Pat Utomi, professor of political economy and management in this interview with Charles Okonji offers a gloomy prognosis about the state of Nigeria’s economy. Excerpts:
What is your projection for 2020?
I will tell emphatically that 2020 would be a very challenging year for Nigeria when you look at the terrible economic performance of the country in the recent years. Unfortunately, most of them are self-inflicted. We keep focusing on such basic macro issues whereas the real problem with the Nigerian economy is fundamental, structural, basic institutional and cultural base. I keep reminding people that the problem of the Nigerian economy was government induced. So, regulation is creating some certain risks and makes Nigeria scary in terms of investment. When you look, you will see that most private business people around the world have it very difficult establishing business in Nigeria because of the fear of governors that comes and revoke the approval for their businesses. State governors are particularly notorious of revoking Certificate of Occupancies and commitments made by their predecessors. So, in all of these, it is good to know that investors are very pre-cautious. The only thing that can save Nigeria is becoming a productive economy driven by investment. How do you expect people to invest when they are scared that their investments will only take a change of government to be jeopardized?
But the President Muhammadu Buhari-led government did promised change. Are you saying the change isn’t working?
Sadly, even though our mantra “is if Nigeria does not kill corruption, corruption will kill Nigeria,” I believe by my experience as a businessman that there is worst corruption today in the country than there was 10 years ago. So the corruption in the environment also adds to the challenge of investing. So there is a need for serious conversation about whether we want the Nigerian economy to grow and what it will take to grow it so that there will be consensus and people will therefore act properly relating to that consensus agreed to. If that is to happen, we need to have a national strategy. Whenever I talk about this, people will object to it, talking about this medium term economic recovery plan, but that is not a national strategy; it is a short to medium term recovery programme.
The national strategy should be what Nigeria wants to lead the world in by 30 years to come. What it means therefore is to take some value chains, most likely looking into the agriculture endowment of the country. When you take this endowment, you decide that we want to become the world’s leading suppliers of sausage derivatives, so that when you think of hamburger, you think of Nigeria because over 60 percent of the inputs come from Nigeria for the next 15 t0 20 years.
You have said so much about the fourth industrial revolution. Is Nigeria prepared for it?
On technology, the world will officially enter into the fourth industrial revolution on the 1st of January 2020 which can enable Nigeria reap from many things, but what is the quality of education? Though, without much help from the government, the Nigerian young people are doing remarkable things in the technology space. Imagine if there was a serious policy, what could happen? How long have we looked at countries like Finland and their approach to education, and the advantage it has given them? How are we thinking about introducing design and tech into our primary and secondary schools curriculum? But we seem to have most of these things in the hands of amateurs that do not have a goal and what it takes to decide the right way to go. So, that is what the challenge of economic development is. It is not when the oil price goes up and we make more money from crude sales, and we go about and begin to make noise about growth. That is not growth. When we have a windfall, we should learn the history of how people that had wind fall behave. The best analogy is from the lottery effect, go and check the poor man who worn a lottery 10 years ago, he is back to where he used to be if not worst. That is what Nigeria is typically.
I recalled that in 2003, Udem Emmanuel and Xavier Sala-I-Martin highly respected economists wrote an IMF working paper in which they said that Nigeria is so incompetently managed as if it didn’t have government. Xavier Sala-I-martin who was in Colombia University at that time noted that Nigeria does not have what it takes to develop the economy, hence recommended that once Nigeria collects the oil receipts, it should write a cheque and dole out to everybody his share of the oil money. However, we need to develop strategy for development, such as listing the areas of comparative advantage in the area of value chains, and how we can dominate the global value chains.
What is your view of the growing inflation?
In terms of inflation rates, we have an awkward situation where the country’s economy is not growing, yet inflation is growing. Inflation is a function of how we spend money and this is because the supply side of essential needs of the people that determine headline inflation is weak. So in spite of people not having enough money, there is too much money chasing available few goods in the economy. So, how do we deal with the supply side? The truth is that there is a little bit of confusion around this border closure business and how it has affected production, but it will also lead to higher prices of goods and services. We need to manage that whole process differently to ensure that the supply side is boosted without necessarily creating disruptions that drive up prices.
One of the policies that have become hotly debated is the issue of border closure. What is your take?
As the Chairman the Pan African Trade and Investment Committee (PATRIC) of the African Union (AU), I am not in support of the whole game of blaming African integration because in the short and long run, it is better for the country. Firstly, what are the options available to us? Building a wall around us that Africa would give us problems means that Africa would just be growing without us and eventually, we do not have a choice and we would become late joiners, which means that they would dump everything that they have in the market to us. So we better get it right now and put our acts together to profit from it. We need to focus on production.
For instance, infrastructure problem is an opportunity and not a threat. There are more than enough resources around the world for private investors to come and build infrastructure in Nigeria, so all we have to do is to prevent our bloody leaders from being foolish. Like I said earlier, these governors going about stealing money make investors think that Nigeria is a dangerous place to put their money.
It has been established that there have been no time in human history that there is much capital flow as it has been in the world like it has been today. The truth is that few young boys in California own more capital than the whole of African continent. Their leaders are more reliable rather than being oriented to plunder. Our leaders are plunderers. Unfortunately, like the French thinker, Claude-Frédéric Bastiat who said that the law can become an institution of plunder. Unfortunately, the law has become an institution of plundering in the African countries.
Recently, things are greatly changing in Addis Ababa, all for Chinese investment flowing into Ethiopia. They now have light rail, light manufacturing, producing leather goods and so on and so forth for local consumption and export. If we show a little more seriousness, hundred times as much as is happening in Ethiopia would start happening here in Nigeria. Though, the climate is welcoming and especially, Nigeria needs to take advantage of Africa to develop. So our problem is largely caused by the indiscipline of the political class.
Conclusively, 2020 is bleak considering the budget. If you look at the needs of Nigerians, the budget constitute a micro percentage of the country’s need. It does not have what it requires for development. The bulk of what will spur development will come from the private sector. We must stop thinking in terms of budget and development, the more that we make the private sector growth ready, development ready, and investment ready, the better we can predict. The budgetary index put together does not go anywhere, given the gaps of what it requires to get the economy running.
The Nation
