By Chukwudi Nweje
Anthony Kila, a Jean Monnet professor of Strategy and Development is the Institute Director General at the Centre for International, Advanced and Professional Studies (CIAPS). He is also an international director of studies at the European Centre of Advanced and Professional Studies. In this interview, he analyses the 2024 budget, the presidents New Year speech and other national issues.
The year 2024 has just begun and President Bola Tinubu has delivered the customary New Year address, what are your takeaways from that speech?
As somebody who writes speeches and reads speeches, I think the New Year broadcast, in abstract is a good speech.
It’s a good prose, and it’s well constructed and it shows some understanding but all that is in abstract. When you begin to contextualise it, that is when trouble starts. The speech is sort of a mistake on a lot of things.
So, when you speak at some point, it’s sort of like, I get that things are tough for people. But you see, in reality, things are not tough for people, things are very, very bad for people.
This is not a dramatic situation. It’s a disastrous situation at the moment because people are unable to feed, they are begging. The New Year is dull, so was Christmas. The festive period was very dull due to the lack of funds. To that extent, I think the speech glosses over reality, making it sound as if it’s not that bad.
If you read it from Mars, you think, oh, that’s a good speech, the guy gets it. But if you read it from Nigeria, and you see what Nigerians are going through, you will see the gravity of it.
And, I also think it’s in bad taste to say that we’re winning security war with what just happened a few days before the speech.
Yes, that’s really bad taste. It shows indolence and incompetence from the part of the presidency and whoever prepared the speech. Or maybe it was outdated, as someone has pointed out. Maybe they had written it before the last day of the event. But it’s still indolent because the president should have updated and upgraded it. And it may be, maybe they should have made the president do the recording again if it was not a live broadcast. Again, the speech is full of contrast. The speech says, do not flutter, do not flinch, it reminds one of Churchillian, British style, and a bit of American style.
It lacks the needed content to inspire people who are despondent, hungry and desperate.
Overall, from the speech, it appears the best thing that happened in 2023 was that Tinubu became president. That’s good for him and his family, for his biological and political family but not for the majority of Nigerians. That cannot be the major achievement.
It’s a shame that after seven months in office, the president and the presidency cannot point at some low-hanging fruit as achievements. They cannot say, because we implemented this policy, we’re happy to say that we’ve moved one million people into jobs, or to say that we have reduced the price of A,B, and C, that is a big shame. They’re still promising and that is worrisome. As citizens and as observers, since we’re not politicians, we have to keep hoping that their promises become reality for the sake of Nigeria. There’s no point wishing the government bad. Only desperate politicians do that. Once the election is over, it’s just a matter of wishing the country well, and wish that their promises and their hopes become reality.
But for now, it’s hard, that’s the critical matter; the speech doesn’t match Nigeria’s problems.
The 2024 Appropriation Act has been signed by the president, and we noticed that the National Assembly increased the budget from the original figure to $28.7 trillion and allocated more funds to themselves; all these are happening when there is severe hunger in the land, what are your thoughts?
There are two sides to look at the budget. There’s a technical side and there’s a perspective point of view. The budget has totally failed on the perspective point of view because for the average Nigerian, I would say the layman, the common man, or whatever expression we’re using, it doesn’t make sense that at a time of hardship like this to see that some people who already have cars are buying new cars for millions of Naira. As an economist, I know that in the scheme of things, the amount they’re spending on cars may not really change anything in Nigeria but in terms of perception, it’s not good. It makes the government appear not connected and insensitive to the plight of the people and that is a bad thing for governance. You don’t want to tell people that you don’t care what they think, you don’t play politics with things like that. If you’re going to go into politics, that means you must care about what people think about you. And in this case, people think you waste money that’s proliferating, which is a bad thing.
The other thing is this. That’s the cars they’re planning to buy. They’re also spending a lot of money on billions of books. What are they reading? I want each one of them to write a review of every book they read for the amount of money they’re spending on the library and they should submit it. They should list the book they’ve read and write reviews about it. That shows insensitivity and being disconnected in terms of perception. Then it takes us into an analysis of the budget. I personally am worried because the figures they’re using does not seem realistic. So, we’re funding debt with over 40 per cent of revenue. That is not the fault of this government, they inherited it, maybe they have a moral fault because they didn’t shout. The tall lanky one that was taking the money has taken his pension and gone to Daura. They didn’t stop him when he was doing that. But using over 45 per cent to service debt is a worrisome place to start.
My other concern, technically, are the projections. This idea that the projected revenue that will come from increased oil production worries me because there is nothing to sustain that, because we have systems that do not work. We are not making it yet, we’re far away from it. So, the figure that all of a sudden, it’s going to go up? I think the figure is an increase of over 300 per cent, if I’m correct; that the oil revenue is projected to increase that way worries me. Also, the projected increase from taxes and value added tax (VAT) and customs, there’s a prediction of what, 54 per cent.
That is worrisome because it was predicated on an expanding economy and that is not what we’re seeing in the world and in Nigeria. People should be worried because that means they’re going to be taxing a lot more. I do not believe this is the time to tax. If I was writing this budget, let’s put it this way, and this is an ideological bias, I would not base my budget on these projections. I would base my budget on fiscal policies that will make the economy grow, then after that, you can go and tax the economy. You generate revenue first, and above all, I would cut expenditures drastically and try to gain revenue by selling some assets and I would try to fund things more by private partnership. So, for what they’ve written, I’m a bit worried that it’s not very realistic. These projections don’t seem realistic, they require prayer. I pray I’m not right and that they are right but based on logic, I seem to be right.
You mentioned increasing revenue earlier. This budget is based on a $73.96 per barrel of crude oil. As it is, the world is moving away from fossil fuels; moving away from fossil fuels means less crude oil sales and less revenue for the country, yet we are still making budgets based on crude oil sales, what is your take?
You see, this budget is a missing opportunity. The present administration found themselves in a bad place because the easiest thing to do is to follow what we have, which is crude oil, as much as possible, and try to make ends meet. But ideally, what we should do is to think outside the box totally, you know, to look at it and say, how can we; I think the total amount of the budget is close to $30 trillion. So, you see, what I would have done if I were involved in this is to sit down in the room and say to everybody, how do you raise $30 trillion away from crude oil?
Now, that will require a lot of thinking, but it’s something that will save us from shock. So, to do that, we have to think of funding our expenditure not by spending, but by investment. So, we have to think of a private partnership with entities that can fund it with the government spending little or nothing. Then we have to think of privatising some of the state assets. We have to turn into revenue-generating assets either by outright sales or by leasing them out.
We have to continue a lot of things. But above all, we have to drastically reduce the cost of energy sales.
I am worried because of the President’s speech. I think it’s a given that everybody has embraced it and they’re going to increase the minimum wage. You see, it sounds good morally and sentimentally, but the economics is bad because when you increase people’s wages, because you feel sorry for them, where you have not increased what they’re going to buy with the money, you have not increased the production, what you are causing is inflation.
What will happen is that people who used to earn N20 will now have N25 in their hands and they’re buying the same amount of rice available. So, the price of those products will simply go up. Instead of increasing wages, I would have increased production, investing capital projects and above all, increase the credit system, make it easier to get loans that people do not need to spend, especially capital loans. So instead of what I’m seeing across the country, philanthropies and foundations doling out food banks, which will be doing voucher systems for credit so that once you have a building, you can buy cement, you don’t need to pay because the bank will cover you. Those are the kind of outside-the-box thinking that we ought to do that we’re not doing at the moment.
And this way, where we’re just thinking of getting money through loans and just spending it is not going to bring a structural change in our system. To that extent, the budget is not encouraging for me; it actually scares me, because if their functions go wrong, then we’re in big trouble.
Talking about increasing production, we have a major challenge with electricity that has led to the collapse of small scale enterprises, how do you address that first, because without electricity, whatever we are talking about, production will not come to fruition?
I think three things about this electricity thing, and this is something that we should have done before. I think we need to learn from God, at least the God of the Bible. The first thing God did was say, ‘let there be light.’
I think we should stop everything we’re doing and go and focus on light first, any amount we have, we should really focus on light and subtractive. I think even if we’re not eating, let’s have light first. People may be hungry, but let there be light because out of light there’ll be food. I think we need to think that way.
Then number two we need to diversify. We need to think of alternative energies, not just the one we’re used to. So prioritization and diversification are what we need about the light. I mean, we need to get people together and say, what’s this problem and identify who needs X amount to save us. But yet, we really need to prioritize the light thing because that’s something that affects everything else from education to health, to agriculture, to processing, to everything we do. We’re a tropical country, we need fans and air conditioners, we need light for all our essentials. My thinking is that the problem is that the people who were hired to deal with this electricity have alternatives. Maybe, we need to go back to the law that says that no government office will have a generator so that they can get the electricity working.
There is currently an ongoing debate between the NNPC limited and oil market over what should be the appropriate pump price of fuel; oil marketers suggest N1,200 per litre as price. What are your concerns?
I think at the moment, what is going on is some kind of call it partial subsidy.
Because you can understand why if you look at the forex situation and you look at the general increase in price and you look at again, the failure of power, the consumption for petrol and diesel is going up because there’s no power; besides needing petrol for driving your cars, or diesel for your tractor, you also need it to power your house. So that means the demand for petrol and diesel is going higher while the supply is not increasing. So, it’s natural, well not natural, it’s logical to expect increasing price. So, the fact that the price is not increasing, it tells you someone somewhere is actually keeping a tap on it.
Because I was not for subsidy removal, I have no scandal with that if there is subsidy. It is those people who gave subsidy a bad name that have to wrestle with their conscience and with history not me, Anthony Kila. When everybody was saying that, is an inevitable thing, it is a courageous thing, those who know me knew my stance. I welcome subsidy where needed. It’s not a problem at all, it just needs to be managed well. This idea I’m saying is a courageous step to take away subsidy, I am not one of those that applauded it. So, if there is need to subsidise, let us subsidize. All we need to do is to make sure that the subsidy is not forever. And the meantime that we’re subsidizing, we’ll be creating alternatives to make sure subsidy is not needed. The alternative we need is refineries to reduce the cost and also again alternative energy. There was a talk about building some gas plants, I think CNG, it seems to have gone down now before it started. So we need to work more on that. What we need to do is increase the supply and reduce the demand for petrol and diesel or crude oil generally. We need to go more into gas, go more into solar. That is the way to balance it. But those are long time things.
A country like Nigeria, if we are really serious, we can fast-track this. We have seen what they’re doing in China and the United Arab Emirates. The way you put your mind to it, it is possible to fast-track a lot of things now.
I will take you back to Nigeria using a substantial part of its revenue for debt servicing; former governor of Ogun State, Olusegun Osoba said that Tinubu will continue borrowing because the last administration left an empty treasury, what are your thoughts?
Well, I think Olusegun Osoba is an elderly statesman, he’s not a trained economist.
Common sense is that when you don’t have money, you borrow or beg. We have begged a lot, so it’s not easy to continue begging, moreover, we’re getting too old to keep begging and nobody’s going to give us money if we beg. If you look at the way our leaders are spending money, they look like beggars in tuxedo. You know, they look like people say, please, I need money but when the people they are begging from asks what the money is for, they say, I want to eat and I’ll do manicure. That’s not the kind of thing you give people money for.
Borrowing is because it’s needed, but that’s having it as a short cut. Let’s look at it this way, there’s a moral thing against borrowing. We all think borrowing is bad.
My thinking is that we can’t say borrowing is good or bad in abstract. We have to think what is done with the money. If you borrow $100 to do a business and the business generates $200, then it’s okay to borrow because you have enough to return the capital and you have enough to pay interest and some from your profit.
But you borrow just to stay alive, what’s the problem there? I think we need to deliberately move away from borrowing and think about quantitative ways to fund things.
Not because borrowing is morally wrong, but I think it’s because it’s more expensive. We have to think, okay, what do we want to do with the money? Want to build roads, fine. We have two ways of building roads or building schools.
It’s either we borrow money to do it or we get people who can do it and get the interest later. So, we can build roads and put toll gates. It just has to be transparent and reasonable so that we don’t spend money today.
We just spend a bit over a period of time after it is done. Because in the meantime, while doing it, it’s generating jobs.
So that’s the thing. But if we don’t get all that, then yes, we have to borrow. But I think borrowing is the simplest and the easiest way to go about things. There are other kinds of arrangements that can be done.