Akpan Ekpo, a professor of economics, is
Director General, West African Institute for
Financial and Economic Management
(WAIFEM). He speaks on the need for the
incoming Buhari’s administration to
jettison neo-liberal
economic framework
used by the outgoing government.
How do you assess Nigeria’s economy in
the last six years?
Looking at the performance of Nigeria’s
economy in the last six years, I maintain
that the economy has recorded only
marginal improvement with the relevant
indices. Government says the economy is
growing at six percent yet unemployment
is increasing. Currently, the unemployment
rate is 28 percent and is rising among
youths. Such high unemployment ratio
constitutes output loss to the economy,
meaning that the economy is not
producing at it maximum potentials.
Invariably, you question where the growth
is coming from.
Has the growth made any impact on
healthcare services, standard of education,
poverty alleviation and basic amenities? If
not, such growth is not meaningful. Why is
our economy growing and unemployment
is rising very high, even to a crisis level
that we are experiencing now? It means
what we have is paper growth or jobless
growth.
In fairness, President Goodluck Jonathan’s
administration, achieved single digit
Inflation rate due to their ability to maintain
price stability within that period. Again,
there is a question mark on the inflation
level, because what matters is whether the
economy is within the threshold. This is
because an economy can have 12 percent
inflation rate and still be doing well, not
that you have single digit inflation and
unemployment is at a crisis level in the
country. For instance, the real sector is
virtually dead and lending rate is very
high, the average now is 25 percent. Which
investor in the real sector can borrow at
such a high rate, improves his margin and
he is still able to pay back the loan? If
lending rate does not go down, the real
sector would be dead completely.
Jonathan did well in his efforts to un-
bundle the Power Holding Company of
Nigeria (PHCN), which previous
administrations could not. But the issue
now is that after privatisation of PHCN,
there is still no power supply for industries
to grow. Today, the manufacturing sector
contributes between 5 and 6 percent to the
Gross Domestic Product (GDP), which is
very low. The sector ought to contribute
about 30 percent to GDP, for us to say that
we are making progress. Currently, we do
not know where we are in the Vision
20:2020 target. Are we still following the
Vision? This question is important because
the Transformation Agenda came from the
Vision 20:2020 document.
The present administration has not done
well in social services. Public education
system is in disarray, from primary to
secondary and tertiary levels. That is why
many people send their children outside
Nigeria, even to Ghana to study. Rather
than making the existing Universities to be
of good standard, government was busy
building new ones. Now we have
mushroom private schools springing up
everywhere in the country. Human capital
is key to development. Are these
mushroom schools what would give us
good human capital development? This
government has not also done well in
healthcare services because our healthcare
facilities are not in good shape, even in
slight headache, Nigerians go abroad for
health services.
Poverty rate now is 70 percent. Misery
index has been rising over time, when you
look at unemployment, poverty, high
lending rate, inflation and deficit GDP ratio,
showing that the economy has not been
doing well.
What is your take on the rebasing of the
economy done in 2014?
Rebasing to me is not a big issue, because
for 24 years the economy was not rebased.
What has been the impact of the size of the
economy on Nigerians? Has the size of our
economy moved people out of poverty?
India and China have large economies,
which moved many people out of poverty
in the last 10 years. So, rebasing only tells
government where to direct economic
policies. For example, like housing sub-
sector that has potentials to create millions
of jobs. Jonathan did well in launching the
Mortgage scheme, and if well managed,
can address the housing problem in the
country.
As Professor of Economics, what economic
framework would you advise the in-
coming government to adopt in order to
fast track development?
They should use developmental-state-
economic philosophy to drive the entire
economy to boost the real sector and other
sectors of the economy. This type of
economic system would make a difference
from what the current administration is
using, because development would be
ultimate in their agenda. Using the right
economic framework to implement policies
is very important, because if they want to
practice neo-liberalism like the present
administration is doing, nothing would
change. Neo-liberalism has been rejected
in Washington, and this economic
framework contributed to why Nigeria has
not recorded tangible growth in the
system. When you liberalise your economy
to the detriment of local entrepreneurs, it
means you are indirectly killing local
industries. Also, government must be able
to check the excesses of private sector
players.
Government has a duty to manage the
economy, therefore, the in-coming
administration must be responsible and
intelligent government. Nigerians have lost
confidence in all governments not only in
Jonathan’s administration. So, the new
government must work hard to regain that
confidence by developing key sectors of
the economy. Such sectors include power,
education, manufacturing among others.
Unemployment must be tackled, because
right now it is a national crisis. Corruption
is also a major issue, but if government
runs the economy well, corruption would
reduce and anyone guilty of corruption
must be punished.
They must be honest with the people,
transparent in managing the nation’s
resources and should carry the people
along by showing good example. Giving
the people a sense of belonging is
imperative, as Nigerians are now
enlightened and are ready to take on any
government that cannot provide basic
amenities for them. My advice for every
government is to alleviate poverty,
because any government that cannot
move people out of poverty has failed.
Nigeria is the only country where middle
class citizens run generators. What we
have now is generator driven economy.
Government must provide an enabling
environment for the private sector to create
jobs. This requires a deliberate effort by
government to bring down lending rate for
Small and Medium Enterprises (SMEs) to
borrow and expand their production
capacity. That way, they can create
employment for the people. Government
should find out the hindrances preventing
SMEs from having access to huge
intervention funds approved for them. Why
are the big companies accessing the funds
while SMEs are not able to benefit from
this money? At present, the banking
industry is not competitive because only
few banks control the entire industry. As
such, direct government policies are
needed to bring down the interest rate, and
the commercial banks would adjust.
When the current governor of the Central
Bank of Nigeria (CBN) took over, he
promised to tackle high interest rate. How
come the interest rate is still very high?
The truth is that CBN is doing well at the
moment and we must commend the apex
bank. Another thing is that the apex bank
does not just want to force down lending
rate. In my own opinion, since inflation is
single digit, why not bring down the
Marginal Policy Rate (MPR), which has
impact on inter-bank rate, because if we
wait for the market, the interest rate may
never come down, due to the nature of the
industry.
President Jonathan just launched the
Development Bank of Nigeria (DBN). What
is the difference between DBN, Bank of
Industry (BoI) and other development
banks in the country?
Financial institutions are necessary for
development and there are such specalised
banks in advanced countries. Establishing
the DBN shows that government is
intervening to enhance growth. On the
other hand, we have BoI, and other
specialised banks in Nigeria. The question
now is, have the existing banks achieved
the purpose for which they were
established? Aside from this, we must be
interested in knowing the ownership
structure of the DBN and what makes it
unique from other existing development
banks. Government must tell us specifically
what the DBN is going to address and how
it would add value to our economy.
The Naira is gradually recovering at the
black market after the presidential poll.
With the declining crude oil prices, do you
think the Naira can appreciate further?
To improve the Naira, we must produce for
export to shore up the local currency.
Crude oil export alone cannot solve our
problems, as we do not have control over
the prices and output. We must use our
foreign exchange to support production
and not consumption. It is important to
note that the States and local governments
must be actively involved in developing
the economy, because the Federal
Government cannot handle everything.
You emphasised on tackling
unemployment. Which areas do you think
the in-coming government can turn
attention to in creating jobs?
Government should create public sector
jobs by opening up the Civil Service. For
instance, we can look at areas like
Customs, Police, Immigration, Civil
Defence, Air-force, Army, State Security
Services (SSS) and Navy, where million of
Nigerians can fit into. This is the time for
government to provide employment
instead of trying to down-size. The fact is
that private sector is profit oriented and
cannot employ a large population of
Nigerians. So, deliberate government
intervention is required to tackle this
unemployment crisis. Once government is
able to solve this crisis, the large output
loss in unemployment would turn into
output gain for the economy.
Moreso, there should be social welfare
scheme for those who cannot get jobs for
no fault of theirs. Government must block
revenue leakages in the system. Healthcare
must be given proper attention. Women
and youths should be empowered.
Securing our economic environment is
also important.
