Short sightedness is killing the economy – Ex-National Planning …


Mr. Rasheed Abiodun Gbadamosi is an economist. His credentials include being minister, National Planning, Chairman, National Committee on Industrial Development for the Industrial Master Plan project, Chairman, Petroleum Products Pricing Regulatory Agency (PPPRA), Chairman, Governing Council, Nigerian Institute of Social and Economic Research (NISER) and member, Nigeria’s External Debt Rescheduling team. He speaks, in this interview, on the state of the economy in the last 14 years, the initiative by the Central Bank of Nigeria (CBN) to make cashless monetary policy a universal phenomenon, privatisation of Power Holding Company of Nigeria (PHCN) and the need for government to harness the potentials in agriculture. Excerpts:

Nigeria has just celebrated 14 years of uninterrupted democracy. How has democracy impacted on the economy?

To start with, I do not like this exultation about democracy. It does not mean that if we do not have democracy we won’t have relative prosperity. Economic indices were positive even in non-democratic governments. There may be some methodological extrapolation of cost and economic growth. 14years of uninterrupted democracy, the economy is not too glorifying, considering the number of people queuing up and begging for alms. You can see the phenomenal rate of beggars on the streets. Millions of youths are looking for jobs and they can’t get.

They have hope of being gainfully employed but their prospect is not realised. If there is tangible economic prosperity, there should have been reduction in the rate of unemployment and abject poverty in the country. The statistics on economic growth may be high on paper, as we have seven per cent economic growth rate currently. Does it impact positively on the standard of living of the people? May be I am prejudiced because I am not getting any younger.

Data from National Bureau of Statistics (NBS) shows that over 20million youths are currently unemployed. Can you tell us why our economy is growing at seven percent without creating jobs?

Well, call it jobless growth if you like. The truth is that we can have economic growth without development. For instance, we can have growth in the oil and gas sector but we face the issue of exploitation, which causes anger among the public. If we have oil boom and increasing exploration of mineral resources for example, there could be few good roads, but we need improvement in electricity in order to move away from over dependent on crude oil to harness the enormous resources in agriculture and improve our economy. Small and Medium Enterprises (SMEs) can spring up in various places across the country if power is not an issue. Running businesses on generators impact highly on the cost of production. Also, our borders are opened and there is influx of the same goods manufactured locally in Nigeria flooding our markets from other countries.

Rasheed Gbadamosi

Rasheed Gbadamosi

Beyond that, development is not about happenings in the urban centres. Realistically speaking, since independence in 1960, there is lopsidedness in the economy and events in the urban centres as people are still looking for development. For example, during the regime of the late Sani Abacha, some youths were brought to Abuja . When they saw how the Federal Capital Territory (FCT) had been transformed with the money realised from the natural resources in their region, militancy began in the Niger Delta region. So, you can see the lopsidedness in the type of federalism we practice in Nigeria . Until we practice true federalism, we are still going to face enormous challenges in achieving wealth creation and tangible economic development.

Some financial experts said recently that the recent move by the Central Bank of Nigeria (CBN) to reverse the monetary policy on polymer naira notes is a clear case of policy inconsistency. Do you share that opinion?

Of course it is policy sommersault because they are trying to change their minds on what they said initially was the best. The cost of printing the note is so high. Aside from that, paper notes are expensive because there is a big competition for paper money globally. Another thing is the need for protection from being easily forged, which may pose some challenges. In this case, monetary policy designers have a role of coming together to view the system to fashion out the way forward. We are more concerned about the value, which gives effect for money as a medium of exchange. Also, it is common in Nigeria to see people abuse the naira by throwing the money on the ground during parties. Some traders also rough handle the currency during transaction.

Considering the fact that most places, particularly rural areas in the country, are un-banked, do you think the initiative by the CBN to extend cashless monetary policy to other states in Nigeria will yield positive results?

The policy on cashless economy is very good and I must give the CBN kudos for this insight. It means we can do business without carrying large amounts of cash about. It has also reduced the rate of armed robbery attacks on people travelling for businesses with so much cash. This is a good policy, which shows that economic development is not about the quantum of cash in transactions. Also, there are some challenges, while small medium transactions can’t be done as beneficiaries can’t access it, with time, we will get it right.

The cashless regime has legitimacy though small transactions are suffering but we will get use to it. Once the economy is growing and needs increase in investments, we have to be innovative like the advanced economies. Since the incidence of robbery has reduced with the cashless regime, making it a universal phenomenon is a laudable initiative but requires time for smooth implementation. The policy will help the banking sector and the economy at large when it is universalised.

Are you in support of the privatisation of the Power Holding Company of Nigeria (PHCN)?
The Federal Government must open up the economy. This is something we cannot run away from, because we don’t have sufficient resources to pay for these things to happen. I saw great efforts in repairing Ikorodu Road and it is costing us much money. Lagos-Ibadan Expressway is a nightmare. Nigeria is not just an investment destination, we have coastline from Lagos to Calabar. So, if privatisation will solve some of these problems, then government must not hesitate to embark on it.

Infrastructure is also about enhancing development, building a functional railway system, moving people and goods to open up the economy for greater productivity. Promoting development implies that the waterways must be developed to foster inter-state, inter-communal wealth creation. Government should prove to people that they can move around to make wealth for the economy to thrive. In doing this, the health sector must be in good shape because health is important to development.

Point of Sales, POS, facilities

Point of Sales, POS, facilities

The citizens need good and affordable medical services to ensure sound health. Education of the populace must also be of paramount concern. Investment in education is a veritable tool for development. Efficient medical care and education are as important as building roads and bridges around the country. Enlightenment of the masses is about fostering aspirations of people on what they can achieve in life.

So, aside from transacting businesses and domestic consumption, we need electricity for the agricultural sector to produce the desired result. For instance, Nigeria is the largest growing cassava country in the world. From Lagos up to Taraba, the country can grow cassava to serve as feeds for cattle in China and other countries that will import the product. Cassava chips have nutrients that human and cattle can eat. We have enormous potentials in Nigeria , but we are not harnessing and utilising the resources adequately.

For example, the Chinese begged Nigeria on the issue of cassava but we could not grow enough to make chips from the outer layers, even if we wanted to use the inside for garri. Do you know that cassava layers can be fermented for spirit drinks? They are just waiting for us to light it up, but without constant electricity, these things cannot work and we cannot achieve much growth and development. Do you know that we searched for maize to make products to be fermented for molasses because the Chinese were willing to sell the technology to us but we could not guarantee them power supply? The project requires high level of energy consumption.

What is molasses?
Molasses is a thick brown liquid product obtained from raw sugar cane and sugar can be made out of it. Molasses can be refined to get concentrated liquor for producing gin and wine. The Chinese were willing to sell the technology to us because they were looking at getting this product for a population of about 1.2billion.

You can see that erratic power supply has always been the major factor militating against economic development in Nigeria . At present, South Africa is producing about 50,000mega watts (MW) of electricity, while Nigeria is producing just between 4,000 and 5,000mw. What we have in Nigeria is not even sufficient for a village. We are jokers. There ought to be incremental inflow of foreign investments for power project because it is capital intensive. Government should privatise the sector if such action will foster inflow of investments, which is the only solution.

What are those things needed that make power sector so capital intensive?
There are three segments in the electricity generation, such as generation, transmission and distribution. These segments need huge sums of money to light up the rural areas. If we do it right, people will even get money than what obtains now. But few individuals are just sitting on the limited capacity to impede the process. The reality is that we do not have the technical man-power to even run the generation and distribution to move the sector forward. The people needed to run the process are not there because few people sat on the whole project. We are killing the economy with short sightedness.

Is Vision 20:2020 still realisable with the high level of poverty and unemployment in the country?

The concept of Vision 20:2020 was borrowed from the Malaysian model to give long-term perspective planning for the economy to enhance production. The reason being that, we have to invest, gather the resources and bring modern technology to achieve the Vision. For instance, the issue of electricity I mentioned earlier requires massive investments. A dam alone can take five years before going into actual production.

It takes a long construction period because you have to look at the people, the geography of the area where the dam is sited and the agro-technical imperatives. It is such a big project. In doing it, World Bank can be involved and other countries experienced in building a dam. You must also look at the manpower in terms of training people to divert water from the dam. This type of project is not about one government. It can take about three succeeding governments.

2020 is just few years from 2013. So far, are we on track?
To be on track, we must keep the Vision that we want to achieve in a given period.