The candidate of the Social Democratic Party (SDP) in the 2023 presidential election, Prince Adewole Adebayo, in this interview, speaks on the economic policies of President Bola Tinubu and their impacts on the citizenry. SUBAIR MOHAMMED brings excerpts.
What is your assessment of President Bola Tinubu’s economic policies? Have Nigerians fared any better under his administration?
Nigeria has only one problem and that is bad governance. I agree with the wife of the president, Mrs Oluremi Tinubu, that her husband is not the cause of Nigeria’s problems. No, he is not; he is only a symptom of the problems. What Nigerians need is a leader that can tackle the challenges of the moment, but they failed to elect this sort of leader in the last general election. Anyone can be captain of a ship. The best time for Tinubu to be president of this country was 30 years ago, definitely not now.
To start with, Tinubu’s government has no clear-cut economic philosophy. His slogan ‘Emi lokan’ (it is my turn) is not a philosophical concept. What kind of a renewed hope agenda begins with the removal of the roofs from over people’s heads, removal of food from people’s mouth and removal of support for industries and normal living?
Everything that brought us to where we are today can be summarised into three. One is former President Buhari’s economic illiteracy and lack of awareness. Buhari was not able to govern physically, so his government was always doing Ways and Means and always borrowing. Secondly, they couldn’t govern properly, so the subsidy they said they were going to remove ballooned out of proportion and thirdly, they couldn’t grow the Gross Domestic Products (GDP) effectively. These are simple problems that have confronted Nigeria from time to time.
Look at the solution Tinubu, Atiku and even Peter Obi brought forward, a solution that did not make any economic sense. The solution was that they would remove subsidy from a transcendental product. Nobody buys petrol to drink like wine. You buy petrol either to fuel your vehicle, home or business. It is a productive use of energy which cuts across every field. We have the supply side of our foreign exchange, nothing more than that. Our foreign exchange hasn’t grown in 30 years.
One of the tools of attracting foreign direct investment is a stable or predictable foreign exchange. You also need to have respect for contracts and the rule of law and a good justice system and security. All these are lacking in this administration. Even in the prioritisation of government’s expenditure, they are spending money on the least productive items and then they yank off support from the economy. The government also created inflation and then turned the Central Bank of Nigeria (CBN) governor to Paul Folca, and now, he has had to ‘Folcarise’ the economy, raising interest rates.
Was CBN’s decision to increase interest rates not targeted at lowering inflation?
But the inflation was caused by the government. That’s the problem Paul Folca had, when he was appointed by United States President Jimmy Carter as chairman of Federal Reserves. Carter had inherited from both Nixon and Ford a high inflation. He thought the only way he could kill high inflation was to raise interest rates because cheap credit was driving the inflation. But this wasn’t the case with Nigeria’s inflation. In Nigeria, our inflation is not driven by cheap credit.
In fact, there is no sufficient banking penetration, and the lending capacity of our banks is so small that regional and community banks overseas have more money than the largest bank in Nigeria. The tension of raising interest rates is that you will suffer one certain problem; you will shrink the economy by having a recession to slow down prices. But in Nigeria, it will spiral out of control because productivity will go so low.
You need to look at the differential in inflation rate and the statistics. You will also look at the component that drives inflation. Also, look at the base increase. How many base points did you increase the rate versus how many points did you drop in the inflation? Secondly, you’ll look at the GDP, which is rising essentially as a result of the nominal increases in the price of factors. If your GDP is rising, it should reflect in growth in employment rate but this was not so. I think the conclusion is that they have taken the wrong measures.
With your analysis of the economy, are you saying the GDP growth rate is not trickling down?
No, it is not. Your GDP in the absolute doesn’t take the difference in the marginal. You must adjust against the marginal increase in your population because if the rate of growth of the population is higher than the GDP, you will have negative GDP. If you look at the illusion of money, you must calculate your GDP relative to stability. We don’t have sufficient goods reserves with which we can measure it. We probably use the US dollar to measure it. We also need to understand that the dollar is under some unusual inflationary pressures. So, when you adjust against a nominal increase and against the foreign exchange differential; when you adjust against the official dollar inflation rate, you now juxtapose it against the population growth. That is why nobody is smiling at you. If they say one is exaggerating what is going on in the streets, how well can they fund their programmes and budget? They need to fundamentally rejig the economy because they have made serious mistakes.
What would you suggest as solutions to these problems you have identified?
The first thing the government needs to do is to target reduction in unemployment rate. The reason monetary economics is allowed is because the fundamental objective is to achieve good employment, not only of labour but also on all factors of production so that you have allocative efficiencies that clearly want to make you want to invest your money in the economy and get people employed.
The government can also look into five areas. Agriculture is number one because it employs the highest number of people. It is also a low-hanging fruit because it is easy to start. With agriculture, you will create employment and solve the problems of inadequate food supply and uncontrolled price increase.
Investment in infrastructure is another. Investing in infrastructure means that you don’t allow people to do for themselves as individuals, things that we can all do collectively. That means you want to make sure that people travelling from one end of the country to the other don’t have to travel in their own vehicles because of the provision of public transport. You need to build rural health facilities as this will employ people and even keep people healthy and make them more productive. You need to make a social investment in education.
Many of the cases of unemployment we are dealing with in our time will be rapidly dealt with by recruiting more teachers. But the problem of the governors even with all the money they collect from the Federal Government is that they don’t want to employ people because when they employ, there is less discretionary spending. This is because if you employ, you must pay as you are bound by contract. Some states, rather than increase compensation for their staff, tell their staff to come to work twice a week.
Let’s talk about hike in the pump price of petrol. Who is culpable here, the government or the Nigerian National Petroleum Company Limited (NNPCL)?
The NNPCL is part of the government, and nobody gets appointed without the government’s approval. The idea is that they don’t want to run the government. They don’t want to run the economy. They are only fighting to take control of the petroleum market. They see Nigerians as customers and not as citizens. They don’t want to be responsible for ensuring that Nigerians have a good life. Our refineries were built years ago. The first one was part of our first development plan, the Port Harcourt refinery, which was done during the Tafawa Balewa era. Then, Yakubu Gowon came and built the Warri refinery. By the time General Olusegun Obasanjo took over as the military head of state, he the built Kaduna refinery. The idea was that we would build more because we are an energy-rich country.
We were not supposed to be worried about the small quantity being consumed in Nigeria. We were supposed to be exporting so that even the little part we are consuming locally will not be the essence of government. How many refineries are in Singapore? Go to the refinery market, with $2 billion or $3 billion, you will build a good refinery. People call bogus figures here because the government is involved and they try to siphon the money. The refinery is an old technology distillation.
The refinery in the Gulf of Beirut has been there since 1900. The one in Pennsylvania was built in 1903, and they are still working. So, what is new about refinery? Talk to chemical engineers and ask them about the largest and most complex catalytic cracking unit. How much would it cost, even if they have to get it designed from the beginning? So, don’t let us pretend that we don’t know that we have been captured and our brothers and sisters in government who captured us want to squeeze the juice out of us like oranges and probably discard us when there is nothing more. They want to remove economic participation.
What is your view on the proposed 25 percent personal income tax payable by the rich? Is there any justification for this?
I, Adewole Adebayo, am ready to pay even 50 percent of my income in taxes. I don’t mind. After all, in Norway, it is higher than that. I am spending billions literally to power my productive enterprises. But you cannot pauperise us, take all the taxes and still not be responsible for anything.
In China, with $10,000, you can have a factory. All you need to do is to demonstrate to the city or the government that you are producing this particular product. If they see the production plan, they will give you a factory on credit, and you start paying back. That is not available here in Nigeria. China is the largest producer of finished goods because of subsidy. And you don’t have to be in China. If it is the US, the first thing they welcome you with is a letter to come and borrow money. Sometimes, the Federal Reserve gives money to banks at negative interest to force them to lend money to people. During Covid-19, I was here in Nigeria. When I went to the US, I got a stack of letters awarding me money, wanting to give money to my law firm. They are subsidising with credit.
If you go to Europe, they are subsidizing social services. You, the employer of labour, when your worker is sick, you are not the one to pay because every worker, every citizen has life insurance and other social services. So, it is cheaper to hire labour there. Come back to my beloved Nigeria, what is the incentive for productivity? Nothing. So, you cannot compete. And the little that people are enjoying because we are a petroleum-rich country, we should now have low energy costs. That is what will drive you to say, let me go to Nigeria to take advantage of the low energy cost for my production.
But don’t you think it is a different thing entirely when you are in the driver’s seat and are faced with overwhelming challenges?
No, it isn’t. That happens when you don’t think before you talk. You think thoroughly before you talk. It is your talk you walk. The government has not been thinking in the right direction. I am not saying this just to be funny with them. Like I said, ‘Emi lokan’ is not an economic philosophy. The essence of coming is to tell us what you want to do. Dodging debate is not an economic policy. ‘Ba la blu, bu la ba’ and all those blabbing are not economic debate. They did not articulate what they wanted to do. They did not understand the implications of the decision they were taking. They do not have the executive capacity to run a neo-liberal economic setting. You can run it; it is an alternative.
So, you are in favour of neo-liberalism?
No, I am not in favour of it, but when I am criticising someone who is implementing it, I criticise them based on their own paradigm belief. I cannot force you to believe what I believe. But within the framework of what you believe, the primary objective of a monetary policy in a neo-liberal economy is to achieve full employment. Have they done that? They have not. That is the problem. So, they are not going anywhere. Even in 40 years, they are not going anywhere.
Your last political outing was in 2023 as the presidential candidate of the Social Democratic Party (SDP). Do you see your party aligning with other political parties in 2027?
There must be a meeting of like minds. Power for power’s sake is a disgrace. You can see the former President Buhari fiasco. You can see what’s happening to the bunch that is there now. If you want to run a bank successfully, you cannot form an alliance with bank looters. What you will do is to see how to change their mind. I have been going round, sympathising with them and giving opinion.
I am not against them; I am against their lack of ideas. It is not that we want to be in government at all costs. I will rather not be in government than be useless in government. What we are trying to do is to build alliances of all Nigerians. What we are trying to do is to see the majority of Nigerians who are suffering and make them realise that there is a link between how they voted and the effect they are getting now. Even if President Tinubu realises he is missing his way and wants to queue up behind us, we don’t mind at all. But I am not going to say for the sake of coming to power, I will go and join those who are running the country aground.
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