Uche Uwaleke is a Professor of Finance and Capital Market at the Nasarawa State University, Keffi, and former commissioner of finance in Imo State. In this interview on Trust TV’s Daily Politics programme, he advised President Bola Tinubu’s Economic Management Team Emergency Taskforce (EET), which has two weeks to submit a six-month comprehensive plan, to put in their recommendation, the need to import food, and then release N1 billion directly to LGAs, without interference by governors, as a stop gap measure to addressing economic challenges.
What is your take specifically on the Economic Management Emergency Task Force put together by President Bola Tinubu?
What the President has said is that he has given them two weeks to produce a plan that he will implement in the next six months.
Is this team taking over the larger role of other economic teams?
Not permanently. It is a task force, they are asked, within the two weeks to produce a plan.
Is this the right time to have such a team?
I think so. I also think that maybe it is even something that should have come before now. The idea of coordination is very critical. It is important that both fiscal and monetary policies, trade policies, investment policies, are coordinated at this point, so that they don’t work at cross purposes. You don’t find them working in silos.
Now, look at what has happened, the consequences of the reforms, both intended and unintended. You see, the two major reforms of subsidy removal and exchange rate unification have thrown up a lot of challenges.
Does hunger really requires any task force?
Well, yes, it does.
People are going to bed very hungry.
Yes, that is the more reason…
Prof., look at what happened at your university for instance. Ten years back, I don’t think if you will see students on queue waiting to collect free rice or N5, 000 in the name of palliative.
I agree with you. People tell you that the pains will be short-lived, that in the medium term things will get better. But what is this short term? Nobody can define short term. The CBN governor, for example, has said that the inflation target for this year is 21.4 per cent. He also said that the hike in rates we are seeing will come down. Now, the point is when people talk about short term, soon, how soon?
Are you referring to a framework?
Yes, nobody can say it is going to be November; it is going to be this. So, that is why I think that this tax force is needed.
When you have a tax force, it is like a war room, you recognise that you have to do something to bring down food prices, to ramp up food production, emergency measures to reduce the hunger in the land. I think that is the idea behind the tax force.
Can we say that, maybe the President is coming to terms that after all, what they thought is very easy, is really not the way they looked at it?
Did you read? I read it, I don’t know whether he was misquoted on what he actually said, Bayo Onanuga. Yes, he said the President…I am not quoting him exactly. What he said was like, you know, the president didn’t really envisage, I think, yes, envisage the enormity of the problem, of the challenge.
Meaning if he had done his homework very well, the removal of the fuel subsidy, maybe he would take like two weeks, instead of being politically correct on the day of inauguration?
Exactly, to understand certain things; and then maybe unification of the rate he would have also taken some time. Some of these things maybe he would have tried to sequence them or try to implement them in a gradual manner. So I would say he meant well. But the repercussion, that is why I talked about unintended consequences. I am pretty sure they didn’t think the enormity would be this large.
Is it practically possible; are there templates that will bring down inflation to 21?
That is why I am in support of this coordination committee. It is the coordination committee that will now look at what the monetary authority is doing, look at what the fiscal side is doing, and say, this is how we think this thing can happen because left to the CBN governor, left to the Central Bank, what is the major thing they want to do is to squeeze liquidity from the system.
Is that why they increased the lending rate?
Oh, yes…
So that people will find it difficult to borrow?
Yes, that is it. So that access to credit will be reduced. Banks will no longer be in a position to make credit; that is it. And then money supply will reduce. And in their thinking, inflation rates will come down. But the mistake in all of that is that there are factors that are driving inflation that are outside the control of the central bank.
Like what factors? Maybe we have to remind them because sometimes they easily forget some of these things.
No, they know. Even in the communiqué that the CBN governor read after their meeting, they put those factors there. They talk about food insecurity. They also mentioned high transport cost. In that communiqué, you will also see rising energy cost.
Do the committees have the magic wand to actually bring out what the president is talking about? Aliko Dangote, Tony Elumelu, Abdulsamad and others are busy managing their businesses. And then the ministers are politicians…
Yes, very good question. One of the outcomes, unfavourable outcomes of these reforms, especially the unification, was devaluation of the currency, and then we saw a lot of companies incurring exchange rate losses, big companies are reporting losses. Some of these players in the private sector, like the Dangote for example, Alhaji Rabiu, Tony Elumelu, the president thinks that they are in a position to know what to do to help these companies to revert.
But you, as a professional and as an academic, was it a right decision?
I am still coming, I want to land. The point I am making is that yes, those people, the advice or whatever they will say, we need them. But in terms of the real work, just as you said, it is not those ones, they don’t have the time. Look at the issue of a Senate president being there. But I think it is for these people to sit down after they have received the report by the tax force, to now take a decision. And to take that decision, you need the head of the executive, the president; you also need the head of the National Assembly. I am sure that is what informed that decision.
But I also think that the composition is also lacking a very fundamental group. The academia is visibly absent because that kind of tax force will require some research inputs.
You want some powerful theorists that are working in some universities?
Not just theorists, maybe people that will conduct research and also perform some scenario analysis. This analysis will be done by people in academia. I expected the President of Nigerian Economic Society to be there. The person you find there is the President of Nigerian Economic Summit Group.
Do you think the president needs multiple committees? Or is it that the take- off on May 29 was actually shaky?
Well, I think, just as you said, better late than never. He has realized that there is need to have a war room.
I want to also recognize that there are a few of them I saw there (in the committees) that would also be in a position to add value.
Talking about the likes of Dr Bismarck Rewane, for example, I am sure he will be there to supply all the data; the likes of Professor Doyin Salami. The likes of Dr. Suleyman Ndanusa, these people of course will be the real think tank of the emergency tax force.
The CBN recently started given the US dollar to bureau de change operators and told them the profit threshold should not exceed 1.5 per cent. Can we say it is a policy somersault from the initial action of floating the naira?
I wouldn’t use the word somersault. I would simply say the central bank is now responding to prevailing circumstances. They have seen that it is not possible to float the naira.
Meaning that from the onset, the new leadership didn’t learn lesson from what happened in 2016, because, I think, during the tenure of President Buhari, they also floated the naira, but within a very short time they shelved the decision.
We also said it at the time that for you to float the naira, you must have a diversified export base. You must also have substantial reserves. So, when it is not there, when 90 per cent of your forex is coming from one product, crude oil sales, then it becomes dangerous to say you are floating.
But is it sustainable, they accused the previous administration of abusing the process…
No, no, this one, as I said, is called for. Yes, if the central bank had not done that, maybe by now, there would have been still these liquidity issues. And once there is a liquidity issue, confidence in the system will not be there.
And again, another good move was even to withdraw the license of over 4,000 BDCs. So they are now dealing with a manageable number.
Assuming the economic teams would call for memoranda from outside, are there like three things you will tell them to put in their report, telling President Tinubu to do A, B and C?
Okay, what is our major challenge here now? The major challenge is food. People want to eat food. We want to see that food prices come down. And you see, what they have done recently to help with food prices they have opened the borders. They are distributing grains.
But if I were to advise this emergency team, I would also talk in that direction. Is it possible for us now, as an emergency measure, to just import food?
You mean we should import food?
Yes, import food at this point in time. That is one. Once you bring in food items, of course, supply will increase and then you would also find that prices will come down. Even the announcement effect alone will help.
I would also recommend the government should embark on massive public works programme that will engage the youths. This public works programme, especially in the area of roads construction, road maintenance, so that people will be paid something to survive.
But are we not going to have a repeat of what happened during the last administration? They said public works in each of the 774 local government areas, people sweeping the streets for N20, 000 and things like that, which remains controversial till date?
No, no, no. As I said, road construction, road maintenance contracts, even mass housing schemes, you know, things that will engage artisans, engage people to work and they get paid for it.
Another thing I also think the government can do is, is it possible for the federal government and the governors to sit down and say, let’s have an arrangement where we can give money directly to the local governments. Imagine giving N1billion to 774 local governments, each one, one billion…
You mean directly to the LGAs?
Yes, because anything you pass through the governors don’t get to them. So you give it direct to them and then they are tied to one project or two projects. Let the people there decide what they want to do with, the kind of project, if it is a water project, if it is a building primary school, if it is a health care centre, whatever. Or skill acquisition centre. If you put that one billion in that local government, maybe through community leaders, through religious people, whatever, let them be the ones to control the funds and so on. You will see a lot of activities in local governments.
