A former chief executive of the Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, who is presently the executive vice-chairman of Alpha African Advisory, in this interview with Obinna Chima, spoke on developments in the Nigerian economy, leadership, as well as what Nigerians should focus on ahead of the 2019 elections
What have you been up to since you served out your term as theÂ CEO of the Asset Management Corporation of Nigeria?
Well, it has been in stages. When I left AMCON, I didnâ€™t do much for six months. I was mostly in the United States. After that, I was persuaded to work on a financial advisory firm called Alpha African Advisory, on which I am the Vice Chairman. We are trying to build it up as a primary investment advisory firm in West Africa. But these are very difficult times. We are looking at the long-term and so we have advised most of our clients abroad that this is not the best time to invest in Nigeria. So, for the first two years, we are trying to build up capacity and I hope that in the next five years, we would emerge as one of the primary financial advisory firms in West Africa.
Why do you think this is not the best time to invest in Nigeria?
I think that we do lack and still lack a coherent economic policy. I have for the last six years, without apology, advocated for a very aggressive fiscal and monetary policy. This is not a matter of the All Progressives Congress (APC) or the Peopleâ€™s Democratic Party (PDP), it is all about Nigeria. Nigeria must expand its Gross Domestic Product (GDP) in double-digits to survive as a nation. If we donâ€™t, we will not survive as a nation, or else, nothing else would matter in the long-run. We are on borrowed time. I think that once we have a coherent economic policy and people understand what Nigeria is going to be doing in the next five to ten years, then it will be the right time for investors to come in. Right now, a new government might come in tomorrow and change everything and it is just too confusing for me.Â
Talking about an expansionary fiscal and monetary policy, from the fiscal side, looking at the size of the budget, with about N8 trillion estimated in the 2018 Appropriation Bill, from where it was in 2015, donâ€™t you think the government has taken deliberate steps to expand the economy. Also, in terms of monetary policy, inflationary pressure, forex pressure are factors that would discourage the central bank from loosening monetary policy. What is your take on that?
Letâ€™s take the points one by one. On the issue of the budget, N8 trillion budget, at an exchange rate of N360 to the dollar, is less than N4 trillion at an exchange rate of N150 to the dollar. So, in dollar terms, the budget is smaller than the last budget of the Goodluck Jonathanâ€™s administration. So, it is not expansionary in dollar terms. But budget is not the only issue in terms of expansionary. Budget is fiscal. On the monetary side where much of the expansionary impetus will come from because there is much more money in the private and banking sector. Interest rates are too high. So, interest at between 26 and 30 per cent, makes it almost impossible for any bank to lend to a handful of businesses; and even these handful of businesses struggle to meet this high interest rate regime. So, what we have chosen is to defend the naira and inflation. Both of which we have failed at because the naira is weaker today and inflation is higher today than it was when we started this defence. We have chosen to do that at the expense of employment, expansion and growth. So, the debate we should have as a nation is what is more important to us. Is it more important to us that we have three or four million people unemployed every year or do we tolerate inflation and a slightly tougher life for the middle class. My position is that we should expand, grow and be aggressive about it. Interest rate for borrowers should be in single digit and not single digit monetary policy rate (MPR). For me, MPR should be at five per cent and we should be lending at about eight per cent to businesses. It has its consequences. The consequences are that there would be higher inflation for a while and the naira would weaken for a while. But in the long run all those things would stabilise.
(Cuts in)..And how will that affect portfolio inflows?
They would in! Why did they start coming in? they started coming in when the central bank allowed them to bring their monies at N360 to a dollar and they know they can take it out at N365 to a dollar. If you allow them to bring money in at N500 to a dollar, they would come in more. I would guarantee you that if MPR is at five per cent and the naira finds its market level, you will get more foreign investors than today. People measure Nigeriaâ€™s progress by how strong the naira is. By that measure we have failed because of how the naira has depreciated over the years. That should not be our measure of pride. Our measure of pride should be how many people do we employ a year? How fast is our economy growing and how quick can we transition from a third world economy to, letâ€™s just say a second world economy? China did it and Brazil also did it. Brazil did a miraculous job. Their economy backtracked for about five years, but today, it has rebounded, and the economy is growing. So, we should just have a national debate and the best time to have a national debate is towards the election. What do Nigerians care about? The naira at N360 to a dollar and the loss of three million jobs in the last five years or the naira at N500 to a dollar and nobody must worry about unemployment? That is a debate we ought to have because nobody has monopoly of wisdom. Letâ€™s have the discussion.
Do you support the federal governmentâ€™s aggressive borrowing plan, and donâ€™t you think it is part of efforts to expand the economy?
When this government came in, I was asked by a very senior official of this government, to write and economic report, which I did, because I am for Nigeria. I am not for APC or PDP, contrary to what a lot of people have posited in the past. I have never joined PDP in my life. So, I wrote the economic report, in which I pointed out that the government should use its balance sheet to issue guarantees to the private sector institutions. Based on those guarantees, they can raise a lot of money. The government didnâ€™t have to borrow directly. Government could borrow contingently through guarantees, instead of borrowing directly. Look, the national debt has gone from N9 trillion when this government came in, to about N20 trillion today, and it is still rising. They have doubled the debt! I challenge anybody to tell me what they have done with the over N11 trillion they have borrowed so far. This government has borrowed more money in two and half years, than the civilian government since 1999 had borrowed. So, in two years, they borrowed more than what had been borrowed for 16 years and nobody can point out what they have done with the money they have borrowed so far. Thatâ€™s the problem. Itâ€™s an ad hoc thing. It is not part of the coherent plan. I know there is an Economic Recovery and Growth Plan (ERGP) that they are all talking about, but when I look at the targets in the ERGP, I am not impressed. I believe we can do better.
Why are you not impressed?
The growth rate they put in there for the GDP, in my opinion, anybody should be able to do that. So, I personally think we can do better.
But the government has told us that part of the borrowing has gone into infrastructure development such as road construction, power, healthcare, social investment scheme, etc
Can you see the infrastructure? I canâ€™t see it. Look, the power-per-capita is less now than when they came in. Since they came in, there have been eight million new Nigerians and power supply is still the same. So, power-per-capita is less. So, I canâ€™t see what they have done. I know the Kaduna-Abuja rail has been commission, but that was built mostly under Goodluck Jonathan, no matter what anybody tells you. The Abuja Airport was mostly under Jonathan and these are just the facts. Is there any new initiative? The Ibadan expressway hasnâ€™t advanced an inch, the second Niger Bridge has advanced an inch. Look there may be hidden projects that we are not seeing, but my point is that its their job to tell us what they have done with the N11 trillion they have borrowed in two years. So, I am not saying they havenâ€™t done anything, but they should show us what they have done.
Earlier, you said you are not for PDP nor APC, are you not interested in politics?
I am interested in the result of the election. I am interested that we get the best president we can possibly get and get things right. And that best president must have, in my opinion, three qualities: He must be a bridge builder to the future and somebody who can heal the country. The country is so divided. Anybody will tell you that we need to be able to heal the country, and from that healing build the bridge to the future. So, whoever that person is, is who we need. The person can be a Muslim, Christian, man or woman, young or old. We shouldnâ€™t rule out the old people because they are old, and we should rule out the young people because they are young. Once you start saying it must be a young person, you are falling inside the same trap. We should not be discriminatory. Let everybody come, state their case and letâ€™s pick the person who can build the bridge, fix our economy and who can groom the next generation of leaders.Â Â Those are the three things I am looking for. A young person is not going to be the president of Nigeria, just because he is young. They should prove to us that they are ready. So, letâ€™s spend the next four years healing the nation, fixing the economy and grooming the next set of leaders. There is no rush that we should do it now. So, if President Muhammadu Buhari somehow proves that he can do those things I mentioned, I will support him. But the last three years or so, doesnâ€™t give one much confidence that he can do that. But he has a year to prove that. Whoever else wants to challenge him, should prove that they can build the bridge to heal the nation, fix the economy and groom the next generation of leaders. I donâ€™t care whether the person is from the north or south, APC, PDP or Third Force. But, we should be asking for much better.Â
What is your assessment of the current leadership in the nation?
The record of the last two or three years is not a good one and anybody who says otherwise is not being fair to Nigerians. But what one can say is that yes, it hasnâ€™t been good, but here is why are going to make it better and here is why it wasnâ€™t good. That is what we want to hear. Defending indefensible is ridiculous. Telling us we are out of recession where people are being laid off more, people canâ€™t eat, there is starvation and hunger in the land, there is deception everywhere, there are clashes between herdsmen and farmers and there are all kinds of division in the country. It is clear. But, it may not be anybodyâ€™s fault. It may be beyond anybody. But show us how you are going to fix it. If they want to campaign based on the job they have done, they will lose. But if they want to campaign based on the things they recognised as problems and the things they would do to fix them that will be credible and well thought out. The government has advantages and they should use that to tell us how they are going to do things better. Now, what I am saying now, if you asked those who are closed to Goodluck Jonathan, they would tell you that I said same thing to the last government. You will not win based on what you have done, your only chance of winning is based on how you are going to do things better. I give same advice to this government â€“ you cannot win based on what you have done. But you can win by telling us how you can do things better. And this is an honest advice and it is not meant to be adversarial.Â Â Â
Are you part of the Third Force movement?
They came to talk to me about the Third Force. But much of this Third Force members were same people that came together to remove former president Jonathan. They all came together from everywhere to remove Jonathan and they removed him. They must ask themselves whether they are happy with the decision. Obviously, they are not because now they want to get together again to remove the president today. So, I view that with suspicion. What I asked them when they came to me was what do they want to do in the Third Force that they canâ€™t do in the APC, PDP, labour party or any of the parties. So, go to one of them and do these things. If you canâ€™t change APC or PDP, how are you going to change Nigeria? So, it is baffling to me that they gave up on their political parties and they want to create a new thing that would save Nigeria. So, I am not a member of any Third Force and I will not be a member of any Third Force because I donâ€™t see the reason for it. So, I wish them all the best. Many of them are my good friends and people I respect. Maybe they have a vision I can see.
Finally, what do you think is the way forward for Nigeria?
We must learn two or three things culturally that are very important for us to learn. One of the biggest problems Nigerians have is that we donâ€™t believe in the future. I made a joke that if you offer a Nigeria N100 million today or N10 billion at the end of the year, many people would go for the N100 million because they donâ€™t believe that the N10 billion would materialise by the end of the year. There is a huge trust deficit. This has been because of peopleâ€™s experience. So, because of that mindset, we donâ€™t build for the future and we donâ€™t invest in the future. You see politicians today that are completely obsessed with 2023 and all their calculations are based on what would happen in 2023. They should be looking at 2050. Who cares about 2023 really! Letâ€™s get the best president in 2019, 2023 as well as the best one in 2027, and that is the way we build our country for our grandchildren. But we are all focused on the short-term. All we are saying now is that letâ€™s support this person, he will do four years and by 2023, it would go back to the south. It is a seductive thought, but people must realise that Obasanjo didnâ€™t do more for the South-west than every other part of the country. Jonathan didnâ€™t do much for the South-south than any other part of the country. The experience has not been that the president of a place will do much more for his region. They may made appointments, but appointments do not equal development in any way. Even if you look at the present government, it is hard to see that the present government has done much more for the north than for any other region of the country, apart from appointments. It looks like key appointments appear to be very northern. But in terms of development and improvement in the quality of life, it is not apparent. So, we should stop focusing on where the president comes from. The fact that the president is from Onitsha is not going to help Onitsha much. So, we are very short sighted, and it is one thing we need to correct. We need to invest in the future and do things for the long-run. The second thing is the obsession with corruption. I have tried to do my numbers and I came to find that corruption is not more than two per cent of GDP in Nigeria. It is not a big problem as people would make it out to be. It is a beautiful sound bite. Every president of Nigeria came in vowing to kill corruption and they meant it. Obasanjo meant it, Yarâ€™Adua meant it, Goodluck meant it and I believe Buhari means it. But the more you fight this corruption, the more you expose the cause of the corruption which is poverty and needs. And because people are poor and have needs, there is no way a man that is dying of thirst will see a bottle of water and not drink it.
(Cuts in)..Greed is also a factor responsible for corruption?
I think need is more of a factor than greed. I think there is more need than greed. So, If you appoint the most competent people into jobs, they tend not to be corrupt. They tend to believe they deserve the job and that they can get another job after they leave the job and that they donâ€™t need to steal to survive. But when you put somebody who is incompetent, in the first month they realise that they canâ€™t fit in, they start planning for their retirement. So, we need to stop being obsessed about corruption and be more obsessed with competence, we need to stop being obsessed with the short-term and be more obsessed with the long-term and thirdly, we need to stop quarrelling about where people come from, but what they can do. What matters is who can do the best job and not where they come from. I have no problem if everybody in Buhariâ€™s administration is from Daura and if they are the best, because it will incentivise us to be better to get the job done. But when you have someone who is not the best on the job, it creates a disincentive to work harder. So, corruption is not just about stealing money, when you put somebody in a job that he or she is not qualified for, that is corruption as well. The only corruption we seem to be obsessed about in this administration is who stole money and what they did with the money. It is equally bad not to put the best people on the best seats because incompetence would always cost you more than corruption. Like I said earlier, I think corruption is about two per cent of GDP and incompetence is about 10 per cent of GDP and that is a bigger problem than corruption in Nigeria. Until we recognise it and start fighting incompetence, we may not get anywhere.
For the economy, we must agree as a nation that the most important problem for us is the employment of our people. Once we agree, then the next step forward is that if we employ five million people a year, our GDP must grow in double-digits. And if you want our GDP to grow in double-digits, we must have a very expansionary monetary policy and credit would be available to a lot of businesses.