Former president of the Nigeria Bar Association, NBA and acclaimed pro-democracy activist Dr Olisa Agbakoba tells of the magic wand that will pull the country out of the economic woods by the middle of 2017. The maritime lawyer, who is also a graduate of the London School of Economics, speaks on those who caused the downturn among other economic and sundry issues. Excerpts.

What is your personal diagnosis of the nation’s slump into economic recession?
We have this complicated, endemic, malignant, metabolic economic recession. To understand that, and proffer solutions to it; the single biggest culprit in our present predicament are the banks. During the great depression in America, banks were busy speculating and trading. But, the president, Franklin Delano Roosevelt, got the Congress to pass a law – the Glass- Stegall Banking Act, directing banks not to speculate or trade, but lend. This strictly restricted what banks can do.
To what extent are the policies of government complementary to the problem? How can the nation pull out of the recession?
This morning,( Tuesday, September 7, 2016) the Special Assistant to the Central Bank governor in his policy speech on Channels Television was talking as if he is the managing director of a bank. They are investing in Agriculture; they are producing rice, they are doing this and that. I said, what is this guy talking about? The work of a commercial bank is to lend. But if you don’t regulate; even in your own profession, if you don’t regulate any profession, it will go haywire. So the problem with the Central Bank of Nigeria, CBN is that it must have more cohesion in regulation. In the UK, their own central bank; the Bank of England created a special supervision agency called the Prudential Regulatory Authority. That is all they do. You may wonder that all the money that the CBN pumps into the system – airline intervention fund, electricity intervention fund; the banks don’t lend them out to the sector that needs it and at the required rate, which is single digit. The banks lend them as ordinary commercial notes to the big cartels; the big investor cartels, therefore, starving the very people for whom the loan is intended like the SME’s (Small and Medium Scale Enterprises). So, no wonder the system is bleeding. No nation can afford not to regulate. In Kenya, the central bank there regulates the lending rates. I am not in support of that in Nigeria, but has it occurred to you that the Federal Government of Nigeria is the biggest generator of money, but it cannot control the rate at which money is lent. So they put the money in the bank, and the bank lends it right back to the government at very high rates. In order to deal with that problem, the government through the Treasury Single Account, TSA is depriving banks of liquid cash. That will not solve the problem, because the TSA funds are sitting idle in the CBN vaults. What the government should have done is to tell banks that this is our money. We are giving it you, but your lending rates must be 3%.When the British government found that it was difficult to cater for school leavers, they set aside £20 billion, and picked four banks to handle the process. They told the banks that we cannot lend. You know how to do it, but do not exceed 2%. That is how to stimulate the economy. Our biggest challenge is financial pep up. Apart from that, the second big challenge we have is that we don’t have a body of economic advisers. If you know any, you can tell me. The only body constitutionally recognized in Nigeria is the National Economic Council. They meet once in a while. That is a body that has absolutely no business in directing the affairs of the economy of the nation. Check out the composition- the Vice president, all state governors, former presidents, etc. We need to have a Council of Economic Advisers made up of doyens and experienced men in econometrics, statisticians etc. They are the ones who plan the model of the economy. The absence of this is part of the reason we have low reasoned economic policy. We also need to be in a position where the country’s monetary, fiscal and trade policies are clear. I don’t understand how the Central Bank thinks that without printing dollars they can control the exchange rates. They simply can’t. The Diaspora returns into Nigeria every year, to the tune of $20 billion, where does it go? It is round tripped, because the CBN claims that they can regulate. If you become the managing director of a bank, and I am buying forex at N200, and I see that if I go out there I can sell at N400, I will do that.

http://sunnewsonline.com/recession-how-nigeria-slipped-into-mess/

There is something wrong if somebody at my level cannot access cash. Who are the people accessing cash? This is because you need cash to grow business?
If we have to get out of recession, I hereby recommend what Franklin Delano Roosevelt, FDR did back in the great depression days in America. He summoned Congress and made a great proclamation, and said we have to fix this economy. I will appeal to our president not to consider this Emergency Powers Act that is being proposed for a number of reasons. You will recall that when we had this recessionary trend under ex- president Shagari, the Economic and Financial Stabilization Act was passed, which was almost the same thing as this one they are floating. It failed. It is not in an Act. It is in the policy. It is in the trade policy. If your trade policy is so ambivalent and uncertain that someone like Erisco, Africa’s largest tomato manufacturer has N6 billion worth of tomato sitting in his warehouse, because it is cheaper to import it; then there is a problem. The trade barriers are so low that, why would anyone want to manufacture tomato? You buy it from outside and sell it cheaper. And that is the problem. The CFA to the Naira has crashed. The recession that is in Nigeria has spread to Benin Republic. Benin was giving us about 75% of our vehicle import necessities. Yet we have ports. But no one wants to use Nigeria’s ports because the bribe you pay is equivalent to the cost of the car. Of course there are no roads in Apapa. If we are growing the economy of Benin Republic by contributing 25% to their economy, you can see the damage that we are suffering. To close the leakages simply requires a strong president. Another thing is, if you go to the hospital, and the doctor tells you that you are anaemic, there is only one thing you are going to do. How can the government do austerity programme? An austerity programme means pulling money from the system. Money is the oxygen. So MPR (Monetary Policy Rates) pulls money, interest rates for treasury bills that are almost 10%. Banks, therefore, prefer to buy treasury bills. They are not going to give you money, when they are not sure you can pay. It is easy. They just go and put all their money in treasury bills, Government bonds, sovereign loans, and all that. If they do all that, it means that there is nothing left for them to give to the real sector. Again, government must be clear as to what policy it wants to pursue. There is only one way out of the recession. That is a massive bounce. You have to bounce the economy.

Some people blame the Minister of Finance for our economic woes, some blame the Minister of Budget and Planning, yet others blame the CBN governor. Who do you blame?
Blame the CBN governor. The MPR at 14% is too high. The over concentration of the CBN on forex market is uncalled for. Let it fall where it belongs. It may engender hardship, but are we not in hardship already? We are already in recession. The third issue is the CBN’s directorate of banking supervision. It is grossly incapable. It is too small to supervise the banks. They should copy the examples abroad and create specialist agencies, and that is why I recommended Prudential Regulatory Authority.
If the monetary policy of the CBN is improved, it will have massive impact on the economy. If you are lending at 6%, then you can borrow money. The CBN governor, with respect to him, needs to revisit some of these policies. And then do quantitative reasoning, which is the ABC of any econometrics. It is what you use, the tool you use to correct all the imbalances in the system. In the case of the finance minister, I would like to see strong fiscal policy, which will discourage irrelevant programmes. For the budget minister, no cheers at all. We are almost at the tail end of the year, but 80% of the budget is not implemented.

When u hear all these guys give sound economic analysis of how an economy should be run, and u compare them to those currently running the economy, u weep for Nigeria.

Buhari is waiting for Nigeria to be destroyed before he put sound qualified people to handle our economy.

This guy has made some good points. Our CBN is not doing enough. The CBN made a lot of mistakes in 2015. PMB also contributed to these by not forming a cabinet on time and indirectly leaving the entire economy in the hands of the CBN.

bonechamberlain:
When u hear all these guys give sound economic analysis of how an economy should be run, and u compare them to those currently running the economy, u weep for Nigeria.

Buhari is waiting for Nigeria to be destroyed before he put sound qualified people to handle our economy.

Did you read the article at all?

An Economist making sense. Instead of this Government striking heavily on inordinate and naforious deals going on in the banking sector including the CBN, they become indolent and carefree while corruption quadruple in the system thereby sending the Economy down south.

The truth is that the commercial banks have form a cartel to punish the Federal Government for pulling out their money through TSA and are determined to recoup their loses through exchange rate forecasting, currency trading and manipulations

agabusta:
This guy has made some good points. Our CBN is not doing enough. The CBN made a lot of mistakes in 2015. PMB also contributed to these by not forming a cabinet on time and indirectly leaving the entire economy in the hands of the CBN.

The CBN is part of the problem. The agency is long overdue for reforms.

What we have in CBN is a regulatory agency that is retroactive instead of proactive in solving monetary policy challenges as we see in other climes.

agabusta:
This guy has made some good points. Our CBN is not doing enough. The CBN made a lot of mistakes in 2015. PMB also contributed to these by not forming a cabinet on time and indirectly leaving the entire economy in the hands of the CBN.

he obviously made some valid points the CBN should take into consideration, but i have noticed there is no flexibility in the present economic policies, they take too long changing a system that doesn't work, and they keep making mistakes that look silly even to a lay man.

agabusta:


Did you read the article at all?

of course.

Buhari's economic adviser said we should donate our gold jewelries to FG and that is the solution to the recession, meanwhile this sound economic advice will be thrown out as "wailing" by a 5%

MadamExcellency:
An Economist making sense. Instead of this Government striking heavily on inordinate and naforious deals going on in the banking sector including the CBN, they become indolent and carefree while corruption quadruple in the system thereby sending the Economy down south.

The truth is that the commercial banks have form a cartel to punish the Federal Government for pulling out their money through TSA and are determined to recoup their loses through exchange rate forecasting, currency trading and manipulations

Isnt this allegation too weighty ? Considering the CBN and directives are under the powers of a president who is a conservative person to the core than a risk taker it would be the presidents fault should recession be rampant through out our system. Just like any other country whatever the policies of the CBN,it is subject to a president who is constantly making the wrong turns and decisions and doesnt understand what macro economics is. Yes there's a cartel even in Churches they exist but our current economic pariah is 99.9% the president's doing. The quality of decisions made and the aftermath of those decisions.

But i always beive your ideas and enjoy your comments.

Thanks for them any day anytime

giantstrides:
Some people blame the Minister of Finance for our economic woes, some blame the Minister of Budget and Planning, yet others blame the CBN governor. Who do you blame?
Blame the CBN governor. The MPR at 14% is too high. The over concentration of the CBN on forex market is uncalled for. Let it fall where it belongs. It may engender hardship, but are we not in hardship already? We are already in recession. The third issue is the CBN’s directorate of banking supervision. It is grossly incapable. It is too small to supervise the banks. They should copy the examples abroad and create specialist agencies, and that is why I recommended Prudential Regulatory Authority.
If the monetary policy of the CBN is improved, it will have massive impact on the economy. If you are lending at 6%, then you can borrow money. The CBN governor, with respect to him, needs to revisit some of these policies. And then do quantitative reasoning, which is the ABC of any econometrics. It is what you use, the tool you use to correct all the imbalances in the system. In the case of the finance minister, I would like to see strong fiscal policy, which will discourage irrelevant programmes. For the budget minister, no cheers at all. We are almost at the tail end of the year, but 80% of the budget is not implemented.

It would seem too direct to blame the CBN,it is however reasonable to take into account that directors of banks are active components in the CBN decision making. For the past 2 years even before Buhari came,the MPC have been super inconsistent and it seems there are forces choosing to keep the system in chaos or they just choose to be effective however in many cases,the CBN chief is just a figurine that takes the beating for decisions made by a large group. Especially when he's not a strong figure,while the CBN chief is also a conservative person owing to his records as Zenith chief we have a conservative president and people who are fat and not creative than have sat in important committees thru the years. It is not without saying it is constructive and creative thinking tht produces good decisions that can lead the coutnry out of the gloom. But i agree with an earlier commenter Nigeria is kick and follow we dont have thorough follow thru guideines and codes we stick to. Just about anything goes

supersystems:


Isnt this allegation too weighty ? Considering the CBN and directives are under the powers of a president who is a conservative person to the core than a risk taker it would be the presidents fault should recession be rampant through out our system. Just like any other country whatever the policies of the CBN,it is subject to a president who is constantly making the wrong turns and decisions and doesnt understand what macro economics is. Yes there's a cartel even in Churches they exist but our current economic pariah is 99.9% the president's doing. The quality of decisions made and the aftermath of those decisions.

But i always beive your ideas and enjoy your comments.

Thanks for them any day anytime

The CBN still has a lot of independence that Emefiele is not exercising. He seems a timid man, and that timidity is doing the country a lot of ills. He should take a particular monetary policy stance if he is 100% sure that is the right way to go and stand by it. That is how a man does things. If Buhari is not comfortable with that, he can then push him out.

We all saw how Sanusi stood his ground with GEJ and he was sent packing. Despite being sent packing, is Sanusi worse off today?? Definitely not!

Let Emefiele be a man abeg. At the moment, he is doing badly with the monetary policies. He also messed up the forex with his somersaulting policies. He cannot blame Buhari, he should take his stand or step aside. The constitution has already done its part by shielding him to some extent.

He should take his stance and if Buhari forcibly pushes him out, everyone will know he has done his part.

agabusta:


The CBN still has a lot of independence that Emefiele is not exercising. He seems a timid man, and that timidity is doing the country a lot of ills. He should take a particular monetary policy stance if he is 100% sure that is the right way to go and stand by it. That is how a man does things. If Buhari is not comfortable with that, he can then push him out.

We all saw how Sanusi stood his ground with GEJ and he was sent packing. Despite being sent packing, is Sanusi worse off today?? Definitely not!

Let Emefiele be a man abeg. At the moment, he is doing badly with the monetary policies. He also messed up the forex with his somersaulting policies. He cannot blame Buhari, he should take his stand or step aside. The constitution has already done its part by shielding him to some extent.

He should take his stance and if Buhari forcibly pushes him out, everyone will know he has done his part.

I agree bros. But the ideology is limited in application.This is an administration tht has believed anchored on ethnicity. As we speak many have been plotting the sack of Emefiele hence some caution may be needed on his side. When people apply excessive caution recessiveness results.

Its a combination of the president and the CBN. The presidents decision arent the best of the country and in many cases to have sound economic doctrine the head of state and the CBN should would on similar path.. No matter how the CBN makes decision so many decisions that guides the macro economic principles of the country are been bamboozooed by General Buhari and he wont listen... Is there a country that restricts importation closes border enforce reduction of importation without making sound principles on getting the country to be prodcutive ?


I love discouraging importation but not without creating incentive for local produtivity backed by CBN and commerical banks.

Commerical banks refuse to participate in CBN enterprenual funding scheme cos they are used to large returns investment,securing funds and giving importers thru the backdoors to make great profit so 5% 3% investment returns will never appeal to them...

supersystems:



It would seem too direct to blame the CBN,it is however reasonable to take into account that directors of banks are active components in the CBN decision making. For the past 2 years even before Buhari came,the MPC have been super inconsistent and it seems there are forces choosing to keep the system in chaos or they just choose to be effective however in many cases,the CBN chief is just a figurine that takes the beating for decisions made by a large group. Especially when he's not a strong figure,while the CBN chief is also a conservative person owing to his records as Zenith chief we have a conservative president and people who are fat and not creative than have sat in important committees thru the years. It is not without saying it is constructive and creative thinking tht produces good decisions that can lead the coutnry out of the gloom. But i agree with an earlier commenter Nigeria is kick and follow we dont have thorough follow thru guideines and codes we stick to. Just about anything goes

The truth is that CBN has a problem with flexibility, they stick to the wrong approach too long, CBN is always so slow about changing a policy that isn't working, why should interest rates be so high when we are trying to get out of recession , TSA has mopped up a lot of cash out of circulation, CBN should be looking for how to get people to start spending so as to jumpstart the economy, but the exorbitant rate they are lending coupled with the present inflation is simply holding people back .

bonechamberlain:
When u hear all these guys give sound economic analysis of how an economy should be run, and u compare them to those currently running the economy, u weep for Nigeria.

Buhari is waiting for Nigeria to be destroyed before he put sound qualified people to handle our economy.

Same people who ran the system aground are talking empty textbook theory.

supersystems:


Isnt this allegation too weighty ? Considering the CBN and directives are under the powers of a president who is a conservative person to the core than a risk taker it would be the presidents fault should recession be rampant through out our system. Just like any other country whatever the policies of the CBN,it is subject to a president who is constantly making the wrong turns and decisions and doesnt understand what macro economics is. Yes there's a cartel even in Churches they exist but our current economic pariah is 99.9% the president's doing. The quality of decisions made and the aftermath of those decisions.

But i always believe your ideas and enjoy your comments.

Thanks for them any day anytime

It's time for Emefiele to tender his resignation to make way for the appointment of a competent and experienced Economist as CBN Governor, who will articulate and marshal a total reform to our failed monetary policies and to help us out from this mess.

I know that this administration should get most of the blames for some policy somersaults by the CBN because of unnecessary interferences in monetary policies. However, it has become obvious that Buhari's Government needs our collective advices than just criticism as to help him make informed decisions by weighing the pros and cons for a better Nigeria.

The recession may not affect me directly, I can even use it as an opportunity to short-change the poor but the question remains, am I safe when so many around me are hungry. What if they decide to eat (kidnap) me? I am worried and want everyone of us to do a little we can to grow and support our economy.

*NB: Thanks for the complement, I appreciate dearie.

Standing5:
Same people who ran the system aground are talking empty textbook theory.

Leave ignorance and seek knowledge at all costs! When has Agbakoba come near governance not to talk of running a sick system aground? Please reserve some shame for ds level of display of bigotry, ethnicity and sheer dumb ignorance!

MadamExcellency:


It's time for Emefiele to tender his resignation to make way for the appointment of a competent and experienced Economist as CBN Governor, who will articulate and marshal a total reform to our failed monetary policies and to help us out from this mess.

I know that this administration should get most of the blames for some policy somersaults by the CBN because of unnecessary interferences in monetary policies. However, it has become obvious that Buhari's Government needs our collective advices than just criticism as to help him make informed decisions by weighing the pros and cons for a better Nigeria.

The recession may not affect me directly, I can even use it as an opportunity to short-change the poor but am I safe when some many around me are hungry. What if they decide to come and kidnap me? I am worried and wants everyone of us to do little we can to grow and support our economy.

*NB: Thanks for the complement, I appreciate dearie.

This makes me laff,i advised Emefiele he wasn't fit but he wouldnt listen.

Except we get new names who can wear the crown ?

Soludo was super fit but since he mentioned the is it 60billion he seemed like a complete idiot

Snusi is not fit

Adeosun is a flop and the president's play girl.



We dont have prepared vessels for now and should cope with what we have at the moment.

But whether it's the CBN governor or not we operate an economy that is running at about 35billion naira in deficit becos we dnt produce.

I told Buhari this is what to do. Or that my words will reach people in authority in get wisdom. Our solution lies in productivity and outside the banking sector. Domintae the Ecowas territory with what we have best Refined oil and gas. The funds we accrue will cover the deficit our economy operates. When we have a neutralized economy we can build afresh.

If we supplied Gas from Benin thru Ghana to Ivory coast we can tap into this reserves and make more money.

I expected us to take advanteage of the Russian - Eu crisis like Russia did and turned towards China and turn to Europe to become a gas supplier given that we had n excess of over 76 Trillion cubic feet. Once agreemnts are signed we can get instant benefts and the news will boost investment confidence. But rather than Buhari facing the road we decided to fight people like that would produce money. Rea,lity is dawning on people now.

The solutions are on the table. I can draft one and bring Nigeria out in months many of we intelligent ones are. But since we have demi gods who would listen to objective and sound reasoning ?

The current ministers are clueless.

We are in recession because to Buhari, Olisa is from SOUTH not needed in his government instead, those who suggested form donation of gold should run the economy.

Who is Nigeria's problem?

We are in recession because to Buhari, Olisa is from SOUTH not needed in his government instead, those who suggested for donation of gold should run the economy.

Who is Nigeria's problem?

xelly:
We are in recession because to Buhari, Olisa is from SOUTH not needed in his government instead, those who suggested form donation of gold should run the economy.

Who is Nigeria's problem?

did you read the article at all or you are having comprehension problem?

Standing5:
Same people who ran the system aground are talking empty textbook theory.

same people, u mean olisa agbakoba?

It won't be easy moving the economy out of recession, first and foremost, those in power don't understand the meaning of Recession. If you ask anybody in government 2day what's recession, they will say past administration stealing all our money. So the problem is here is gross ignorance among the so-called leaders. You must understand the problem before seeking the right solution to it. Secondly, the person of PMB is also a strong factor here, his rigid, inflexible, obstinate, outdated and conservative personality is counter-productive any effort geared toward salvaging the economy. The perceived lack of vision which is manifested through the apparent lack of economic blueprints and ambiguous fiscal policy is another challenge. Then the attitude of the ruling party, channelling all their strength and efforts into propaganda leave nothing or much to be desired. But I pray they wake up early before its too late.

kenny987:


Leave ignorance and seek knowledge at all costs! When has Agbakoba come near governance not to talk of running a sick system aground? Please reserve some shame for ds level of display of bigotry, ethnicity and sheer dumb ignorance!

Who is ignorant between u n I? Where was he as pro democracy activist when dollar was being subsidized to the detriment of productivity?

Standing5:
Who is ignorant between u n I? Where was he as pro democracy activist when dollar was being subsidized to the detriment of productivity?

This is exactly the same problem Bubu has and that's why he's dragged d country to where it is today. You cause and superintend over a major problem, u are totally ignorant but because of ur power as oga, u refuse to let better experienced people help. Someone hives u sound advice again but u reject it because u feel someone else caused d problem since u can never take responsibility and u don't remember hearing him talk to d previous occupier of ur seat.

The above scenario smacks of recalcitrant, intractable ignorance which u persist in! Keep waiting for only God knows what. This post covers exactly what I mean:

jerusalem101:
It won't be easy moving the economy out of recession, first and foremost, those in power don't understand the meaning of Recession. If you ask anybody in government 2day what's recession, they will say past administration stealing all our money. So the problem is here is gross ignorance among the so-called leaders. You must understand the problem before seeking the right solution to it.

Secondly, the person of PMB is also a strong factor here, his rigid, inflexible, obstinate, outdated and conservative personality is counter-productive any effort geared toward salvaging the economy. The perceived lack of vision which is manifested through the apparent lack of economic blueprints and ambiguous fiscal policy is another challenge.

Then the attitude of the ruling party, channelling all their strength and efforts into propaganda leave nothing or much to be desired. But I pray they wake up early before its too late.

Wake up before it's too late as advised and seek wisdom while she may yet be found!

realjoker:
did you read the article at all or you are having comprehension problem?

I guess it was writing by those suggesting donation of Gold to FG as palliative to recession who currently run the government or those changing our diet saying we eat a lot of rice.

Well, you may be guilty of your claims. COMPREHENSION

bonechamberlain:
When u hear all these guys give sound economic analysis of how an economy should be run, and u compare them to those currently running the economy, u weep for Nigeria.

Buhari is waiting for Nigeria to be destroyed before he put sound qualified people to handle our economy.

kenny987:

This is exactly the same problem Bubu has and that's why he's dragged d country to where it is today. You cause and superintend over a major problem, u are totally ignorant but because of ur power as oga, u refuse to let better experienced people help. Someone hives u sound advice again but u reject it because u feel someone else caused d problem since u can never take responsibility and u don't remember hearing him talk to d previous occupier of ur seat.
The above scenario smacks of recalcitrant, intractable ignorance which u persist in! Keep waiting for only God knows what. This post covers exactly what I mean:
Wake up before it's too late as advised and seek wisdom while she may yet be found!

be honest with yourself, if you really think you are wise and knowledgeable, engage me and let's start with this:

Is buhari the cause of this recession?

KINGwax007:
be honest with yourself, if you really think you are wise and knowledgeable, engage me and let's start with this:

Is buhari the cause of this recession?

who is the cause