By Dele Sobowale
“First of
all, don’t forget that there are local and global financial markets. What is
their job? It is to lend money. If you don’t borrow those people are going to
lose their jobs.” – Fashola
Minister of Works and Housing, Report, July 31,
2022.
I had to check four times to be sure that the person being
interviewed was our former Governor of Lagos State. He was once
everybody’s favourite Governor in Nigeria. Most people were not sound enough in
economics to realise that he also had far more money to spend than any other
Governor.
It would have been interesting to find out how really good he was if he was Governor of Nasarawa or Taraba State. He is now Minister of Works and Housing – before he was also Minister of Power. Now, he has no financial advantage over other Ministers; so we can judge.
Like other Ministers, he had been serving a non performing
president and he never knew when to quit. His descent from
perceived great performer to just another failure as Minister was predictable.
It started with absurd portfolio overload by Buhari . Each of the three
Ministries – Power, Works and Housing – would have taxed anybody to the
limit. Even a Superman would have been defeated with
the three.
From my experience writing on these pages since 1987, neither
Fashola nor anybody else in Nigerian history who was given a combined portfolio
– Ministry of Mines and Power, Ministry of Power and Steel etc – has made a
success of the combination. Obasanjo, with his vaunted experience and sagacity
appointed late Chief Bola Ige Minister of Power and Steel in 1999. Ige, like
Fashola was expected to perform wonders.
In his first interview with the media, Ige, who I have known
since he was in Ibadan Grammar School, with my eldest brother, promised to
achieve uninterrupted power supply in six months and get Ajaokuta producing
steel in a year.
I travelled to Abuja at my own expense to beg Uncle Ige to
withdraw the statement – on the grounds that it would require at least one year
to control the Power Ministry alone. He literally threw me out of
his office. Two and a half years later, after he was relieved of the two
portfolios, uninterrupted power supply remained a pipe dream – as it is today
after four years of Fashola’s tenure.
The truth is, the Nigerian power sector, as it is set up now,
cannot serve a Federal Republic. Like America’s power sector, it must be
totally de-centralised. A thousand Fasholas will labour in vain and it
still will not work.
Fashola’s acceptance of the appointment was the first hint I got
that our best performing former Governor was perhaps
fortunate to have governed the richest and most advanced state.
Given his statement about why governments borrow, it is obvious
that the man might be a brilliant lawyer, but, his deficiency in Public Finance
is glaring.
Is it possible that for eight years, the people of Lagos State
were saddled with heavy debt burden just to keep bankers employed? When was a
President or Governor ever elected to keep bankers employed? If that was his
defence of Buhari’s reckless borrowing, then he has done himself a real
disservice. Nothing can be more fallacious. Here is why.
*Employment in banking sector
First, on the eve of Banking Consolidation, introduced by
Professor Soludo, there were 73 banks operating in Nigeria; and the number of
people employed by banks reached its peak.
Consolidation reduced the number of banks to 25 in 2006; and
massive layoffs followed.
Second, by 2008, virtually all the banks were in distress;
mergers followed and more bankers were retrenched.
Third, the remaining banks embarked on automating their
operations; and e-banking is now the rule – not the exception. Those who still
visit our banks personally, can confirm to Fashola that layoffs are
accelerating in the banking sector now more than ever before. I know
individuals who have not stepped in a bank for more than two years; and who
will most probably not go for years to come.
Meanwhile, the Federal and State Governments are taking on heavy
loads of debt at unprecedented rates. The FG, under Buhari, Fashola and others,
has added more debt in seven years than all the governments before it since
1960. If government indebtedness is what is required to keep bankers
employed, then, every branch should be full of people by now. But, empirical
evidence will prove to the Minister that what he said is not true.
*Why is the FG borrowing?
The truth is already known regarding why the FG keeps borrowing
like a habitual drunkard who thinks one more will solve his problems.
Nothing personal about this; but, Fashola knows too well that Ministries,
Departments and Agencies, MDAs have all failed to reach their
revenue targets.
Yet, their staffs are paid fully every month.
Last month during the presentation of the Medium Term Expenditure
Framework/Fiscal Strategy, MTEF/FS, the Minister of Finance announced to
Nigerians, that in the first four months of 2022, the FG budgeted expenditure
of N5.77tn; spent N4.72tn; earned revenue of N1.63tn and ended with a deficit
of N3.09tn.
Clearly, the Buhari FG is deficient in how to manage public
finance. A government which generates N1.63tn and spends N4.72tn is not doing
bankers a favour by borrowing; it is ruining the economy. Bankers, eventually,
will be the major victims of a busted economy.
In case Fashola wants to find out why we are borrowing so
heavily and mortgaging our children’s future, he should consider the following.
First, crude oil export is far below budgeted projections by about 35%;
and that creates a huge negative variance in revenue. Added to
that, a significant percentage is stolen – probably by officials.
Second, the fuel subsidy figures are certainly bogus and
fraudulent. Third, the Ministry of Works and Housing has continued to delay
re-introducing toll gates. Nigeria is the only nation on earth with hundreds of
thousands of kilometres of road without a single toll gate. Elsewhere highway
toll gates are standards. Toll collection is used for regular maintenance to
prevent highways from becoming death traps. The FG, under Buhari, has for
political reasons refused to do what sound economics and global best
practice dictates. So, instead of collecting revenue, it borrows. That is the
truth.
*Sobowale is a syndicated columnist
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