Politics
Current Nigeria leadership is incompetent in handling the economy – Moghalu
Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria is eyeing Nigeria’s top job – the president. In this interview with a team of Editors of National Daily, he spoke on sundry issues and his plans for Nigeria if elected.
Aside from role as a former deputy governor of the CBN, who really is Kingsley Moghalu?
I have been a lawyer; a journalist; a United Nations diplomat; a central banker; political economist; an entrepreneur; and a university professor. Who knows? It might just be that I’ve not finished yet! Although I studied Law as my first degree, master’s degree in International Affairs at The Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, USA was interdisciplinary. The Fletcher School was the first exclusively graduate school of international affairs in the United States, established in 1933 jointly by Tufts and Harvard universities. I studied a combination of international law, diplomacy, and international economics and political economy.
I can’t overstate the importance of my Tufts education. It enabled me to think in a certain way and to understand the real world – because in reality all these subjects are interconnected. Of course, my further education in risk management, macroeconomics, financial management, leadership, strategy, was also helpful in handling various responsibilities as my career progressed. Later, I obtained a doctoral degree in International Relations at the London School of Economics and Political Science.
My family was another major influence. My childhood was international; my late father, Elder Isaac Moghalu, was one of Nigeria’s pioneer Foreign Service officers. We lived in Geneva and then in Washington DC, where he was posted in the mid-1960s. So, my dad naturally supported my interest in an international career as I was growing up. I remember that, as a young boy and a teenager, I always read the ‘World News’ section of the newspapers first before reading anything else.
Which of these, would you say, has impacted most on you?
The economic aspect of my life’s career because it is the one that directly affects the people’s welfare the most. I believe not just in economic growth in terms of Gross Domestic Product (GDP). I believe in economic development. There is a difference. I believe in economic transformation. How do you take millions of people from poverty into the middle class? That is my vision for Nigeria. That’s what drives me, today. That was what drove me to write Emerging Africa which some people say is the most intellectual work I have produced although I have another one coming out on February 26 titled Build Innovate Grow (BIG). A Vision for My Country.
The Diplomacy side was also very important because nation building is a necessary foundation for economic development. I learnt how to rebuild divides, how to reconcile broken nations so that they could begin to grow.
In Rwanda, we see where they are now. They are doing much better. There was a time they were known for genocide. Today, they are known for business, success and development. That is how you can change the narrative. But that is because first of all, they, themselves decided to stabilize their own country and reposition for the future because of the type of leadership they have.
You may say that their President, Paul Kagame, is controversial but I must tell you that I respect what he has achieved. I think he is one of the very few African leaders that have a clear world view. They are not more than four, in my own view.
Both the monetary and fiscal policies have come under serious attack in recent time. You as a technocrat, what do you think the present government is getting right in its economic policy?
Well, the economic policies of the present government have actually not worked. One of the reasons it hasn’t worked is a very fundamental reason. No country’s economy can prosper any more than the competence or incompetence of a country’s political leadership.
Nigeria’s political leadership is incompetent and to that extent its economy cannot prosper.
I have been a technocrat in this country, and what I have found in my experience is that it doesn’t matter how well you mean for your country, it doesn’t matter how brilliant the policies you espouse, the vested interests of Nigeria’s political class are what govern Nigeria and that is why Nigeria is still a very poor country.
Otherwise, how do you define a situation where for several decades Nigeria has been exporting crude oil and importing refined petroleum products? What is the clinical definition of madness if not this type of scenario? And how any citizenry could be electing politicians who run this type of system just confounds me. And that is why I think, that’s why I say, that Nigerian citizens have been too complacent. They need to execute a democratic revolution at the ballot box in 2019.
While many have lauded the federal government’s effort at stabilizing the local currency, others have criticized the approach. They argued that the multiple exchange rates system as well as CBN’s intervention in the forex market is breeding more corruption. What I your take on this?
Let me tell you something, I have been a technocrat in this country, and what I have found in my experience is that it doesn’t matter how well you mean for your country, it doesn’t matter how brilliant the policies you espouse, the vested interests of Nigeria’s political class are what govern Nigeria and that is why Nigeria is still a very poor country.
We cannot fix the artificial value of the naira, now there are multiple exchange rates operating in the central bank today that is again very, very bad in economic management, it is harmful to the economy because it means for political reasons there are a lot of wasteful subsidies going on. We are running a “fake type of economy,” for political reasons but that is not how country that is serious develops. Here we don’t have a productive economy but we want the naira to remain strong. Politically it is popular to have a strong naira but there is no productivity fundamentally to sustain that strength.
So what is happening is that the Central Bank is keeping the foreign exchange market on steroids, constantly pumping dollars in order to maintain a false value of the naira so that people can feel that the naira is stable or strong. But the question is what the real value of the naira is and it is the productivity of the economy that should determine that not how much dollar that the CBN pumps into the foreign exchange market every week.
The CBN under your watch as the deputy governor overseeing Financial Systems Stability was able to stabilize the naira, and more importantly the Nigerian banking system. How were you able to achieve this?
It took the appointment of Sanusi Lamido Sanusi as Governor of the Central Bank of Nigeria for Nigerians to realise that our financial system had been severely affected by the global financial crisis.
The CBN under Governor Chukwuma Soludo also had to contend with the serious damage that had been done. But I think they tried to handle it in a different manner so as not to affect the confidence of citizens in the banking sector.
But under Sanusi’s leadership, we took a different approach. And I think this approach worked. Remember that 90 banks had been consolidated into 24 banks under Prof. Soludo’s consolidation exercise which raised the minimum capital for banks from N2 billion to N25 billion.
I led the team that carried out the extensive reforms that stabilized Nigerian banks. First, we had the National Assembly pass the law that created the Asset Management Corporation of Nigeria. The whole point of creating AMCON was that it would be a vehicle to absorb and manage the toxic loans of the affected banks, leaving the banks with a clean balance sheet which would help restore confidence.
We also used AMCON to bring the Negative Asset Value of several banks which were below zero up to zero before investors could come in and invest in the banks and before some mergers and acquisitions of banks took place. I led corporate governance reforms in the banking system. We also introduced structural reforms such the new banking model which established different categories of banks with different capital requirements instead of a ‘one-size-fits-all’ uniform capital requirement that was not working out very well.
So, global Nigerian banks with subsidiaries abroad had the highest capital requirement of N50bn, national banks needed to have minimum capital of N25bn, and regional banks required N10bn in capital. I was passionate about protecting Nigerian financial consumers from the excessive bank charges imposed by many banks. My team ensured the recovery and refund of about N14bn to bank customers while I was at the CBN. We abolished ‘universal banking’ by getting the banks to divest all their non-core banking businesses. This was a way to manage risk in the banking system because having banks that could do several other financial businesses at the same time under one roof increased the risk of depositors’ funds being used to shore up such businesses.
I was responsible for the supervision of all the commercial and merchant banks in Nigeria, the development finance banks, AMCON, finance houses, and bureaux de change through the various departments in the FSS directorate that reported to me.
I had to give final approvals before anyone could be appointed the chairman, a non-executive or executive member of the board of directors or the managing director of any bank in Nigeria.
Of course, as a deputy governor of the CBN I was also a member of the board of directors of the bank and a member of its monetary policy committee. Overall, I think it is beyond any dispute that the reforms we executed restored stability in the financial system. No bank failed. No Nigerian lost a kobo of his or her savings despite the distress their banks faced. We made sure of that outcome; unlike the failed-banks crisis in the 1990s in which many Nigerians lost their deposits.
Sometimes ago in one of your statements, you identified failure of the political leadership as contributing to the problems in the financial sector. How do you think we can get out of the situation?
That is very important because without getting it right politically, we will not get it right economically. This has been my experience and I learnt this after I left the CBN. With my reflections on my experience while I was a professor, and looking at the Nigerian economy from a certain distance, I was able to come to the conclusion that the real problem we have in our economic management is actually our politics. Because the politics distorts everything.
So, how we can get it right is that when there is a leadership failure, the citizens must step in. Normally, it is the role of the leader to set the direction in which the country should go but if the leader is not capable or the leaders are not capable, the citizens must act. So, Nigerian citizens must become politically engaged. They must become politically active by making sure that they are registered to vote because that vote has its power. It is a power that you can use to hold governments or the performance of political leaders accountable.
And I think we must retire the current political class in Nigeria. If the country is to make any progress, we must retire them at the ballot box because, certainly the leadership of today is incompetent, visionless and divisive.
Football over the years has been unifying factor for Nigerians irrespective tribal or religious affiliations. 2018 is another World Cup year and Nigeria’s Super Eagles will be in Russia in June, any hope for the Super Eagles?
Good. First, I’d wish as a Nation we have more things that unify us. Secondly, I also imagine how glorious it would be if our politicians and national leaders have this same attributes to unify.
Having said that, I think the Super Eagles have all it takes to go do us proud in Russia. As a typical Nigerian I watch football and love the young energies embedded in this team. Surely they will go and do the needful. So long the managers cross the tees.
Your background and messages so far in deed puts you a distance far from the Nollywood and entertainers industry. Don’t you think so?
You have said so because I don’t sing, or act. I understand. But we all know the importance of Nollywood to the nation’s goodwill. The movie people have provided basic economic uplifting to the nation’s economy as in a few years back we say how they contributed to making Nigeria the largest economy in Nigeria.
I will ensure the industry get the basic policies, director and support it deserves. We will not control any sector of the economy without the right persons put and enabled to contribute transformation in the various sector.
The present administration took a long time to get his cabinet members intact. When you become the President would you consider giving such time towards finding your right team members?
We saw how the eventual list was a disappointment. We all thought after such amount of time It took to assemble the team we were going to have something different. But that wasn’t the case.
I am already armed with the list of persons I know are good enough to give the leadership value. We will hit the ground running, once we are in. I tell you I already have the visual picture of things and the persons in my mind.
Why do you think Nigeria needs technocrats and not the regular politicians at this point in time?
Do you know how many people that have lost their jobs since this government came in? Millions. What’s the argument about the end justifying the means? Is that the end?
This is economic illiteracy, I’m sorry, that’s just the truth. Nigeria has over 33 million people today unemployed or only very partially employed. A lot of those people, at least 7 – 10 million of those people, became unemployed in the last three years. That in itself alone disqualifies this government’s economic management, that’s the bottom line.
We have to look at basic things like poverty and employment. What’s the poverty rate in Nigeria today, it’s over 60 percent. Nearly 100 million Nigerians live on less than $1 a day and you are telling me that I should give a pass mark to such a situation?
As a Nigerian citizen myself, I am very concerned. This country is in a very serious mess and the political leaders of Nigeria and the political class must take responsibility for it. And that’s why I’m calling on Nigerian citizens to execute a democratic revolution at the ballot box in 2019. We need a totally different type of government in this country.
This country needs to be led by technocrats who have been given political authority to execute reforms, technocrats who have vision, and technocrats who care about the country.
Let me be very clear, the fact that you are a technocrat does not automatically mean that you are not corrupt or that some things cannot go wrong, no, but at least within that class try to find the ones that are… voters should find within those kinds of people the type of people that they’ll prefer to give political power. That’s all I’m saying.