Nigeria’s rising debt profile has become a big challenge to the economy. The Chairman of Mutual Benefits Assurance Plc, Akin Ogunbiyi has advised the Federal Government not to take further loans to fund recurrent expenditure. For him, loans should go to projects with capacity to replay the loans through revenue earnings.
He spoke on the pension industry, workers’ welfare, capital flight, inflation, and how Federal Account Allocation Committee (FAAC) allocation to states reduces drive to increase revenue in many states
Nigeria’s inflation rate rose for many months but has been declining in recent months, according to the latest figures from the National Bureau of Statistics (NBS). Do you think the NBS figures reflect the market prices?
When COVID-19 came, economic activities were not the way they used to be. But now, we are having a bit of stability and I think that is impacting positively on economic development and inflation rate. What was published by the NBS is close to reality when you look at how economic activities in the country have improved.
It is not just government spending that is making the impact, but when you look at the individuals and various companies, economic activities have actually picked up and that will definitely impact the economy. Look at real estate, trade and commerce, even major towns and cities in Nigeria, economic activities have picked up, except in the North where we have insecurity issues. The level at which we were bringing things to the South was badly affected when COVID-19 started.
Nigeria is spending a substantial part of its revenue on debt servicing and is still borrowing. How sustainable is Nigeria’s mounting debt?
Let the government do an analysis of the debt profile and tell us what they used each debt they have taken for?
The National Assembly will not ask questions. There is nothing wrong with taking debt. America borrows but it is still the wealthiest country. They are taking debt to satisfy their needs. If you are going to borrow money, attach it to a particular project.
Let the project have its life, cash flow generation, then the project will pay back. If it is a social project like education and health, let us see exactly what you used the money for. I don’t subscribe to Nigeria taking any further credit because they took this money to satisfy the few.
How can you be taking debt to satisfy your recurrent expenditure; is that how it is done? How sustainable is that? It is unfortunate that you pass debts to other governments after you. I will say Nigeria should stop borrowing to fund recurrent expenditure. The projects awarded in the country most times are exaggerated.
If you are borrowing money, give it to people that will deliver the projects, but do not overload the cost of the projects. How many billions have they spent? They are too complacent; nobody asks questions. And when our youths rose up, they killed them. I just pray that in the next elections, Nigerians should vote rightly. How can you sell your conscience because of money? The youths have the power to change the leadership in this country.
What advise do you have for the Nigerian youths given the challenge facing the country?
Let them come together and form a party. They have the population. I am challenging our youths to rise up. We don’t have another country.
Our country is one that we should be proud of. I am challenging the youths; don’t just go and protest. There are better ways to do it. The election is 2023; they can organise themselves now. Let them register online now. There will be sanctity in the unity of Nigeria; we should not compromise it. We can do it better.
Many states have very low internally generated revenue and are depending on the Federal Account Allocation Committee (FAAC) funds to meet their financial needs. How can this trend be addressed?
One thing affects the other. How many states are viable the way they are run now? That is why I support the idea of regionalisation. Many of our states are not viable.
If we run federalism the way it should be run, the states should have control over any resources that are in their domain. The power in the centre should be decentralised to the states.
For example, Osun State can provide resources that oil is providing. We have stock of mineral resources in Osun State, but what is the state getting out of the mining business that the Chinese are doing in the state? If the Federal Government allows Osun to take over the resources and ensure the management of it, you will see the development.
And that is how it is happening in many other states. The way we operate our federalism is the issue. We first contribute resources to the centre and the centre now looks at it. Look at the recent agitation on the Value Added Tax? A state that contributes little is getting more. Some states are challenging the Federal Government.
They are right. They don’t have to do any out of court settlement. They should challenge this federalism. That is the beginning of restructuring. The states should allow the Supreme Court to make a pronouncement because they are right. When you don’t have control over the resources you generate. Again, in terms of IGR, many people cut corners. How many businesses are registered in the states? How many businesses are paying taxes? Tax evasion is criminal. If you are a petty trader, there must be a registration.
Who is implementing the laws? The laws are there. I wish and I pray that the right leadership will emerge for this country and for each state. It takes boldness on the part of a state governor to challenge the Federal Government. All of them should wake up and get the right thing done.
What are the economic implications of doctors and lecturers going on strike and way to solve all these incessant strike actions?
The implication is capital flight, brain drain. It is because of the insensitivity of our leadership.
Tell me one hospital that you can walk into and get services that you need? Is it teaching hospital? They are glorified hospitals and we have lots of people working there who would not even go to work.
All the doctors there have their own private practice. It is because of continuous neglect of these facilities. So you will continue to have strike upon strike. If you have certain things, when you don’t even have funds to fund all the basic things, all you pay is salaries, and that is what you find not only in health sector but also in education. Do you know that private universities are more than the public universities?
What are your thoughts on funding for health and educational sectors of the economy?
The first thing to ask is hat is the budget assigned to education and health. Do the monies get to such projects? When you select people who are incompetent, they value the wrong thing. Somebody talked about knowledge, power and wealth; it is only a fool that will go for wealth.
If you have knowledge, that knowledge will give you power, and that power you will use to create wealth. We know that in civil service, when you retire, you get your pensions. The funds under the contributory pension scheme, is about N13 trillion.
Almost 80 per cent of the funds have been borrowed by the government. How will they pay back? They way they will pay back is to print naira. But in this economy, who cares about pensioners? If you retire today, you don’t even talk about pension for the next five years for which you may have even dropped dead. It is unfortunate.
There has been neglect over the years, but there has to be somebody who is competent to handle this. Look at what happened in Ghana, the president went to an hospital, everything was empty. No equipment was working. And he said I want this, if you don’t fix it in two weeks, everybody is fired. He got there, everything was renovated, equipment working, everything. Why, corruption.
A country that neglects its best and goes for medicals abroad, what do you expect. As long as we don’t go the convention way of seeking knowledge, to give us power and to create wealth, instead of just spending and spending.
With good leadership, does it mean all these challenges will stop?
There are many corporate gurus that have done extremely well and they have gone out there to take leadership courses for this our country Nigeria.
But the way and manner in which leadership are selected in this country is a challenge. By the grace of God, I started out with Mutual Benefits and now we employ over 5,000 Nigerians. You can imagine, the federal and state government that is the largest employer of labour, what do they give? There are many civil servants that are totally unproductive; there are those that are corrupt. It is not as if they don’t have something to offer, but because the system does not encourage them. We need good leadership in this country. When you have these good qualities, you put them into use to make this country to grow.
Many people who require traveling to do their businesses are scared of going by road because of insecurity, and traveling by air is expensive. How in your view is insecurity affecting the business environment?
I’m happy with the aviation industry each time I travel and see the activities at the airport, and the response index with the level of traffic; it is phenomenal.
The airlines are buying new aircraft. It is not that they are too comfortable, but they are managing themselves and they are responding. Why will people abandon the roads and go for aircraft? It is at a great inconvenience, I must say. What is the cost of a flight from Lagos to Abuja? It is so high.
But can you blame them? Insecurity in this country has affected trade and commerce. Even the few people traveling by road and carrying their goods are being disturbed on the road by Customs agents. Customs are to secure the borders. But if the goods have passed the borders and somebody is traveling within and he has to pass through several checkpoints by Customs, and for every point, he has to drop something, it will only add to the cost of the goods, apart from the insecurity on the roads. You have to organise your security if you are going by road. Thank God for IT, services can be rendered online now. But no matter what, some services have to be done physically. We don’t have good roads also, aside from the security challenge.
