UTOMI: To Survive, Government Must Cut Cost, Block Leakages
OBVIOUSLY, the financing gap needed to get Nigeria to where it should be is huge. The infrastructure deficit is incredible. I think, for most countries that desire rapid development, infrastructure stock is about 60 per cent, and for Nigeria, it is just 25 per cent. So, we have a huge infrastructure deficit. Traditional methods of financing will not suffice to help us achieve what we should be pushing for in the position of infrastructure in our country. Fortunately, I think there is a national infrastructure masterplan, and it is a perspective plan, 2013 to 2043 or so. It was carried out when Dr. Shamsudeen Usman was the master planner.
We need to revisit the plan and find partners, who could work with us, using several models of public private partnership. We need private capital from outside of our shores to help develop these. It could be on bilateral basis. It could be the Chinese, Koreans, Japanese or Australian banks, which are particularly good at infrastructure finance.
There is need to finance certain infrastructure on a long-term arrangement. Look at Ethiopia, if you’ve been there, lately, you will see the amazing turn around of infrastructure, in terms of deals that they have done with the Chinese.
So, we must find those kinds of creative finance methods to bridge the financing gap in the country, generally. What we need is to show that our country has come of age in terms of respecting property rights, good legal framework for investors to know their investmnets are guaranteed.
Reserves are down now, but there is still that logic that if we take three or four billion as starters from our reserves, it is still in our reserves, but we will use it as collateral security, and tell whichever bank is holding it that this money is our money, you are holding it in trust, if we renege on any of our side of the agreements with the people we do any of the infrastructure deals with, you have recourse to that three or four billion dollars in our reserves. Because that is always the fear about Nigeria.
One governor will come and every thing the governor before him did, he reneges on it. I remember having this argument with Soludo, when he was the Governor of Central Bank of Nigeria, that that is the kind of thing we should do, and he said how much do we have as reserve for that kind of thing compared to our needs?
It is not the exact amount that is the issue. The point is, if you do it, they will take Nigeria seriously and will be willing to risk their money to show that they can behave properly. That demonstration on its own will make more private capital to come to Nigeria with or without any security. So, we have variety of options for creative financing to deal with the deficift in infrastructure.
Cost of governance in the country is very high, if this is reduced, will it not impact on fund for social projects?
The first thing to do is to reduce leakages. They are so huge that everywhere you look, Nigeria is a basket. Leaking money everywhere. Sometimes, we call it corruption, or bureaucratic failure. If you can just block the leakages, you will immediately save millions. Then cost of governance, so many people being paid for doing nothing in Nigeria. Everybody wants to have 30 special assistant, and all sorts, we need to make sure that we use people productively, we need to create jobs, but not jobs where we do nothing in the name of politics. So, yes, we need to trim the cost of governance without reducing its effectiveness, because most of those things are just waste. We need to stop one man from having 10 cars, because he is called public official, wasting things. We need to prevent people from running around in all these motorcade. The President of South Africa goes out with just two cars — the one he is sitting and one security aide and another car in front of him. In Nigeria, it has to be 50 cars. Anytime the British Prime Minister is going out of the country, he goes to charter British Airway aircraft. Nigeria’s presidential fleet is bigger than most Nigerian airlines. The last time I said this, there were so many governors in the room, former Deputy Speaker of House of Representatives was equally there, and many others; they just bent their heads down saying in their mind that this man has come again, what is he talking about? I really don’t know how we got here.
Do you believe government should go straight away to recover stolen money in order to raise fund?
The rule of law defines the society. If we go the way of assuring that there is a rule of law, all of those things will come as a matter of course and we should be able to recover where there is evidence that money has been taken and it is there to be recovered.
What do you think Nigeria can do to attract direct foreign investment?
To behave well; Nigeria currently does not behave well in the eyes of international communities, especially, in area of property rights. The country needs to show that it has a clear national strategy of where it is going, in terms of the appropriate incentives, in terms of reduction of corruption, in terms of transparency in the things that are done. When we do those things, the world will respect us, the world would be willing to partner with us to get things done.
Do you think approve of external loans to finance the government?
There are a number of issues involved in borrowing. Amongst the challenges we have is a trust deficit. People have not trusted Nigeria for a long time because of those who have abused public authority for their own selfish gain. Truly speaking, given the size of our economy, prospects, potential, Nigeria is not too leverage, but if it is badly managed by the kind of people, who have done the kind of damage that we have seen in the past, it is extremely dangerous. So, fiscal responsibility legislation is needed. I am not one of those who is a great fan of international borrowing just for the sake of borrowing really, because that happened in our history. Remember that General James Oluleye, Federal Commissioner for Finance, under Obasanjo in 1976 or 1977. When the West was pressing us that we were under borrowing, we went around the world in search of jumbo loans. Eventually, we didn’t manage the debts well. In a country where we are using borrowed money to pay salaries, you can get into very serious trouble borrowing. However, if borrowing is project tied and the projects yield good returns, they will create future tax revenues.
No comments yet