Another bombshell from SANUSI LAMIDO SANUSI
"We did not have money. Oil prices had collapsed.
Niger Delta Avengers were blowing up oil wells.
The scarce dollars we had, we were selling cheaply,
subsidizing people. What was the argument? We
need to promote manufacturing. Right? Thank
you. But, what percentage of your GDP is
manufacturing? Eight percent.
Let me ask you Commissioner, you are a
manufacturer, you are able to secure $10 million
from the Central Bank to import raw materials
and produce goods, you spend N2 billion to get $10
million, and somebody says to you: “Listen, I will
pay you N3 billion for this $10 million, so that you
make a profit of 50 per cent for just doing
nothing. Just buy the dollars and sell.”
Your option is to buy raw materials, establish a
letter of credit, import raw materials, maintain
generators, buy diesel, pay labour, produce your
goods, take the risk you may not sell at a profit,
transport it, or to make a profit margin of 10 per
cent over a 120 term period, what would be your
choice?
Would you import and manufacture?
You have an automatic guaranteed 50 per cent
return immediately for no labour. With this every
manufacturer abandoned production and started
looking for FOREX. I had people who would come to
me or telephone me and book an appointment only
to ask me: “Your Highness, I want you to help me
get dollars.” They wanted to turn me into a dollar
middleman. So, every manufacturer decided that
he would get the dollar and sell, instead of buying
raw materials and producing. So, what happens to
production and employment? What do you end up
with? A recession. And why are we surprised we
are having a recession? We created it.
But, we did not call it recession. We called it
demand management. People were using words
they did not understand.
Who is advising the government? I have asked
that question before. I want to know so I can talk
to the adviser."
"A lot of the reforms done in the second term of
Obasanjo laid the foundation for sustainable
growth. But, then we kept going back and forth.
And I am hoping that in here we are not like the
ordinary innate Nigerian.
We do feel a level of shame at what we see. You
have got your per capita nominal income – Angola,
Botswana, Cote d’Ivoire, Egypt, Ethiopia, Ghana
and Zambia.
Per capita income in Kenya is $1,388. In Nigeria,
it is $2,943. So, on paper, Kenya is half as rich as
Nigeria. So, how much is Kenya able to raise as
tax revenue per capita? $232. How much was
Nigeria raising in 2014-2015? $117. Now, how
much was Kenya spending as development spend
per citizen? $129. How much was Nigeria
spending? $17.
The research you see don’t just come out of
nowhere. They are the direct consequence of
deliberate policy decisions. If you choose to make
it very profitable for people to produce fake bills
of lading and claim fuel subsidy and build estates
and private jets, we are never going to have
refineries.
If you make it profitable for a Chinese man to
come to Kano…. Now in Kano, the Chinese are
doing tie and dye. Even the tie and dye pit that
has been in Kano for about 600 years are at risk.
We have been talking about the protection of this
industries. Minister of Planning, nobody has done
anything you know. In the next 10 or 20 years, if
people of Kano starts picking Chinese and
throwing them into the dye pits, because they are
importing simple dye, they took the technology
from Kano, went to China and they will now be
coming to ask the people the pattern that they
want.
They come in, they bribe Customs, and because
there is no way you can produce that thing in
China and bring it and they sell and our
industries are destroyed. The textile Industries in
Kano are gone. The tanneries and leather
industries are gone. combination of a lack of
electricity and infrastructure, lack of
investments and very bad trade policies. "
"Lagos has done very well. If I have money to
invest, I will invest it in Lagos, because it is
attracting investment. Lagos has realized a long
time ago that the government cannot fund all it
needs. And I just love what Lagos has done. The
Lagos story is a story of what Nigeria can do with
itself – transparency, consistency, regulations –
and people can be rich. There is no problem if
people can be rich while growing an economy.
Nobody minds. But, in Nigeria people become rich
when people are dying. Let’s take the Lagos
story, and that’s why today Lagos state is 30%
Nigerian non-oil GDP, and Lagos can do without
oil.
Lagos can do without the rest of this country. So,
we must not let Lagos go.
This country is better off with Lagos than with
the Niger Delta. Let’s not make that mistake. We
should be together as a country. Every part of
the country is important. But, let us not be so
obsessed by a resource, because we have had the
commodity driven model, and we are blind to the
potentials of an alternative model.
Lagos doesn’t need oil. What is oil anyway? It is a
raw material. You don’t drink it. You need it to
move your vehicles. Now, you have electricity. You
need it to fill your generator. Now you have solar
power, and biomass. The future of oil is not there.
So, those few people who are trying to break up
this country over oil, after sometime that oil will
be worthless. You are better off being in a
country that is based on this model. This is a
country of the future, that is the past."
My sense is that where we are today, the Naira
is already undervalued. If you look at the real
effective exchange rate, we are below the zero
line. Basically, what this means is, if the Naira
were to strengthen to about 9%, you will get
exchange rate palliatives. So, you are not really
under any more pressures for a devaluation. This
is the nominal exchange rate adjusted for relative
prices, and also adjusted for rates of our trading
partners. So, on a trade basis, the Naira has gone
from one of the most overvalued currencies when
we were at N197 to the dollar, to the one that is
undervalued. So, that adjustment has been made
by the Central Bank. And what the Central Bank
needs to do is just to allow this system to operate
properly and stop panicking. You know, from what
you can see here, even if the markets starts at
N320, N340 or N350 to the dollar, if you allow it to
operate, it will revalue itself and adjust.
What is causing the problem is all the sense that
we are not entirely flexible, and sometimes wrong
signals. After you have allowed the flexible
markets, you act as if you really don’t believe in
it.
These things don’t just work on fundamentals. "
"I was in the Central Bank, the markets works on
the basis of confidence and perception. There was
a time speculators started hitting the market
when I was with the Central Bank. The Kenyan
Shilling got hit and got divided by 25%. Ghana
got hit by 30%. South Africa got hit and they
started heading towards Nigeria. And I called an
emergency monetary policy committee meeting
jerked up the monetary policy rate (MPR) by 200
basis points, jacked up CRR (cash reserve ratio)
by 400 basis points and declared that I will
defend the currency. I didn’t have the money to
defend the currency, but everybody believed me
and they left me alone. The market works based
on confidence. By the time you have taken over
one bank, fire one bank MD, they will believe you
when you make a threat. I made many threats as
governor of the Central Bank that I never carried
out. If banks messed up, I will say, I will remove
you, and because I have removed bank MDs, they
will say sorry sir. They fell in line. So, if you are
going on a flexible exchange rate, have the
nerves. You have produced a fantastic document,
stick to it. You can’t be any worse than you were.
You are in a recession anyway, so you are trying
something different. So, try it and try it.
