For daring to score President Goodluck Jonathan’s economic
policies very low, Minister of Finance, Ngozi Okonjo-Iweala has described the
former Central Bank of Nigeria Governor, Professor Charles Soludo as embittered
loser who is in search of power and relevance.
It would be recalled that Soludo in his submission titled:
“Buhari Vs Jonathan: Beyond the Election” told President Goodluck Jonathan not
to campaign on his six years record in office as he had failed Nigerians
particularly in the management of the economy.
In a statement issued by Paul C. Nwabuikwu, Special Adviser
to the Coordinating Minister for the Economy and Minister of Finance, titled
“BEYOND BELIEF:
SOLUDO’S SELF-SERVING ARTICLE ON ECONOMIC MANAGEMENT IS
DEFICIT IN FACTS, LOGIC AND HONOUR”, Okonjo warned Nigerians to beware of
“so-called intellectuals without character and wisdom”.
“Let it be noted for the record books that Soludo’s
single-handed mismanagement of the banking sector led to an incredible
accumulation of liabilities that will cost tax payers about N5.67 trillion
(being the total face value of AMCON-issued bonds) to clean up. Let it be noted
also that this amount, which is more than the entire Federal Government 2015
Budget, constitutes the bulk of Nigeria’s “contingent liabilities” mentioned in
Soludo’s article.”
Satirically, she noted that Soludo who presided over the
worst mismanagement of Nigeria’s banking sector as Governor of the Central Bank
of Nigeria between May 2004 and May 2009, could write about the mismanagement
of the economy.
Read Okonjo’s full statement below:
BEYOND BELIEF:
SOLUDO’S SELF-SERVING ARTICLE ON ECONOMIC MANAGEMENT IS
DEFICIT IN FACTS, LOGIC AND HONOUR
(Response to “Buhari Vs Jonathan: Beyond the Election, by
Charles Soludo”)
• For anyone who has not read Professor Charles Soludo’s
article in the Vanguard (online version) on January 25 2015, I would encourage
them to do so. It is littered with abusive and unbecoming language. It shows
how an embittered loser in the Nigerian political space can get so derailed
that they commit intellectual harakiri by deliberately misquoting economic
facts and maliciously turning statistics on their head to justify a hatchet
job. We hope all the intellectuals in the international circles in which
Professor Soludo has told us he flies around in will read what a Professor of
Economics has chosen to do with his intellect.
• In this one article Soludo has shamelessly pandered to so
many past leaders that Nigerians are asking one more time – what position is
Soludo gunning for now? He claims in his article that he has had his own share
of public service, yet he has failed twice in his attempts to be Governor of
Anambra State and Vice Presidential candidate of various parties. There is
definitely an issue of character with Prof. Charles Soludo and his desperate
search for power and relevance in Nigeria. Nigerians should therefore beware of
so-called intellectuals without character and wisdom because this combination
is fatal.
• But let us turn to the main subject of Soludo’s discourse.
So much of what is written is outright nonsense and self-seeking aggrandizement
that need not be dignified with a response. It is totally remarkable that
Professor Charles Chukwuma Soludo, the man who presided over the worst
mismanagement of Nigeria’s banking sector as Governor of the Central Bank of
Nigeria between May 2004 and May 2009, can write about the mismanagement of the
economy.
• Nigerians must be reminded of his antecedents as CBN
Governor, and even prior to that, as the Chief Economic Adviser to the
President. The consolidation of the banking sector was a good policy idea of
the Obasanjo Administration but Soludo went on to thoroughly mismanage its
implementation leading to the worst financial crisis in Nigeria’s history. So
what did Soludo do?
• After consolidation, the regulatory functions of the
Soludo-led CBN were very poorly exercised. As Governor, he failed to adequately
supervise and regulate the now larger banks – an anomaly in Financial Sector
Supervision. In fact as every Nigerian knows, in his time there was very little
separation between the regulators and the regulated which is a violation of a
key requirement of Central Banking success.
This led to infractions in
corporate governance in many banks as loans and other credit instruments
running to hundreds of billions of naira were extended to clients without
following due process, and several of these loans could not be paid back. This
massive accumulation of bad debts or non-performing loans as they are called in
the banking sector meant that our banks were ill-positioned to deal with the
global financial crisis when it hit.
• In fact, the banking sector was brought to its knees and
required a massive bailout by Nigerian tax payers. This bailout was done by his
successor (now Emir of Kano) who cleaned up all the bad debts and transferred
them to the newly-established AMCON, from where they are managed today. So let
it be noted for the record books that Soludo’s single-handed mismanagement of
the banking sector led to an incredible accumulation of liabilities that will
cost tax payers about N5.67 trillion (being the total face value of
AMCON-issued bonds) to clean up. Let it be noted also that this amount, which
is more than the entire Federal Government 2015 Budget, constitutes the bulk of
Nigeria’s “contingent liabilities” mentioned in Soludo’s article. It is only in
Nigeria where someone who perpetrated such a colossal economic atrocity would
have the temerity to make assertions on public debt and the management of the
economy.
• Let us now look at some of the points he makes. Luckily,
Soludo has told us that he has been busy travelling internationally, hobnobbing
with his global partners. It is obvious from this article that from the
rarefied heights at which he is flying he is completely out of touch with what
is happening with the management of this economy. Take his comments on the
mismanagement of the economy and the imposition of the austerity measures. The
present fall in oil prices, a global phenomenon over which Nigeria has no
control, has given every charlatan the opportunity to attack the economy, and
by extension the managers of the economy
• It is true that the economy grew well during the
second-term of former President Obasanjo as a result of the reforms supported
by the President and implemented by the Economic Management Team. Please note
that the Finance Minister under whose leadership that good performance took
place, including massive unprecedented debt relief, is still Finance Minister
today. But thorough examination of the facts on performance under the Jonathan
Administration will also reveal that at a time when global economic performance
was mediocre, with GDP growth averaging about 3 percent per annum, Nigeria’s
GDP growth – averaging about 6 percent per annum – is indeed remarkable. Even
more interesting is the fact that the oil sector did not drive this economic
performance but the non-oil sector (Agriculture, Manufacturing,
Telecommunications, the Creative Economy, and so on), which shows that the
current Administration’s diversification objective under the Transformation
Agenda is working. Transformation equals diversification
• This current government managed to control inflation,
which he Soludo, was not able to do during his time at the helm of monetary
policy in Nigeria. When he left the Central Bank in 2009, inflation – which
hurts the poor and vulnerable in the society the most – was above 13 percent
per annum. Now, inflation is at single-digit, at 8 percent per annum. What
about exchange rates? Well this administration again managed to stabilize the
naira exchange rates, such that between May 2011 and the end of 2014, official
exchange rates against the dollar rarely moved out of the N153 to N156 band. It
is only with the recent dramatic fall in oil prices and the consequent impact
on our foreign reserves that the exchange rate has become quite volatile. The
drop in oil price has been heavy and rapid impacting all oil producing nations
significantly. Nigeria is no exception and appropriate fiscal and monetary
policy measures are being put in place to manage this situation.
• In fact, history will recall that careless remarks by
Prof. Soludo (then Chief Economic Adviser to the President) hypothesizing a
possible naira devaluation, condemned the naira to a free fall towards the end
of 2003. Ray Echebiri, in his 2004 article in the Financial Standard, wrote
that not even the assurances given by the then CBN Governor, Mr. Joseph Sanusi
or President Obasanjo that any plans to devalue the naira existed only in the
head of Professor Soludo could halt the fall of the naira from N128 to the
dollar in the official market to about N140 between September and December
2003.
• It is true that our foreign reserve accumulation is less
than what it should be but the reason for this has been fully given, not as
excuses but simply as fact: lower oil production and crude oil theft along with
the refusal to save in the Excess Crude Account (ECA) are the reasons. Contrary
to what Soludo said, oil production under President Obasanjo was higher than
current levels. Quantities produced averaged 2.4 million bdp, 2.22 million bpd,
and 2.21 million bpd in 2005, 2006, and 2007 respectively but has declined now
to between 1.95 and 2.21 million bdp due to vandalism of the pipelines and the
resulting “shut-ins” to fix the problem. It is true that had production been at
the previous levels and had there been willingness to save we would have had
more money in the ECA and also in the reserves. But the overriding setback to
savings is that the State Governors felt it was their constitutional right to
share the money. Please recall that even as we speak the States have taken the
Federal Government to the Supreme Court on this issue
• Soludo’s claim that 71 percent of Nigerians live below the
poverty line is misleading and disingenuous. He uses 2011 statistics on poverty
by the NBS to support his argument while ignoring more recent figures. But as
stated in the Nigeria Economic Report 2014 by the World Bank, poverty rate in
Nigeria has dropped from 35.2 percent of population in 2010/2011 to 33.1
percent in 2012/2013. By the way, the reason why our poverty numbers have been
so wrong is that the National Bureau of Statistics (NBS), under Soludo’s
supervision as CEA and Vice-Chair of the National Planning Commission, departed
from the international standard method of poverty measurement. Is he now
ignoring the right economic statistics to wilfully manipulate information?
• No doubt we have a problem with unemployment in this
country and we must deal with it. Indeed this Administration is dealing with it
and stands proud of what it has accomplished so far and is pushing hard to
accomplish much more. As a first step, the Administration, through the office
of the Chief Economic Adviser to the President and the NBS, worked hard to
determine how many jobs we need to create in a year. What you don’t measure you
cannot make progress on. Why didn’t Soludo do this when he was CEA?
• We need to create about 1.8 million jobs a year in this
country to cater for the new entrants into the labour market, but we also need
to deal with the backlog of the unemployed and the underemployed, e.g. those
selling on the streets. Dealing with this global challenge of unemployment is
not an easy task for any country, as can be seen from the experiences of developed
countries particularly in the euro area. But the Jonathan Administration is
making good progress, creating an average of about 1.4 million jobs per year by
driving quality growth in key sectors like Agriculture, where the bulk of new
jobs are being created, Housing, Manufacturing, Financial Services, and the
Creative Industries like Nollywood.
• In addition we have special programs to promote job
creation among the youth and these include:
• Promoting entrepreneurship among the youth through the “Nagropreneurs”
program to support 750,000 youth farmers with grants and training, and the
YOUWIN program that is directly supporting up to 5,400 young entrepreneurs with
grants, training, and mentorship and so far beneficiaries are creating an
average of 9 jobs each, for themselves and others. About 22,000 jobs have been
created by the first 2,400 youwinners.
• Graduate Internship Scheme: that is reducing the
vulnerability of unemployed graduates by enhancing their employability. The
Scheme targets up to 50,000 unemployed graduates in the 36 states of the
Federation and FCT and about 22,000 graduates have so far been placed by the
program.
• Community Services Scheme under SURE-P: developed to
empower young unskilled Nigerians, women and people with disabilities. About
120,000 mostly young workers have been engaged across the country
• On the issue of debt, Nigerians deserve to know the truth
and we have said it before. The truth is that the government borrowed in 2010
to pay an unprecedented 53.7 percent wage increase to all categories of federal
employees as demanded by labour unions. The total wage bill rose from N857
billion in 2009 to about N1.4 trillion in 2010, and as a result, domestic
borrowing increased from N200 billion in 2007 to about N1.1 trillion in 2010 to
meet the wage payments. Where was Soludo at the time? Why did he not react to
the borrowing then? Was it because he wanted to pander to labour in preparation
for his political career?
• It is noteworthy that since 2011, the Administration of
President Goodluck Ebele Jonathan has been prudent with the issue of debt and
borrowing. The Economic Management Team not only looks at debt to GDP ratio,
where Nigeria has one of the lowest numbers in the world at 12.51 percent but
it looks at debt service to revenues. That is why in spite of the rebasing and
a larger GDP, the administration has taken a prudent approach to borrowing. The
prudent approach helped to drive down domestic borrowing from N1.1 trillion in
2010 to N642 billion in 2014. In fact for the first time in our nation’s
borrowing history we even managed to retire N75 billion of domestic bonds
outright in 2013.
• Despite the present tough situation, we do not plan to go
on a borrowing spree but to keep borrowing modest at a level sufficient to help
us weather the present situation. We have already ramped up efforts to generate
more non-oil revenues for the government while cutting costs of governance.
Therefore, Soludo’s claim that this Administration is reckless with debt does
not hold true.
• Since Soludo seems so ignorant to what has been achieved
by the Jonathan Administration, let us present just a few examples of them here
again. This information is easily verified.
• We are improving infrastructure across the country. For
example, 22 airport terminals are being refurbished, and five new international
airport terminals under construction in Lagos, Port Harcourt, Kano, Abuja, and
Enugu. Soludo’s kinsmen in the South East now have an international airport in
Enugu, and for the first time in Nigeria’s history can fly direct from Enugu to
anywhere in world for which they are very grateful to this Administration. But
with Soludo being up in the air with his international travels, he has not
touched ground in the Southeast to observe this development for himself.
• Various road and bridge projects have either been
completed or are under construction. Those completed include the Enugu –
Abaliki road in Enugu/Ebonyi States, the Oturkpo – Oweto road in Benue State,
the Benin – Ore – Shagamu highway, and the Abuja – Abaji – Lokoja dualization,
and the Kano – Maiduguri dualization. The Lagos – Ibadan expressway and the
Second Niger Bridge are under construction.
• Rail from Lagos to Kano is now functional, as is parts of
the rail link between Port Harcourt and Maiduguri. All these have brought
transport costs down. We recognise that more needs to be done in the power
sector, but bold steps (like the privatisation of the GENCOs and DISCOs) have
been taken, and our gas infrastructure is being developed to power electricity
generation
• In Agriculture, over 6 million farmers now have access to
inputs like fertilizers and seeds through an e-wallet system, which is more
than the 403,222 that had access in 2011. Rice paddy production took off for
the first time in our history, adding about 7 million MT to rice supply. An
additional 1.3 million MT of Cassava has also been produced and as a result,
the rate of food price increase has slowed considerably, according to the NBS.
• In Housing, we have put in place a new wholesale mortgage
provider – the Nigerian Mortgage Refinance Corporation (NMRC) – to provide
affordable mortgages to ordinary Nigerians, starting with those in the
low-middle income bracket. This sector will help the economy grow as we tap it
as an economic driver for the first time. Mortgage applications from 66,000
people are currently being processed and 23,000 have already received mortgage
offers
• Our Manufacturing sector is reviving with new automobile
plants by Nissan, Toyota, etc. This is in addition to the backward integration
policy in key sectors like petrochemical, sugar, textiles, agro processing and
cement, which Nigeria is now producing 39,000 MT and exporting to the region.
• The Creative sector is now a factor in our GDP, with
Nollywood alone accounting for 1.4 percent, creating over 200,000 direct jobs
and nearly 1 million indirect jobs. This is the first Administration to
recognise its importance and support its further development with a grant
program.
• A new bank – the Development Bank of Nigeria – will soon
be operational and this bank will help bridge the access to finance gap, which
is a major constraint for the private sector especially SMEs. The bank will
provide long-term (5 – 10 years) financing at affordable rates for the first
time in our nation’s history.
• This is the path that the government has been on before
this fall in oil prices. The response to the economic shock has been spelled
out to the Nigerian public over and over again, and the Administration intends
to focus on managing this crisis appropriately. This year will be difficult. To
say anything less to Nigerians will be untruthful. It would have been better if
there had been a bigger cushion of the Excess Crude Account to manage this
situation but despite this the nation can rise to the challenge. More
importantly, President Goodluck Ebele Jonathan and the Economic Management Team
are seeing this as an opportunity to diversify the revenue sources of an
already diversifying economy. In fact let me at this juncture use this
opportunity to comment on Soludo’s appalling statement that rebasing brings no
policy value. Rebasing has enabled us to better grasp the new diversified
nature of our economy. This provides the basis for our present drive to support
different sectors with appropriate policy instruments to enhance their
development. Rebasing has also enabled the Administration to create the
platform from which to drive our work on increasing non-oil revenues. These are
areas of critical policy value.
• Soludo mentioned the issue of the Economic Partnership
Agreement with the EU, noting that this Administration has not been vocal or
clear on its direction with this agreement. On the contrary, the
Administration, particularly the Ministry of Industry, Trade, and Investment,
has been clear on this issue but since Soludo has been in the air he probably
has not been aware of this. Just recently, the Minister of Industry, Trade and
Investment reiterated again to the corporate sector that Nigeria has not signed
and does not propose to sign the EPA in its present form.
• The point is that this government has been pursuing the
right economic policies, and its efforts have been acknowledged nationally and
internationally. Let me say that there are objective ways to measure performance.
There are international institutions globally accepted to do this. They have
acknowledged this Administration’s good economic management up to the recent
crisis and even now.
• We cannot go by someone’s subjective view, driven by
bitterness and bile. We need to look to the truth and to professionalism. This
is where Professor Soludo totally fails. For the other gratuitous, political,
and personal attacks, we are sure that those mentioned will respond
appropriately. It is a sad day for Nigeria and the economics profession that
someone like Soludo, a former CBN governor should write such an article. If
Soludo wants to regain respect, he should return to the path of
professionalism. He certainly needs something to improve his image from that of
someone whose sojourn into National Economic Management ended in disaster for
the banking sector, his sojourn in politics, ended in overwhelming rejection by
the electorate, and more recently, his sojourn abroad, has put him out of touch
with the reality of the Nigerian economy.
Paul C Nwabuikwu
Special Adviser to the Coordinating Minister for the Economy
and Minister of Finance
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