First, take a model that is investment-driven, rather than consumer or consumption-driven. At the very top, you have Ethiopia, Uganda, Rwanda, Ghana, Kenya and Egypt. Those at the bottom are Angola and Nigeria. And if you talk today in Africa, they will think Nigeria and Angola are the richest countries, because they are oil producing. But, the truth is that we are the worst performers, in terms of investments to GDP.
If you look at the other countries that do not have oil, look at what they have done. If you have a high investment to GDP, you will deliver high growth that is also inclusive. If you continue working on consumption and rent-seeking model, your growth is not inclusive, which is why in Nigeria, you have, over the past two decades, increasing income distribution inequalities. It is very easy to be very rich based on rent.
I went to my friend’s house the other day in Lagos and they gave me Moringa tea in a nicely packaged tin. That is the thing that grows wildly here in the Northern part of the country. Somebody takes Moringa, puts it in a tin, packages it. I did not even know it was called Moringa until I took the tea. They packaged it and gave it an English name. I did not even know it again. It was after I drank it that I knew it was Zogale, as it is called in the local language. If they had packaged it and called it Zogale, it would have been known as Zogale tea all over the world. Just like people know coffee from Ethiopia. But, now that it is called Moringa, a Hausa man does not know what Moringa is, and it is growing in his backyard. Then, he takes pound sterling to import Moringa tea. So, this is what Ethiopia did. I will show you what countries like Kenya did, which we didn’t do, and therefore Nigeria is right there in the low band and non-commodities Africa is in the upper band.
Even this one I am giving this lecture, maybe someone would say: “Emir, stop giving these kinds of lectures.” That you have someone who writes what you call a brilliant economic paper, and he is telling you that if you devaluethe currency prices would go up. Is that economics or arithmetics? It is arithmetics!
If you ask your boy in Primary 3, if the dollar costs N150 today, and tomorrow it costs N300, what would happen to prices? He will tell you prices will double. He can calculate. One times 300 is two times one times 150. That is noteconomics. That is arithmetics. The economics of it is, these billions that are being schemed off by people who get official exchange rate, should you give the states their revenue. For example, should you take dollars, for every $1 billion taken from the Federation Account and sold by the CBN at N200 to the dollar, the states were losing N100 billion that could have gone into salaries, agriculture, healthcare. Yet, the states were going to borrow from the same government on a bailout when the government was selling dollars cheaply to a small group of people. What kind of economy are we running?
Something else to look at. This is the slide that got me sacked from my job. You know the truth will always be there and I like this power point presentations because the figures tell you more than a thousand words. These are our externalaccounts, now look at Nigeria and look at Kenya up there in the blue line. These are current accounts surpluses we have had from 2005 to 2014. Not even one oil price rise in 2014 did we have in our current account deposit. I think today, up to 2014 we have current accounts surpluses. Now, below there you have other investment assets, which will be your capital inflows. I mean your reserve, and you have something called net errors and omissions.
Look at 2014, the errors and omissions were about $20 billion, from about minus 5 to minus 35, about $30 billion actually. So, when you are accountant and you produce accounts and errors and omissions that are 70% of thenumbers, or 60%, what does that tell you?
I am Chairman of a company called Black Rhino. By the way, I don’t have a kobo in that company, but I am a Chairman. This short man who owns black stone said to us: “Gentlemen, here is $5 billion to invest in power projects in Africa, a joint venture with Dangote on a condition that for every $1billion you put in, Dangote puts in $1 billion, so we have $10 billion to invest. We have projects in Ethiopia, Eritrea, and Kenya. I accepted to be Chairman on one condition only, that he will allow me to fix a power project in Kano. And he said: “If you can find a good power project in Kano, I am okay.” Now, power companies are here trying to invest, negotiating. & what did we hear? One day some judge in a court sits down and says reverse the tariffs. I am here talking to someone in New York who cannot understand that a government can issue a power privatization plan; that investors can come in; that there is a regulator for power;that they looked at the numbers, looked at the cost of power, looked at what is cost recovery, agree on a tariff, announce that tariff, they bring in their money to invest on the basis of that and a court in the same country says this is illegal.
When the minister is there, you tell them, “You know, Hon. Minister, Nigeria is very lucky to have you in office.” No! You tell the minister that you are doing well, but, you know there are these areas that you must change. If a policy is wrong, it is wrong. Nothing will make it right. And it has to be changed. So, this is what we did. Look at real sector wages. It was not just Nigeria, it was all over Africa. Look at sovereign debt fuelling growth. If you take the example of an individual. You happen to know bank MDs and you can make a few phone calls and get loans. You borrow N1 billion here today and build a very nice mansion in Abuja. You borrow another N1 billion and let your family go out on first class ticket as you are travelling all over the world. You borrow another N5 to N6 billion and buy a private jet. We have very many people in Nigeria who you think are very rich. But, who are really bankrupt, because everything about them are being financed by bank debts. When one debtmatures they have enough connections to call another bank, borrow and refinance that debt. They are not earning anything. They have private jets. They have yachts. Their families travel first class. They go abroad and stay in the most expensive hotels. It happens. And it is happening today. What do you think of those people? When you think about such people, do you think they are foolish people? Or do youthink they are wise people? So, what would you say of a country that does this? So, you feel growth by borrowing money, pay salaries, people spend money on pure consumption spending, nothing is produced. It’s fine. It’s short term. But, it is not sustainable. How much can you continue to borrow and consume without producing?
- Muhammadu Sanusi II