EMMANUEL DELE BALOGUN is a senior lecturer in the Department of Economics at the University of Lagos. He holds a PhD in Economics and has over 25 years experience as a researcher with the Central Bank of Nigeria, worked as a Commissioner for Finance, Commerce and Industry in Edo State and Director General of the Abuja Chamber of Commerce, Industry and Agriculture. He is a member of the Nigerian Economics Society and the International Atlantic Economics Society. In this interview , he talks about the implications of insecurity in the economy and other vices affecting the development of the nation.
What has been the effect of insecurity on the economy?
There is hardly any day you watch the international news that Nigeria doesn’t feature, all that is being reported is that Boko Haram constitutes a nuisance and this is the climax of insurgency because when there is insurgency of this proportion it causes political destabilization. However, investors will normally look at political stability; they see us as an economy that is not politically favourable and so investors are actually moving their investments out of the country and it is beginning to be so pensive. One that is very obvious is the fast depreciation of our foreign reserve, one will expect that as exchange rates is depreciating and as there is looming political crises, we expect that the demand for foreign exchange will slow down but the reverse is the case and one will also expect that probably investors are busy repatriating their investments and those who have access to acquire foreign exchange are also busy doing so because they do not know what the aftermath of the elections would be.
What is the effect of these crises in the economy?
The immediate effect on the economy is that demands for goods and services especially the once that come out of the economy will fall. Secondly, industries might stop operating at desired capacities, in other words, output is relatively low. Thirdly, in most of those regions where there is insurgency, you find that these areas that are predominantly farmers, where a significant proportion of grains come from, have suffered losses, because the farmers are now internally displaced persons and in refugee camps and so there is disruption of economic activities. More importantly, those that are involved in food transportation from the north to the south have lost their businesses and so it has had a negative impact on output. It is likely to continue except insurgency is curtailed even as the incessant suicide bombing have also created fear.
However, if you have a teeming population of unemployed youths, this will have adverse effect on the economy and you can easily see what is happening. In the north, there is a teeming population of Almajiris, jobless youths whom mostly have ended up in Koranic schools, it is therefore expected the kind of crisis you find there because these are jobless youths who have a very bleak future and they are used as tools for suicide bombing. In the south, we have a large population of unemployed youths and you also see the kind of sophistication they use in the act they commit; abduction and demand for ransom, violent armed robberies and when they are caught, you find out that they are graduates and well-polished, these are the fall out of insecurity. The likelihood that it is going to abet is not there and some of the incentives that give rise to these is that they have increasingly seen that they do not have good system for penalizing those who are culpable because those who are in government offices engage in looting the nations treasury and nothing happens. Related to this is the frequent disruption in the educational system, when you have had to close schools and these students stay several months at home, they become rusty.
How crucial is the 2015 elections to the economy going by the insecurity threats it portends?
This election is crucial because each time you see a sitting president trying to contest for an election and the agenda for the election especially the electoral processes don’t appear transparent enough it causes acrimony, which is the real cause of the tension we have. However, it ought not to be like this because the incumbent president four years ago, rode on the quest of popularity and support of the masses of this country and after these four years, people are not convinced that he had perform well to warrant a comeback. Secondly, they say show me your friend and I will tell you who you are; he is also surrounded by a clique of friends which some have been openly discredited and it is this same set of people that engage in campaign of calumny with their opponent in a non-African manner, because here, we learn to honour our elders. The third part is that the contestants too don’t seem to control their supporters or those agitating for them and therefore they tend to cast aspersion on the integrity of contestants. Finally, I think the fear that one of the contending candidates should he win, will engage in a cleansing exercise that would bring so many public servants to book is also part of it. In politics, there is usually a vested interest groups who are those that have benefited from polices of the current government and have enriched themselves and therefore they do everything to ensure that the status quo remains which heightens campaigns. Finally, the surreptitious attempt by the government to subvert electoral process through threats, for instance security doesn’t require timing because nobody knows when insurgency will strike and therefore it is highly disturbing and unbecoming of the security chief to say that they cannot conduct election because they cannot guarantee elections, it is like the chief security officer writing his own report card.
Do you think the security agents are doing enough, having said that?
I won’t know, it is only what I read on newspapers I comment on, but suffice to say that if our politicians are honest, and do not engage in malpractices to subvert the electoral process, we don’t need police to queue and vote in an orderly manner. In fact, in 2011 elections, how many policemen do we have in police stations and then we all voted. But politicians are skinning to subvert electoral process that is when they start engaging the services of military and paramilitary, after all what where they supposed to do? To me, the issue of security is ought not to be an issue if our politicians are prepared to play by the rule.
How do you think we can revive the economy to make it better?
To revive this economy, there are three things that is fundamentally wrong with us, the first one is that government has lost grip with a purposeful vision and plan of where they want to move the economy to. What we seem to be doing is we hear the type of policies that work in some places and somebody adopt it but we do not have a detailed blue print of how they want to move the economy forward. When the current government came in, they said they were for transformation agenda, now if you are to transform an economy, it should be routed in two details; you must be in a position to be able to support innovation- new technology and secondly, research and development will be the forefront of your agenda and should be focused on your area of relative comparative advantage which is where your strength lies. In other words it is not just research on how to shift the production possibility but also the relative productivity of your capital within the context of your factor endowment.
Now if you look at it, all nations that have advanced like China which has a large population; they concentrated on human capital improving the intellect and capacities of the large teeming population to produce at highly productive level; even the US take their modes to China to be able to assemble some electronic components and so the first thing that China did was to improve the relative productivity of the teeming population, what is known as human capital to improve the skills and competence and so there is hardly anything you take to them that they cannot produce.
To achieve this, you must lay emphasize on educational skills, not just reading and writing. Our educational structure today, colleges of technology and technical school which impact skills have all been relegated to the background, now if your R and D is not treated in improving the skill of people, perhaps, as teeming population we could also engage in evolving technology in a human face, in the sense that there would be small scale technologies which small scale people can use which is not too expensive but which is capable of increasing their productivity. A case in point will be our farmers where 70 percent of them are small scale, who don’t own more than two acres of land and dig the soil with cutlass and hoe. So, there is nothing wrong in promoting technology with a human face like motorize hand mower that can help to weed, you can also talk of small scale immigration where you just provide a well and a small pumping machine so that you can have more season cropping round the year. Instead of spending money on acquiring tractor when a small scale farmer cannot affort to rent it and so you can see where we have misplaced that.
The second major one is that even in the industries; in areas where we ought to have relative comparative advantage, we ignore it and allow foreign companies set their branches here and displace indigenous ones. For instance, we used to be the major producer of cocoa, by now we should hear of brand names of Nigerian chocolate products or cocoa drinks instead we find multinational companies who confine us to just giving them raw cocoa and they send back to us as processed products. We cannot point to one that is truly Nigerian we don’t have any. The worst aspect is that the opportunities provided by petro-chemicals is very evident because 70 percent of products are made from rubber, therefore if we want to enter into auto industry, we should have ask them to sell us the mode for making rubber related materials.
Finally, we have a structure of incentives by government which does not favour truly indigenous enterprises to have access to credit unlike the big once – multinationals. Therefore, each time you put up some things that seem like incentives, we always try to disenfranchise the indigenous processes and so you will be robbing peter to pay Paul which is not right. For instance, in the petroleum sector where you purported say you are giving subsidy, but then, they use tax payer’s money to augment their income and so the same tax payer still get to petrol pump station and he has to cough out whatever money is asked to pay.