Kingsley Moghalu is a former Deputy Governor of the Central Bank of Nigeria overseeing Financial Systems Stability. In this interview with PREMIUM TIMES’ Ben Ezeamalu and Nicholas Ibekwe, he spoke about his tenure at the apex bank, the Nigerian political space, and his stand on the Biafran agitation.
Excerpts.
PREMIUM TIMES: What is your assessment of the present government’s economic policies?
Kingsley Moghalu: Well, I think the economic policies of the present government have actually not worked. One of the reasons it hasn’t worked is a very fundamental reason. No country’s economy can prosper any more than the competence or incompetence of a country’s political leadership. Nigeria’s political leadership is incompetent and to that extent it’s economy cannot prosper. Let me tell you something, I have been a technocrat in this country, and what I have found in my experience is that it doesn’t matter how well you mean for your country, it doesn’t matter how brilliant the policies you espouse, the vested interests of Nigeria’s political class are what govern Nigeria and that is why Nigeria is still a very poor country. Otherwise, how do you define a situation where for several decades Nigeria has been exporting crude oil and importing refined petroleum products? What is the clinical definition of madness if not this type of scenario? And how any citizenry could be electing politicians who run this type of system just confounds me. And that is why I think, that’s why I say, that Nigerian citizens have been too complacent. They need to execute a democratic revolution at the ballot box in 2019.
PT: These vested interests… you were in government for about five years, how did they affect your activities?
KM: Let me say that in my own particular case, there was a certain uniqueness because I was in the Central Bank, as the deputy governor. At the time I was in Central Bank, the Central Bank was truly an independent institution’ because it was independent we were able to achieve a lot. Everybody knows that during the period when I was at the Bank, under the governorship of Sanusi Lamido Sanusi, and I was one of the deputy governors, we executed very successful reforms of the banking sector and stabilised Nigeria’s banks. Several systemically important banks would have collapsed and Nigeria would have lost at least N1 trillion and depositors fund would have been what went down and many of those depositors would have been basically bankrupted.
Now no Nigeria lost a kobo, no bank failed. Why was this possible? It is possible because of the importance of having independent institutions. We could take decisions… the politicians tried, let’s be very clear, it not as if the politicians didn’t try to influence what we were doing, but we were resolute in doing the right thing. And that’s why we were able to save our banks, that’s why we were able to save the deposits of you and I in the Nigerian banks. So that’s just one example.
Now let’s look, for example, at forex policy, foreign exchange policy, we were able to maintain the stability of the naira during that time also which is difficult because there are fundamentals that affect the stability of the naira. Most of those fundamental issues are outside of the mandate of the Central Bank.
People don’t understand that Nigeria’s economy is divided into two, there is fiscal policy, which is the responsibility of the government, the Ministry of Finance and that has to do with taxations, the budget and those type of things and how you generate and spend revenue. Then you have monetary policy, which is the responsibility of the Central Bank, we exercised our own mandate successfully and brought inflation down to single digits from a very high rate where it was before.
Again, that’s because our institution, the Central Bank, was independent at that time. Subsequently, of course, as we know, there’s been a lot of sadly, sorry to say, a lot of political influence on the Bank over the last three years. We saw it in the forex policy when this administration, the political leadership, began to make loud noises about maintaining a fixed exchange of some sorts and that led to, basically, the extent of the recession that we had in this country. It was a massive recession because trying to maintain the strength of the naira when the underlying fundamental, the oil price, was down and so there wasn’t much forex, much foreign currencies coming into the country. So how do you maintain an artificial exchange rate? That created a lot of scarcity in the foreign exchange market and that bred a lot of corruption because manufacturers could not access foreign exchange production went down, when production goes down, layoffs, workers are sacked, unemployment goes up. So I’m trying to tell you the interconnections between political decisions and the economy of Nigeria. That political urge for N1 to $1, economically it does not make sense because what does your economy produce and export that the value of your currency should be N1 to $1 or do you think you just legislate the value of your currency? The value of a currency reflects economic fundamental in the economy, so that’s just to explain what I’m saying.
PT: Nigeria slid into recession a few years ago, after you had left the Bank. What would your team have done differently if you had still been in government?
KM: We would have let the naira to find its true value. If you let the naira find its true value, Nigeria is a very attractive destination for foreign investors. If you allow the naira to find it value, what will happen is that foreign investment will massively come into the country. Foreign currency will come in because they think they will make a profit. Yes, they will make a profit, but what will happen is that there will be so much foreign currencies inside the economy that the value of the naira will go up again or will find at least it’s natural level.
So that panicky response of trying to create an artificial naira rate, up till today, we still have multiple exchange rates at the Central Bank.
PT: But if the aim, like you said, was to make the naira find its level, supporters of this government have argued that the end justifies the means. Because they have been able to bring down the naira from N500 that it was at a time to about N350 now.
KM: Do you know how many people that have lost their jobs since this government came in? Millions. What’s the argument about the end justifying the means? Is that the end? People look for artificialities, people are focusing on a false value for the naira rather than focusing on how productive the Nigerian economy is. This is economic illiteracy, I’m sorry, that’s just the truth. Nigeria has over 33 million people today unemployed or only very partially employed. A lot of those people, at least 7 – 10 million of those people, became unemployed in the last three years, that in itself alone disqualifies this government’s economic management, that’s the bottom line. We have to look at basic things like poverty and employment. What’s the poverty rate in Nigeria today, it’s over 60 percent. Nearly 100 million Nigerians live on less than $1 a day and you are telling me that I should give a pass mark to such a situation? As a Nigerian citizen myself, I am very concerned. This country is in a very serious mess and the political leaders of Nigeria and the political class must take responsibility for it. And that’s why I’m calling on Nigerian citizens to execute a democratic revolution at the ballot box in 2019. We need a totally different type of government in this country.
This country needs to be led by technocrats who have been given political authority to execute reforms, technocrats who have vision, and technocrats who care about the country.
Let me be very clear, the fact that you are a technocrat does not automatically mean that you are not corrupt or that some things cannot go wrong, no, but at least within that class try to find the ones that are… voters should find within those kinds of people the type of people that they’ll prefer to give political power. That’s all I’m saying.
I am not saying that once you are a technocrat, therefore… no. But you see, there are some very basic fundamentals that have to be present in a political leadership. You must have a certain level of economic knowledge for a country like this, otherwise, nothing will happen and that’s why we’ve been going backward in time. This country has progressively gotten poorer for the last 10 years. So how can anybody then tell me I should continue to stay with what has not worked? You know, doing the same thing all over again and expecting a different result is another definition of madness, that’s the point. We just don’t like to hear the truth in this country, but we will say the truth, and the truth will set us free.
PT: You spoke about independence, just how independent was the CBN during your time, seeing that the governor was suspended at a time and the whole drama that played out afterward?
KM: Now let me be very clear, there is no absolute independence. When I said that we were independent, it meant as the CBN Act said, that the Central Bank should be independent in its operations, in doing its job the Central Bank should be independent. That the Central Bank should not be influenced from external sources, that’s what the CBN Act of 2007 said. And I can tell you that during the period we were there we maintained that position, that’s what I can tell you. It doesn’t mean that somebody does not appoint the governor and the deputy governors, it doesn’t mean that we are not accountable, we are accountable, and that accountability we showed it in several occasions when we would go to the National Assembly periodically to brief them, take questions from them, and explain everything transparently that the needed to know. So there cannot be independence without accountability.
PT: You were in the CBN from 2009 till 2014. This present government came in 2015, and much of the reasons they have given as to why things are so bad is that things were really bad when they came in. Did you guys really mess things up before leaving?
KM: Who is the ‘you guys?’ I was not a member of the Jonathan government. I was a Central banker and so I was politically neutral and politically independent. So I don’t like…
PT: (Cuts in) But could the Central Bank at the time completely distance itself from some of the economic policies at that time?
KM: The Central Bank can be held responsible for central bank policies. You cannot hold the Central Bank responsible for the economic policies of a government including if that government does not listen to advice from the Central Bank. The Central Bank is supposed to be an independent institution, this is what people need to get into their heads.
In our own Central Bank, when we were there, I have told you what we achieved. We achieved what was under our mandate to achieve, the payment system reforms, the cashless payment system, we did all those things, no politician could stop us, we did it.
We were not going to politicians every night to give us instructions about how to run a part of the economy that was under our purview. We never did that. And that’s why you cannot lay at the door of the Central Bank under Sanusi Lamido Sanusi any economic failures of the Goodluck Jonathan government or the Yar’adua government for that matter; you can’t, because the Central Bank does not determine the budget of the federation. If 70 – 90 percent of a federal government budget is used for recurrent expenditure instead of capital projects, how is that the fault of the Central Bank? That is the fault of the politicians who are making those decisions the Central Bank has no control over the budget.
PT: Are you saying that the Central Bank during Lamido Sanusi tenure was flawless?
KM: Oh no! That would be lacking humility if I said that we were flawless. Of course, we were not flawless. There is no human enterprise that is flawless. And I’m sure that some people would find this or that criticism which may indeed be legitimate. But I’m saying overall I certainly feel proud that I served in the Bank at that time and I’m proud of what we all accomplished together, that’s for sure.
PT: But with the benefits of hindsight, what are some of the policies…
KM: (Cuts in) Let’s not make this interview an interview about the Central Bank, let’s be more forward-looking…
PT: (Cuts in) No no but…
KM: (Cuts in) I don’t want this interview to turn… it’s now turning to an interview about my tenure as the deputy governor of the Central Bank. No, let’s be more forward-looking about the challenges Nigeria is facing…
PT: (Cuts in) We will get there, but I think this is a follow-up question that you should respond to. I was saying with the benefits of hindsight, what are some of the policies the Central Bank took at the time that looking at it now, you would have done differently?
KM: Quite frankly I cannot think of any, I can’t. I can’t think of a policy with, I told you, we saved Nigeria’s bank from collapse, am I supposed to regret that? We made sure that your deposits in the bank are safe, am I supposed to regret that? We brought inflation down from double digits to single digits, is that something I should apologize for? We introduced a payment system that has improved transactions in the Nigerian economy, is that something I should apologize for? People love sometimes to criticize for the sake of criticism; I have told you we were not perfect. Let me tell you that even the banking sector reform program that we did, there are people who felt we should have done it differently. They have a point of view. Some people felt we should have allowed one or two banks to collapse and then bankers will learn their lessons. But, what happens to the depositors? In our mind at that time, the depositor is king.
We did not want what happened in the failed bank crisis in the 90’s to happen again and so we said we would sacrifice the investors, we can sacrifice other interests but the depositors’ money. The average Nigerians hard-earned savings, nothing will happen to it. And in retrospect, I think it was a good decision.
PT: Talking about democratic revolution, do you think that is realistic looking at how apathetic Nigerians are when it comes to voting during elections?
KM: That’s a big problem, obviously, and that’s why there is a lot of voter education going on in various places. Nigerian voters are being told, including by myself, I have the Institute for Governance and Economic Transformation, and part of our mandate is to educate Nigerians on leadership, governance and inclusive economic growth. And so we are telling Nigerians look, this country can’t change, your economy can’t change, your leadership can’t change for the better if you do not exercise your own civic responsibility and go and vote. People have become apathetic precisely because of the things I have told you, the failure of the political class in this country.
But they are mistaken in responding with apathy, that’s what we are saying to them, you don’t respond with apathy, you respond by taking your future into your hands. Go and vote and vote for better outcomes that can give you the Nigeria we all want. That’s my position and I think we can see, even though it may not be perfect, there is an uptake in voter registration in Nigeria today. Many people are becoming increasingly conscious of why it is important for them to go and vote and people are taking their voters’ card.
PT: People have always been told to go and vote during elections and they’ve always ignored that either because of fear of violence or something else. Is there something you believe can happen to ignite the spark for that urge to vote on election days?
KM: I believe that a number of things have happened that I think would eventually increase the voter turnout. All through December and January, even up till now, there has been fuel scarcity in this country. A lot of people are very upset about it. There have been killings by herdsmen in various parts of the country, people are upset about these things. So a lot of people can see a country increasingly in which security of life and limb cannot be guaranteed. A lot of people are seeing a country in which they struggle from morning till night and they go and sleep at petrol stations to buy petrol. And we are a crude oil producing and exporting country. This is what I told you about what is the clinical definition of madness other than the situation we are today regarding the petroleum sector. A lot of people are upset. Why won’t the government simply deregulate the petroleum sector in this country? Why must the government control the importation and sale of fuel and all we get in return is scarcity.a
Forty years after, somebody showed a headline in the Daily Times when President Buhari was the minister of petroleum in the 70’s and there was petroleum scarcity, and we were being given the same explanations we are hearing today. Forty years after. So it’s time for a more fundamental change, and I believe that many Nigerians are beginning to realize this. And I think that that would increase voter turnout, whether it will get to the level we will like to see or not. After all, you cannot coax anybody to come and vote, you can only preach and educate.
PT: Nigeria is mostly a two-party system and recently we are hearing of a third-force coming into the picture. Do you really see any change in our polity with the way things are going?
KM: I think we have to be hopeful. You see, the two parties we have in Nigeria today cannot bring progress to Nigeria, let’s just, first of all, accept that. The reason is because they have grown up with a certain culture of politics. It is not a culture of real accountability to the people; it is a culture in which the ultimate interest is always the political class themselves. You see what I am saying now if you now talk about where would the change come from, it is fanciful and we have a habit in Nigeria to create all these very catchy phrases, third force, fourth force, fifth force, seventh force, coalition this, coalition that.
What we need in Nigeria is a real coalition of the people of Nigeria, a coalition for the people, of the people, and by the people to take power in this country, that’s the coalition that we need, I haven’t seen it yet.
Let’s be clear, how was the APC formed? APC was formed by people who were dissatisfied in the PDP but have pretty much the same political habit, the same lack of a political philosophy, so they formed an alliance which became the opposition. And because people were not happy with the government at the time, and because they were able to use certain mantra effectively to whip up people’s sentiment, they became the government in 2015.
What has happened today? There is nothing better going on, so it became clear that the purpose was simply to take power, the purpose has not been effective governance, we haven’t seen effective governance in this country in the last three years. Security is very bad, the economy is very bad, corruption is still rife. So that’s why we should be very careful going forward. Going forward, Nigerians should be very discerning, the fact that some people are dissatisfied now with the PDP and APC and begin to form this coalition or that coalition, it should be thoroughly looked at carefully. Look at the people who are coming to tell you that we are the new face of change, look at their track record, look at their character, look at their competence, look at their capacity, that’s a decision for Nigerian voters to make. But I believe that something truly new and different is coming.
PT: Media headlines last week said you are running for president. But the actual report quoted you as saying that you are still consulting. Are you running for president or are you still consulting?
KM: Yes, indeed, I am still consulting. First of all, let’s be clear, I have been under enormous pressure from young people across the length and breadth of Nigeria, from northern Nigeria to southern Nigeria, from southern Nigeria to western Nigeria, from western Nigeria to eastern Nigeria, I have had those pressures to come take a stand politically and to offer myself for service to Nigeria.
Now, you can’t ignore those types of pressures, especially combined with my own passion for our people in this country and the very bad situation in which we are. But that still does not… I am a careful person. I am somebody who thinks through what I do. I don’t do things simply because someone is saying you should do it or just because I feel I should do it. So that’s the purpose of the consultations, that’s the purpose of the reflection. If you want to do it if you want to go forward, what is the basis on which you are doing it? What’s your message? So these are the things that I am thinking about, things I’m consulting about.
And I think that when those consultations and reflection are complete, I will, if I decide to go ahead then I will announce my interest. Until then, I don’t think it’s fair for the media to be running sensational headlines that I am running for president. If I am running for president, I will say it, I am running for president, after all, I’m a Nigerian citizen. I have the right to do so if I choose to. I mean we should wait, if and when I say so then we know it’s happening?
PT: But for how long do we have to wait? 2019 is just around the corner…
KM: (Cuts in) I cannot tell you that. It’s my right, it’s my right to think through my possibilities, and it is my right to choose my own timing.
PT: You have just written off the ruling party and the main opposition, and from what you’ve said, I don’t think you look at the so-called Third Force with so much hope. But looking at the strength and reach of these parties, do you think an ‘outsider’ will have the financial and the right influence to cause an upset?
KM: This question you have asked reveals the real problem we have in Nigerian politics and democracy today. You’ve talked about financial muscle, you’ve talked about this and that strength, you have not talked about the Nigerian people, so, therefore, the thinking in Nigeria is that the Nigerian people don’t matter, what matters is the strength, the financial power of the government or the financial power of any political groups or coalitions for them to come into office, that’s the problem.
My own approach to Nigerian politics is that the people come first, the people matter or should matter and their views and choices matter. Therefore, my own approach to politics is that we need to go directly to the people to talk to them about a potentially different future for Nigeria from what’s going on and let’s see what choice they make.
PT: How do you intend to convince people who, for decades, have been beaten by poverty to not follow the person who has money to throw at them?
KM: It’s a tragedy, the situation we are in in Nigeria today. That Nigerian people have been beaten down by Nigeria’s political’s class to a situation in which they have to beg for money in order to vote, that is to say, they are selling their birthright for a mess of porridge.
Who is responsible for this situation? I say the politicians, it’s not the people themselves, the people are the victims, so you know, we will not blame the victims, we will blame those who have created the situation because they are the one who are responsible. But the victims, who are the Nigerian people, also have a role to play. They have to begin to snap out of their feeling of powerlessness. Yes, poverty is rife, you hear people now saying take the money from the politician and vote your conscience, who am I to argue against that? I recognise that the people are poor. I recognise that they are hungry but my approach is this, why don’t we put into office, politicians or technocrats or people with a different vision that can create a more sustainable end to hunger and poverty in Nigeria.
That’s what I would be saying to the Nigerian people. It is in your own interest to do so. Taking stomach infrastructure every four years doesn’t take you out of poverty, it doesn’t give you better hospitals, it doesn’t give you better roads, it doesn’t give your child a job after he or she graduates.
So the Nigerian people now need to look at themselves in the mirror and say what is our own role? Can we emancipate ourselves? Can we set ourselves free? The choice is theirs.
And my message to Nigerian people is that we should set ourselves free by moving away from the politics of stomach infrastructure toward the politics of mental infrastructure because stomach infrastructure, the only guarantee you get from it is a trip to the toilet, period. You will eat today, you will be hungry tomorrow. Why don’t you go for a situation in which you can actually eat today, tomorrow and the day after, because you have a job, because the economy is flourishing, because poverty is coming down.
A structural and a systematic change in Nigeria, what the economy, what the masses of Nigeria needs. And for that to happen, the masses of Nigeria need to put in power the types of people who can create those systems and those realities. It is not rocket science, it is not impossible, so I would say to the people of Nigeria that you future in your own hands. If you are not able to do this, then stop complaining.
PT: What do you think about the recent agitation for Biafra?
KM: I don’t believe that secession, a Biafran secession from Nigeria, is the solution to any problem, no. I recognise that it’s like a cry for justice because there is an absolute lack of justice and equity in Nigeria today, I recognise that but what is the solution? The solution is for all of us in Nigeria to come together and honestly address these problems, that is one of the reason I believe that for the stability of Nigeria, for the economic growth of Nigeria, Nigeria must be constitutionally restructured, that’s my view, succession is not the answer, restructuring I better by far.
PT: You were in the CBN for five years, you have worked in UN, you have taught in the U.S. When you look at Nigeria, why do you think it’s so hard for us to achieve our potential, economically and otherwise?
KM: Why it’s so hard is because somewhere along the line, the country was captured, especially in the most recent democratic dispensation, the country was captured by the wrong people. And one of the reasons it was captured by the wrong people is because the right people stayed out of politics. They felt that they couldn’t trust the military transition programmes, so they stayed away and so the wrong people went into politics and captured the system, that’s what we are suffering today.
So that’s why I think more and more young people, more and more technocrats, more and more intellectuals, more and more women need to get into the political space and the political discussion.
The Nigerian people, the broad representation of Nigerians from where you will find the very best in this country have yet to come into politics.
And when they do or if they do, I hope that we begin to see a gradual change. We don’t need messiahs in this country, we make the mistake of thinking there is going to be some sort of Messiah who is going to come and wave a magic wand and everything will be okay. No.
Countries grow, counties work through their problems, but that process must be led by the right people. So the reason why we are where we are is because through some accident of history the wrong people took charge, but I think the right people should begin to come back into that political space, they shouldn’t feel it’s too dirty, they shouldn’t feel it beneath them because we all suffer as a result.
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