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Sunday, 13 March 2016

How we grew Edo economy without over-borrowing – Obaseki



*On 2016 gov. race: My vision

Mr Godwin Obaseki is the Chairman of the Edo State Economic Team and one of the people  aspiring to occupy the Osadebey Avenue after Governor Adams Oshiomhole’s tenure in November 2016. In this interview, he bares  his mind on why he wants to govern Edo, saying that with the foundation  laid by his boss, Oshiomhole, he will take the state  to the next level with his expertise in the financial sector.

Excerpts:

Before becoming the Chairman of the Economic Team, where were you? I was born in Benin where I had my primary and secondary education. I  finished from the University of Ibadan, got a job as a stockbroker in Lagos and  started operating in the capital market in the mid 80s and then worked in the International Merchant Bank. From there, I veered out to financial advisory AVC Fund, where I managed a large commercial paper portfolio and also did advisory work in helping to  establish some banks in Nigeria at that time.

Thereafter I went for my graduate school work in the United States, had my master’s  degree and came back to  establish  my firm,  Afrinvest. And since 1994 when I established that firm, we have pioneered several innovative financial instruments. We have been the cutting edge of financial services in Nigeria and then I got into the Council of the Nigeria Stock Exchange and participated in several reform projects in the capital market and in the entire economy including being a member of the presidential committee that worked  to set up what we call the National Pension Commission today.

To answer you specifically, I have been in the financial services industry in Nigeria for the past 30 years and I have been involved very deeply in the financial landscape of Nigeria.

How has it been  working with Governor Oshiomhole as Chairman of the Edo Economic Team?

It has been quite a rewarding experience. And then looking back seven and a  half years later, it has been fulfilling and quite an interesting experience. Overall, our expectation  is that, with  proper leadership, human capacity to manage resources efficiently, we have enough resources internally, if properly harnessed, to kick-start our economic growth. If  you look at what we have done in seven and a  half years, the level of improvement, the level of infrastructure we have built, the order we have brought into the politics and polity of Edo, when you compare our accomplishments with the amount of financial resources we have utilized, then you will appreciate how much we can achieve as a country.

Specifically, the total amount of money we have spent to improve infrastructure  is less than 50% of the amount involved in Dasukigate. It is less than the amount spent on  Abuja  airport road; I am talking about us having constructed almost a thousand kilometres of roads, we refurbished almost 50% of our primary school infrastructure and 30% of our secondary school infrastructure; we have built a world class General  Hospital and refurbished all our General Hospitals; spent over N30billion draining Benin-City so that we can build roads and you can see the quality of  the roads.

But, more importantly, our procurement process has given us quite a lot of advantage. We made sure we got value for money from all the works we did. Even  our opponents sometimes claim bogus sums to say we spent three times  of what we actually spent. So, in their mind, we would have borrowed over  N600m  because that is the value of what they would have created from what we have done. The economy of Edo  has improved significantly since we took over in  terms of GDP ranking; we have  moved to be among the  top ten states in Nigeria;  in terms of IGR, we are among the top five. In terms of attractiveness to business, our ranking is quite high; you can see businesses  trying to locate  Edo  because of the quality and nature of infrastructure which we have created. In terms  of human resource development, we are working on that. Having refurbished our school infrastructure, we have now moved to the next stage of giving high quality training to our teachers. The outcome is becoming obvious, going by  our ranking in  NECO and WAEC exams. There is quite a bit of work to be done especially in our technical colleges and then vocational schools and so, I believe we have started well.

Before the coming of Oshiomhole, why didn’t people like you come to help the state?

I have always been concerned about policy issues and, during the PDP administration, some of us took  interest and tried to understand what was going on and engage Governor Lucky Igbinedion at that time. In our group in Lagos, we invited him once or twice and he actually came once to address us on the state of things in Edo. At that point, some of us were even nominated by him to be part of an  Economic Advisory Team under the chairmanship of the late Aret Adams. The late Chief Aimuwu was a member of that team but we couldn’t do much with him because we were just confused about what was going on in the state. We just couldn’t understand why they felt that the issue, at that point in time, was how to raise money to set up few factories. In fact, one of the officials at that time threw away series of feasibility studies which we did and said our role was to go and raise money for them to carry out projects. With that kind  of orientation, that group  disbanded because we just couldn’t work with them, but that raised real concerns and issues in my mind that state policies had been reduced to a couple of transactions which we found out later they went ahead with and we could see what the outcome is today. So when Comrade Oshiomhole said he was going to run, I saw in him a great advocate, someone who could convert our frustrations into development. I saw someone who was not contented  lamenting  the decay we all saw but someone who could have the courage and the boldness to  promote and foster the changes that we required and that is how I got attracted to him. I got close to him because I had worked with him briefly at the presidential committee on pension reforms. Even though we were on the other side of the divide, he didn’t trust us coming in from the financial industry and he saw that the whole purpose of our  being involved  in the pension reforms was because we wanted business for ourselves, to the detriment of  workers. So, having worked  closely with him gave me confidence in his ability and closeness to know that he understood the macro and micro economic issues that were required to transform not just the financial system but also the economy of Edo  as a whole. With that background, I was  confident that, if he was supported to embark on his gubernatorial ambition,  he will make a good governor. That is how it started in 2006 when I met him at a friend’s birthday  party, and we talked about his ambition, his concerns, the need to help raise awareness and resources, and we agreed that we would support him and, a  few weeks later, we started the work. Many Nigerians supported him through the electioneering and he won but he was deprived of his victory and he went to court. But as professionals and people who believed in his cause, we  hung around and continued to support him in our own little way to  pursue the case in court. Later, we  began to prepare his mind for governance. I had the opportunity of meeting with him in a flight. He called  the next day and asked us to set up a team in Lagos to help create a blue print for his administration. That team was made up of fellow professionals in Lagos like Aisue Ighodalo, Uyi Akpata, and some other professionals but he then included people like the late the Professor Iyayi, Didi Adodo, Professor Osarhenhen  and a host of other people who met in Lagos. Even though we did all these, when he took over, it was so different; we didn’t believe that the state had really decayed to the level it did, we did not believe that our school infrastructure was in such a decayed state. Going on inspection with him one of those days, I was almost in tears like if this is what the school system looked like when I was growing up, I could not have gone to school. But this was just the surface. We took a tour after inauguration round the city to see what the situation was. Most parts were  just impassable; the roads were bad and what was even more worrisome was the way government was being run. What we met was worse than what we expected.

You have never been in politics, what inspired you  to  run for governorship?

Having been part of the whole policy infrastructure, the whole policy machinery over the past  seven and a  years, even though it was on  advisory basis and I have been working probono because I felt that, given what I have been endowed with, given God’s grace, given the almost unmerited favour from God to accomplish all I have accomplished in life, I felt that I should pay to serve, not be paid to serve and, from that stand point, one was able to use the experience from the private sector to begin to understand how government functions and why government  functions the way it does in Nigeria. I was also privileged to grow in a home of civil servants; so I understood what the structure of the civil service ought to be and, to my greatest surprise, what I found was that the way government ran when I was growing up was not totally different from the way it now runs. I began to understand why things had become so bad, why things had  fallen apart so much. So my experiences in the private sector helped me to  make that comparison, to understand how the private sector functions in relative to what  was going on in government and the last seven years has helped me deepen my understanding of governance.  The opportunity of just having an Economic Team, working with all the MDAs, observing EXCO  proceedings  have given me the unique opportunity to understand the inside of government and how government functions and why government is not able to accomplish most of its goals. So, with that knowledge and experience, we have done a few test runs with  Oshiomhole. How do you build roads despite the fact that you don’t have your core of quality engineers in the Ministry of Works? How do you build your infrastructure when you do not have the tools in the various ministries and Ministry of Urban Planning? What I find is that there are  private sector tools that will be very useful in government. Planning was at the core of government when I was growing up. Budgeting was a very important tool,  but most of these have been diluted in government. So with the benefit and understanding of how these things work in the private sector, I have been able to understand the priority in the private sector, how it got broken and where to begin to fix it. But, in the mean-time, we also had the benefit of the experience of Comrade Oshiomhole on how to execute transactions, policies and projects even when the super structure of governance is broken down. So, we had to build roads, whether we had qualified engineers to help us to design roads in the Ministry of Works or not. We had to get our bills of quantity right for our schools and our government buildings; we had to procure the services of consultants to help us understand the lay of the land of our environment to do the mapping to determine what we needed to do before we build roads.

But there is this fear that you may embark on excessive borrowing if elected  governor and that may plunge the state into debt?

First of all, a lot of people, their understanding of finance and financing is not very sophisticated and they see borrowing as permanent indebtedness. Meanwhile, government, all over the world, usually spends money they don’t have to create money that the society needs. That is why when you go to Europe and America, you find out that government continually issues municipal bonds, government bonds, treasury bonds; these are  instruments by government to borrow and  finance its operations but you are limited. Government just doesn’t borrow indiscriminately, they only borrow to the extent they have the capacity to  repay. And how does government derive the capacity to  repay? It is ability to impose taxes and levies. The total indebtedness of Edo  and the figures can be paid under two or three years from our current tax revenue if we don’t do anything. When you say we are borrowing and over-borrowing, how does government get money to spend? It is only in Nigeria where  states go to Abuja and earn salaries, local governments go and earn salaries. What happens is that government organises itself, it has a whole string of levies and taxes to use to generate revenue and, in anticipation of that revenue, it makes commitments  to build roads, schools and infrastructure that can help the  society to generate more economic well-being. Now, what this administration has done is to change that to make sure that the bulk of the resources that accrue  to government is used to provide goods and services for the people. So, first, Edo has not over-borrowed; second, government doesn’t have money. Government money is what you call the tax payers money and no responsible financial institution  will give you money if you do not have the capacity to pay tax on one sole factor on how you govern yourself. If you don’t have  transparent, accountable governance, nobody is going to lend you money or they would lend you limited amount of money. So, Edo has not over-borrowed in the last seven years; if anything, we have looked for ways to internally grow our economy. Today, where many states cannot pay salaries, we are able to pay and we are not paying salaries from borrowing, we are paying salaries because there is economic growth. Because of the infrastructural development, we are the  bride of investors;  people want to come and produce in our state; people want to come and grow things and participate in the agricultural plans in our state and people want to come and do solid mineral mining in our state. So, with all of these economic activities growing, we can see that our revenues in Edo will continue to grow and, therefore, we will not need to over-borrow or put so much financial pressure on the balance sheet of the state. The problem is that you don’t the collection of technical skills in financial management which you have in the private sector in government and, as you begin to bring them in and educate people, they will now begin to understand that bond is not bondage.

My vision for Edo

The Edo project, which is the house that we started seven  and a half years ago, will tower above many in this country and so we have taken time out to lay a very solid foundation in terms of ensuring that we have restated the whole idea that government is about the people; that there must be governance, there must be prudence in the management of government resources because these resources belong to the people. You can’t just dip your hands in the treasury and take people’s money and do whatever you like with it. You have to have a sense of accountability; you have to show the people and tell them what you are doing with their money. In specific terms, what I will do differently is to extend the plan to the next phase which is to begin to introduce more of the economic elements into the plan; to begin to sell what we are doing to the outside world, so that we can attract investment and investors to create jobs. We have to send children to school, we have to create an economy that will employ them and the only way we can get employment for them is to encourage and attract the private sector to come. Will they come? They will come because they see that we are governing the state properly. They will come because they will see we have built infrastructure which will help reduce their cost of doing business. We are the only state that has actively encouraged electricity because electricity is a core plank required for production and industry. I am going to redesign our agricultural cadastral so that we can make land an asset available to investors who want to do agriculture. We will organise an agricultural value change such that we can get large commercial farmers to come in and support our small scale  farmers with modern technology, with modern tools of farming so that their yields can be improved. So, this out-grower arrangement, which is change government extension services, we will see how we can combine our grower framework to extension services working with the private sector to ensure that we can move our peasant farmers into modern day farming and boost agricultural production. We also want to make sure that we extend that value change such that we can begin to process what we produce and add more value before we take them into the market. How is that going to happen? We are going to have industrial layout close to agricultural concerns and I believe that, if we can put between 100 and 200 thousand hectares of land by the way we have 20 million hectares of land, if we can put 15 to 20% of that land into active use and properly organised agriculture, we should be able to create jobs in their hundreds of thousands. Then we look at industry, because of the location of Edo  at the core of Nigeria, we are three hours away from every major market in Nigeria, that is, like eight hours from Kano, the farthest. We believe that if we can create Edo, as a production hub, attract people to come and produce here, then we should be able to have access to all the major markets in Nigeria. I am confident because we have refurbished our educational system, we are going to create more technical schools, more colleges of agriculture, and we will partner under the TEVET arrangement, the private sector, with government to train youths so that you can move them into jobs very quickly. We will have school of agric that will be closely affiliated to large commercial farms so that we can have a basis for training and you know that when you attend any of our colleges, it is already affiliated to an industry and there is likelihood to get a job when you finish. So those are the things I will do differently while continuing to extend what we have started, but we have to focus more now on how to create jobs and economic well-being for our people. We want to use what we have started, the infrastructure we have built, the governor’s framework that we have, to now move forward to ensure we have economic growth.

Read more at: http://www.vanguardngr.com/2016/03/anti-corruption-saving-money-programme-is-wrong/

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