What Nigeria must do to fix economy –Falae

By Charles Adegbite

Chief Olu Falae was the Secretary to the Federal Government and former Minister of Finance during General Ibrahim Babangida’s military era. He was the joint presidential candidate of the Alliance for Democracy(AD) and All Peoples Party (APP) during the 1999 general election, which he lost to Chief Olusegun Obasanjo. He is currently the leader of the Social Democratic Party (SDP). In this interview, he spoke on a wide range of national issues.

Excerpts:

If you had been elected in 1999 as the president of Nigeria instead of Chief Olusegun Obasanjo, what are the things you would have achieved which he couldn’t achieve during his eight years in office?

– I would have achieved so many things. You know I prepared myself thoroughly for the presidential bid because by being in the corridor of power for many years, I know exactly what is required. For example, I was Director for Economic Planning and Development for Nigeria for many years and that has given me the opportunity to see the problem that we have and turn it to potentials for development in Nigeria. And based on that experience, I have been able to put together a Blue Print for the governance of Nigeria which I titled ‘New Directions for the 3rd Republic’.

The document is about 371 pages long. That is where I stated out my vision, my planning and objectives for Nigeria, sector by sector. In agriculture, there were things I was going to do; in Education, Health, Transportation, Defence, Foreign Affairs, and so on. I had put down every point but the basic philosophy and approach was clearly set out after several discussions with stakeholders in each sector. In education, I had one, two, three, four sessions, with educationists; proprietors of education, teachers and even students so that we were able to discuss education in various perspectives.

From the perspectives of the owners of the schools, the proprietors, both corporate and individuals from the point of view of students who were the beneficiaries of education; and those that are financing education, those who are employing people into educational institutions.

So, from all these various perspectives, we were able to put together a succinct programme for educational development. For example, in the educational programmes, we were going to return schools to their former proprietors for the simple reason that discipline had collapsed in the schools because authority has been divorced from management. Under this system, we have the Board of Governors in every school. If any teacher or student misbehaves, the Board of Governors will summon him within 24 hours to deal with the matter. Under the system we were then running, the government had taken over the schools; no Board of Governors, the principals have become toothless bulldogs. If a child misbehaves, he could not suspend or expel him because that student will go to the Ministry of Education and get the decision of the principal reversed, and humiliate the principal and thereby undermining the authority and discipline of the school. So, we must return the schools to the owners so that we can return authority to the schools. Not only to the teachers but to the Board of Governors that will be composed of both the teachers, the parents and the other constituencies of the school.

So, I just use that as an example of the kind of thinking we did and the kind of recommendations that will take place. We would have done this thing in every area of national endeavour. So, if I have been allowed to exercise my mandate with the support of Almighty God and the planning we had done, Nigeria would have become completely different from what we have now.

For example, when I was Director of Planning in 1975, we produced the first National Development Planning between 1975 to 80 under General Gowon, and when some of the recommendations in that plan were to be implemented. We projected that Nigeria needed 6000 Megawatt of electricity by 1980. Today, we are still struggling with 4000 Megawatts, 35 years later. Now if I had become President, I would have done all that is humanly possible to make sure that Nigeria was generating at least 10,000 mw of electricity. If we had done that between 1999 and year 2000, by today we will be talking of 25 and 30,000 megawatt. And power is perhaps the most reliable proxy for development.

The amount of electricity used or consumed per head of population is a reliable index of development in all society, whether you are developed, developing, or whatever. So, I would have pushed for power generation to a level where most industry will get power that is stable and affordable because power is the key.

Today for example, if we are able to generate power in quantity that is sufficient and at affordable price, Nigeria will be opening 10,000 or maybe 20,000 industries that have been shut down over the last 10 years. As you reopen those industries, you are going to employ millions of people within the next six months, 12 months. And the economy will begin to revive and to grow because power is now available. So, power is the key and I would have pushed for power generation if I had became president.

Also in the 1975-80 plan, we had projected that Nigeria will have, at the end of the plan in 1980, a surplus of $5 billion after implementing all the development projects of roads, and schools and universities and hospitals. After doing all those things between 1975 and 80 and pay salaries, etc, Nigeria will still have a surplus of $5 billion which we recommended to be invested in assets abroad. Take it out of consumption, invest it. If we had invested $5 billion in 1980, by today we will be talking of $50 hundred billions sufficient to run government of Nigeria three, four, five years if we are not producing oil at all. Now, these are the things I would have done because I have the blue print on my hands.

What I’m going to do next is agriculture; because agriculture is the most important industry in any economy. It is the only industry patronised by everybody at least once a day. Everybody doesn’t go to Hospital everyday, everybody doesn’t go to school everyday but everybody eats at least once a day. Therefore, that is why agriculture is the number one industry.

Now, we have fantastic agricultural land and we would have left it to the traditional cutlass and hoe farmers, but there is no way that type of farmers can feed the great population; a sophisticated population like Nigeria. So, we are going to have massive investment in agricultural infrastructure. Government can never be an efficient farmer, an efficient manufacturer. No!, But they will create the enabling environment for agriculture by putting in place the right policy and incentives that will attract private people, private money into developing agriculture: maybe Nigeria investors and foreign investors to come and develop agriculture.

Our land is fertile. There are areas in the North you can drive two, three, four hours without seeing any settlement on the fertile land. With appropriate policies and incentives, those areas will produce more than enough food for Nigeria. We will have enough to export and have foreign exchange that will compare total earning from oil. Those are the things I loved to do to make Nigeria move forward.

Also on the external debt of Nigeria, you will recall that during the campaign, I said I will end the foreign debt of Nigeria in six months. But some people said “Oh! Are you a magician? How are you going to do it? And I said I won’t tell you but later in my book “The Way forward For Nigeria”, I hope you get a copy and read it. I disclosed my programmes there, which was later used by Obasanjo’s administration to deal with the debt issue. At that time, we were owing  about $24 billion to foreign creditors who were holding us to ransom.  And I said the way to do it is as follows: The debt we were owing them was projected to be paid about 7, 8, 9  years. And every quarter we were to pay interest to them. So, my proposal was that I would ask the various governments to whom we were owing that we wanted to buy that paper back because we will issue documents to them that we owe you money. For instance, say France, we owe you $5 billion, to be paid back over the next 9 years. We come back and say okay, the paper we gave you, give it back to us; we want to buy that paper back. We said we will pay you $5 billion in 9 years time. Now, don’t wait for another 9 years, let me pay you $3 billion today. $3 billion today is a good deal for them than $5 billion that may not come in the next 9 years time. So, I got to buy it from various ventures like that. In other words, we will pay far less than we owed them. We owed $5 billion and we will pay them $3 billion. That is 60 per cent. In other words, we have made a discount of 40 per cent from the same value. So, 60 per cent obtained before, that is $14.4 billion; that is what we are going to raise and use it to buy back the debt from all those who we were owing.

General Obasanjo was lucky that when he came in as civilian president, the oil price went up. So, we were earning from oil sales, enough money to import what we needed currently and the surplus with which to buy back the debts. He didn’t have to sell part of our equity. My own equity sales was if we came to crunch, if we were not able to have enough dollars in which to buy the debt, we will sell what we have to get what we need. What we have was the shares with the oil companies and what we need is our freedom from dictation from the International Monetary Fund (IMF). And that we will achieve by buying out the debts and getting rid of foreign debts. Then, you will be free to operate as sovereign country. These are to show you how ready I was and what I was going to do to make a difference in Nigeria.

Now, let me say that any modern nation of our size that has no iron and steel industries is joking. Any nation of this size and opportunities; look at every hardware we use is steel.  Your fridge, your car, deep freezer, dust bin, name it: they are from iron and steel. Not to talk of the construction industries -the flat sheet, the long sheet, the structural sheet like the roof, constructing of bridges and so on. And we have one at Ajaokuta that has been substantially completed in certain sections. And you needed just maybe another investment of about $5 billion and you complete that industry; and you will directly employ something like 5 million people in the plant and in the auxiliary facilities. And that will transform Nigeria completely and you stop importing all these steel we can make here from abroad. So, if I could do all these things I am talking about say in three, four years, surely Nigeria will become a big country.

  The nation is facing serious economic crisis now and as somebody who has been in the financial sector and handled Nigeria economy before, what do you think is the best way out? 

.     It is going to be a package of measures not just one thing. What is happening is that we have been screaming since 1975; 40 years now. That we should use the oil revenue to diversify the economy, away from sole dependence on oil, and create alternative sources of employment and revenue and income in agriculture, in agricultural processing, in the exploitation of solid minerals, and so on.

They did not do it. If we have done it and have generated power along the lines that I mentioned and if we have the steel industry, if we have developed the infrastructure; for instance, I have a programme of road. For instance, I was going to link all the state capitals with double carriage ways throughout Nigeria. And resurface all other existing roads within the first two years. And if we have done all that, now we won’t be where we are today. And we are where we are; we have not diversified. Even if we start diversification today, it will still take several years before we begin to take the benefits of diversification.

So, what do we do in the short term? The first thing we do is to take a very hard look at the recurrent expenditure. As a product of the system, I know there are a lot of wastes going on. I am not talking about fraud and stealing now but waste. You have government vehicles which have little faults, packed all over the place; instead of being repaired and put back on the road, they are abandoned. They will say to themselves, “go and buy a new one.”

When I was still in the government, I carried out an exercise. I asked every ministry to give me the list on their broken vehicles and equipment and tell me how much it will cost to repair them instead of buying new ones from abroad. You will be shocked. Bulldozers and graders, hundreds and hundreds of them were broken down and abandoned for years in various sites.

So, we got them repaired and we commissioned; so that we save foreign exchange that we would have used to import new ones. Now, you can look at those areas and make all savings that can be made. Instead of buying new things, repair what we have and recommission them. That is number one.

Two: unessential staff, the tea girl in your office. Your secretary should be able to make tea for you. I just make that one as an example. Unessential staff can be retired, but they should be given their retirement benefits: They should not just be thrown into the street. Three: Expenditure that can be postponed should be postponed. Push forward or face out. Instead of spending two N2 billion naira this year on these things, why don’t you stretch it out so that you spend half a million this year and half a million next year; to reduce the expenditure this year. Four:  You can borrow from the bilateral lending agencies abroad, like the World Bank and IDA. Those ones will lend you money for 30 years at the interest rate of two to three per cent. That is the kind of loan that we should go for. Low interest, long term, and then the money should go into the projects that will make an impact on the economy in the shortest possible time.

Looking at the opportunity that you lost to Obasanjo and the fact that age is no more on your side, can you say you have a particular regret that you were not given opportunity to lead Nigeria to put all these your ideas into practice?

Yes. A while ago I did indicate the kinds of things that I was going to do, that would have made all the difference. So, I do regret that I didn’t have opportunity to do those things, and many more things. The standard of integrity in public life was going to be one of my targets. And also, I wanted to go for modernisation of bureaucracy. You see, all professions end in management. If you are a soldier, by the time you become a general, you no longer carry a gun. You are only managing people and resources in the battle front; and that is management. I am an Anglican. If you are a priest, by the time you are an Archdeacon or a Bishop, you go to conference and manage church affairs. Similarly, in the country, in the civil service whether you are an engineer, or an architect, you end up in management. So, I’m going to train people so that they can operate as if they are executive of modern companies. The chief executive of Peugeot might have been an engineer, might have read History; but he is so trained in the motor industry in area of management that by the time he becomes chief executive, he is competent to run the place. So, you professionalise people in their chosen fields so that they can have competence and effectiveness. So, I was going to make that the hallmark of my administration. I will pay them in a decent way. You see, United Kingdom was our colonial master. In the UK today, civil service pay is comparable to public sector people, because they can’t afford a second rate civil service. So, they pay them well. Those who are in the Ministry of Foreign Affairs in the United Kingdom are paid comparably with what people are getting in Shell or British Petroleum. It is not so here. Our pay in the public services has lagged behind the private sector considerably. And it should not be so. If you allow it to go on for too long, you create room for  mediocrity, incompetence and fraud. People steal public funds to augment their legitimate pay and  to maintain a standard of living that they are not allowed to enjoy.