THE KANO GOVERNMENT AND AJINO-MOTO ECONOMICS

BY

SANUSI LAMIDO SANUSI
2001


On Wednesday, August 29, 2001 the Daily Trust newspaper published an interview with Hafiz Abubakar, Ph.D. (Food & Nutrition) and Commissioner for Finance, Kano State, which purportedly represents the position of the state government on its face-off with me as detailed in my "The Kwankwaso Phenomenon" (See The Guardian of Monday August 20, 2001. Also www.gamji.com  and www.nigerdeltacongress.com )

 

Abubakar’s interview was an embarrassment to all educated indigenes of Kano State. Similar to his BBC Hausa service interview (of Monday 20th August 2001), the views he expressed merely served as a validation of the general perception that in a number of cases we have continued to entrench a culture of mediocrity and to entrust our affairs to persons with little grasp of their own portfolio. In this write-up, I intend to dissect Dr. Hafiz’s expression of his understanding of Economics, as well as refute some of the more outrageous of his averments.

 

The first point in our discourse is the honourable commissioner’s insistence, in both the Daily Trust and the BBC interviews, that the N719 million "Governor’s lodge" being constructed in Abuja is an "investment" for the people of Kano State. Dr. Hafiz is surprised that being an economist, I am yet unable to see the value of this "investment". Consideration of this issue should reveal the extent of the honourable Finance commissioner's grasp of elementary Economics.

 

An investment, to be considered a wise one (as opposed to a foolish one), must meet three criteria in both "common sense" and Economics. First, it must be acquired in an efficient and cost-effective manner ( i.e there must be value for money); second it must be such as one can reasonably expect an appreciation in its value over time; finally the investment plus the gain thereon should be reasonably projected to be realizable.

 

Let me give an example of such a project. The Zamfara State Government is constructing on its own plot in Abuja a hotel at a cost of N500 million. Although I have reservations on the project on grounds of reflecting misplaced priorities, I nonetheless concede that it as a wise investment, which meets all the above criteria. As a banker, I know from information available to me on similar projects that N500 million is roughly the cost of building and furnishing a good 3-star hotel with 60-80 rooms, sporting and healthcare facilities and conference centre. If the hotel in question meets these criteria we may conclude that it is being established at a reasonable cost.

 

Secondly, the Zamfara State Government believes the hotel will contribute between N25 million and N30 million monthly to its internally generated revenue. I suspect the Governor here confuses the hotel’s sales revenue (part of which will be needed for running the hotel) with profit, which in theory can be repatriated monthly to the owners. Assuming a rate of profit of 30-40%, the state government can expect anything from N7.5m to N12m as average monthly contribution. Being in the "service" industry, we can also expect the pricing to move in tandem with inflation. This means that in about five years the state would recoup its N500 million investment and still own the hotel buildings. Meanwhile, the building has appreciated in value over time, in addition to a substantial figure on the Balance Sheet classified by accountants as an "Intangible Asset " in the form of "Goodwill" associated with quality service and an "Islamic" patent to the hotel. The state, if it so wished, could sell the hotel at a handsome profit despite having recouped its cash investment. This is what is called a wise investment.

 

In the case of our Ajino-moto (or Kafi Zabo) government we are investing N719m in one house built purely as a lodge for the Governor or key Government officials. There is no provision in the building for rental accommodation, therefore nothing will be contributed to Kano treasury from the project. The house will continue to consume resources for maintenance, the cost of which will increase with time. Besides, the house is being constructed by Julius Berger, a company whose construction of the Abuja stadium is reportedly said by no less an authority than the World Bank to cost Nigeria twice what it should . If we took the Abuja stadium as a guide we should assume that this Governor’s lodge, even as designed, could be built at about N360 million. Given the fact that the contract was not awarded through a process transparent to the general public, all probabilities point to this.

 

The suspicion here is compounded by a more disturbing recent development, which underscores the arrogance of the Kano State government and its complete insensitivity to the opinion of its electorate. The Guardian Newspaper of Monday 27 August 2001 carried a story titled "renovation of Kano govt. house to cost N1billion." The State's honourable Information Commissioner, who is known to be even more brilliant than his Finance counterpart, confirmed that Julius Berger is again the contractor handling this project. In a dazzling display of original thinking, our Einstein argues that this colossal amount is justified because "a lot of places in the building are leaking while in others there are breakages here and there". Not yet satisfied, the honourable gentleman delivers this most ingenious coupe de grace: "We have to wake up to standards so that anytime we have visitors there will not be any problems." Reading this interview led to the evaporation of any doubts I had that our Executive Council is filled with rocket scientists. But there is even more to come.

 

Every indigene of Kano State resident in or visiting Abuja is advised to go to Asokoro and drive down an untarred close near AP station. (Deeper Life church is located on the close). Under construction at the end of the Close is a beautiful palatial house with green roofs in which a mosque has been constructed of the type aptly labeled by the Hausas "Allah ga naka"- meaning "God, here is your share (of my loot)". That house belongs to a principal officer of the Kano State government. The same official is reputed to be the owner of a new multi-storey structure located at 211 Shehu Shagari Way, Abuja and housing at present the headquarters of Nigerian Export Promotion Council. It is true of course that there is no necessary connection between large contracts and large personal houses for those who award them. What is also true, most unfortunately, is that there is a constant conjunction between the two. All of these points strengthen our conviction that Kano state is not getting value for its money, so the issue of capital appreciation does not even arise.

Our "lodge" also fails the final test of a wise investment. A single house costing almost N1 billion and built as a residence is simply not marketable at that price. Anyone with N1 billion to invest in a house would rather build one to his taste and design. Had the money been applied to the construction of blocks of flats for office or residential use, or even of twenty smaller houses instead of a single mansion, the story may have been different. As it stands, the purported investment can not be realized.

 

It therefore is evident to me as an economist, that there is no way the government of Kano State can consider this waste of public funds on a white elephant project an "investment" for the people of Kano. Ashikiwe Adione-Egom used to write on something called "motor-park economics". Today, we are witnessing in Kano what I call "Ajinomoto" or "Kafi Zabo" economics.

 

Next I will briefly touch on other points made in the interview and in which the "honourable" Commissioner was being, as it were, most economical with the truth.

 

The first fallacy is the allegation that I participated at the Abuja seminar as a representative of UBA Plc. I am without doubt an AGM in that bank and I am so identified in all my publications and so introduced at all functions because that is my identity. In 1999, I was invited to a conference at Arewa House, Kaduna where I presented a paper on "Issues in Restructuring Corporate Nigeria". The conference was jointly organized by the Vision Trust Foundation and the Network for Justice. Dr. Hafiz Abubakar was then the president of Network for Justice, and he was a fellow participant in the conference. Throughout that conference I was referred to as an AGM in UBA Plc and Hafiz knows he did not invite me to that conference as a representative of my bank. More elementarily, even Dr. Hafiz should know that foot notes to any paper are to be read as part of the text. I reproduce below footnote number 1 of my Abuja paper:

 

" Paper presented by S.L.Sanusi, Assistant General Manager, United bank for Africa plc, Lagos at the second International seminar on Islamic Banking and Finance organized by Ahmed Zakari & Co with the theme: "Establishing a Truly Islamic Financial system in Nigeria-setting the Agenda" on 30th June and 1st July, 2001 at the Abuja Sheraton Hotel and Towers. The author is grateful to the organizers for honouring him with an invitation as one of the resource persons."

 

 

Everyone knows that a "resource person" is invited to a conference on personal merit. Everyone, that is, who is not an illiterate.

 

The second fallacy is the allegation that the government closed its accounts with UBA because of problems with PAYE tax remittance. In "the Kwankwaso Phenomenon" I published only those parts of Dr. Hafiz’s letter to my bank's MD that dealt with my person, omitting the first paragraph which dealt with this matter. Since Dr. Hafiz has discussed this matter publicly, I reproduce the letter's opening words below as sufficient refutation of his averment:

 

"It is with esteemed regard to the Board and Management of your Bank - a pride of the Nation's strength in commercial banking - that I convey my Government's appreciation of your timely response in resolving the subject of PAYE with our Board of Internal Revenue."

 

Finally, Dr. Hafiz accuses me of going into a "public foray" on "the person of His Excellency the Governor" and (of) Hafiz himself. The reference is obviously, in the case of Kwankwaso, to my calling him a "rural aristocrat" (which he is) and suggesting that he has dictatorial tendencies (which he does). As for Hafiz, I am willing to concede that I owe him an apology on two grounds. First I pronounced him to be the holder of a Ph.D in Nutrition. I have since been informed that he actually holds a Ph.D in Food and Nutrition and I should recognise his expertise in the field of Food. Secondly, I referred to his preoccupation with a crusade against the consumption of Ajinomoto but inadvertently missed the fact that he was also a crusader against the consumption of Carbon Sugar. Although I do not see how these corrections enhance the Curriculum Vitae of a candidate for Finance Commissioner, it is important in these post-Toronto days, to state our CVs correctly. After-all a certain governor we all know, who used to have the prefix "Dr" to his name has since quietly dropped it.

 

The lesson in all this is that it is time for the Kano State government to understand that dealing with educated critics is not the same as dealing with illiterates. Education makes a man free, and freedom demystifies the trappings of authority. Education gives one the capacity to reply every insult, revenge every injury and stand firm on principle. It was Aristotle, I believe who said that:

 

"only education makes a man see as a profit any loss resulting from his acting according to the dictates of his conscience, and to see as a loss any profit gained from betraying his conscience."

 

It is for this reason that I keep repeating, as I did in my Abuja paper, that the north will only find freedom if it finds education. What better way to conclude this piece than with the following words of the great British economist and philosopher, John Stuart Mill, in his book "Utilitarianism":

 

"No intelligent human being would consent to be a fool, no instructed person would be an ignoramus, no person of feeling and conscience would be selfish and base, even though they should be persuaded that the fool, the dunce, or the rascal is better satisfied with his lot than they are with theirs."

 

If politicians understood this, they would show a little more respect for the educated elements in the electorate, even as they live in the blissful opulence of their ill-gotten wealth.


THE WRITER IS AN ASSISTANT GENERAL MANAGER, UNITED BANK FOR AFRICA PLC, 57, MARINA, LAGOS.

If there is one lesson I learn from SLS, it is, you can engage establishmt and still excel in your career. How UBA did not sack him for all the wahala he was having with governments and powerful politicians them surprise me.

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I learnt UBA lost some key accounts of Kano state GOVT then however SLS was able to get key accounts from other northern govts with the help of ADO Bayero to make up for the shortfall.