A professor in the Department of Economics at the Obafemi Awolowo University, Abayomi Adebayo, speaks with AYOOLA OLASUPO on the state of the country’s economy and how to bring it out of the woods
A recent report released by the National Bureau of Statistics capped the unemployment rate at 4.1 per cent. Is this a good indicator of our economic strength and is there a need for the Federal Government to lift the embargo on employment, especially amid the high rate of unemployment?
What we need to understand is that we are talking about the employment rate that was released by the Bureau of Statistics and we must understand the dynamics of the labour market in Nigeria. What happens within the labour market is that the majority of the unemployed people are sometimes doing something. So, when we are talking about the unemployment rate, it will only count for someone who is not doing anything at all. Even somebody working in Nigeria may have up to two or three things he or she is doing simultaneously. So, what is very strong in Nigeria is underemployment because many are engaging in jobs that do not fully utilise either their qualifications or potential.
In most cases, because Nigerians are hard-working, you will see people engaging in one thing or the other. You will even see a student still studying and teaching in a school but the real unemployment at a given period may not be more than that because it is not a static thing. It changes daily because people fly in and out of the country. Don’t forget that many of the people roaming the streets before are now leaving the country. They are not only going to the Western world but to other places but many of us criticise things by impression without looking at the critical and peculiar situation within the Nigerian labour market.
Therefore, at a point in time when that (survey) was conducted, it might be correct but the other issue is that in many of our statistic agencies, at times some people can just sit in a corner and put things together. It is not that people who are applying are totally unemployed. They want a better job and in most cases, your first job is not your best job.
Brain drain is also a factor that contributes to the unemployment rate, what can you say to that?
Some decades ago, when people moved out of the economy, we called it brain drain. Look, people speak from sentiment. As an individual who went to school, you can’t dictate where I will work. A person who has become a professional should have the right to decide where to work. Some decades ago, when lecturers were moving out, we called it brain drain but it is not. You know anybody graduating now is not only facing a local market; he or she is facing a global market. With globalisation, we are all confronting the global market.
People are working for companies in London and they are working from home. People are still thinking backward; that is why they are saying brain drain. It is no longer relevant because if you don’t need me and someone else does, I will go somewhere else where my service is best needed. People get their best jobs here and there, and that is why the global community can have better productivity. That is the theory of the labour market or else you will keep someone in a corner suffering, underutilising his potential.
We train more. So, as people are coming out of the university, you train them and let them work for you. I believe that people going out are going to be a blessing later. The evidence from remittances shows that when people move across nations, they have not left their nation because they have something they will be giving back to their parents, brothers, and even to the economy. Many doctors in the USA have come to conduct surgeries for people in Nigeria free of charge and take care of them. So, exposure is important for the perfect development of human capital.
But there are opinions that if the system is working properly, people wouldn’t be moving out of the country. What is your take on that?
You can’t plan with the Nigerian economy now. If you want to remove the fuel subsidy, is it during the swearing-in that you will say it and everybody will take it as a law? Is it just an announcement that we have removed the subsidy and people take it immediately? Within 24 hours, everybody started believing that the subsidy had been removed. Economies are to be properly planned. So, I don’t want to mix the point up. What I’m saying is that Nigeria’s economy is generally not stable. The economy has been very volatile, disorganised since January when the whole issue started.
When people leave an economy, this means it is time for the economy to reorganise. To retain workers, you also need to attract external workers from outside. That was what it used to be before. This is happening because we are not organising properly and corruption is ruining the economy. I agree that people are leaving because of economic hardship, the volatile economic environment and you cannot help that. It is the government of the day and all of us that should reorganise ourselves for people to retain ourselves within the country.
Nigeria has over time been battling fluctuation of the naira value against foreign currencies. How do you think the exchange rate regime influences the country’s international trade and competitiveness?
Whether you peg or fluctuate, the real value of currency is determined by the productivity of that country. The value of the currency of a given economy is determined by the productivity of that economy. If an economy is not productive and it’s purchasing from somewhere else, no miracle or exchange rate policy can stabilise such a thing. Nigeria is a dependent economy such that ordinary salt, fans, wall clocks, and toothpicks are imported from China. So, we buy many things from them (China) and there is nothing more than crude oil here. What miracle do you want to do? People abandon the problem. I don’t say CBN is doing well because they have their problems. The management of currency has an issue but the main issue is productivity. The exchange rate is an index that only speaks about how productive a nation is because whether you like it or not people will interact with other nations. Before, we used to have companies that produced tyres but where are they now?
Despite the country’s huge indebtedness, the World Bank still approved another $700m loan for the Federal Government. Is this necessary, and how do you think Nigeria can deal with its external debt, and manage its debt-to-GDP ratio?
The simple issue is that the World Bank is a banker to nations and as such they are looking for customers that will take their loan. When you have an unintelligent customer who never works in the reality of their circumstance, you keep loaning them so that they can become a slave to you. That is the illustration I can make because if we are removing subsidies, our goal is to clean up the economy and make it a stable one. The theory behind a loan is that maybe you want to invest in roads or others and we have taken so many loans that we still have an infrastructural deficit. Why don’t we then sit down and leave within what we have? But people in government always feel that ‘this is a loan; so, let’s take it’ because it helps them do some corrupt practices so that it will be believed that the more they are taking, the people will think they are working, without knowing that they are putting the economy into trouble. I do not see any rationale for obtaining that loan.
Is the N35,000 announced by President Tinubu as a provisional wage award for Federal Government workers for six months enough for the purpose it was declared?
We have operated irrationally since May 29 when President Bola Tinubu took over. In every economy, you have four markets; the labour market, the commodity market, the money market, and the capital market. Anytime you are deregulating other markets and the labour market is left behind, you are going to destroy the economy because your reform will not balance. The posture of the government is to go to the market in foreign exchange, go to the market on petrol by removing subsidy, and that started affecting commodity market pricing which has gone up, and the foreign exchange which we are shouting about.
Now, they pegged the labour market down on the spot. Their lives are getting eroded and they are still surviving. When you see workers surviving without an increase in their wages, they are internally damaging the economy. How do they do it because labour will survive anyhow? They will change documents because they must survive. When you don’t pay workers well, they are the ones who will destroy all the reforms you’re doing. People do public business as public officers because they want to survive. Everybody has a parallel business they are doing because the wages they are earning can’t sustain them in reality. That is just the simple way the labour market works when you ignore it.
I was even surprised when they said they were going to set up a committee to review the minimum wage. So, this provisional wage is good enough because if you pay workers too much, inflation will go too bad. This pay will dictate the price in the market once it does not correspond with the changes in other markets, the purchasing power of buyers will bring down the market in the long run.
Is it not better for the Federal Government to have done something like that initially rather than giving each state N5bn for palliatives?
We knew it would never work and it was a disappointment to everybody that the government would go back to the age of throwing bags of rice to people and people are fighting over it. Some were almost stampeding themselves. It was so disgraceful seeing that again. When you give people commodities, you rob them of the right to decide what they need. Somebody you gave rice may not need it. When you give people cash, you empower them to decide and spend at their point of need but when you share commodities, you will have to contract contractors who will also sell those things to you with a higher margin, and a lot of corruption also goes into that. This way they have gone is better, they are paying the workers who have accounts with the government already. The states will also help in doing that and you know workers are connected to the people down the stream. An average worker in Nigeria has a battalion connected to him. This is more innovative and creative than what we used to have. We shouldn’t buy commodities as palliatives for anybody again.
Since Nigeria is deeply engaged in more importation than exportation, is there a need for the country to step up domestic production of what the people want?
That is where we should focus; the government needs to step up production. The simple mathematics to encourage production in Nigeria is development finance. What the government should do is look at the key sectors, look at individual investors, and subsidise things for them. If we do that, the economy will gain it back. Like they did to Dangote Refinery, if the refinery starts producing, there is no way we won’t reap from it. Instead of importing fuel, we will stop and that will also stop a lot of money going into the importation of fuel in the exchange market. The pressure will begin to come down.
The government does not need to do business because corruption will finish whatever it is doing. It should just look at key industrialists in those sectors, subsidise, and keep them alive. As you stabilise them, they are going to generate employment and stop dollar importation for materials needed, and its effect goes on.
How do you think tackling the security challenges in the country and more investments in mechanised agriculture can help increase food output and significantly bring down the cost of food?
Security is key to anything, not only to investors and manufacturers. It is so simple because the problem we have is division. All these security issues, the so-called Boko Haram, are so strong because we are not united. Those Boko Haram terrorists are not stronger than the Nigerian Army. What the government needs to do is to transform the Army, get them heavily equipped with state-of-the-art equipment, and reorient them to national security that our division will not bring us any good. Without security, there is nothing like farming and manufacturing. The safety of lives is very important.
There is this argument that the Federal Government should investigate, identify, and prosecute subsidy thieves rather than remove subsidy. How will you react to this?
Let me tell you that Tinubu’s government is not very bad because he is doing things that no government in Nigeria has ever done before and we have to give them that credit. The removal of subsidy was very important; it is just that it was done wrongly. What the literature says is that in an economy where corruption is endemic as it is in Nigeria, when you want to arrest those big men involved in the corruption, the person will just lose his life. So, what they should have done is call a town hall meeting to sensitise all of them and urge them to stop. The government can then arrest those who do not listen and not that you will embark on a witch-hunt of one or two persons that you do not like.
