by Tajudeen Adebanjo,
Author of the book “Reversing the Rot in Nigeria”, Olusegun Oyegbami, gives graphic details of how Nigeria slipped into a recession. The economist suggests what the Federal Government should do tackle corruption head-on, reports TAJUDEEN ADEBANJO
AN economist and oil industry player has countered claim that the Nigerian economy slipped into recession because of declining growth for two consecutive quarters.
The economist, Mr. Olusegun Oyegbami, blamed the collapse of the economy on the management of oil wealth and the abandonment of agriculture, which he described as the nation’s economy life wire before the discovery of oil.
He said the journey to recession had been gradual and steady for more than four decades without successive governments doing anything to stop the drift.
“When we are talking of recession, it didn’t start today. It’s been in the pipeline for a long time. We have been doing the wrong thing by running the economy more or less as a social service, which it is not”, Oyegbami said in his new book “Reversing the Rot in Nigeria”.
In the book, the 63-year-old author pointed out that the motive behind the establishment of the Petroleum Equalisation Fund (PEF) has been eroded and that successive administrations lacked capacity and political will to bring perpetrators to book.
He also noted that the Assets Management Corporation of Nigeria (AMCON) established to take over toxic loans warehouse debts incurred by some organisations and individuals has become a toothless bulldog.
According to him, it makes no sense for the Federal Government to run the nation’s economy social service instead of running it on business template.
Speaking on the content of the book, Oyegabmi said on AMCON: “Some horrendous huge debtors, if they were to be treated in a proper banking way, would have their assets seized. But because the government wants to protect them, it has collated all those debts, paid off the money to the banks and AMCON will now seize their assets and match the assets to the debt.
“But the assets turn out to be a small fraction of the debt. So, they hope that after freezing the debts, the assets can be generating income to liquidate the frozen debts, but the debts are so much and whatever assets these people have, cannot cover their debts.
“That’s why I called it favoritism at its most reprehensible. It is so glaring that its (AMCON’s) purpose is to save their faces. But it is the economy that bears the brunt.”
On why the economy collapsed, the author said: “The over-dependence on oil actually led us into this sorry situation. Before the discovery of oil, agriculture was the main stay of Nigeria’s economy. It provided employment for the teeming population until oil was discovered.
“The way we have been running the oil industry made us to forget about agriculture and the administration of the industry has been anything but transparent. The economy depends largely on oil but everything in that industry has been full of manipulations and fraud.”
He described as unfortunate that the Federal Government has not been able to end sharp practices in the oil sector.
“Even now, we’ve not been able to tackle sharp practices in the sector. This is why this book is timely. I have written it to bring about a turn-around to rationality and sanity. It is only when we do what is right that we can improve on the economy.
“For now, we are just deceiving ourselves. There is still corruption in the system, especially in the economy and this is not being tackled as expected.”
He also lashed out at some clerics, who he accused of being afraid to speak out the truth and for abandoning the pulpit to chase after worldly things.
“The people’s means of livelihood have been destroyed and many have become seriously hopeless. Yet, the clerics are not speaking out. Rather, it is the kind of hopelessness that the so-called men of God have been exploiting to even render the people more prostrate.
“We now have men of God in Nigeria riding in planes and building estates, acquiring a lot of material properties and engaging in those acts that are actually in contrast to what the Bible and the Quran teach us that we should build our treasures in heaven and we should help one another to make life better for everybody.
“We have the men of God running institutions of higher learning, including varsities, where the fees are very high. Don’t get me wrong, I am not against high fees in universities because if you want quality education, you should be ready to pay for it. But when it is not being put in place by government but by these ‘men of God’ just to make more money, then, we should call into question our so-called obedience to God.
“God wants us to prosper and He wants us to be properly educated but it is not these clerics who should educate us but it’s the government’s duty to educate us. It is when government has failed to perform its duty that some people take advantage of that lacuna.”
On the alleged scam in PEF, Oyegbemi said: “The Petroleum Equalisation Fund (PEF) was established in 1975 with the intention to make petroleum products available to consumers at a uniform price. That is to say that if you are in a particular place where you are close to petrol, then you can buy it slightly cheaper but it should be available to everybody in that location at same price.
“The whole idea in economics is that you operate on a comparative advantage and localisation of your advantage when you are in a place like Warri or Port Harcourt. And when we are talking about importation, Lagos, where the product lands should be cheaper than in other places to where the products are transported. But fraud comes into the system when government pays to transport products to far places. Until we change this, Nigeria can never make any progress.
“The government has been favouring those people transporting petroleum products at government expense. This has been happening for more than forty to forty-two years and until we change that we cannot get it right as a country. You run an economy on an economic template and not on a social platform.”
Explaining his claim that the government has not been subsidizing petroleum products since 1975, the author said: “Petroleum products have always been coming in at economic price. When you increase the price from N1 to N1.50k, maybe they use to allocate 5k out of that N1 for transportation but when it is now N1.50k they will add another 5k to the transportation cost so that they will now have more money to pay for transportation and 10k will now be used for transportation.
“So, the government has not subsidised the price of petrol. The subsidy has been on transportation of products to distant locations. So, when the price has gone began to N100, the government has decided that because it was bringing it in at N80, it will give marketers additional money. But all the extras are being built into the transportation cost.
“The transportation cost, which is the bridging element in the price build-up, is what that constantly goes up. I am telling you that out of N145 as the cost of petrol today, N6.20k is still allocated for transportation. Why? It means that anybody using fuel in the South still pays N6.20k more than he should have paid. This is now gathered together to transport petrol to other parts of the country, especially the far North. It is really an economic matter.
Continuously for more than 42 years, the South has been paying for transporting fuel to the North. Come to think of it, whatever is coming from the North always has its own element of transportation that the South pays for. Consumers in the South have never eaten beef, cow and tubers of yam at the same price as their counterparts in North. It is purely an economic matter. It is only when looking at it from a political point of view that you will say this man is trying to incite one tribe against the other, No, it’s purely economics. These are elements of deception that we have been having in this country.”
On what should be done, he said: “The Federal Government should let the people trade fairly among themselves. If we are going to trade in petroleum products, take the products at the available price form the depots, add your own transport cost and sell it there, we will have normalcy in this economy within a year or two.
“But now, we still have deception and manipulation going on even right now because anybody who is buying petrol in Lagos is still paying N6.20k for carrying it to the North. It is wrong. That should stop. It is when this manipulation stops that we know the President Muhammadu Buhari administration is ready to fight corruption.”
On what the government should do with the International Monetary Fund (IMF) counsel to devalue the local currency, Oyegbami said: “The naira is officially a confused currency today because nobody knows the actual exchange rate. One thing I want to emphatically state here is that any time you have a dual exchange rate for any currency; it is an invitation to fraud.
“In Nigeria today, we have a minimum of treble or quadruple exchange rates. It is very corruptive and fraudulent, it is very wrong. At any point in time, there must be only one exchange rate. Anytime a government has more than this, that government is fraudulent. Based on the exchange rate criteria we are running now, I made bold to say that it’s most fraudulent system ever, because we have exchange rate now ranking between 197 and 480.
“It means some people can quickly do fraud, if they want to manipulate the system they can actually collect the dollars at 197 and they can resell at close to 480. So, we are just going deeper and deeper into corruption and it is most unfortunate that all these happen under this government that is supposed to be fighting corruption.
“But what this government is doing today is barking against corruption and grandstanding against corruption. I think we should actually be ashamed of ourselves as a people. On the IMF demand for currency devaluation, the idea is to find a sensible and realistic rate for your foreign exchange rate.
“So, there is no reason for questions or argument and talking a lot of theories about if we are devaluing or not devaluing. The most important thing is to find the exchange rate for which you can provide the dollar at any point in time.
“In any reasonable or developed economy of the world, there is always exchange rate that goes up and down by probably 0.1 per cent and at worst 0.3 per cent, that is how exchange rate should float.
“But when you now say you are fixing exchange rate for different categories of people, a rate for people bringing things in for the government is N350. This is different from sourcing for it privately at N470 and for going on pilgrimage, it is N197. This is corruption incorporated.
“Please, whoever is in government should know that as soon as the exchange rate has 50k differential from a second level (if there is at all), that is an invitation to corruption. There should always be one exchange rate in any honest economy and we started PEF, Nigeria’s has not been a honest economy.
“It’s quite unfortunate, we have Ph.D in economics all over the country, I challenge them to read my book and see where they have been running contrary to the dictates of their calling. You can’t have Ph.D in economics and we are running the economy the same way we are running it in Nigeria and say you are proud of the Ph.D. I challenge them to read my book.”