Professor Akpan Ekpo, the Immediate Director General, West African Institute for Financial and Economic Management and former Vice-Chancellor, University of Uyo, Akwa Ibom, in this interview sets economic agenda for the post election government stressing that the country has the resources to move millions of people out of poverty. He also blamed the persistent power supply problem on the elites who he averred are not interested in solving the problems of the power sector.
By Babajide Komolafe
We are close to another major election and there is so much concern about the Nigerian economy, what is your opinion, irrespective of the election outcome? How do you think the Nigerian economy will move?
Thank you very much, I think the economy in the past has had a lot of hiccups, there was a recession in 2016, we got out of the recession, the government gave us Economic Recovery and Growth Plan (ERDP) which is not really a planned document. It is a medium term framework to restore growth; it is not really a planned document. I hope that any party that wins will concentrate on the economy of the country. What do I mean by that? Concentrate on ensuring that 80% of Nigerians can enjoy the resources of the country. To do that, they must develop infrastructure like power, quality education, quality health delivery system and so and so forth. When an economy does that then that economy is on the right part because you can grow and not be developed.
China grew double digits more than, I think 30 years back and sustained it for about 15 years to move 700 million Chinese out of poverty. And Nigeria has the resources to do that, so any government that comes in must begin to focus on Nigerians. In fact, the LDP has it that we have not done it to the extent we are satisfied, they call it investing in people, they must invest in Nigerians. Because even if you build railway, people still have to man those things. Then the government that comes in must be strategic, in moving the country forward. What do I mean by that? First it must have a comprehensive economic plan-20 to 25 years.
Which will be passed into law so that no new government will come and truncate it, that is how Asian countries were developed. That happened some years back when we had vision 2020 but it was abandoned. So whoever wins the election, whichever party that wins, the economy should be the main focus and that focus should be on basic needs. Give Nigerians power and they will pay for it, give them water, good roads, education, good health system and other things will follow. But if you are growing and the growth is showing positive signs and these other indices are declining then you are not developed.
Definitely government need money to drive the economy. How will the government raise revenue to fund the objectives?
You know the Nigerian government’s revenue is dependent on the oil sector in most part and I call the oil sector revenue exogenous revenue, you know you have no control over the price, you are not even in control of the output. You can’t use that to finance long term development. You will see it as a wind fall and use it as such. They did it in Norway and the rest, they saw it as wind fall, developed themselves with it. We have not done that over the years. So we must get out of that by building and economy that is diversified into other areas so that we can earn foreign exchange from other sources out the oil sector. Another way of making money is to look at the tax structure.
Not to increase the tax rate but to bring more people into the tax net. A lot of Nigerians who are wealthy or rich don’t pay tax; you have to bring them into the tax net. Then you have to tax luxury goods heavily. For example if you go to Abuja airport and Lagos airport the number of private jets that you see, they should pay tax. We are taxing what they call conspicuous consumption. Then also you look at some government owned enterprises, and here I am not saying privatise them, I will prefer the word commercialise them. In other words let those companies be managed by private sector people with government still holding substantial shares.
If you have to privatise them let it be open, and not secretly done, so that anybody can buy shares. Thirdly, people will not like to hear this; our VAT rate is the lowest in the world. If you thinker with VAT to even 6.5% that will generate a lot of revenue. So those are the areas, because right now the government needs liquidity to do a lot of things. But let me say that it is good to tax, like I said Nigerian Tax to GDP ratio is one of the lowest. But there is a limit to taxation, you have to have service delivery, I pay tax because I get service. If people are not happy about the service delivery they will not pay tax, except those who are working which don’t have a choice.
Again you can generate more tax by looking at people who are employed, if employment increases people will work and they will pay tax. When you have employment figure of 33%, 56.5% youths are unemployed that is serious, you are losing tax from that. The next thing will be how will the government create employment? Nigerian cities are the least policed in the world, if you employ a lot of policemen in thousands, you are creating jobs. They will police the citizens, they will earn salaries and they will pay tax. But when that is higher than the unemployment rate , the private sector will never fill that gap. It is the government so the government has to think of way to do it.
You mentioned the issue of power as one of the things that the government needs to focus on. Looking at how far we have come with the power sector, we are still yet without regular power supply, what do you think can be done in the next one year that can have very significant impact?
Well, I will like to disappoint you in two or three issues; first, power in the last one year has improved marginally compared to previous years. The problem with it is that the Nigerian elite are not interested in the power sector. The way they unbundled the existing government plans was not transparent enough. They sold it to their own cronies. In the world we know the companies that can give us power, invite them, they have the expertise, and they will tell you we will do it but it will take so much time.
Nigeria has the ingredients for us to have power supply, how come we don’t have it? Again, state capture, how can every day, people are setting up generator companies to sell generator? They are not interested in the power sector because it is a struggle, if power is there 24 hours those guys are not in business. So government has to break it. You call it power reform but I don’t think there is any reform, there is no reform. We are just trying to make money from the same; it is like recycling the samething. If you call those companies, I said they will tell you it will take us five years, after five years you will have regular power supply. Every year we will add this megawatts, they will tell you.
In the last bid they did, we didn’t see those companies, the people that bided are companies owned by Nigerians. They brought some people as front and we sank billions of dollars into it. Now for example, if you are selling any asset, you sell both the asset and the liabilities. Now, you bought a power plant, you have done your arithmetic very well, all of a sudden the company said that they didn’t know gas will be a problem. Instead of the government saying that you have bought it, you should go and fix itbecause when you sell asset you give them time to say if X number of years you don’t improve we will take it back.
I was chairman of Akwa Ibom state Investment Council for almost 8 years, so I know what I am talking about. When you sell you still set a limit, say if after 5 years, if we don’t see any improvement, we will take our asset. Rather than doing that, in fact the Central Bank of Nigeria went again gave them money.