Nigeria: ‘We really just must put our best foot forward’ – VP Yemi Osinbajo
With all the caveats of the vice-president’s role being a double-edged sword – responsibility without power – Yemi Osinbajo has a demanding year ahead.
This is part 3 of a series
As chair of the Economic Sustainability Committee, a multi-agency group that brings together the key economic ministries, the governor of the central bank and the managing director of the state oil company, Osinbajo has to ensure the implementation of its ambitious N1.3trn ($3.4bn) Bouncing Back plan to refloat the economy, which has been blasted by the coronavirus pandemic.
Osinbajo’s other task, handed down by President Muhammadu Buhari, will be to coordinate between the government executive, the leadership of the governing All Progressives Congress (APC) and the national assembly.
Top of the agenda will be to build wide political support for the ending of fuel subsidies and the raising of electricity prices.
After that, he will have to help steer two hefty reform bills, on the police service and the judicial system, through the legislature.
TAR: President Buhari has asked you to coordinate between the executive, the APC and the national assembly. What will that mean in practical terms?
Yemi Osinbajo: The idea behind trying to work with the legislature and the party is to take maximum advantage of the fact that we have a party manifesto, a government agenda which is clear, and an economic sustainability plan which requires an all government approach. We have a time frame within which to execute the plan, and it’s 12 months. So the critical issue is to see how we can very quickly and effectively implement our plans.
What are your priorities for reforming the justice system?
As they say, justice delayed is justice denied. And, when it takes too long, people lose confidence in the judicial process and look for their own ways of resolving their problems. Some of those can be antisocial or give rise to conflict. The issue is how to mitigate some of these delays: one of those is time limits for trials. So we managed to achieve time limits for electoral cases.
One of the proposals that Mr President laid out in his speech to the Nigerian Bar Association is that we should set time limits for civil cases and for criminal cases. [Buhari has proposed 15 and 12 months respectively.] We’re also concerned [that] a judicial appointment should be on merit. It shouldn’t just be by promotion within the judiciary. […] [Our priority also] is ensuring that allegations of judicial corruption are investigated and there are consequences where they are found to have been liable.
How does the government want to strengthen the police service?
Recently, the President signed the Police Act, which makes institutional and procedural reforms to the functions of the police. So we now have community policing as a feature of our law. […] In many cases, you’ll find that the law enforcement challenges we have could be resolved with adequate intelligence at community level. […] This act also makes provision for the appointment of supernumerary policemen […] it’s a way of increasing the number of police officers who are not within the regular force.
There’s a programme for recruiting 50,000 supernumerary police officers. I agree with those who say that we should have a larger police force. There are 200 million people and we have under 500,000 police.
What is your view on identity politics, the tension between ‘federal character’ provisions and appointments on merit?
I think the general [principle] should be merit, especially appointments to major government positions. But you find that the way our laws are structured at the moment, federal character or the notion that there must be equal representation across the country plays a very significant role, which is good and inclusive.
But we must also emphasise merit because as a country, given our economic and social circumstances, we really just must put our best foot forward. In much the same way as when we want to win a football match we don’t ask for federal character.
Insecurity across the country – insurgencies, herder-farmer clashes and armed robbery – is spreading. What is your response?
Yes, these are challenges that we really have to face as a country, […] that our region faces. If you look at what is happening in the Sahel, a lot of the problems that we have are imported, although we’ll find a lot within our own borders. There are all sorts of very severe challenges. We must focus on improving law enforcement, which is why the improvements in the police are important. We must equip our army and air force, which is what we’re trying to do.
How much is Nigeria able to help stabilise the region?
The approach that Nigeria has adopted is really one of collaboration with our neighbours. So we have the Multinational Joint Task Force [MJTF], which has helped a great deal in dealing with Boko Haram and the Islamic State West Africa Province. […] Rather than being the big power in the sub-region, we can only deal with security issues as a community, in our case the West African community.
[…] What we’re hoping we can get is far more support from Europe and America. Yes, the EU is supporting the G5 Sahel Forces as well as the MJTF, but we need far greater support in terms of platforms, equipment, intelligence, logistics, etc.
How is the government financing its response to COVID-19, its Economic Sustainability Programme?
The plan is on stream. There is N500bn ($1.3bn) in budget resources, by drawing down on special accounts dedicated to certain sectors. Now the rest of it, about N1.3trn will be from structured loans through the Central Bank of Nigeria [CBN] for special projects.
The CBN will be giving facilities to farmers under our Jobs for Agriculture programme, it’ll be giving structured loans to our mass housing programme, as well as to our five million solar connections programme. So, essentially, what we’re doing is getting loans through the CBN to the commercial banks to pay for the programmes. We got a $3.4bn emergency financial assistance from the IMF’s rapid financing instrument, which is all part of the package.
What is the plan on government revenue?
All our plans for revenue of course have been hit very badly by the pandemic and the fallout of the pandemic. So there’s no question at all that we are way behind in terms of revenue targets, we’ve seen a drop of almost, just sliding over 60% of revenues, so that’s a major hit, there’s no question at all that it’s very difficult to meet revenue objectives.
Despite the fact also that oil prices at least have sort of stabilised somewhat, but the problem we have is with fairly low production and fairly low uptick or uptake of oil, of cargo. And the simple reason why that is the case is because many of the world’s economies are not opening up yet.
I mean, we for instance, one of the major consumers of our oil, one of our customers for our oil is India. India as you know is grappling with the pandemic, it’s factories are opening up quite slowly. So we naturally have a problem with [the] uptake of our own.
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Revenues are really low. Our tax-to-GDP ratio was somewhere around 6%. We ramped that up to about 8% as of last year. But with what we’re seeing now, it’s even more difficult for people to pay taxes. This is why we’re trying to ensure that businesses survive this period by providing as much support as we can.
Can Nigerian businesses and particularly the wealthy individuals expect at some point to pay higher taxes or is the government on the other side of the argument that putting up taxes now would actually be counterproductive because it would slow the country’s recovery from the pandemic induced recession?
Yeah, our position really is that this is hardly the time to raise taxes as, a matter of fact the way that we looked at it is that as much as possible, we should be looking at how to reduce the burden rather than increase the burden.
We think that companies that are already within the net, who are paying their taxes should just be left alone to prosper and as things improve, I’m sure that our financial flows will improve, But we’re certainly not looking at increasing taxes at all, as a matter of fact, all of what we we’re looking at now is how to ensure that the environment makes sense for badly hit supply chains, badly hit businesses. As I’ve said, several businesses have huge problems just trying to stay alive, so a tax increase just wouldn’t make sense at this point.
Why were there no moves in the plan to cut the salaries of Nigeria’s lawmakers whom he says are some of the highest paid in the world.
The economic sustainability plan could not of course recommend salary cuts because salary cuts, as you know, are done by recommendations from the Revenue fiscal and mobilisation commission, there’s a whole process for doing that.
So while voluntary salary cuts [were] done by the house of representatives […] in order to do so in any meaningful way and effectively, you have to go through the revenue fiscal mobilisation commission to do so.
Now that’s on the one hand, but the other point is that we also strongly believe that we must ensure that we rationalise government spending in various ways and this is where we’ve done several different rationalisations in the new budget, you’ll probably see that there’s quite a few recurrent expenditures that has been cut down in so many important respects with rationalised such that as it were barebones terms of any expenditure that we think may not be appropriate at the start.
Are there specific measures in your plan or more generally to keep the inflation rate under control? I know the central bank has just cut interest rates.
What we’re experiencing in some sense is there are those who would say that this is cost push inflation because again we’ve seen a rise in the exchange rate, the value of the Naira and all of that. So a considerable number of imported items have gone up […] and we’ve also had some – because of the disruptions in the supply chain – over the COVID period, that has also led to prices going up.
So what you found is that in many cases prices went up – inflation has moved up in the past 2-3 months and that is in the period when these severe disruptions took place.
We think that as the supply chains open up, as we ramp up the food production and as we bring back more of our businesses and all of that, we think that we might be able to bring down inflation somewhat. But again as economists will say, we may have to allow some bit of inflation in order to be able to increase consumer spending in order to put money in the hands of people, we may have to just tolerate some inflation.
But we’re working very hard to ensure that we don’t wipe out money in people’s hands by the inflationary trends. And we think that with increased supply of goods and with the disruptions corrected, with production going up, we might be able to do much more and improve inflation more.
Has government thinking changed, or was your decision to cut the fuel subsidy a matter of financial necessity?
We had a severe downturn in our finances. So, at 60% less revenue, we’re in a position where sustaining fuel subsidies is practically impossible because we do not have the resources. On 18 March 2020, when we effectively deregulated, oil prices were very low, pump price was about N125 [since then oil prices have doubled and local fuel prices have also risen]. It is both for us an absolute [financial] necessity and at the same time an economic approach to solving the problem.
The government has closed the country’s borders. When will they be open again?
There were two main reasons why we closed the borders at the time we did. The first was that we were trying to control an avalanche of smuggled arms and ammunition into the country, which is a major security concern for us.
Secondly, we found that producers in priority sectors like rice and poultry were struggling to cope with smuggled products dumped in our market, using our land borders as entry points. We had to contend with some of our neighbours being used as staging posts for bringing rice and poultry and other smuggled products into Nigeria.
So we’re working with our neighbours to see how and on what terms we will reopen those borders. We are at the moment policing joint border patrols, and these are at an experimental stage. […] So that that’s our reason for the border closure but it certainly isn’t meant to be permanent and we’re looking forward to reopening as quickly as possible.
This article is part of a special print edition of The Africa Report magazine: ‘Where is Nigeria (really) heading?’