bringing down interest rate for industries to thrive. The apex bank said it will bring down lending rate gradually, but I prefer a more interventionist approach, where the CBN “forces” down the interest rate since the macro-economic fundamentals are moving in the right direction. The economy is growing at 5.45 percent after the re-basing, inflation rate stands at single digit of 8.2 percent, exchange rate is relatively stable, deficit Gross Domestic Product (GDP) ratio is less than 3 percent, foreign reserve is increasing and can finance six months of imports.
The recently announced mortgage financing to boost the housing sector is a good initiative and must be implemented as soon as possible. Government should work the talk, not talking the work. The citizens are the ones to give verdict on how the economy is performing and not ministers and other government officials.