Mr Olusegun Adeyemi-Showunmi, who is the spokesperson of the presidential candidate of the Peoples Democratic Party (PDP) in the 2019 elections, Alhaji Atiku Abubakar, in this interview on the sideines with select journalists at the just concluded 2019 Annual Meetings of the World Bank/International Monetary Fund in Washington DC, kicked against most of the federal government policies. Kunle Aderinokun and Obinna Chima provide the excerpts:
Why did you attend the annual meetings of the World Bank/IMF?
We are here to be able to see precisely where the world is going and to relate whatever is being learnt to issues of importance back home and eventually deepen democracy in Nigeria. The conversation around democracy, governance and power cannot be limited only to the political narrative of elections. Sometimes you need to bring it up to the issue of policy and where you think the world is going and that is why I am here.
We want to see how well Nigeria is measuring based on projections. There is no gaining saying that the approach of the Buhari-led government has been running on the single perception indicators for everything. It seems that they desire to interpret what they think should happen to the country primarily on taxes and perhaps on borrowing. But the thinking of the World Bank/IMF from these annual meetings suggest that there is need for caution because the volatility and vulnerabilities in the debt market may cause a lot of problem for emerging markets who are heavily in this. More importantly, to ask is what are they doing with that debt?
When you are saying that they are aggressive about taxation and heavy on debts, what other option are you recommending if you feel they are not going the right way?
They have had about five opportunities of running the national budget. They have run the budget from 2016 to 2019, and they have proposed another for 2020. So, after about five budget cycles, you will need to know that you are not going to grow your economy significantly if in every budget cycle all you are trying to do is to find another way to increase taxes, borrowing and then you are not seeing that there is a commensurate growth at the speed you need.
It’s a chicken and hen approach, and we hold the view that if you just prepare the economy of your country to be more receptive to private capital from all over the world, you may be able to use more creative instrument of long-term infrastructure funding with private capital to take care of some of those things that you are doing. We are also of the view that government in Africa, especially in Nigeria needn’t consider most of the things that other countries of the world have now started seeing as businesses as social investment.
For instance, you cannot run a concept that imagine that the federal government is still going to be in the business of low-cost housing – that is kind of an archaic approach. What the federal government needs to be doing and what we would have been doing if we were in charge of the country right now, would have been to make sure that we can prepare the real estate market to be able to do those houses and if need be government can then be an up-taker of those properties for purposes of placing those that are vulnerable in society in housing. That is what we see the whole world doing. We also believe that in terms of taxes, yes you need to expand the tax net by bringing in those who are taxable in, but you cannot constantly insist that the only way you can grow is to add more taxes.
You are moving Value Added Tax (VAT) from five per cent to 7.5 per cent, that means that you have a view around creating wealth that indicates that the only way is to take what is available. What we believe is that you must take a glance at what your fellow African countries are doing. We have a very good example in Ghana. What they have been doing to attract investment in their country and open up the economy a little bit more is actually to lower taxes. This is because they hold the view that if they create the investments first, then they can tax people.
The Nigerian government seems to be running a budget that is consuming and willing to consume. If they are futuristic, they would have known that before you increase tax, you work on reducing the consumption of overhead that you are managing. If there was a commensurate reduction in the overhead cost of government and the cost of doing governance, then you can say we have done our beat from this side and therefore we could do a little bit more in taxes.
Is that not happening?
What we see is ballooning every day and the numbers are not reducing. Rather, we see that the quantum of money that is being put in critical areas in terms of health and education is reducing. You cannot plan your budget that way if you want to achieve quantum growth. You must also know that capital on its own has a tendency to go to where it is needed. If your mind-set is too much on punitive regime around multinationals and others, then you are not going to attract more capitals into your country.
So, you have to create a rule of law system that is stable and encourages private capital flow. These are the kinds of things they (this government) should be doing. We are not saying that you should not extend the tax net to capture those who are escaping it. But you can’t use that as a perception to grow the Nigerian economy because at the end of the day the best you will do is get money from taxes but you are not going to expand the business space and income for the future.
And if you are not investing in health and education, how then do you want to get the capacity to fund and manage your economy especially with the projection that in 2050, Nigeria will be the third most populous nation in the world. So, serious minded government needs to think and work with that. Whatever investment you are not doing today, whatever decisions you are not taking today for the future, you are going to have to pay for it because it would be a decision too late.
Do you support the decision of the federal government to close the country’s land borders to two of its neighbours? If not, what other options do you think they should have adopted?
The federal government should know that trade stability is critical to growth. For people to be able to take investment decision in your direction, they must reasonably be able to predict what the trade relations around your country is. You cannot have a haphazard approach to your borders and to free trade zones around the ECOWAS region and you are saying you are making gains; but the truth is that you are not making any gain. What you are doing is that you are driving away potential investments because they don’t know when you are going to close the next border or put out another draconian policy that is outside regulation.
What we would have expected them to do is to speak with broader presidents and leaders in the sub-region so that they can jointly look at these issues. For the size of the Nigerian economy and the consequences of what the Nigerian economy will be to her neighbours when they close their border, I think it’s not a right decision for the Nigerian economy. What would have been more appropriate would have been to strengthen our patrol system there because you ask for how long are we going to close our borders for? Whatever gains you claimed to get are only going to be momentary. Truly, it’s consistent with the draconian ill-thought approach they have to everything including diplomacy, trade and international relations.
What do you make of the sectoral allocations in the recently presented 2020 budget by the Buhari-led administration?
If you look at the 2020 budget estimates that was just presented, you would have noticed that a significant amount of that budget will be used for debt service and overhead cost, while only a small fraction will be used for capital expenditure. When you now look at what they are planning to use for capital expenditure, you can conclude that that budget is only a consumption budget for now. Any nation that wants to plan itself for the post-oil era must do more than they are doing.
So, what economic direction do you think the current administration should be taking?
The position of our party and Alhaji Atiku Abubakar is that we must start to invest in the people such that they can now create the wealth we need for the future. We also believe that those who want to grow the economy must think outside the box. We cannot keep doing the same thing and expect a different result. We believe that they are going too far on the taxation trajectory.
We believe that nations that will be able to pay their debts or who would have the capability to attract more debts, would be more mindful of the quality of their disclosures on those debts, the way they assess non-banking instruments and the risks that those could pose and how they are using their pension funds. If you are going to use debts to fund infrastructure, you must ensure that such infrastructure have the capability to be able to generate the funds that will pay the debts back. Also, in terms of diversification from the mono-economy that we have, we have not been seeing the value chain and mobilisation in that regard.
If you are going to be a global economic player, you cannot wake up overnight and start to close borders despite the issues you think are rearing up. On the part of the central bank, we can see some areas where they are not doing badly because they have been able to keep inflation pretty much stable and they have been able to sustain macro-economic growth. But we feel the growth is not big enough. We feel they need to bring down the interest rate. Also, they need to look at non-bank credit agencies such that you don’t have the volatility that can take place in that particular sector creating a ripple effect on the overall Nigerian economy. These are some of things we feel are not doing too well.
The approach of the presidential candidate of the PDP, Alhaji Atiku Abubakar , which is a bit more towards opening up the economy such that bigger players from the world can come and play in Nigeria. For this to be done, you must critically respect the rule of law and in that regards you are all witnesses to the fact that the present occupiers of the federal government are pretty much struggling. We must focus more on our policies.