Moghalu’s proposal on Nigeria’s economic revival

At the LEADERSHIP Conference and Awards 2023 which held recently in Abuja, Professor Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), delivered an adrenalin-pumping keynote which ruffled not a few feathers, even as the appreciative audience applauded his brilliant and thought-provoking presentation.

But what exactly should anyone expect from such a great mind, public intellectual and authority on political economy? Going by his antecedents, Prof Moghalu shoots straight and does not like beating about the bush. He delivered an excellent Masterclass which will resonate in the public and private sectors for a long time to come.

The economic challenges that we face today, Prof. Moghalu pointed out, are the result of continuous mismanagement over the years, yet those responsible always go scot-free. “The past 10 years have been particularly ruinous,” he said. Moghalu spoke from his heart as an economist, professional, technocrat, and patriot – not as a politician.

Clearly, he was not interested in any blame game; his aim was to proffer solutions to our seemingly intractable economic problems. The best way to solve a problem, he said, is to know what caused it.

Speaking on the topic, “Nigeria’s distressed economy: Which way forward?” the keynote speaker explained that every choice we make has consequences, but we have no choice over the combined consequences of the choices that we have made.

When a country like Nigeria that is so blessed with human and natural endowments refuses to achieve its full potential, it shouldn’t be a surprise. Our GDP per capital, as Prof. Moghalu told his attentive and bewildered audience, is only $2,000 in more than 60 years of nationhood which he described as a “testament of failure.”

That kind of report is shocking and deeply troubling, and it calls for serious interrogation of our economic fundamentals if we truly want to join the league of developed nations.

How do we undo the period of the locusts? The issues that Moghalu raised in his presentation are not exactly new, but he wondered why rising unemployment, extreme poverty, debt distress and revenue challenge have refused to go away.

If we add the illegal ways and means lending of N30 trillion, unprecedented corruption, hyperinflation and the hunger in the land which the keynote speaker also listed in his paper as problems we must address urgently, it means all hands must be on deck, no matter our political persuasion or where we come from.

If we know what are economic problems are, why can’t we fix them? What is holding us back? When we have experts like Prof. Moghalu pointing the way forward, why has it been difficult to act on their recommendations?

The answers are not far-fetched. One, we politicise the best ideas and actionable plans; two, we weaponise tribe, region and religion, and three, corruption – the big elephant in the room – has remained a major albatross.

Moghalu explained that “ideas rule the world,” but he also knows that we have never lacked good ideas or policies; the other elephant in the room has been poor implementation of policies by the enemies of Nigeria. They know themselves.

Having situated what the problems are, Moghalu went on to make recommendations on how we can navigate our way out of the crisis. But he provided a caveat: the crisis and its effects will last for three to five years.

If we are truly serious about fixing the myriad of economic problems, five years is not a long time, but the political leadership under President Bola Tinubu must come up with a winning strategy as we have seen in the USA, UK, Germany, UAE, Singapore, China, India, Japan, Malaysia, etc.

In the case of UAE, Moghalu provided data to explain how the country’s economy was transformed. By 1971, 90 percent of UAE’s GDP depended on oil but it is now less than 30 percent arising from a deliberate strategy of development away from oil. He also said that UAE’s GDP grew more than 247 times in 50 years – a remarkable economic growth index indeed.

It would appear that the unprecedented assault on the CBN is giving Prof. Moghalu sleepless nights and grief, and he said it must stop. How did we get here? Having played an active role at the CBN as a deputy governor for financial system stability, he is obviously disappointed and pained at what the CBN has turned into.

It is evident that the unbridled political assault on the independence of the Central Bank since 2014 is at the heart of most of our economic problems today. How will Godwin Emefiele defend his tenure as CBN governor? It will be nice to hear his own side of the story – that is if he chooses to write his memoirs or grant media interviews.

Moghalu praised President Tinubu’s decision to remove petrol and forex subsidies, describing the decision as “bold and correct.” He said that we could no longer afford to pay petrol subsidy or defend the naira artificially – the double whammy and hydra headed problems that eroded our foreign reserves.

He also said Yemi Cardoso, CBN governor, acted well by raising MPR (monetary policy rate).by 400 basis points to 22.75 percent on February 27 – a new record high since 2007, and above forecasts of 21 percent. The aim is to tighten rates and money supply to rein in inflation. Well done, Yemo.

However, Prof. Moghalu went on to identify three “strategic errors,” or, if you like, blunders, that the Tinubu administration made. He said it loud and clear that he was not attacking the government with his comments, but he believes that there are lessons to be learned by everyone, except, of course, those who earn their daily bread sabotaging the economy and de-marketing Nigeria.

In fact, he said that we must not waste the current economic crisis as it presents an opportunity to re-build the country. The three mistakes, he noted, were: 1.) the precipitate nature of the reform policies; 2.) the exchange rate unification that occurred in a loose monetary environment which contributed to the naira’s race to the bottom, and 3.) it took too long for the cabinet to be formed, and it was predominantly political.

In a nutshell, if we had a tight monetary policy, the demand pressure on the dollar would have reduced. It goes without saying that when you prioritise politicians over technocrats, there’s no way we will not pay the price.

Based on his research and findings, Moghalu went on to present a dashboard of seven problematic areas which he believes caused our present predicament.

They are: 1.) absence of nationhood, 2.) bad governance in Nigeria’s national life, 3.) adhoc-ism and lack of strategy, 4.) absence of philosophy and knowledge, 5.) financialisation and de-industrialisation, 6.) irregular power supply (let there be light!) and 7.) population crisis.

In order to craft the right strategy to overcome our economic challenges, we must first know whether we are operating a capitalist, socialist or a mixed economy.

Moghalu said in our free market type of economy with capitalist orientation, the economic system must guarantee property rights, unleash innovation and that access to capital is non-negotiable. An economy built on innovation, he explained, is the secret of the rise of great nations.

Rich people, he continued, have access to capital but how many of them re-pay their loans when they are due? For Nigeria to develop its productive base, Moghalu prescribed that SMEs – they constitute the engine of the economy – must have access to capital.

Since liquidity is critical, the political economist recommended that the federal government should raise a N20 trillion bond to develop three strategic sectors in three years: railways, housing and agriculture. He described the proposal as Project 3-in-3 which is capable of putting about five million Nigerians to work.

Moghalu also listed the following prescriptions: a vibrant fiscal policy, end oil theft and corruption, cut the cost of governance that is bleeding the economy, CBN must continue its monetary tightening, and Nigeria should carefully consider borrowing between $20 billion and $30 billion from the International Monetary Fund (IMF) that would serve as a stabilisation fund and life line.

The corruption-laden palliative economy, he said, must be abolished immediately. He also did not mince words when he said that our national and subnational budgets legalise corruption because between 40 percent and 50 percent of the budgets are usually not accounted for; they simply disappear like the morning dew.

He believes that the Ministry of Finance Incorporated (MOFI) should sell some of our assets to raise additional funds to reflate the economy.

Moghalu also strongly recommended that President Tinubu should create a full time Economic Advisory Council (EAC) made up of seven wise men and women. The idea behind the EAC is to build an economy that can function, adding that fixing the economy cannot be a part-time job.

He was very clear about the composition of the council: they must be experts with established credentials in agricultural economics, business economics, fiscal policy, industrial policy, trade policy, industrial policy and development economics.

How well are some of the ministers performing? Probably not good enough and we should not be surprised to see a cabinet shake-up by May 29 which Moghalu also recommended. Such a moved, he believes, will boost investor-confidence.

The keynote speaker accused banks of hoarding US dollars. He asked the CBN to go hard on bank CEOs and take action against erring banks. Why should they become part of a criminal enterprise sabotaging the economy?

Another strategic policy prescription is that the government should work towards achieving 20 megawatts of electricity within three years which should be tied to our productive base to enhance industrialisation.

Finally, Moghalu is confident that we can beat the crisis, but President Tinubu must have the political will to insulate our institutions from politics, and avoid knee-jerk reactions because of policies that are not well thought out. It is common practice for our political leaders to mix politics and governance which is clearly a recipe for disaster.

After all said and done, only Nigerians can make Nigeria a productive economy and better place. Moghalu is of the view that Nigeria is too important to fail. If Nigeria fails, he said, then we have all failed.

To avoid failure, Moghalu said we must do away with corruption, nepotism, tribalism, cronyism and mediocrity. Let us have a new resolve to replace these unproductive adjectives with meritocracy, strategy, discipline, competence, and integrity in governance.

Thank you Professor Kingsley Moghalu for the deep insights on, and critical analysis of, the Nigerian economy and your bold recommendations which, by the way, some consultants get paid for. You truly earned the standing ovation that you received for your honesty and scholarship

Braimah is a global public relations and marketing strategist. He is also the publisher/editor-in-chief of Naija Times (https://ntm.ng) and Lagos Post (https://lagospost.ng), and can be reached via [email protected].