Economy

I will create N500bn venture capital fund to jumpstart economy – Moghalu

by ZEBULON AGOMUO

March 1, 2018 | 2:58 am
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Kingsley Chiedu Moghalu, a political economist, lawyer and former United Nations official, is a professor of Practice in International Business and Public Policy at The Fletcher School of Law and Diplomacy at Tufts University. Founder of the Institute for Governance and Economic Transformation (IGET), a think tank focused on the achievement of inclusive economic growth and effective public policy in developing countries. Moghalu was deputy governor of the Central Bank of Nigeria (CBN) from 2009 to 2014. In this exclusive interview with ANTHONY OSAE-BROWN, Editor, BusinessDay and ZEBULON AGOMUO, Editor, BDSUNDAY, Moghalu, who has just declared his ambition to contest the presidency in 2019, says he is on a mission to redeem Nigeria from the stranglehold of maladministration and bad leadership. He also speaks exhaustively on what he hopes to do differently in the critical areas of the economy, including infrastructure, management of oil wealth, diversification, wealth creation, education and human capital development. Excerpts:

You left the Central Bank and went to Tufts University where you had a teaching experience. How has that provided you the opportunity for reflection and bring you to where we are today?

Thank you for that question. You are the only one who has asked me that question and it holds the key to everything. That interregnum between the very frenetic, high tension five years at the Central Bank into which we packed a lot – bank reforms, economic achievement in terms of our mandate because people forget, we don’t have the mandate for all the economy; at the Central Bank we have the mandate for the monetary policy part- payment systems and of course, financial system regulation.

When I finished my tenure, I slept and woke up for two to three months without break. I did not realise how tired I was; how exhausted I was from all that was packed into that five years at the CBN. My directorate was in the forefront of all the action. I was heading the financial systems stability directorate, so the pressure on me was quite enormous. And that’s why when I left the Central Bank I turned down a number of offers from the global banks, which were quite financially lucrative and chose to become a professor for two reasons. One, I had always wanted to be a professor and I always knew it was something I would do at some points in my life. Two, it seemed the best use of my executive leadership experience was to transform it into intellectual reflections and teaching of new generations of leaders.

Three, that three-year space between November 2014 when I finished my tenure and November 2017 which was when I returned gave me the opportunity to look at Nigeria from a distance and which I had space to actually think in a longer term and strategic manner. When you are in a public office in Nigeria it is 12 to 14-hour days, you really don’t have a lot of time to be reflecting on the state of the country; you are just reflecting on the state of your own mandate and all that. Being a professor of a very prestigious university was for me another level of fulfillment and it made the point to me, which to be very frank, I was happy with, that I was not caught up with the problem in this country in which many people think if they are not in government they are irrelevant; if they are not in government they have no livelihood; if they are not in government they are worthless.

I had a real nice sense of worth as a professor of the Practice of the International Business and Public Policy of the Fletcher School of Law and Diplomacy at Tufts University. So, to me, it was a transition to another pedestal and it helped me a lot in terms of giving a very strong sense of comfort with myself. But it was in this period that I began to think very seriously about the future of Nigeria and I asked myself certain questions. Here I am the only black man in the Faculty of the Fletcher School, I teach 30, 40 students from over 20, 30 countries – Canada Switzerland, Japan, China, America and they all learn and holding on to every word that I speak about emerging Africa in the world economy. I was appointed a professor, essentially to teach my book, nobody in Nigeria asked me to become a professor and teach on the basis of my book. This is why these societies advance and we are poor. They appreciate knowledge.

One of the opportunities this interregnum gave me was the freedom to opinionate. I could now state my opinions without being too cautious. I was not writing public opinion articles as a Central Bank deputy governor because, except if you were writing the  official line, it might not have been appropriate.

So, I was free; I was on the back page of ThisDay, BusinessDay, Financial Times of London, etc. I began to think and said to myself; you are comfortable and doing well, what does our life mean when so many people in your country are suffering; am I content with personal achievements? I began to feel that was not enough. Then the next question was; how do you re-engage beyond opinion shifting?

Do you know that our politicians do not listen to good advice? So I said to myself, all these lovely opinions that you write and everybody who praises them happens to be people who are intelligent but the real people who are taking the decisions are not engaging; I said to myself; what’s the best form of engagement? And that’s where I decided to establish the Institute for Governance and Economic Transformation (IGET) which is what I came back to run. Then I decided that I could even go further- turn the ‘think-tank’ into a ‘do-tank’ and translate into engagements in political system because one of the products of my reflection was that it doesn’t matter how good you are as a technocrat, if you don’t have political power you can’t make a change in a society like ours because the society is not knowledge-driven it is not knowledge-interested.

It is political power-interested for vested interests.  So, if you have good ideas, you must fight to get the political power to implement your good ideas. Simple. And this is what has led me to where I am today. Just of course, because of the frustration that I have felt like every other Nigerian has the seemingly endless circle of hopelessness.

Nigeria is going backward in time with speed. This country today is much more divided than it has ever been. This country today, the economy is worse, in my thinking, than it has never been or it has been in a very long time. This country today is as just corrupt or perhaps more corrupt than it ever was. So, what is the solution? What’s the reason the situation exists?

I said to myself, this situation exists because our political class has failed. They have failed because they are not competent to address the practical problems and complex challenges that the country like Nigeria faces as we go into the 21st Century.

They don’t have the intellectual bandwidth, most of the time, not all the time; and then there is the cultural problem because you see those of them who are even intellectually-equipped behave in a very strange way when they get into political power; and you begin to wonder. So, it is not just a matter of being an intellectual or a technocrat, it is a matter of character and value system. Therefore, I decided, in all humility that the only thing that can make a difference now in my life, and make me fulfilled is for me to offer myself to Nigerians as an alternative to what is going on and see if people like us- because I feel I represent millions of people in this country who want something different, something new. So, if I could step forward as a representative and if I could have the opportunity working with a brilliant team of first eleven Nigerians, we can turn Nigeria around.

Prof, the Nigerian politics is a different kettle of fish in this part of the world. Now you are coming from the boardroom to soap box; and you are not streetwise in terms of knowing how they play the game; where do you draw the courage to go into this race?

First of all, God is my own personal philosophy; I am in the hands of God. That’s number one, and God’s grace is sufficient for me. Blessed assurance. That’s number one. Number two, I feel you must have a sense of sacrifice. For too long, many people like us have left the space (the political space). Bad leaders as the saying goes, are elected by very good people who refuse to vote. Bad leaders are elected by very competent people who refuse to go into politics. Therefore, if not now when? So, the time is now; the time to engage with all the difficulties; we can only persuade our people of their enlightened self-interest in moving in a different direction.

Let’s come back to the ideas and the issues. So bad leaders are elected by good people who refuse to vote, still we must assume elections will be free and fair, and elections are about number; how wide has been your consultation and how strong are the pillars arising from that consultations upon which you show your ambition?

It is actually not so much an ambition as it is a vision. The focus is the vision and the focus of the vision is the people. It is not so much an ambition, because ambition is about self. But I have a vision for the people. So, that’s number one; number two, I consulted quite widely. I could have continued the consultations if there were more time and I will continue the consultations. The fact that one has decided to go forward doesn’t mean one is no longer consulting; I will still need to continue consulting and listening to people as I go around the country.

Now, the first thing in a practical organisational realistic political sense that actually made me to take this decision was that I saw a number of things that gave me an indication of the massive amount of the support that I have from the youth of this country. Most of the youths from the Northern part of Nigeria; from the South West, from the South East and the minority ethnic groups have been pressing me for the past several months to step forward as an alternative to what is going on. And that was the first thing that gave me some kind of assurance.

Like you said; yes, if you are going into politics, you are not a preacher; politics is a game of numbers – who is supporting you? It is a very practical and realistic question and I began to feel very strong support from young people of this country; from educated middle class professionals; most of the people who have stayed away from the political space, either because they are afraid, or because they are disgusted or because they just want to make ends meet in their own little lives; so that has been a very strong basis of support for me to go forward. Second; I have also consulted with a number of important figures in this country; I will not mention names. I have listened to their wisdom; their experiences and their own regrets also; and learn from those lessons.

So, it is a combination of grassroots bottom up and also top down. So, my decision came in the middle because from down up and top down I got support and that made me feel I could move forward.

In your opening statement you said economy was at its worst point now for a very long time; in very specific term, what would you do differently?

A number of things. My economic vision is a vision that is not based on oil or natural resources. The vision I have on the economic front and will execute as president of Nigeria will be based on innovation and human capital. Let me explain. What is the secret of the wealth of nations? If you look at the Western world; if you look at Asia, you find out that 90 percent of the wealthy countries of the world is based, not on natural resources but on innovation- scientific technological inventions and innovations that were commercialised and create value. That’s number one. Number two: based on the productive knowledge which comes from human capital that is able to manufacture and export complex products.

The raw materials for those complex products come from your village and mine. They are rich; we are poor. We are sitting here thinking we are rich because we have crude oil, meanwhile we are 60 percent poverty in Nigeria; 100 million people living on less than one dollar a day; and the people in Switzerland, in Canada, in America in Japan – a people who have nothing under their soil are the wealthy ones. These are something that we should think about.

So my vision for economic transformation is based on this- that we will, and we have, I know, so many intelligent young people in this country from all parts of the country who invent, who innovate but what they invent and innovate never ends up on the market shelves, because we have a government, a political class that is simply, let’s not be too polite about it, myopic. They are only interested in themselves. If they were interested in the people of Nigeria; talents could have been harnessed and supported with the appropriate policy space and incentives so that the production of these intelligent people will become mass-produced. Their invention will become mass production and with this it is on the shelves of markets; their middlemen created and jobs are being created as manufacturing companies mushroom on the basis of these inventions that now have to be mass-produced. This is how wealth is created that is inclusive.

This also means when you talk about human capital, you mean that the educational system of Nigeria will be fundamentally overhauled; I will do so as president of Nigeria in order to make sure that young men and women that came out of our schools have very practical skills – vocational skills, innovations and entrepreneurship – how to self-employ themselves and stop waiting for somebody to give them a job in office. So, this is number one in terms of my economic vision. Number two is that the government that I will lead will specially tackle the question of unemployment in two ways – and I have said this in many fora – the creation of a N500 billion venture capital fund; I will scrap the N500 billion social intervention programme.

It is a monument to waste and corruption. I am looking for those who have benefitted; I am yet to see them. Now the reason why that fund cannot work is that you don’t give man fish, you teach a man how to fish. So if you go and be giving people N5,000 (five thousand naira) a month as a palliative, which in economics  we call exhaustive transfer– creates no economic value. They blow the N5,000 in one day or two days. But if you put that money as an investment– a venture capital fund and that fund saved for the millions who are unemployed. We would train you to present a proper business case, and when you do this, on a competitive basis we will invest in your business; and many of them, not necessary all, many of them will succeed; because capitalist economy is risk.

So, the successful ones will create jobs and this is how jobs are created in capitalist economies. The government does not create jobs; a competent government does not create jobs; a competent government creates an environment where jobs are created. Again, we will use part of that kind of fund to bail out businesses. We will subsidise production but we will never subsidise consumption. So, these are the two ways you can stimulate economy to start growing again with production and employment being created at the same time.

I quite believe that there is a place or a role for oil even if to fund the diversification programme. What would you do in specific terms with oil?

The first thing my government would do about the oil industry is that the Nigerian National Petroleum Corporation (NNPC) needs to be, at least, partially privatised. For as long as the NNPC is completely government-owned it would remain a cesspool of all manner of sleaze and corruption. It will never meet its promise given the realities of the Nigerian society. The government of Nigeria must let go of the downstream petroleum sector so that the laws of supply and demand can actually create efficiencies; we saw it in telecommunications.

It can happen in the downstream petroleum sector even in the upstream. So, for example, I would say, I would move as president for the Federal Government to own may be 51 percent of the NNPC and the remaining 49 sold at the Nigeria Stock Exchange; to private ownership Nigerians; and I want to be very clear- to Nigerians. You can have a very little portion of it open to foreign investments but majority to Nigerians because you cannot sell all of the part that does not belong to the government to non-Nigerians. No, you don’t do that.

So you can balance the ownership. You even create a certain profile for the oil producing communities also. So, all these things can be woven into a very commercially viable enterprise social contract that does not ignore the goose that lays the egg; that is to say the Niger Delta communities. Intelligent discussion; intelligent policy evaluation can produce something that works. But as long as government continues to own the NNPC and run it, I am sorry we are going nowhere with oil. Number two. When you produce oil and export crude oil and then you import refined petroleum products; how do you define clinical madness? I mean someone should explain this to me; and we have done this for over 40 years. In any sane society, why would a political class that has overseen this monumental failure be entitled to anybody to return them to office?

That’s why I say voter education is very important in this country. The people have been captured and imprisoned by the political class in Nigeria such that the Nigerian people for a long time have not been able to identify what is in their own interest; and they have become like the Stockholm syndrome captives who fell in love with their captors because their captors are the only people they see from morning till night. Well, from 2019 Nigerians will be seeing people who are not their captors, may be they have a choice. I believe that 2019 is a very clear choice between progress and retrogression, between freedom for the Nigeria people and forced imprisonment in which the Nigerian political class has kept them. The choice is theirs?

On what political platform do you hope to prosecute your vision? Again, politics in Nigeria is capital intensive; do you have the war chest to match the incumbent assuring you get your party’s nod at the primaries?

First of all, one of the reasons why Nigeria is poor, why our citizens have been rendered powerless by the political class is because they have been indoctrinated into a state of powerlessness. They have been indoctrinated into a sense of feeling that nothing can change. That it is inevitable for this ‘powerful and rich’ politicians to keep coming back to power. When you think that way, the Nigerian politicians have you exactly where they want you. So, the first thing you begin to ask is the type of question you asked one, well, because by the grace of God I can see clear; I have refused to become powerless because I am not a moneybags; become powerless because I am not part of some almighty political machine, because I believe that the people themselves have power, they only need to be awaken to their power and to begin to use it.

Coming back to the practical implication of the statement I made– money is important in politics even the legitimate logistics that you will use to run any political endeavour require money. But where should this money come from? I have no godfathers; I expect and would ask the people of Nigeria to fund my campaign; it is an investment in their future. It is a reverse type of investment that will bring yield to the Nigerian people, rather than the type of investments that politicians make; where it is the politicians that give people money to vote. When the politicians get into power, the first thing is to recover their investment.

Their first attention is not the people of Nigeria. Their first attention is to recover the investment they made in getting the election. So, it is a different kind of investment that I am proposing. I am proposing that the Nigerian people invest in a different mindset coming into the political authority so that we can work together – they and myself; because one person cannot do it alone. It is a collective thing and I intend to run an inclusive government.

So, all of us Nigerians, we sit down and reason together and come to an agreement on how this country’s future will be changed and how the destinies of our young children and our youths will be turned to bright and right now.

Right now, on current trends, it is actually very bleak if the Russian roulette we are playing or the merry-go-round of poverty that we are having because of the stomach infrastructure politics or the stomach infrastructure  politicians.

So, the point I am trying to make to you is that the people can invest; crowd-fund my campaign. If one million Nigerians put N1000 (one thousand naira) each into my campaign, even if it is N100 (one hundred naira) we would have all the money we need to do the legitimate things. The reason why politics is very expensive in Nigeria is because more than half of the money established political parties spend is not spent on right things but on bribery and corruption and that’s why it looks as if you must break the Central Bank to win an election.

It is not true. You just need enough money to run your logistics and your messaging. That’s what you need money for. Now the party platforms. You have noticed that I have deliberately did not announce the party platform. The reason is because right now my focus is on the people of Nigeria, not on a party platform. We have laid too much emphasis on party platform which have not produced anything of  consequence for the Nigerian people.

The PDP; the APC – they are both powerful party platforms but what have they produced in terms of governance in this country? Therefore, that’s one of the reasons I decided to present myself first before a party platform so that Nigerians can assess me. We will need to begin to focus on the individuals who are seeking positions of responsibility and then look at their platforms. The more competent individuals come into politics the more the platforms become sanitised eventually. At that point, they will begin to look at the platforms as well as what is your ideology and philosophy. So, going forward I am going to be consulting with the movement that I represent from various parts of the country and we are going to agree which the platform we will go into; we are not forming a new party. We will join an existing political party and contest election under that platform. We will decide which party it will be. A number of parties are already talking to me on the possibility of me carrying their flag; so we are having those discussions and within the next few weeks we would come to a decision on which direction we would be heading.

You made a point earlier that power should ordinarily reside with the people and let them choose their leaders. Given  that you are just coming in, doesn’t that concept presuppose that there is already a grassroots movement that can be mobilised and leveraged to get people put in their N500 or N1000 or whatever. How do you reach these millions of Nigerians at the grassroots that make the decisions?

Yes, there are many ways to reach the millions of Nigerians. In the last few months I have visited different parts of Nigeria, we have held events with various youth groups, various women groups and other segments of the Nigerian populace; also there’s the media in which people can also put out their messages; then there’s the social media as well. So, these are various ways to mobilise Nigerian people at the grassroots.

But there isn’t much time … and then you are going to have established opposition to contend with?

Yes, there’s isn’t much time, I admit. It is a democracy and that’s why it is electoral contest; other people with different views are free to put out their own message and let us see which one the people will buy. But my world view focuses on what is possible; it does not focus on impossibilities. This is one of the reasons I can tell you, apart from grace of God which is the most important, God gave me a certain type of mind. I always look at what is possible to better the human condition; what is possible to make our society better.

I do not look at why it is impossible that we can make progress. If I look at life that way, I would not have achieved all that I have achieved in life, because I have played in a very competitive global environment for the last 20, 25 years and emerged at the top; it is precisely because of this spirit that God has given me. I recognise the obstacles, I just go to work on how to overcome them; so. I know that time is short before the elections; the new parties have that disadvantages, but you can still create things out of nothing. Two things are required– a world view on which you now have a strategy and the discipline of execution and consistency.

Do you at any point hope to align with the third force mentioned by former president Olusegun Obasanjo?

We are in a democracy, and there is freedom of association. People who want to form a third, fourth, fifth force are all welcome to do so. Who judges? The people. So I and those that are with me and the millions of people I believe I represent, the movement of the people, the coalition of the real Nigerians as I call it, the real coalition, we have our focus- and that is the people of Nigeria- the focus is not that we hold power or not. Let me explain something to you, how was the APC formed? APC was formed by people who were dissatisfied, or who lost out inside the PDP. For me, that is not a credible basis to make progress in Nigeria anymore- the politics of I lost out, therefore, you go and form another party- no. we have a more fundamental message that we are putting out to Nigerians that it is time for politics to become about service; service to the people of Nigeria.

It is time for governance to be handled by people with the knowledge; it is time for political leadership to be exercised by people with intellectual and technocratic knowledge; people with the right type of character, capacity, track record and competence. That is what we are focused on. So we are saying to the people, ‘Give us a chance. This model we are proposing is actually to your best interest.’ I do not want to comment on anybody’s movement or coalition, it is a democratic space and people are welcome to try their hands at it.

Infrastructure is a big issue in the country, how do you plan to tackle it across the broad spectrum?

The first thing about infrastructure is this, there has to be a social contract; that we are the government, you the people have the right to expect things from us. In return for what you expect from us, which includes a very decent infrastructure, you must pay your taxes. Social contract is a two way thing, so the first thing we have to discuss with the people of Nigeria is, ‘Why don’t you want to pay your taxes?’ Because you feel the government is stealing your money, you feel you cannot trust the government. We are going to lay ourselves open with an inclusive and transparent government.

The first thing my government will do is to establish trust with Nigerians. Once there is trust, money will flow. Money will flow because we will begin to bring people into the tax system, when we begin to bring people into the tax system, the resources to execute infrastructural projects without selling the future of Nigeria’s children to bankers abroad. The foreign debt has more than doubled from 9trillion to 20trillion dollars in two-and-a-half years; that is a scandal!

The future of Nigeria has been mortgaged and I know that we do not have any concrete credible infrastructure to show for that. So when you generate money through taxation, the next thing I want the government that I head to do; we are going to change the paradigm. The Development Bank of Nigeria’s mission should not be funding small businesses. Small businesses should be funded by the venture capital firms; that is the N500billion venture capital fund I am talking about. The business of the New Development Bank of Nigeria should be to fund infrastructure; big ticket items. That is how the BMBES in Brazil helped to transform Brazil. Now we will make funding for the New Development Bank of Nigeria a first line charge on the consolidated revenue fund, from there you begin to mobilise really serious money.

Secondly, we would go into a lot of public/private partnerships. We will create conditions where private investors can actually come in and fund infrastructural projects, make their money over certain period of years but the people have the infrastructure.

Now let us talk about power infrastructure, electricity. The reason why we are where we are, apart from corruption; every year we are being told stories of how many megawatts of power, we are still stuck at 4000MW more or less over the last 10- 20 years, the world is changing. In the 21st Century, you cannot be focused on fossil power, and you cannot be focused on hydro and natural fuels- you have to go renewables. So I feel that the electricity in this country, especially for homes and offices, should be generated by solar energy and other forms of renewable energy, while the gas powered projects and hydro go to fund industrial zones in Nigeria, that is to say, Kano, Aba, Nnewi, Onitsha, Lagos, those types of places; those are where you need such heavy power. Most homes and office can be powered by solar, why not? We will create the market for it, we will create the incentives; we are not going to give everybody free solar power, no, we will just create incentives for that sort of power.

So this is my thinking about infrastructure; starting with source the financing for it, and continuing into the focus of it and the partnerships that are necessary to create it between the private and public sector. It is a holistic approach.

Clearly you have set for yourself the path which I am sure kicks off with making a public announcement. Following after that, what happens? What will be your message to ordinary people?

The message is the message just released; it is time for something new in this country, it is time for something different, it is time for something bold.


by ZEBULON AGOMUO

March 1, 2018 | 2:58 am
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