The Nation Newspaper

Tag: Prof. Sheriffdeen Tella

  • ‘Nigeria needs long term national development plan’

    Prof. Sheriffdeen Tella, an economist and former Vice-Chancellor, Crescent University, Abeokuta, Ogun state is a Senior Lecturer at the state-owned Olabisi Onabanjo University, Ago-Iwoye. In this interview with Ibrahim Apekhade Yusuf, the university don advises all tiers of government on major priority areas for 2019. Excerpts:

    From the socioeconomic perspective ,what are the key priority areas the government must focus on this year?

    I think what is important is that the government must continue with the infrastructural development, particularly with respect to road and rail. On the rail aspect, we must shift attention to passenger rail. And I think what they should doing is to now focus on cargo. The rail should be able to carry cargo because it is the trailers and trucks that are destroying the roads. So if they want the roads to last long they should shift attention to cargo rail so that most of these cargoes can be carried through the rails to the rest of the country instead of using the trailers. It would also reduce the destruction of roads by trailers as well as reduce the spate of accidents by trailers and trucks on the roads. So there is need to shift attention to cargo rail. Then agriculture and industrial development are very important. Industry generates lots of employment and agriculture equally generates lots of employment. Thankfully, the government has just got $1.1billion loan from Brazil to develop the nation’s agriculture sector. I think it’s a good thing.

    So when you combine the employment that the two of them would generate, you can imagine how humongous that would be. And this nagging issue of growing unemployed youths would reduce greatly. But the government would not be involved in industrial development directly but would make policies that would create the enabling environment for businesses to thrive including new and existing ones to be able to expand. Of course, one way the government can encourage business is to grant them incentives like tax holidays amongst other reliefs. That is how it is done elsewhere.

    Another area of priority for government is to ensure that we develop proper national development plans to drive the economy on a sustainable basis. Rather than rely on short term goals, the focus should be on developing long term goals. For instance, the current The Economic Recovery and Growth Plan (ERGP) is a medium term all-round developmental initiative focused on restoring growth. It is good in the interim but it is short term. There is need for the government to develop long term national development plans. Most countries of the world have long term national development plan. That is what is required to achieve the desired growth. In a situation where you have plans that last for just five years, it is not good for the growth and development of the country.

    In most developed economies plans are usually for longer term not adhoc basis. The Sustainable Development Goals for instance is one example. The SDG is a collection of 17 global goals set by the United Nations General Assembly in 2015 is for 20230. Even the African Union has come up with what it called, Agenda 2063, which is a strategic framework for the socio-economic transformation of the continent over the next 50 years. Nigeria population has been projected to grow to about 300 million in 2050. That means we are going to have more population, we need to prepare for them. We need to know how many children are out of school. That’s why I think we need to develop a proper national development plan that is long term and can guarantee sustainable development.

    I also think there should a synergy with government parastatals in terms of seamless policy initiative and implementation of such policies. For instance, the monetary policy and the Ministry of Finance must be on the same page they should work in sync rather than working at cross-purposes. A situation where each of them would be in disagreement is counterproductive to the national interest and the economy at large.

  • 2018 budget: Experts fault oil benchmark increment by NASS

    Some financial experts on Friday faulted the increase in the oil benchmark of the 2018 appropriation bill from 45 dollars to 51 dollars by the Senate.

    The financial experts told the News Agency of Nigeria (NAN) in Lagos that the increment was not needful, while reacting to the appropriation bill passed by the National Assembly.

    Mr Okechukwu Unegbu, the former President, Chartered Institute of Bankers of Nigeria (CIBN), said increasing the benchmark because of the rally in the global oil market was not needful.

    Unegbu said the surplus could be saved for the rainy day or used for infrastructure development to achieve the desired growth.

    “Why can’t we save the surplus and prepare for the rainy day? We can’t just be consuming and consuming,” he said.

    Unegbu said the surplus should be used to finance critical infrastructure since the country was faced with acute infrastructure deficit.

    Unegbu, also, the Managing Director, Maxifund Investments and Securities Plc., kicked against the small allocation to the health and education sectors, which were critical to economic development.

    He said the allocation of N57.15 billion and N15.7 billion to health and education respectively was disheartening.

    He explained that more funds were allocated to non-priority sectors that would not aid development in the proposed budget.

    “If you give more money to education, a very educated person can take care of him and can provide for him good house,” Unegbu said.

    Unegbu, who said health and education were critical for economic development, called on the executive to address the problem before signing the bill into law.

    Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University Ago-Iwoye, Ogun, said the passage of the budget was very late and had created problems in the economy.

    Tella said the budget, though late, was expected to wake up the economy from slumber, as the private and public sectors, including the external sector would become more active.

    Tella said the capital market reacted positively to the announcement of the passage of the budget, noting that the market activities would be further boosted when the budget was accented to by the President.

    Also read :Reps break 2018 Budget laying promise

     “Although it will take some time for the implication to be fully felt in both the money and capital markets, the very short term reactions starts now and the capital market normally reacts very fast if it is an active one,” he said.

    NAN reports that the Senate and the House of Representatives on May 16 passed the 2018 budget, raising it by N500 billion.

    Both Houses approved the budget that rose from N8.6 trillion to N9.1 trillion, six months after it was presented by the executive.

  • ‘Borrowing is counterproductive’

    An economist and former Vice- Chancellor, Crescent University, Abeokuta, Ogun state, and senior  lecturer at the state-owned Olabisi Onabanjo University, Ago-Iwoye, Prof. Sheriffdeen Tella, has advised the federal government to stop the penchant for obtaining loans to avoid economic burden on succeeding generations. He spoke with Ibrahim Apekhade Yusuf. Excerpts:

    Where are growing fears over Nigeria’s rising debts profile. Is it something we should really lose sleep over?

    The country’s debt profile in my own opinion is that we don’t need to borrow money anymore.Even the World Bank complained about Nigeria’s penchant for borrowing money,more so when we are borrowing money from commercial banks,  which is quite expensive.

    And it is not tied to any particular project.Because from the commercial banks point of view all they are interested in is that you can borrow money and you can pay back.That’s what is important to them. There’s nothing wrong with borrowing money in any case. But all the money we have borrowed thus far are from commercial banks. And the worrisome part is that the interest rate is very high. And that’s why we’re using over 50 per cent of our budget to service debts and not to pay the principal. But just to service debts and the thing is growing and we cannot even see or feel the effect of that borrowing.  So if we’re building up reserves and we’re owing lots of money, it’s not economical at all

    Like I said somewhere, the reserves that we’ve is not in this country,  it’s outside this country so it’s not as if the money is with our Central Bank here.No.So it’s like lending us our money that we have elsewhere. We must have threshold of debts and there is standard. Unfortunately, we have gone beyond that standard, which is the GDP ratio of debts.

    So the question is why are we interested in continuous accumulation of loans for something that we can use the money that we’re earning to do? 

    Like I raised in the article l penned recently, people who are negotiating the loans they also reap a lot of benefits from it because they’re going to be paid for initiating it.

    What normally happens is some international banks would come over here and tell us that oh, your account is good, you can borrow money and stuff like that, which they do with individuals as well with the assurance that you can always pay back.

    But the thing is that our economy is still largely dependent on oil. If the price of oil goes down now, the exchange rate will go haywire again. It’s not as if we’re diversifying at all. And that’s why the World Bank and other official development institutions have said that Nigeria and some other African countries should stop borrowing money and concentrate on how they’re going to use whatever they have to move forward.

    Fortunately now the price of oil has gone up, we now have reserves in excess of over $40billion. So why don’t you spend that since our budget is based on $40-50 per barrel. We now have excess of may be $30 on top. But unfortunately, we’re keeping it in reserve elsewhere and people are using it. It’s wrong. We should bring it home to do whatever we want to do with it.By now with the increase in our reserve, we need to start paying back the ones that we’ve borrowed and we ought to have stopped collecting loans too.

    What’s the way forward?

    It’s a very worrisome development and we should not encourage it at all.

    My candid view is that the National Assembly should stop the federal government to continue to borrow. Because we have gone beyond the bounds, we should start thinking of how to begin to repay what we owe so that the debts burden and debt servicing will reduce ultimately from our budget.

    But the argument most of the time is that our debt to GDP ratio is low hence the motivation to continue to borrow…

    That’s exactly the point I’m trying to make.  It’s no longer healthy for us to continue to borrow. Right now,  our debts is too high compared to our reserve. So it’s not good for us.  The amount of money we’re spending on servicing debts is too high to our budget and that’s killing our budget itself so we cannot see development as long as we continue to do that.

    If there is any need to borrow money,  we can borrow money from World Bank with very low interest rates and with long term gestation period.  But even then we don’t need to borrow money because we now have money that we can use for our development because if you spend your money to develop,  and you start producing domestically, we don’t need to import. And if you produce in excess,  you also export it.  And you use the money to develop the export sector,  you’ll have something to export and then get more money rather than say you’re keeping money in World Bank reserve and then you’re going back to borrow the same money. Because World Bank is not going to put the money in any reserve.  Some people are coming to borrow money from the World Bank for onward lending to other countries. So it’s like borrowing the money we have in reserve at a higher rate than if we have the money in the reserve.

    Even if we’re investing our reserve,  the amount that we’re going to get it is better than what we’re going to use in servicing debts.

    So you actually align with the World Bank that we should put a break to borrowing for now? 

    Absolutely.  Yes, we should not borrow again but start thinking of how to repay back the loans we’ve borrowed because the burden on future generations,  and that future generations we’re talking about is even in five-ten years time.

  • Experts to CBN : Publish forex allocations to banks

    Experts to CBN : Publish forex allocations to banks

    Some financial experts have commended the CBN for suspending some banks from the foreign exchange market due to some infractions.

    They advised the apex bank to henceforth publish foreign exchange allocations to banks weekly.

    The experts, who spoke to the News Agency of Nigeria (NAN) in separate interviews in Lagos on Thursday, called for effective supervision of the banks to check round tripping.

    NAN reports that the apex bank, had on Tuesday, suspended 12 banks from the market for denying small and medium enterprises access to foreign exchange under the new window for SMEs.

    Prof. Sheriffdeen Tella, an Economic Lecturer at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, said the sanction on the banks was long overdue.

    Tella said that some commercial banks were not transparent in their foreign exchange operations, alleging that some were indulging in round tripping.

    The don decried the numbers of documentation the banks subjected customers to while accessing foreign exchange, but which many customers never got in the end.

    He said that some of the banks gave all manners of excuses for their inability to sell foreign exchange to customers.

    “The banks should reduce the amount of documentation required to buy foreign exchange.

    “The CBN should also publish foreign exchange allocations to individual banks for all to see,” Tella said.

    Alhaji Aminu Gwadabe, the President of Association of Bureau De Change Operators of Nigeria (ABCON), said that retail transactions for SMEs were more effective at the BDCs segment.

    Gwadabe said that the transparent and effective operations of BDCs and their nationwide reach had enabled genuine foreign exchange seekers to leverage them for their needs.

    NAN reports that the CBN opened a new foreign exchange window for SMEs about two weeks ago to enable them meet their foreign exchange needs to import items not exceeding 20, 000 dollars per quarter.

     

  • How Nigeria can overcome recession – Economist

    An economist and former Vice – Chancellor, Crescent University, Abeokuta, Ogun state, Prof. Sheriffdeen Tella, has advised Nigeria to start producing goods consumed locally by Nigerians as a way out the recessiom buffeting the country.

    Tella, who is a lecturer at the state – owned Olabisi Onabanjo University, Ago-Iwoye, also said the governments and Nigerians should go into agriculture to make food available and affotdable.

    He explained that these measures when applied would not only stimulate the economy to create jobs, more industries, markets and income but also facilitate its quick recovery from prevailing doldrum.

    According to the don, there may be respite insight for the nation if Nigeria continue import heavily, the goods being consumed locally and at a great drain to the foreign exchange.