Buhari’ operated worst economic, fiscal policies by exercising over-bearing influence on CBN-Dr. Itsede- Economist.
Dr Chris Itsede
----
By Cyril Mbah
Subject: Buhari’ operated worst economic, fiscal policies by exercising over-bearing influence on CBN-Dr. Itsede- Economist.
INTERVIEW
Buhari operated worst economic, fiscal policies by exercising over-bearing influence on CBN-Dr. Itsede- Economist.
Dr. Chris Osiomha Itsede, served as pioneer Director General of the West African Institute for Financial and Ecominic Management [WAIFEM] for several years before retiring to establish Polar-Afrique Consulting Limited, a management advisory firm, where he now serves as chairman.
The renowned economist described the economic and fiscal policies of the Buhari administration as the worst since independence and he advised President Bola Ahmed Tinubu to jettison the rash policies because they have not served the nation well before the government can hope to attract meaningful local and foreign investment to positively grow the economy and reduce inflation in the country. While dissecting the policies of the past regime further, in this interview with Cyril Mbah, Dr. Itsede also canvassed for the amendment of the Central Bank of Nigeria [CBN] Act 2007 to remove the overbearing influence of the Executive Arm of Government on the CBN Board through the CBN Governor, who also acts as chairman of the board. Excerpts.
How would you rate the economic and fiscal policies of the immediate past administration and the fact that Nigerians were forced to endure eight years of hardship which did not achieve anything tangible for the nation?
The achievement of the administration in managing the economy was below average. Monetary policies must compliment economic policies of any administration for proper balancing. In the last administration, monetary policies were at its worst. One of the necessary things required within the financial environment is proper discipline. It was not there. We saw how the former president, even at the eve of his departure, still requested National Assembly approval of N23.5 trillion. Why should the Central Bank give out such illegal credit? We must take another look at the Act which established the CBN to ensure that the Central Bank of Nigeria is adequately insulated from the overbearing influence and pressure of the Executive Arm of Government in the future. The CBN Act 2007 really needs review to protect the CBN and the governor from executive pressure. This can be done by removing the chairmanship of the CBN Board from the CBN Governor. Central Bank governors should not be made chairmen of the CBN Board in the future. This is a very crucial conversation that has not been put on the table yet.
In terms of economic performance, do you think the present administration should tow the line of the previous one?
If one wants to be objective, I would say that the past administration performed below average in economic management. Even where there were good policy initiatives, the implementation was so lackadaisical, just like the leadership of the administration had a casual, nonchalant approach to issues. Although few ministers acquitted themselves honourably well, otherwise, the performance was below average. It was on its own and very outstanding in terms of poor performance and has no comparison. It is not a model of government that we would want repeated in the country.so, to answer the question, the present administration should not tow the line of the previous one.
Judging from the performance of the last army general in office, do we really need former military officers in democratic governance since it appears they are not good at administration?
Military personnel in Nigeria, both serving and retired are Nigerians and the constitution allows every qualified citizen to vote and be voted for except where the person has committed some infractions. Some advanced countries like France and the USA have been led by retired military officers who performed very well. We have many cases around the world where retired military officers have led their countries from a state of hopelessness to a situation where everyone was proud to be citizens of the countries. It has to do with the personal capacity of the retired general, coupled with the environment and the political structures of the area. The military is a very rich environment for leadership training, discipline and motivation.
The nation’s debt profile is so high. Why is the borrowing habit preferred by our leaders to the point that it has become the entrenched culture of governance lately?
There is really nothing wrong with borrowing to run the government. There is no county that does not borrow. The main issue is to know why we are borrowing. Even in private life, a bank will ask a customer who wants to borrow money what he would use the money to achieve. There must be something like a business plan, which will give the bank some details and an idea of how the borrower intends to use the money. A situation where we borrow but cannot effectively utilise the resources is a recipe for disaster. When government borrows but lacks strong institutions that will ensure the money obtained is used productively and judiciously, such funds are likely to be looted and that was what has been taking place. If the amount of funds borrowed by the last administration were judiciously pumped into the economy, the nation would have been over-liquid by now but the money was squandered. So, borrowing to squander is different from borrowing for productive use. The institutional, legal and legislative controls on borrowing should be made stronger to check excessive borrowing by politicians in government. The last administration had serious aversion to obeying laws and it flouted every regulation.
It even ignored the limits set for borrowing. We have limits for borrowing both at the internal and the ECOWAS levels to checkmate fiscal rascality or irresponsibility by governments because ECOWAS countries are moving towards a monetary union. Under the micro-economic convergence criteria, it is forbidden for a central government to borrow from the Central Bank of the country. Central Bank borrowing is call “high-powered money” or ways and means because it raises the inflation rate. At the level of ECOWAS, Nigeria committed itself to such restrictions but the last administration failed to obey the fiscal discipline laws. The CBN was not supposed to give money to the Federal Government except those it earned by way of revenue or tax collections and whatever the CBN gives to the central government as short-term overdraft must be cleaned-out by 31st December of every year and should not be rolled over to another year. What we saw during the last administration was that all the rules were swept aside and flouted. This resulted in excessive borrowing to the tune of about N38 trillion. This was what the present administration inherited from the Buhari government. It is a huge burden for the nation.
Do you think that the business climate under the present administration will be better than the past one judging from its body language so far?
Every government will always promise to relax the business environment to ensure the ease of doing business. A conducive business environment is important. It is like a tide which lifts every boat on the water when it rises. When there is good business climate, all the businesses will do better and life will be more abundant for everybody. If the economy is booming, it will affect everything positively and people will be happy. Security is a principal factor in a good business climate. Freedom of movement is also important. We also need reliable energy. If businesses do not have sustainable energy at affordable rate, then the ability to produce will go down. Above all, we need the enforcement of rule of law and the sanctity of contracts must be guaranteed. Otherwise, no investor will bother to invest in our economy. Law facilitates certainty and ensures protection of investment. These are some of the basic indicators of good governance. The rule of law is very important coupled with political stability. Even in the absence of political stability, people still invest where there is rule of law. For example, people are still investing in war torn countries like Libya, Syria, Afghanistan and Somalia where there is no central government since January 1991.
What about the economic policies of the Asiwaju government, will it be something different from the past? People started complaining from day one as a result of the removal of subsidy. What do you think?
Well, the morning sometimes tells how the day will turn out to be. Some of the policy indicators of the administration have suggested the leaders may be better than the immediate past ones. The administration has taken some bold decisions on policy trusts that previous governments were either afraid or too timid to face. The president came out strongly about removing the petroleum subsidy which was the biggest scam in the country. It was really courageous on the part of the president and the pronouncement will give the business community some confidence.
Are you comfortable with the palliative arrangement? Many people have suggested that instead of giving out N8, 000 to selected individuals, the government should buy buses for states to reduce the high cost of transportation. Is the suggestion sustainable?
Subsidies are not bad. There is no economy where we do not find one form of subsidy or another but the now rested fuel subsidy was a monumental fraud. This fraud was practiced across several governments but it got to its zenith during the last administration. The administration was noted for being outrageous in everything it did wrong. There was nothing good about the regime. Ironically, people who formed the last administration shouted at the top of their voices when former President Goodluck Jonathan wanted to stop the subsidy. When they entered the presidency, they probably discovered that subsidy was a honey pot and all the bees perched on it for a share of the honey. It was an organised scam. On the N500billion palliative, one can say that many good policies have suffered from bad implementation. I believe the government will be a listening one as it has taken into cognizance the feedback from its proposal, which may have resulted from the failure of such programmes in the past. The so-called feeding of school children during the Covid-19 outbreak made Nigerians very suspicious of such programmes. We also saw where ware-houses were stacked with palliatives that were not distributed to the needy. So, it will take some time to win back the confidence and trust of the people on government programmes of this nature even when they have good intensions.
Buying buses overseas will only empower the economy of other countries such as Japan or China because our vehicle manufacturing companies are not functioning again. It will also put further pressure on the Naira which goes for N802 to one Dollar at the moment. If we did not kill Styre Motors in Bauchi or ANAMMCO Enugu, it would have been economically advantageous to buy buses from them but as it stands, buying them from outside will impact negatively on the economy.
Why do you think our leaders are finding it difficult to effectively manage the nation’s economy and its fiscal policies?
I think it is because many of the leaders lack the capacity and competence to manage the economy and not because they do not have the interest of the nation at heart. The other reasons include the lack of accountability whereby those who fail in the nation will be held accountable and punished where necessary. Policy making requires critical thinking which many leaders parading as policy makers lack. Only a small percentage of them have critical thinking abilities and competences. The tragedy of the Nigerian political system is that the younger ones, who are followers of politicians, look at failed leaders as role models and because the system does not penalise failure, the followers accept such failures as normal.
Can you advise the government on how to prop-up internally generated revenue [IGR] so that it does not resort so often to borrowing?
It is wrong to think that we do not have enough money in the country. The major problem of Nigeria is not revenue or money shortage but lack of prudent spending. I do not hear people talk about accountability or the judicious utilization of the little we have. Even if we triple the revenue available to governments, it might not change the lives of Nigerians except government officials change their attitude towards looting. There is a limit to the amount of revenue that can be generated from a non-productive economy like we have in the country. A company is supposed to pay income tax from the profit it has made from a particular business circle. Where the company does not make profit, what revenue is the government going to generate. When businesses boom, even the government will smile to the bank because tax revenue will grow. When there is depression and companies are not making money but are laying-off staff, tax revenue will go down. We must be talking about prudent ways of spending. For example, why should eight or more cars escort top officials to the airport and waste so much fuel. There is so much wasteful expenditure in government.
The last administration came into office with the promise to fight corruption but it appears that the government failed and corruption has almost overwhelmed the nation. How can we effectively fight corruption?
It is very easy to fight corruption. We should allow the rule of law to prevail. We should allow institutions, including the ministries, to function well according to the Acts that established them without undue interference from government officials. Impunity has become the most effective manure that helps corruption to grow. When people do things wrong and they are not punished according to laid down rules, others are likely to copy such behaviour. We need a transformational leader who will lead through examples. All the laws and anti-corruption agencies that we have today, were not there in the seventies when General Murtala Mohammed was head of State for about six months but we had order and rule of law. For me, all the anti-graft agencies are not necessary to fight corruption. They were created to provide jobs for the boys. This is why they have overlapping functions and it looked like the democratization of corruption. If the Nigeria Police was effectively doing its job, according to the Police Act, there would be no need for the EFCC and the ICPC. Nothing has changed at the corruption war front since they were created. The situation has even worsened and we hope that one day we would have a leader who does what he says to help smash the head of corruption in the country. Ends.
Metro
