A topnotch economist Dr. Ayo Teriba is praying and hoping that never again will Nigeria ever descend into near anarchy, all in the name of holding an election and changing currency about the same time.
In a webinar attracting a global audience, he gave the next administration of President-elect Bola Tinubu some economic imperatives and home truths that should guide the government to succeed on the economic front.
According to Dr. Teriba who is the CEO of Economist Associates, some “far-reaching institutional reforms are required” to create a new Nigeria and a new economic order. He says: “I expect they would not continue the situation of anarchy that almost engulfed the country in crisis on something as commonplace as the replacement of old currency notes with new currency notes that led to riots, banks being burnt, people being injured, some people being killed, people killing, people waiting by ATM overnight, sleeping outside banks. We should see more civility. No government agency should ride roughshod on the populace. The populace has rights as the Supreme Court has declared. No elected person has the right to infringe on the rights of the ordinary citizens or infringe the rights of companies. A situation in which companies complain and their complaints are not heeded, a situation in which banks groan under the punitive weight of the Cash Reserve Requirements (CRR) to surrender one-third of their deposits to interest-free cash reserve requirement is repressive. And I hope that the incoming democrats would bring relief to banks, to companies that have been under the stranglehold of an autocratic Central Bank of Nigeria.
“I am expecting just as the Labour Government did when they came into power in England in 1997 that we would see reform of the Central Bank of Nigeria at a minimum. That time they stripped the Bank of England of its powers to supervise banks and created a Financial Service Authority to discharge that function.
“I have listened to very ignorant debates about why Central Bank should be independent. There is no independent Central Bank anywhere in the world. If there is a principal agency issue at stake here, if you have a principal, the agent cannot be independent of its principal. Yes, for some functions like setting interest rate, you have operational independence. But the goal is the liberty by your principal. And if you deviate from the goal, they will retrieve that independence from you. Till tomorrow, if the Monetary Committee of the Bank of England fails to meet the inflation target without good reason, the Secretary of Treasury has the powers to withdraw the rate-setting functions from them and set the rate himself, although for a limited period of time.
“You have interdependence. You don’t have independence. You have accountability. You have checks. You have balances. I hope the incoming democrats would achieve those. They’ve expressed stronger sectoral reforms, they’ve said more than enough on the campaign train and I don’t have to repeat them here. Reform of the oil sector, gas and power, road, rail, air, water transport, real estate and even state-owned enterprises. When will Nigeria have the first state-owned enterprises whose market value we will know and which will be listed on the stock market? These are issues I expect the incoming regime will be very strong on. You don’t have to share my optimism that there will be reduced policy uncertainties around revenue, debts, tax, subsidy, currency notes and exchange rates. Particularly to harmonize the tax regime across federal, states, local governments in the country. I am expecting that the democrats in the saddle will be more sensitive to issues like this—issues that domestic and foreign investors care about.”
Dr. Teriba is of the opinion that most of our politicians, including Presidents don’t have good economic knowledge so they “pass the buck of economic management to appointees who they did not hold accountable after appointment. The appointment for example of the Governor of Central Bank is a case in point. President Obasanjo initially did not know the difference between an accountant and an economist until he was criticized in his first term that his Central Bank governor did not understand economics. He was relying on one of his deputies then: Dr. Samsudeen Usman. So he appointed an economist. Now, economics has different fields, just like medicine. Being an economist is not enough. There is a field of enquiry called monetary economics. Or the economics of money. Central Bank governors and members of the board of CBN should not just be economists, they should have sound understanding of monetary economics. Members of the board of the Bank of England must have published scholarly articles on economics.”
According to Dr. Teriba, “mature democracies make arrangements for building capacity of elected persons after they are elected. Whether you are elected President or elected to Parliament, you undergo that training. And that technical capability enables them to discriminate between who should be appointed to what functions. And it is also to equip them with the competence to hold them technically accountable. Not a situation where a Central Bank governor makes an announcement without consulting the Parliament and the Senators read it in the newspapers or heard in the news. Nigeria now has the opportunity to fill the big gap between democratic legitimacy that comes from winning an election and democratic effectiveness that comes from having democratic capabilities. And the final outcome is that there have been weak engagements between parties, parliaments and Presidents over the last 24 years. In Nigeria, Presidents tend to be aloof. Nothing compels them to engage with the Parliament, except when they do the annual budget ritual. That’s the only time they are required to face a joint session of the National Assembly to propose the budget. And at the end of that, that’s it. Until the next year.
“There is no state of the economy report that they have to present to Parliament. Nothing brings them to come and give an account of their stewardship on the economy. There is no engagement and therefore, it is little surprise that acquiring democratic mandate has not led to the delivery of desirable economic outcomes.”
Dr. Teriba recommends for Nigeria to “create US-style Council of Economic Advisers that will boost the President’s capacity to deliver on his mandate. I reasonably expect that the US-style Joint Committee or the UK-style Select Committees which are bicameral, bi-partisan committee without legislation drafting responsibilities, but help the committee system getter better grip on the technical issues on issues ranging economy, to finance, technology or national security to boost legislative capability to deliver on their mandates.
“We should expect stronger democratic engagement. We’ve seen Presidents who were active on the campaign tour, and once they win the mandate, you rarely see them engage with the public. You have to send a delegation to persuade the President.”