BEVERLY HILLS, April 25, (THEWILL) – In this interview with AMOS ESELE, Professor of political economy,founder of the Centre for Value in Leadership andone of the founding fathers of the ruling All Progressives Congress, Pat Utomi, explains the background to the N60 billion printed money controversy generated by Governor Godwin Obaseki of Edo state, its implication for the larger economy, the rudderless leadership of the APC amid the worsening insecurity in the country and the need to restructure the country before the general elections in 2023. Excerpts:
You must have followed the controversy ignited by Governor Godwin Obaseki’s claim that the Federal Government printed money for the states to share in March. What is your reaction?
Let me begin with a caveat. This is not the best time for experts, politicians, people whose views are respected to be talking without caution about the state of the Nigerian economy. The economy is fragile. That does not mean it is bad, but there is a way one can talk about it and accentuate perception and cause a run on the currency of the country.
How?
The first thing is that our economy is challenged, but it is not so bad that it cannot recover gradually. But there must be management. Both Godwins are correct (Governor Godwin Obaseki and Governor of the Central Bank of Nigeria, Godwin Emefiele). Obaseki recognises that the reserve is diminishing and we cannot control spending significantly to meet these economic challenges. It means the ways and means have to be adopted by the government. That is what the other Godwin explained. When government needs money, the CBN prints money, but it is in relation to value being created.
What will be the effect on the economy?
It will disorient and generate inflationary pressures if not controlled and you will get to the fear which the other Godwin (Obaseki) is expressing. What has happened is that Nigeria has depended far too long on oil resources. It recently increased from where it dropped dramatically during the COVID-19 pandemic. That means revenues that the CBN exchanged value for and gave to government, those values had dropped. But oil revenues started going up again. There is a lag between when oil is sold and the money enters the treasury. If, for example, May 20 is a date given for receipt on sale of 200 barrel of oil at a certain price; until it becomes cash there is a lag. CBN could then decide to print money because it sees this money coming in a few months. So, it can print money to finance expenditure. This, however, is not acceptable practice. If you go on like this, you can get into trouble. That is what the other Godwin (Obaseki) is saying.
Is there a hidden danger in this approach?
We do not want to get to a situation in which, like it happened in Argentina, there will be hyperinflation and exchange rate divergence. I used to go to Brazil in the 1990s when they did it and got to a point where, if you got into shops, you would find that prices changed three times in a day. In Uruguay, there is a famous story told of a man who sold his house and had a accident on his way home and had to be hospitalised for three months. By the time he recovered, he could hardly afford lunch. All of us have to be very careful now, that includes the Minister of Finance and National Planning and the two Godwins, not to give the rest of the world the impression that our economy is in a free fall because our economy can grow to where Brazil has grown up to now.
I will not say to you that it is so easy a decision to take. The Federal Government is under pressure and says we need N60 billion for FAAC. You say yes sir and, calibrated on future oil earnings, you go ahead. When the earnings do not come, you can print. But you have to be careful. Just as it happened in Zimbabwe, there has to be a given parity on the exchange rate and purchasing power or else nobody will open letters of credit for you because you have no credit to pay.
What is your take on the threat by the CBN to recall loans that it extended to state governments following Obaseki’s claim?
Maybe they are frustrated and they do not know how to say it.
You talked about fundamental challenges facing the economy, earlier on. What are they?
The problem we have right now is how we are going to pay for these budgets we drafted because oil is in decline. Total, one of the biggest oil producers in the world, issued a statement indicating that it would cut down all its revenue in Canada to zero. 18 years from now, cars would not be running on petrol in the world. 12 years from now cars in Nigeria may not run on petrol. How are we generating financing on the short term? If you get out there, there has been capital in the range of $17.1 trillion earning 200 per cent interest in California, Japan and Singapore. How do we get these people who have this enormous money to bring it into our economy and use it to improve our competitiveness? One way it was done in Brazil and India was the financialisation of their economy. Used assets are all over our country and wasting away.
Can you mention some examples?
Look at the Federal Secretariat in Ikoyi, Lagos, for example. It is sitting there with no value since the Federal Government moved to Abuja. Let us assume we want to sell the property at $200 million and people want to invest from anywhere in the world, we would use the money to finance our budget. I am almost running out of my mind on how to run Nigeria. Look at another example. Instead of going to bring $1.81 billion for the purpose of carrying out repairs on a refinery and then in three years it breaks down again, why not sell it on the condition that the buyer will bring in the billions to finance it. Corruption has ruined this country and prevented our leaders from doing the right thing.
As an APC Chieftain, are you satisfied with the way the country is being run?
Look, what I think is that this is presumably the reason I have been complaining after the party won the last general elections. There is a way you can govern and put things in place. I am a member of the party, yet I have not been invited to a single meeting. That is why we need to fight and take the party away from those who are running the party. What we need is a robust decision-making process in the party.
When former National Chairman, John Oyegun was in office, I went to see him. I told him that the party had no structured way of doing things and all the characters appointed or elected to govern had no brains. He said he had no money to organise a retreat. And I volunteered to get my friends to teach them free of charge. I had friends like Ayo Salami, Ayo Teriba and Bismarck Rewane. Yet nothing happened. They have no interest beyond politics. No government in Nigeria has tried harder to shut me out than the party I laboured to bring into power. Not even former President Jonathan’s government.
Considering the worsening insecurity, poverty and high unemployment rate in the country, what do you think should be the way forward? Do you support the overwhelming call for restructuring?
Yes, we must restructure. I do not think and expect any election in 2023 unless we restructure this country. Restructuring will not take up to three months to carry out and on the basis of that, we can then go ahead to elect a new set of persons into positions of authority.
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