By Nkiruka Nnorom
Barrister Ejike Nwuba is the founder & CEO, The Renaissanceafrica Company, a corporate training and management consulting firm. In this interview, he spoke on the inauguration of Economic Advisory Council, EAC, by President Muhammadu Buhari, saying that the defunct Economic Management Team headed by Vice-president Prof. Yemi Osinbajo, performed below expectations.
Do you think the decision to constitute an Economic Advisory Council (EAC) by President Muhammadu Buhari is a good move for Nigeria’s economy?
To be objective, would say yes. I said yes because the performance of the defunct Economic Management Team, EMT, led by the Vice President, Professor Yemi Osinbajo, has been underwhelming.
I believe that the major reason is the constitution of the EMT which comprised mostly politicians from the public sector who lack the intellectual wherewithal to chart the course for our economic prosperity as a nation.
The present Economic Advisory Council (EAC) comprises of renowned economists, business experts and technocrats from the private sector.
If we had a sound economic team from the word go and the political will to revamp our economy by our political actors, our economy will not be in this dismal condition.
Was the move anticipated?
It was not really anticipated. Largely because Nigerians don’t really know what to expect anymore, and their confidence in the present administration has been eroded.
Do you think the timing of the move is connected to suspicions that Nigeria is likely to go into another recession?
Well, that is quite speculative. But regardless of whether or not a recession is imminent, an overhaul of this administration’s economic team, I think is long overdue.
The fact that the new EAC was inaugurated at the beginning of the incumbent President’s second term is also a welcome development.
There is a dire need for concerted efforts to revamp our economy. It’s better late than never.
Would you say that the composition of the new team inspires hope for the country’s economy?
Not exactly. It is largely under probability.
Like I said earlier, we now have a team of technocrats and economic juggernauts.
Prof. Doyin Salami, the Chairman, is an astute economist and senior lecturer at the Lagos Business School.
Bismark Rewane, the MD/CEO of Financial Derivatives Co Ltd. we all know is another astute economist, banker and financial expert.
Prof. Chukwuma Soludo is a Professor of Economics, who has worked as a consultant to the World Bank and the United Nations Economic Commission for Africa. And he performed creditably well as Governor of the Central Bank.
The rest of them: Dr. Mohammed Sagagi, Dr. Shehu Yahaya, Prof. Ode Ojowu, Dr. Iyabo Masha, and Dr. Mohammed Adaya Salisu are all reputed economists with sterling track records.
I believe if this EAC is given the necessary cooperation by this present administration, they would be able to chart a course for our economic recovery and resurgence.
But then, they are an advisory council and are not part of the Presidential cabinet- and have no executive powers. It is left for the executive to accept or reject their recommendations. That is why I said it is largely under probability.
Our economic recovery depends largely on the whims and caprices of the executive and our political actors. The EAC is only advisers.
Many have described the formation of the new team as a confirmation of claims that the previous economic team failed. What are you take?
That is stating the obvious.
It’s as clear as day that our economy has been on a tailspin since the inception of this administration in 2015. From all indices, things have gone from bad to worse.
As at 2015, our unemployment rate was officially 7.5 per cent, but now as at the third quarter of 2018, it has galloped to 23.1 per cent with disturbing record of well over 20.9 million unemployed Nigerians. In fact, earlier this year, 2019, the Minister of Labour and Productivity said that our unemployment rate would hit a whopping 33.5 per cent by next year, 2020. The problem of unemployment has only worsened. NNPC advertised for recruitment in March this year and 26 million people applied. Unemployment in Nigeria is outrageous.
A lot of our young people are leaving the country in search of greener pastures culminating in brain drain. You can see the inhumane treatment being meted out to our fellow Nigerians in South Africa.
Our national GDP as of 2018 was $397.2 billion, while our GDP in 2015 was $481.1 billion. Our national GDP instead of increasing is reducing and you cannot blame that on crude oil prices. Our national debt as of December 31, 2018, is N24.4 trillion!, now that’s humungous! The question is – why is has our national debt increased at such an atrocious rate.
In June 30, 2015. our external debt was $10.32 billion, but now on June 30, 2019, our external debt has skyrocketed to $22.08 billion. Our external debt grew by over 114 per cent in their years. Most of the debt stems from commercial foreign loans. What has been done with all these loans?
In 2015, our exchange rate was $1 to N200. Now it’s $1 to N360. Investor confidence in our capital markets has been eroded, culminating in capital flight. Government’s fiscal policies have not helped matters.
A lot of companies have shut their operations in Nigeria within the past four years and laid off thousands of Nigerians citing lack of an enabling environment. A notable case in point is the $300 million Procter and Gamble manufacturing plant that was commissioned in Ogun State in 2017 – one of the biggest foreign direct investments in this country of recent. Only for the American behemoth to shut down their operations in 2018 and lay off over 1000 staff complaining about the lack of enabling environment.
Under this administration, Nigeria officially became the poverty capital of the world, surpassing India in the population of poor people. Mind you, India is more than six times our population. The population of India is 1.339 billion, while the population of Nigeria is 201 million. Presently, over 90 million Nigerians are living in poverty.
Where does this development leave the federal government’s Economic Recovery and Growth Plan, ERGP?
I believe it gives room for improvement of the plan and the coalescence of a better framework for our economic growth. Alchemy of the contributions of the seasoned technocrats comprising the EAC can only bolster this administration’s economic objectives if credence is given to their recommendations by the executive.
Do you think that there is a need for the review of ERGP
If the ERGP is actually being followed- what has been its impact on the lives of Nigerians? Yes, Nigeria is officially out of recession, but how many Nigerians have been brought out of poverty? Rather more and more Nigerians are living in poverty. We need immediate economic reforms and the political will to turn the table of fortunes around for our country.
As an industry expert, could you set an agenda for the new economic advisory council?
First, we need to provide an enabling environment for indigenous businesses to thrive and to boost foreign direct investment in Nigeria. Presently, we do not have an enabling environment. Entrepreneurship is the key to global prosperity. The economic team must come up with policies to boost and incentivize our private sector and our small and medium scale businesses.
Then we need to revive investor confidence in our country. We need to woo investors to invest in our capital markets as well as invest directly in our country. But to do that, we must honour agreements, provide tax rebates and provide other incentives for foreigners to invest in our country.
We need to learn from countries like Singapore, China and Dubai. How have they been able to provide an enabling environment for international investors? Nigerian ranked 146 out of 190 countries in the global Ease of Doing Business rating by the World Bank in 2018. We lack an enabling environment.
We must tackle the issue of insecurity. Nobody wants to invest in a volatile environment. The Fulani herdsmen crises coupled with Boko Haram has besmirched our image globally and eroded investor confidence. Security is fundamental. And it is not a herculean task to address our security crises.
There is the issue of power. Lack of power hampers production. It increases the cost of production – a disincentive for foreigners to invest in our country and for indigenous businesses to thrive.
We must invest in education and capacity building. Over 60 per cent of our population are under 30. Can we get them skilled? Can we equip them with vocational skills? What has happened to our technical schools? Can we provide free compulsory basic education like China has done for their population of 1.38 billion people? Nigeria has one of the largest populations of out of school children in the world.
According to the 2017 UN, Human Development Index Nigeria ranked among the countries with poor human development at #152 out of the 188 countries assessed.
What percentage of the annual budget is allocated to education? UNESCO recommended that at least 26% of the annual budget of developing countries should be allocated to education, but not up to five per cent of our annual budget is allocated for education. We need to refurbish our public schools and upgrade our curricula. Education is very key if we are serious about economic growth. That is one of the hallmarks of China’s economic success. They have a skilled population. They can produce anything! In 1960, 45 million Chinese people died of starvation, today they are the world’s second-largest economy after the United States with an annual GDP of 19 trillion dollars.
There is no economic growth without education.
Then, of course, the government needs to provide basic infrastructure. The better part of the national budget should be devoted to capital expenditure and not recurrent expenditure. We must reduce the cost of governance.
We need to diversify our economy. Presently, the bulk of our foreign exchange comes from the sale of crude oil. And by 2050, nobody will buy our oil anymore. The world has embraced clean energy and is fast abandoning hydrocarbon because of its collateral damage to our environment. How are we preparing for life after oil? We need to think long term. Short term thinking is the enemy of long-term success. And we need to reduce our national debt. We must borrow responsibly. There is so much to be done.
With hindsight, can you identify areas where the previous economic team didn’t do well and what do you think is the solution?
Like I said earlier, practically in all ramifications, the defunct EMT performed dismally.
And I have enumerated ways this present economic team can remedy the situation.
What do you expect that the new economic advisory board should do differently from the defunct Economic Management Team?
Everything. There is no room for politics here. We must be sincere with ourselves. The Nigerian economy is on life-support. We must do everything we can to revive it and make our country great again.