Emir of Kano, Sanusi Lamido
"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 properly." - Emir Sanusi
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