Obadiah Mailafia in his last media interview: Unless we wake up and take responsibility, things are just going to get worse
•‘I don’t hate Fulani, many of my childhood friends were Fulani’
The last media interview granted by statesman and former deputy governor of the Central Bank of Nigeria (CBN), Dr Obadiah Mailafia, before his death last Sunday, September 19, was to Crest FM, Akure, in Ondo State, on Monday, September 6, when he featured on a programme of that radio station. In this interview, he spoke about a number of issues afflicting the Nigerian polity. Courtesy of that radio station, SATURDAY TRIBUNE presents excerpts from that last interview.
As a development economist, what is your position on the latest policy of the CBN on foreign exchange as it concerns Bureau De Change (BDC) operation in Nigeria?
I am sure a lot of people are aware of the directive and from what we heard, the issues of corruption, fraud and the rest have been cited as the reason and my reaction to this is that a lot of the foreign exchange market has been covered up in sharp practices that have never been transparent. That market is the forex market and people have forgotten that in the 90s and early 2000s, it was the banks that were really responsible. The allocation was to the banks and not to BDCs.
And with the economic reforms that now include the BDCs, my worry is, how prepared are the commercial banks to fulfill the reform that the CBN is expecting them to do? And are we sure they have cleaned themselves of the allegations that brought the BDCs into the picture? My answer to this is no. Those issues are still very much there. The commercial banks were using most of the forex for their own corporate trading. So, I do not think it is a right step in the right direction unless this menace is addressed.
How can this policy work to effectively block all of the loopholes and shortcomings?
One thing we are hoping for is better documentation of what is happening. In the 1990s, I was not living in Nigeria. When I arrived in Lagos from London and I needed naira, I went to the newest bank in Ikeja and they received me very well. A guy kept me in a corner and I waited for 45 minutes. Then a mallam was brought to meet me inside the bank and he started asking me: ‘How much do you have? How much can we change for you?’ This means the bank had a mallam who did the transactions for them. That, for me, was an eye opener. How are we sure that it is not the same mallams who will be brought into the banks to make the transactions? How are we sure that these people in the banks will not compromise the system and engage the BDCs for their personal trade? So, these are the issues and they are still there.
Over the years, stakeholders have been concerned about how dollar has kept rising against the naira. And today, what a dollar exchanges for naira is mind-boggling. How do we get out of this quagmire?
It is a national crisis. As of 1960 when we got independence, one Nigerian pound was equal to 69 cents in the United States. That is to say that the Nigerian pound was almost double the value of the dollar at that time. The Nigeria pound was at par with the British pound and this continued until 1973 when the naira was introduced by the great Chief Obafemi Awolowo who was at that time Minister of Finance under (General Yakubu) Gowon’s military administration. He doubled as the Vice Chairman of the Federal Executive Council and he managed the economy and the finances and as well coined the naira. At that time, naira was still 66 cents. Naira was still at par with the British pound. Then in 1980, it started deteriorating to two naira to a dollar and before you know it, it started declining under (General Ibrahim) Babangida, which was 14 naira to one dollar. And later 22 naira exchanged for one dollar when there was a massive devaluation of the naira.
In 2014/2015 before the president, General Muhammadu Buhari, took over, under President Goodluck Jonathan, it was N160 to a dollar, but today, it is over N500 to a dollar. You know, you can only ask, how did we find ourselves here?
The financial institutions are collapsing. These are issues that impact negatively on the exchange rate, so we have to reduce uncertainty. We have to revive our institutions, we have to restore business confidence and be willing to have a more productive economy. We need to put an end to this massive borrowing. I think this is dangerous as it doesn’t help our case. It also does not help the value of the naira. So, these are things we need to look into if we want to be stabilised. The saddest point is that there can be no end to it. There was a time that 10,000 Zimbabwean dollar equalled one US dollar. So, if we continue mismanaging the economy and continue allowing insecurity, breakdown of law and order, there will be capital flight, there will be growing anxiety and political tension and all these will translate to further depreciation of the naira and it can become, God forbid, a bottomless pit. This is not theology, I am talking economic science. Unless we wake up and take responsibility, things are just going to get worse.
What is the way out of this borrowing spree?
Let me just refer you to the case of Tanzania under the late John Magufuli who died a few months ago. When he took over power, they had a lot of challenges and the Chinese came and offered to help with $10 billon loan. He sought the interpretation of the loan and they said that they wanted to use the port of Dar es Salaam as collateral, and that they would like to own it for 99 years. When Magufuli saw this, he was so angry. In fact, he threw the loan offer back in the face of the Chinese and said only a madman could accept such an offer. He walked away. They were shocked at what he did. He called his economists, sat them down. He said they couldn’t afford a lot of foreign debts. He passed a lot of directives. He said nobody should go abroad for medicals – if we are going to die in Tanzania, let us die in Tanzania. Again, he said there should be no more unnecessary travels. He said people must work harder and he would ensure that discipline was taken seriously.
This man created a productive economy for his country. He cut excesses everywhere. Later, he discovered that Tanzania didn’t need to borrow a dollar from anybody. He built infrastructure. He created a system that was well implemented. We can learn from the Tanzanian government by cutting a lot of government excesses and doing away with all this needless borrowing and use the little money we have wisely. I am not saying never borrow but borrow only for projects that have been guaranteed to return investment. Do not borrow for social investment. Set up a monitoring mechanism and ensure the money you have borrowed is only used for projects and nothing else. This is the only way to get Nigeria to work.
You have described Nigeria as a failed state. What exactly are we not doing right?
Well, let me just say that I am not the one who started the debate. For more than 10 years, Nigeria has been placed on the list of fragile states, that is, states that are extremely divided, ethnically and religiously. Any slight issue can lead to outbreak of violence and possible collapse. That is the definition of a fragile state. It now looks to me like we are graduating from being a fragile state to a failed state or a failing state. Recently, around April, two Americans wrote an article and they described Nigeria as a failed state. I joined the debate in saying yes. They did have a point. First of all, what is a state? Going by an American definition, a state is that community of persons that have come together under a social contract. A political philosopher, Thomas Hughes, described a state as a situation in which the citizens of a country, instead of living in the state of cows, have agreed to submerge their liberty into the hands of a set of people who in exchange offer them protection of lives and prosperity. And today, in the 21st century, for a state to be called a viable state, it must secure lives and liberty of the citizens. Number two, it must build a viable government with sound and effective public institutions. Number three, the state must provide physical infrastructure, social services, education, health and the rest. Also, a state must have full control over insecurity because, by definition, a state is that organisation that has absolute monopoly on violence.
Regarding insecurity in Nigeria, many times, we have had stakeholders say maybe the government is not sincere about the fight against insecurity and that is why we keep having all of these issues virtually on a daily basis?
Well, people do not always credit General (Sani) Abacha with anything good. Now, General Abacha famously said that if an insurgency continues for more than 24 hours, the government knows something about it. This is what General Abacha said and he did a lot of work. He never told anybody that he was a gentleman or a democrat. He had native intelligence and I am inclined to agree with him that if an insurgency on this scale continues, then the government knows something that we don’t know about it. I will give you an example. The so-called bandits kidnapped university students and schoolchildren and then there were negotiations with them and money changed hands. Are you meaning to tell me that the security services cannot take over these negotiations, monitor the phone calls, locations and payment of money so that they can trace the flow of this money and be able to arrest these people at their locations and deal with the issue fast? But no, they don’t do that. So, what are we to do? And then we are hearing stories that the so-called repentant Boko Haram terrorists are being resettled. Some of them are even given scholarships to go abroad to study and some of them are allegedly being recruited in the military. No wonder, when the military are getting ready to attack Boko Haram, they are normally ambushed and killed before getting to their targets. It is because there are insiders that are always the problem there.
What about drones? We could use drone technology because the terrorists are already ahead of us. They are using drone technology. Why can’t we use drone technology to monitor these people to be able to attack? And then one attitude I find very disturbing is the attitude of appeasement of Boko Haram, of terrorists. If they repent, you will resettle them, you will pay them money. But nobody talks about the victims. There are 3.2 million refugees in Nigeria today, almost a million of them outside the Nigerian borders, in Cameroon, Chad. Nobody is talking about their welfare. Nobody is talking about their resettlement.
How can the authorities go about tracing the ransoms being paid to the bandits?
If we are serious enough, we will be able to trace them. Let us wait and see what the Americans who have offered to help will say, but I do not think the government is totally unaware of some of these people. You said these people are coming through the porous borders. You say some people crossed your border; they came to Arigidi Akoko right here in Ondo State and started slaughtering people. In a civilised country, if anybody carries AK-47 or any military-grade weapon and crosses into your territory and you know the person is a foreigner, the international laws of war applies immediately. Your government, if it is a serious government, would treat such a person as enemy combatant under the international law of war.
One of the suggestions by people on stopping the menace of kidnapping is that we should stop the payment of ransom. Do you see that as a solution to kidnapping?
Well, in the 70s, the government of Italy had the serious problem of kidnapping. Some terrorists were kidnapping industrialists and politicians and make them pay millions for their freedom. One of the most pathetic cases was the abduction of Aldo Moro, who was a former minister. They raised the money but because the money was not enough, they threatened to kill him. In fact, they burned him to ashes and wrote a letter to his wife and that letter was a classic one. After that shock, the Italian government passed a law making it a criminal offence to pay a ransom to terrorists and this is the way they implemented it: Immediately they heared that someone had been kidnapped, they blocked all the accounts of that person’s family members so that the chance of even going to withdraw money to pay the terrorists would not be there. I can tell you that this actually worked.
This can work in Nigeria too but it must be a comprehensive policy. These terrorists are not bandits. You have been subjected to calling them bandits. No bandits can bring down a military aircraft unless they are serious, sophisticated international terrorists. If we really want to go with this policy, it has to be done by a sincere government, a government that is determined to kill this monster before it kills us as a country.
I have seen that the bandits are the financial arm of Boko Haram. They kidnap, cash out and transfer the money to Boko Haram. This is the way Boko Haram has been financing its activities. Things can be right if we have a government that is not committed to a Fulanisation and Islamisation agenda.
I must say this before I go: I don’t hate Muslims. Half of my family members are Muslims. I don’t hate Fulani. Many of my childhood friends were Fulani. I even liked following them with their cattle. I used to deceive my parents that I was going to school and I would follow my Fulani friends around in the bush and when school closed, I would return home and pretend I was coming from school. But it is important that we speak truth to power, the truth that will set us free as great people of a great nation.
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