Yusuf: Government should be open to recommendations

It’s becoming popular to have economic summits. Is that what we really need?

The summit is important because it will provide a platform for engagement and further discussion. What is missing now is, because there is no sufficient engagement between stakeholders and political leadership, especially, on matters that relate to the economy. The political leadership has its own idea of how the economy should be managed. Some other stakeholders have different ideas. The government and stakeholders’ vision is the same: To make the country better. But where we have an issue is the methodology and the approach to realising this vision.

There is clearly a divergence of views on how to transform and grow the economy, as well as create jobs. This is where the summit will bring some value to the whole process. I am hoping that the outcome will further enrich the quality of economic policies at the macro and sectoral levels and may be at the institutional level, too. For the economy to move forward, the macro, fiscal, and monetary policies must be right. The foreign exchange and sectoral policies must also be right. If we don’t have a clear understanding of what structure of policies can bring value to the economy, then there is a problem. You can have the passion in making things happen, you can have the integrity to drive the process, but if the policy configuration is defective, you cannot get the right kind of outcome. That is why I think the summit will be useful. Be that as it may, it will only be useful to the extent that political leaders are ready to accept the outcome. It is one thing for it to be put in place; it is another thing for you to accept the outcome. If it is not acceptable to political leadership, then nothing much will happen.

We have had many summits in the past, what makes this one different?

I don’t expect the outcome to be different from we have had, in terms of propositions, reports and suggestions, especially, on contemporary economic policy issues. The Nigeria Economic Summit, in the past, had made very robust recommendations and the way out of the current situation, because during the last economic summit, issues around macro economic policies were comprehensively discussed, and the reports were presented to the Federal Executive Council. The organised private sector, which includes the Lagos Chamber of Commerce and Industry (LCCI), also made suggestions. Before now, we have had series of reports, focusing on sectors and national vision. We have the Vision 2010 report, which is a fantastic document. We have the infrastructure master plan, a fantastic document that was prepared by the last administration. We have the Nigeria industrial revolution plan document. In terms of resources from which we can draw, clearly, we are not short of ideas. For me, in order to save cost, as well as gain speed, we can draw on some of these resources, look at them, distill and align them with the current realities, and from there, we can get a clear direction.

Why are we not making a case for the adoption of previous summit reports instead of organising another summit?

I agree we don’t need to reinvent the will. But it is possible that this could also be part of the process. We have not seen the modalities of the proposed summit. By the time we see it, we will have a clearer idea, and I am sure that those putting it together are also likely to have this same perspective that we don’t need to reinvent the will. Let’s look at the ideas that have been generated in the past, and see what we can take from there, so, as to save time and cost. It is a meeting, which I expect to be more for technocrats and stakeholders in the economy, because we are discussing investment and the economy. So, we should be talking to investors, economists, and those who implement policies. And it doesn’t have to be a large gathering, where every market woman would come, that would just become another distraction or jamboree, because we are dealing with technical issues, which makes it imperative that technocrats be given more voice. If there is anything missing in this administration, it is that technocrats don’t have sufficient space to express themselves in the configuration of the economic policies, but it is very important.

But many conferences and summits have been organised in the past by the so-called technocrats in government, and they seem to have compounded the problems…

The technocrats I have in mind are those outside government, not people that have vested interested. Such technocrats will come with positions that are informed by tested economic theories, empirical theories, evidences of how similar things have been done elsewhere, and evidences of how similar things have been done even in our own country, how we dealt with it, the options we adopted and what the outcomes were. In this kind of situation, you don’t put people who will be working just to promote self-interest. It is not some thing to be left to bureaucrats, even though it will be part of what they will implement. It will also bring technocrats from the academics and people from the private sector. We have technocrats from the private sector who have the benefit of both sides, the practical impact of policies to business, as well as informed view about the theoretical aspect of economic policies.

The revenue base of government is low. How do you intend funding this conference?

It doesn’t have to be elaborate or expensive like the national conference, and all those constitutional conferences. If you have about 50 to 100 people that could look at issues, draw from past works and come up with a report, it is enough. It doesn’t have to be something big that will now impose another burden on the government. There is nothing new under the sun; they are not going to come up with anything new or different. What is important is just to articulate and situate it within the context of current realities, and use that to make a proposal to government. We are not dealing with generalisations. We are dealing with specific economic policy issues, which to a large extent are also technical issues so that we can avoid bringing in people who will come and talk from the perspective of sentiments or emotions. What we are looking for is a policy that is sustainable, not necessarily a popular policy. It has to be something sustainable and which will also bring value to the economy now and in the future.

Apart from those you have mentioned, who are the people that are most vital?

In this summit, what is most important is for the political leadership to have an open mind, and be ready to go forward with the outcome of the summit, because no matter how good your suggestion, if the political leadership does not buy it, it won’t go anywhere. Secondly, we need to structure the summit in a way that will cover all key areas impacting on the economy. We have the policy area, which is to structure the policy that will allow for more private investment because what we lack now is investors’ confidence, either at the private level investment domestically or at the foreign investment angle. We need to build that confidence. Even the most advanced economies such as China and Japan still attract huge investment, which is helping to boost their economies. I am talking about Foreign Direct Investment (FDI), not portfolio investment.

For developing countries like ours, we need investment more than all these advanced economies. So, it is important that we come up with policies that will give investors confidence to enable them bring funds into the economy and assure them that there will be the consistency of policies. We should also come up with things that will ensure that we have the right kind of institutions to drive those policies for us to get required outcome. All key stakeholders are critical to this. The technocrats are critical, and the investors who know where the shoe is pinching are very critical because they can give feedback on the impact of current policies. Investors that want to come in also have a role to play, as they will tell you if you do XYZ, they are ready to bring funds, because the government hasn’t got the resources to turn this economy around. The government is struggling to pay salaries and meet basic responsibilities, so where will the money in fixing infrastructure come from?

The right kind of policy framework is needed to attract this kind of investment. So, the investors are critical, just like the bureaucrats, even though most of the times they usually have their rigid positions on issues. But if the political leadership buys into the new policy direction, the bureaucrats would have no choice than fall in line, otherwise they will be fired. However, the political leadership’s conviction seems to me the most important of all.

What do you think is wrong with this administration in terms of positioning the country economically?

Firstly, there has to be more trust for the private sector. The government seems to want to yield too much grant to the private sector for whatever reason. We feel that one of the draw backs to this economy today is the amount of resources government is committing to the oil and gas sector in the area of importation of petroleum, managing refineries and all those things. Some of us feel this is one area that government needs not bother itself so much about in terms of direct commitment of resources. What is needed in those sectors is to create the right kind of policy framework to attract investors, so that government can move on to more socially important things.

For a long time, the Nigeria National petroleum Corporation (NNPC) was not publishing reports. The NNPC just declared a loss of over N200bn, which is a big hole. Who will fill that hole? It will be filled with national resources, but it is supposed to be the other way round. Operators of the sector should be paying huge taxes to the government so that government can use it to fix infrastructure, strengthen our institutions, and improve our security. Virtually all our institutions of government are complaining of poor funding. Look at the recurring agony we go through with fuel queues. We have no business experiencing that. Have you seen any queue for diesel in the last five years? We don’t have problem with its availability, but we have problem with the cost, which is what happens, when you allow the private sector to take control and the market to also perform.

But if you keep fixing the price and the department of petroleum Resources (DPR) keeps chasing people selling above a certain price all over the place, it is a distraction. We should yield more to the private sector and encourage them to come into infrastructure. Although the private sector has done well with telecommunications, but not power. We need to look at what model fits each sector, because the model that worked for telecoms may not work for power. Government also needs to realise that because of the strategic nature of power to the development of other sectors, we have to do some intervention in terms of support, not so much for the investors, but because of the larger economy. We ought to look at what model will fit what context and these are things that are done through rigorous research. These are things that had been done in other economies before, and it is key.

Then there is the issue of foreign exchange policy. We have said over and again that when you are faced with the challenge of scarcity, you manage it from the demand and supply front. But what we are doing is just to concentrate on demand, as we have no policy to incentivise supply of forex. The bulk of forex today is from oil, but now that oil has collapsed, we need to look at other sources and encourage inflow of forex from there. We have to put a policy in place to encourage the Diaspora to also bring in money.