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Selling our crown jewels isn’t the solution – Yemi Osinbajo

By Interview by Eromo Egbejule and Patrick Smith in Abuja
Posted on Friday, 14 December 2018 16:36

This has been a testing three years for Yemi Osinbajo – an economic recession, proliferating security crises and now a resurgent opposition rallying for what most politologues think will be one of Nigeria’s closest-run elections.

As soon as the election campaign opened on 18 November, Osinbajo set off on a regional tour to convince Nigerians to vote for his All Progressives Congress (APC). Osinbajo is not a natural politician and his careful delivery and considered statements are out of kilter with the revival of populist politics.

The Africa Report caught up with Osinbajo at the Presidential Wing at Abuja airport, just after he had attended the dedication of the Dunamis International Gospel Centre. Osinbajo soon snapped back into campaigning mode, with his critique of the opposition’s manifesto.

Then he was ready to jump on a plane to address more meetings in Lagos. Osinbajo’s outreach to people at town hall meetings and his criticism of those trading in identity politics have won him a growing respect. A former law professor and a pastor of the Redeemed Christian Church, Osinbajo now comes across as the cool-headed technocrat.

But that is not the whole story. Politics runs through his veins – not the partisan barracking style of politics, but one of organising communities to change society. Osinbajo is married to the granddaughter of nationalist leader Obafemi Awolowo.

He sees the rapid development in those early independence years as holding important lessons for today’s political class. Since Osinbajo took over the vice-presidency in May 2015, he has been put in charge of stabilising the economy against a backdrop of crashing oil prices and militant attacks in the Niger Delta.

“A good man in a crisis,” said one of his colleagues, without much fear of contradiction. And the crises have piled up. For much of 2017, there was intense speculation about the state of President Muhammadu Buhari’s health after lengthy trips to London for treatment.

Osinbajo temporarily took over as acting president in his absence and won more good reviews. As he and Buhari take to the campaign trail, Osinbajo will need all his powers of persuasion. Buhari’s campaign director Rotimi Amaechi says that people will need to feel there is more money in their pockets.

But the recovery has been slow. The economy is set to grow at 1.9% this year, slower than the birth rate. Osinbajo has been stepping up social investment programmes, which he says have brought 13 million Nigerians into job creation schemes, a free school meals programme as well as a cash transfer programme for 300,000 very poor households.

With a population nudging 200 million, it is a question of scale. If the government is doing the right thing, is it doing enough of the right thing for enough people? Or will the opposition under flag-bearer Atiku Abubakar start to land some killer blows? Few are prepared to place large bets either way.

TAR: What are the big issues for you in this election campaign?

YEMI OSINBAJO: Corruption, security and the economy. We have stemmed grand corruption, by which I mean the direct looting of state resources, the inflation of contracts and various schemes like the ‘strategic alliance’ contracts in the oil and gas sector set to divert state resources for personal gain. In terms of security, in direct contrast to the hand-wringing, self-pity and corruption which typified the People’s Democratic Party (PDP) response to Boko Haram, this administration has retaken the 14 local government areas that were under the control of Boko Haram and has restricted their attacks to a limited geographical area. Whereas in the past, people in places as far away as the Federal Capital Territory slept with one eye open in fear of attacks by the terrorist grouping. Of course, there is still a lot more to be done in terms of security in general, but the benefits of decisive positive action are there to be compared with an era of supine helplessness.

What is your reaction to the calls to restructure the federation and devolve more power from the centre?

I reject the idea that geographical restructuring will magically solve our problems. Good governance, honest management of public resources, deeper fiscal federalism and a clear vision for development are the keys to addressing most of the challenges the nation faces. The APC empanelled a committee chaired by governor Nasir El-Rufai of Kaduna State to look at the issues. They came up with recommendations on geographical restructuring, revenue allocation, devolution of powers, the form of government and residency of citizens in states, and increased community participation. The proposals are being deliberated in a wide-ranging and inclusive manner, and we will be coming out with the official stance of the party.

Could restructuring speed up economic growth?

Stronger more autonomous states will lead to faster growth for the states and consequently for the whole. Greater devolution of powers is the way to go: enabling state police and more control over natural and other resources. The Lagos State government, between 1999 and 2007 in particular, undertook a policy of seeking to deepen the autonomy of the state and fiscal federalism by litigation. I was then attorney general of the state. In several cases before the Supreme Court, we challenged the federal government’s fiscal and administrative hegemony.

The opposition pres­idential candidate Atiku Abubakar is promising that his economic strategy will promote growth and be driven by the market.

I don’t see anything original about what he [Atiku] is saying or in his policy documents. He takes a few things from our Economic Recovery and Growth Plan (ERGP), a few sound bites here and there. We very strongly believe in markets, and we have always believed in a private sector-led economy. If you look at the ERGP, one of the key issues is how to sell down some of the government’s shares in our joint ventures.

Then do you favour a radical privatisation programme?

The opposition saying that they’re going to sell 90% of the Nigerian National Petroleum Corporation is neither here nor there. Between 2010 and 2014, the country realised $383bn from oil and we can’t see the infrastructure that was meant to be built. So, if at that time all of our assets had been sold in some purported free-market operation, we would have been in an absolute mess today. At the moment we have all these joint ventures, the government is the principal party in these joint ventures. The real issue is fiscal prudence, good governance, ensuring that we are able to deal with corruption – especially fiscal corruption. I don’t think it’s a matter of just throwing open everything. The first question that ought to be answered by the opposition is what happened to all of the resources that we’ve earned all this time? Why do we think that selling the crown jewels today is a solution to the problems? We think that a gradual process putting in place strong systems to ensure good governance is the way to go.

This economy does not need a shock right now by removal of subsidies and the cost-push inflation which will result

So you oppose shock therapy?

When the opposition talks about deregulation, I mean these are the same people who say they want to deregulate the downstream oil sector and then they’re going to fix petrol prices at N80-90. There is absolute confusion as to how they intend to execute their economic policy. Their policies are not thought out. They are simply taking a look at our economic programme and trying to see what can be tweaked here and there. If you say, I want to deregulate, then you are saying let the markets determine the price.

But your government has retained a fuel subsidy regime?

We were determined to ensure that the abused subsidy regime was corrected. The reason why subsidies have earned such a bad name is because we had several companies that were purportedly supplying petrol to the markets, so they would say they brought five cargos whereas they brought only one but they would claim subsidies for five. So there was what was called the subsidy scam and several companies and individuals are still being prosecuted. Under the former regime, this scam was pervasive. What we have tried to do is to attempt to deregulate, but not complete deregulation. So the petrol price moved from 87 naira to about 145 naira a litre which is where it is today. It’s not a situation where different companies are coming with their claims and all of that. This is purely a government-funded subsidy and there is no room for abuse.

Do you think this fuel subsidy is a good use of state resources?

Most countries subsidise something or the other. You may have to subsidise agriculture or something else to enable the economy to go the way you want, empower people in the way that you want. Today we know that if there is a sudden shock and the subsidy is completely removed, transport prices, housing prices and food prices will go up. So the subsidy in our view holds down those prices. We think that this economy does not need a shock right now by removal of subsidies and the cost-push inflation which will result. We are doing quite a bit in terms of funding. Giving micro-credit loans, loans to industry and giving loans to traders to improve consumer spending and all of that.

Atiku has said he would float the naira if he wins the presidency. What would happen if he went through the policy like that?

First is that it’s not up to him. At the central bank we have a monetary policy committee that determines many of these parameters and there’s the central bank governor. I’m surprised that he [Atiku] would say that. We believe that we should as much as possible allow in the markets where the naira is concerned. If you look at our ERGP and several of our other policies, we’ve pushed in that direction. We also think that it has to be gradual.

The International Monetary Fund (IMF) has been highly critical of Nigeria’s exchange rate policy. What’s your response?

I’m one of those who believe that any purist, monetary theories belong in the realm of academia, not in practical economics. You’ve got to look at your circumstances, you’ve got to look at what is going on and you’ve got to make your calculations. The IMF has its own doctrines and ideas. But it’s not a one-size-fits-all. You can’t make the same recommendations to Ghana as you would make to Croatia. I think that there are substantial differences in the way that we want to approach the economy and calculations that we are making. So I am not certain that their recommendations ought to be accepted.

There is rising concern about the quality and availability of education in Nigeria. How are you addressing this?

Under its Every Child Counts policy, the government will focus on public education with the aim of democratising digital, functional skills and science, technology, engineering, arts and mathematics literacy. The main tools utilised will see an uptake in coding, animation, robotics, design thinking and other computational skills, as well as critical thinking, collaboration, project management and skills that prepare children for the world of work. The plan will also target a nationwide retraining effort to ensure teachers are able to impart the skills to revolutionise the sector. The third plank of the plan aims to remodel 10,000 schools per year to deliver the required outcome.

This week the government floated a $2.8bn eurobond. How sustainable is this borrowing, given the high percentage of state revenues spent on debt service?

Our debt-to-GDP [gross domestic product] profile is quite low: The public debt-to-GDP ratio stood at 18.4% by the middle of this year. We are reducing the debt overhang that has been stifling investment and growth. Up to N2.2 trillion ($6.1bn) in debt is owed to states, contractors, electricity distribution companies, the export expansion grant, on judgment debt and pensioners, amongst others left unpaid [by the last PDP government].

This article first appeared in the December-January 2019 print edition of The Africa Report

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