By Dele Sobowale
“First of all, don’t forget that there are local and global financial markets. What is their job? It is to lend money. If you don’t borrow those people are going to lose their jobs.” Fashola Minister of Works and Housing, Report, July 31, 2022.
I had to check four times to be sure that the person being interviewed was our former Governor of Lagos State. He was once everybody’s favourite Governor in Nigeria. Most people were not sound enough in economics to realise that he also had far more money to spend than any other Governor.
It would have been interesting to find out how really good he was if he was Governor of Nasarawa or Taraba State. He is now Minister of Works and Housing – before he was also Minister of Power. Now, he has no financial advantage over other Ministers; so we can judge.
Like other Ministers, he had been serving a non performing president and he never knew when to quit. His descent from perceived great performer to just another failure as Minister was predictable. It started with absurd portfolio overload by Buhari . Each of the three Ministries – Power, Works and Housing – would have taxed anybody to the limit. Even a Superman would have been defeated with the three.
From my experience writing on these pages since 1987, neither Fashola nor anybody else in Nigerian history who was given a combined portfolio – Ministry of Mines and Power, Ministry of Power and Steel etc – has made a success of the combination. Obasanjo, with his vaunted experience and sagacity appointed late Chief Bola Ige Minister of Power and Steel in 1999. Ige, like Fashola was expected to perform wonders.
In his first interview with the media, Ige, who I have known since he was in Ibadan Grammar School, with my eldest brother, promised to achieve uninterrupted power supply in six months and get Ajaokuta producing steel in a year.
I travelled to Abuja at my own expense to beg Uncle Ige to withdraw the statement – on the grounds that it would require at least one year to control the Power Ministry alone. He literally threw me out of his office. Two and a half years later, after he was relieved of the two portfolios, uninterrupted power supply remained a pipe dream – as it is today after four years of Fashola’s tenure.
The truth is, the Nigerian power sector, as it is set up now, cannot serve a Federal Republic. Like America’s power sector, it must be totally de-centralised. A thousand Fasholas will labour in vain and it still will not work.
Fashola’s acceptance of the appointment was the first hint I got that our best performing former Governor was perhaps fortunate to have governed the richest and most advanced state.
Given his statement about why governments borrow, it is obvious that the man might be a brilliant lawyer, but, his deficiency in Public Finance is glaring.
Is it possible that for eight years, the people of Lagos State were saddled with heavy debt burden just to keep bankers employed? When was a President or Governor ever elected to keep bankers employed? If that was his defence of Buhari’s reckless borrowing, then he has done himself a real disservice. Nothing can be more fallacious. Here is why.
Employment in banking sector
First, on the eve of Banking Consolidation, introduced by Professor Soludo, there were 73 banks operating in Nigeria; and the number of people employed by banks reached its peak.
Consolidation reduced the number of banks to 25 in 2006; and massive layoffs followed.
Second, by 2008, virtually all the banks were in distress; mergers followed and more bankers were retrenched.
Third, the remaining banks embarked on automating their operations; and e-banking is now the rule – not the exception. Those who still visit our banks personally, can confirm to Fashola that layoffs are accelerating in the banking sector now more than ever before. I know individuals who have not stepped in a bank for more than two years; and who will most probably not go for years to come.
Meanwhile, the Federal and State Governments are taking on heavy loads of debt at unprecedented rates. The FG, under Buhari, Fashola and others, has added more debt in seven years than all the governments before it since 1960. If government indebtedness is what is required to keep bankers employed, then, every branch should be full of people by now. But, empirical evidence will prove to the Minister that what he said is not true.
why is the FG borrowing?
The truth is already known regarding why the FG keeps borrowing like a habitual drunkard who thinks one more will solve his problems. Nothing personal about this; but, Fashola knows too well that Ministries, Departments and Agencies, MDAs have all failed to reach their revenue targets.
Yet, their staffs are paid fully every month. Last month during the presentation of the Medium Term Expenditure Framework/Fiscal Strategy, MTEF/FS, the Minister of Finance announced to Nigerians, that in the first four months of 2022, the FG budgeted expenditure of N5.77tn; spent N4.72tn; earned revenue of N1.63tn and ended with a deficit of N3.09tn.
Clearly, the Buhari FG is deficient in how to manage public finance. A government which generates N1.63tn and spends N4.72tn is not doing bankers a favour by borrowing; it is ruining the economy. Bankers, eventually, will be the major victims of a busted economy.
In case Fashola wants to find out why we are borrowing so heavily and mortgaging our children’s future, he should consider the following. First, crude oil export is far below budgeted projections by about 35%; and that creates a huge negative variance in revenue. Added to that, a significant percentage is stolen – probably by officials.
Second, the fuel subsidy figures are certainly bogus and fraudulent. Third, the Ministry of Works and Housing has continued to delay re-introducing toll gates. Nigeria is the only nation on earth with hundreds of thousands of kilometres of road without a single toll gate. Elsewhere highway toll gates are standards. Toll collection is used for regular maintenance to prevent highways from becoming death traps. The FG, under Buhari, has for political reasons refused to do what sound economics and global best practice dictates. So, instead of collecting revenue, it borrows. That is the truth.