Consummate Economist and two-time Finance Minister, Dr. Kalu Idika Kalu, is not given to playing to the gallery. He is rather a man of facts and figures. These astute attributes he demonstrates in this engaging encounter with Managing Director, IKECHUKWU AMAECHI, and Editor, Politics/Features, EMEKA ALEX DURU, where he talks on issues holding down Nigeria’s development and the way out.
Nigeria is in dire economic straits. What do you think are the issues and how do we get out of the menace?
You know, the old subject has always been properly named Political Economy. It is not just Economics. That old nomenclature, perhaps, focuses attention on the fact that economics, policies, projects, implementation, selection of projects, supervision of projects, distribution of income, have to take place within the context of politics. But ideally, if you look at the countries that have done so well, those who have really used leadership, politics, administration, the law and society as a whole, to advance economic development, they are those that make every effort to make sure that the policies are right from the economic standpoint.
There are certain dictates that arise from the basic concepts of price determination. When things are scarce, whether it is foreign exchange or tomatoes or banana, the scarcity always tends to affect the pricing. When you see an advantage, it may justify your expending or investing beyond your immediate cash. So, when you see an advantage, you may say “I want to take advantage even if it means to borrow,” so long as the cost of that borrowing would be more than taken care of by the benefits that accrue from implementing that opportunity or advantage.
I am just saying this as a preliminary statement to illustrate how we are where we are despite the fact that there are few countries in the world that have been better endowed than Nigeria. I know we say that a lot. Maybe we exaggerate a little bit. But by and large, I think it is probably true that we are really among the better endowed economies. For instance you talk about our whole colonial experience. Yes, we had some bitter moments. But by the time we were getting our independence, there was all the talk that it was being handed to us on a platter. Philosophically, we have not really examined the implications of that. Because in the liberal tradition of economic development, there is a certain basic freedom when you allow the talents of the people to flower without much restraint. That is why people are against slavery. This is because you can’t expect people to do their best when they are enslaved; when they are not taking decisions that affect them. So, to the extent that we got independence and we felt that we were so free, at least, that was the feeling. We didn’t see us struggling like some other economies. So, we even had that advantage. Of, course this has really not been delved into at length by Economic Historians.
That aside, look at the sheer breadth of raw materials that we have, replicated by the sheer breadth of zones from the arid savannah to swamps that reflects in the sheer variety of fauna, vegetation and forestry that we have had. In each of these things, you can build a whole industry, if we are properly organised; never mind we have not done it the way it ought to be done. If you go to Indonesia, Malaysia, Philippines, you see what I am talking about. These are developing countries. Let’s leave out the advanced countries.
On top of that, we have solid minerals in all these zones. As if that is not enough, we have oil and gas. Then, look at the population, look at the demeanour, look at the inventiveness, look at the energies of the population. The world knows about these things, perhaps, better than Nigerians. That is why, no matter how we have underperformed, there has continued to be that sense that given this depth of advantage, we should have been since 20 or 25 years ago, in the ranks of the medium income countries.
That is the picture. But what do we have today? Here we are (in Victoria Island, Lagos). Can we call it the privileged part of the town? We have two power generators right here. Water is a constant problem; power is a constant problem. On the contrary, in the climate and vegetation we had just described in the advanced countries, go to any corner, you will see fresh fruits in abundance. Whether they are produced hundreds of kilometres away, there would be fast trains to distribute them. But we are yet to see that because we have not really applied ourselves as we should have. If you take a picture of what I am painting – our resource depth and the quality of service you get in countries that don’t even have anywhere near what I described, that will describe very truthfully, where we would say we are.
So, why do we have this wide variance between the reality, the continuing potential as we have been saying from 1960 when we got independence and the underperformance?
At independence, health trainings, right up to Teaching Hospitals, engineering, education, were fairly high. The standards were close to what they should be even among the developed countries. You come here today, I am not talking about football, you talk about our universities, our hospitals, you talk about the standards of our roads, you look at the availability of rail transport that should be sweeping at top speed, providing avenue in the hinterland for evacuation of farm produce to distant places. But this is where we are. We have seen a situation where we have a little advance here and there. But for the most part, 40 or 50 per cent rot away in the field because they cannot be evacuated, after heavy drudgery, labour put in by people who you cannot really describe as middle class farmers. They are still peasant farmers, by and large.
Somewhere along the line, we stopped going steadily from one stage to another. We started jumping the stages. We started drinking champagne; we started travelling abroad in droves, without ever developing our own scenery. We started eating foreign food, without developing our own that we can also sell or buy. The question is not eating foreign food but you should also be able to produce and export your own. So, the discontinuation of so many processes is among the things we are paying for. We continue to say there is need for us to go back and ask, as late Professor Chinua Achebe would say, where the rains started ‘beating’ us.
Where did we start to go wrong?
We started to go wrong squarely because of leadership. When we say leadership, we are not talking about one or two or three persons. We are also not talking of one level, we are talking of virtually at all levels because they are all interacting – informal education, the universities, traditional institutions and of course, political leadership, where the emphasis would have been based on how do we move step-wise so that as the population is growing, you are at least, sustaining the standard on a particular basis whether it is creating classroom space, boarding room space, additional transport facilities, providing information to farmers to continuously grow crops that will not be spoilt by insects or rot but be sprayed with things that will preserve them, providing power to sustain the preservation of things produced and so on.
So, we should have been going step-to-step-wise. But we didn’t, either because of lack of knowledge or gross indiscipline. Of course, when we stopped creating those opportunities, was when the vice came in. If you are creating opportunities, they will reduce that queue jumping mentality. You will wait for your turn. But once the person behind knows that if it is based on the queue, it may not get to him, he starts jumping the queue. In the process, this was what led to the great tragedy that we had – the Nigeria-Biafra War. This is just to give you the setting on what happened and how we got where we are.
So, how do we get out of the mess?
The way to get out of the setting, therefore, is to go back. There are no quick fix answers. We have to call ourselves to order. We have to take stock, sub-sector by sub-sector and see how we can correct things that had been done wrongly. Look at the education sector. Can you imagine where teachers are not paid, where there are no libraries, where the Laboratories are no longer there? So, somebody has to sit down and ask, ‘how do we re-grade the schools, how do we look back at the curriculum and see the kinds of substance we have in the curriculum and how they fit in the needs of a modern Nigerian education? How do we train professionals? How do we banish examination malpractice and all the other things that undermine merit? How do we reduce resource misallocation? How do we create a better culture in the development of the personnel that take part in politics and administration so that if people go there, because they see others are committed to providing for their need, they can also get committed to govern according to the rules’?
Do you see the political will to create this kind of environment you are talking about?
You will recall that I said something on how the rest of the world understands what we have. They can’t be that wrong. Maybe we have the political will now but how that will has to be expressed, is another thing. As you are asking the question, you can see all the problems. How do you define the will? Whose will are we talking about? Is it the will of one person or that of the so-called ruling class? Or is it the will of the traditional society? Is it the will of the structures or the institutions that we have as expressed through the executive, legislature and the judiciary? The will has to come through all these institutions for it to really work out. That is where you begin to worry at the enormity of change, the enormity of the will, the enormity of commitment that you have to have in order to be sure that yes, next month will be better than this month; next year will be better than this year. It is a tremendous effort that will be required. That is why countries have to have those checks and balances which force you to pause at a point where you can reverse yourself. If those checks and balances collapse and you have degrees of impunity where people do what they like, you get all these things we have said. You have to be exceptionally lucky as a society, as a community to be able to pick yourself up and move irreversibly forward.
How much of our problems could actually be located in the political structure of the country?
We have come to put a lot of stub on structure. I don’t think that question is a settled question. There are still others who will feel that you can define a certain feasible minimum structure. That is, if you have that feasible minimum structure, you can start talking about whether it is parliamentary system, presidential system, whether it is a three-tier system or centralised system, whether it is a federal multi-state system or huge provinces with big powerful centre. But you cannot abstract from the overriding importance of the persons who are operating that structure. That is one angle.
The other way to look at it is of course to say we know that you cannot get this kind of strength and quality and relative perfection in so many people; so, it is better to build a structure that you think can handle dynamic change over time than to trust in the fact that once you get good people, it doesn’t matter what is wrong on the other side.
I don’t think it is a settled question. We said for instance that at the time we had three regions and later four regions, the country was moving faster. But it was during that time that we had the civil war. Right? There was impunity, there was the disputation, and there were all kinds of political issues that created the problem. The issue was not the structure, really, although you can turn it the other way and say, maybe if the structure was different, then it would have been a different outcome. It is a convoluted kind of a thing.
We have moved distinctly on a larger unit; from large unit to smaller unit – smaller but numerically more units. The sense of that, being you are bringing that heavy governance, not just from one centre or four centres. You are now spreading it to 12 centres or 19 or 21 and to 36 and so on. Okay! But here we are, today. Is the impunity now, worse or more moderated compared to the impunity that led to the civil war? The individuals are different. Maybe if you had the same quality of individuals at the beginning, now, maybe you will have a totally different perspective on the relative importance of institutions versus persons and individuals. It is a very difficult question to answer.
You have been in government, at least, as two-time Finance Minister among other positions. Why is it difficult for us to get it right?
Well, the reasons are already, somewhat, implicit in what I have said. We don’t want to use individual experiences, although in other situations, that may be very illustrative of why we may not have got it right. You may come up with an idea, just being hypothetical, but unless you had the wherewithal to move that idea into final service or product, somewhere along the line, it’s misunderstood, it’s misinterpreted, and it doesn’t come out as a service or product the way you conceived it. So, the upshot of that is that we only get it right where there is knowledge, commitment and where there is some sense of objectivity that is removed from the subjectivity of the issue that you need to address.
You can say this is how it should be done. But the first issue is whether the person saying this is how it should be done, is already groomed and prepared that when they come up with a proposal, that proposal is in fact, addressed to the solution that needs to be addressed. We may not get it right because from the outset, the person who is making the suggestion doesn’t fully understand. The person may understand but those who are now going to implement, are somehow, unable to understand. So, it also calls to question the practice of consultation and decision making. There are so many myriad bye-products of the issue of how you missed it.
For instance, if you say, was it right for us to have created 36 states, I happen to be one of those who still believe that from what I said at the beginning – namely the sheer endowment of resources here, 36 states can still be viable. It depends on how you define viability, it depends on how you allocate the subjects, the responsibilities to those levels of government; to those local government areas in the 36 states of the federation, including the Federal Capital Territory (FCT). But if you have a different perspective in terms of the perquisites of office and the flashy things that are associated with offices, then, obviously, division just means that you are creating bureaucracies that cannot be handled by certain levels of income until you have a higher technology where you can produce more or use more efficiently, that which you have produced. So, there could be so many reasons why we missed the mark. Besides, in this type of issue, you don’t generalise; you talk on specifics.
You had aspired for the presidency. What were those economic objectives you had which you can avail the country of now, for us to get it right?
It is always strange when people say ‘you aspired’ because I don’t really think it is a matter of sitting down and the next moment aspiring for an office. It is usually something that comes out of a discussion, maybe because of my personal predilection and as a trained development economist. I wouldn’t say I am your typical politician, just aspiring for the office as the office. I am a trained economist, especially in the area of development and public finance. I had worked in some of the star performers in the world – Japan, Korea, Taiwan, Hong Kong and I am conversant with many other developing countries from the vantage point of being an economist from the World Bank that used to go out to go and solve problems. So, naturally, in the 1970s, my colleagues and I always thought that given what I had already described as the natural advantages we have, we should be one of those that are the star performers too. So, that is the context of my being involved with presidential campaign, not just aspiring like a typical politician.
As to the answer to the question, I thought and still think, that it is a collective responsibility. There will be those who will provide the political leadership, there will be those who will provide the economic leadership. Providing economic leadership means that you will take these various issues that we are talking about within the context of politics, social mobilisation, education, management and doing it the way it had succeeded elsewhere where resources are mobilised to achieve certain ends. Here, resources are priced in relation to the supply and demand; resources are mobilised to complement your own resources because you can see that you are going to grow it and be able to retire whatever leverage you have exercised.
But until we get the people who understand these things, at times, we limit ourselves. We don’t have the right imagination, we don’t have the right commitment that is outside of self. So, it requires a certain level of commitment that the preoccupation should be changing that physical environment that you know can be made better. That’s what will make somebody want to aspire to provide that leadership in whatever form it is. It doesn’t have to be at the very top. It could be even at the lower level, so long as the environment could be conducive to think together those elements that could make a success of development. To me, that is the focus, not necessarily the aspiration to the top position.
Do you have any regrets for not having realised that political ambition?
That goes without saying. If we are not holding this discussion in the sense we are doing, you can say obviously one must be so fulfilled that you can say you don’t have any regrets. But if you have kept your eye on the ball, you have not allowed the failures to dampen your perspectives on what needs the proper focus, you don’t think of it in terms of regrets. You would rather say, whatever opportunities you have to still make that contribution, as long as you are healthy enough to do so, keep you going. You don’t start dwelling on regrets of not doing this one or the other one. That is the way I see things.
You headed the committee dealt with issues that had to do with refineries under President Goodluck Jonathan. Why do you think we still have issues with petroleum product supply and distribution? What also do you make of all the mess that we are being told of in NNPC? Was it part of what your committee dealt with?
You know there were various committees that were set up. Ours was on what to do about the refineries and indirectly, on Nigeria’s ability to produce enough and in the same vein, how we can expand capacity for refining. We recommended that: Given the history of Turn Around Maintenance (TAM) which costs a lot of money which the bureaucracy evidently didn’t seem to be able to handle efficiently, we should just prepare the refineries we had in Port Harcourt, Warri, Kaduna for privatisation, to hand them to those who know the business, whose standards are profit and loss calculation. It is not something that should be handled by allocations through the files in the ministry but by the owners who have to pay a penalty if they don’t do it well because they have to get financing from commercial sources; they have to produce in order to survive. So, we said, we had to privatise them. I am not talking about the sequencing, now.
We said, at the time, there was a very large loan. As a financial analyst, I know that that loan was very cost effective because of the interest rate and the rate of returns that emerged from the cash flow projections to build a big refinery in Lagos, one in Bayelsa and one in Kogi. The one in Lagos was by far, more viable than the other two but all the three taken together were still viable the way refineries go. Refineries are not like hot cake, never mind what the public perception is.
We also recommended that in the meantime, we should stop importation, adding that giving a lag of two weeks or one month within which the implementation would take place, we should take the crude possibly to Europe where there were refineries that were no longer working at full capacity where we could, very cheaply refine our own crude and bring it back. So, we could cut off importation. You know that cutting off importation would imply a big slice off subsidy, by that, solving the subsidy problem.
We also recommended that besides the big refineries, although that is what is now becoming the vogue because of the economics of the industry, to have modular refineries by private investors who can handle them. Those were the things that we felt if done, would stop the subsidy problem. By that, you would be creating additional capacity, you are refining enough of our own crude and the balance that we don’t need, could be sold. Then, we moved from there to other processes beyond just crude refining to petrochemical and all the variegated bye-products of which we have not really achieved much.
Do you think we can still go back to the recommendations of the committee?
Why not? The only thing now is that I don’t think the Chinese will be that generous. At the time, I believe they were expecting not any financial return but maybe, diplomatic support from Nigeria. I don’t know whether they still think we still have the diplomatic muscle. I don’t think they would be so generous because what they were giving us was tantamount to what they now spread to the whole of Africa.
Recommendations of your committee on refineries were simple and straight forward. Why would the government not implement them?
Well, I don’t know who we are going to ask to answer that question. I don’t even feel right, locating the blame in an individual. I think we are looking at the whole system. We talk about vested interest, we talk about the issues not being properly understood. The answer could even lie outside the oil industry, to people who have to take decisions in the financial sector, who are supposed to be directly involved in advising the government on the appropriateness of a particular financing and so on. That is why it is not so easy to locate the blame on any particular person. But there is no question that there will be lack of understanding, there will be vested interest, there will be tardiness. Within those three, I think you would have located 95, if not 100 per cent of the answer to the question.
