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AS an industrialist and newspaper columnist, Henry Olujimi Boyo has at various times demonstrated his passion for issues of economy. With a university degree in Economics and post-graduate degree in Administrative Sciences, Boyo’s views on the issue of economy are germane and cannot be easily discarded with a wave of the hand.
That notwithstanding, he is passionate about the Nigerian economy which has done more damages than good to the psyche of the masses. At every given opportunity, Boyo has thus expressed his disenchantment, or frustration, if you like to the way the people in government have been so insensitive to the plight of the common man initiating economic policies which has most times favoured the rich at the expense of the poor.
Boyo has appeared at various fora, including radio and television programmes to share his opinion on what the government has been doing wrong that affect the masses negatively.
Irked, by the current downward movement of the Naira, Realnews team sought his opinion on what had gone wrong and how the situation could be tempered before it could get out of hand. As it all turned out, the renowned economist was not an easy person to interview.
A gentleman that he is, he welcomed the Realnews team to his office warmly. He even offered some refreshments which were politely turned down. After the exchange of why Realnews reporters would like to speak with him, Boyo brought out a published pamphlets he authored and ask them to read “so that we can be at the same level,” as he put it.
After about 30 minutes of studying “Nigeria: The Sensible Road to Economic Prosperity” to be at the same level with him, the conversation started. From his expression, it was obvious that Boyo expected everyone to be as knowledgeable as he is on the economic situation in the country. Combative and garrulous, the industrialist virtually spent about two hours educating his guests why some individuals connive with government officials to feed fat on the instability of the Naira and his simple solution would not meet their fancy.
Throughout the conversation, Boyo’s voice rose or lowered with the level of his anger and dismay at what the public had been fed with by the government on economic instability. He was sometimes abrasive questioning why Nigerians, especially the Nigerian press have been so docile and folding its hands while things are been run aground. “You Nigerian journalists don’t ask questions you just collect press release and go to press with whatever they give you,” he said.
Boyo traced the problem of the Naira to the Central Bank of Nigeria’s monthly allocation of $1 billion to Bureau de Change. He also blamed the CBN for its liquidity policy, saying it is responsible for the current inflation trend.
Many a times, Boyo cuts in whenever questions were asked, saying please, “let us respect ourselves, I don’t expect you to ask that kind of question.” A tough customer that he turned out to be, Boyo also had his funs with his boisterous laughter.
Whatever the impression one may have about the person of Boyo, there is no doubt about his love for the country and why he would want the economy to thrive so that there would be peace and harmony. Boyo is the managing director, Cocosheen Nigeria Limited, Ikeja, Lagos State.
Boyo studied in the University of London, where he obtained his Bachelor of Science degree in Economics in 1973. He also holds a Master’s degree in Administrative Science from City University, London. He is the founder and chief executive officer, Allied Technol Systems Limited.
His view of the economy and how to get it right is captured in the very testy and breezy interview with the Realnews team of Olu Ojewale, general editor and Anayo Ezugwu, reporter. Excerpts:
Realnews: What is wrong with Nigerian economy?
Boyo: I should ask you because you are the journalists who cover the activities in the country. Is it today that it started? I have been on the forefront complaining that something was wrong with the way the government is running the economy but you as a journalist were not concerned. All you know, as a journalist, is that my editor said I should fill up these pages and I filled it. Whether you filled it with nonsense is not important. In any case, your editor doesn’t even know the difference.
Realnews: But that is not the case here.
Boyo: Look my brother, the load that is yours is better you stand and take it once and for all rather than trying to hide because in trying to hide you will expose more of your inadequacies. Is it today they started saying that they are mopping up excess liquidity? Have you ever asked why? And they are stealing you blind in that process. Have you just realised that it doesn’t make sense to sell dollar to Bureau De Change? They started 10 years ago and all of you kept quiet. I didn’t see one journalist, qualified or unqualified journalist as the case maybe to say what are we doing here? You all accepted it and now the whole thing has backfired, you now come up as a journalist writing long stories, whereas you are supposed to be the custodians of people’s liberty.
Realnews: We are not schooled in economics.
Boyo: Then they should get people who are schooled in economics. You are reporting yourself again that they are sending you, non-economist, to come and discuss with an economist. Then you don’t have the qualification to be here because you will misrepresent what I said since you do not even understand it.
Realnews: You are misunderstanding us.
Boyo: No, I’m not misunderstanding you.
Realnews: What we are saying is that in economics, we have experts who are working for government when they introduce certain policies …?
Boyo: (Cuts in) Ooooo my friend, Mr. Ojewale can we talk like we respect each other. You are talking stories that we have people in government, so we have and look at where we are and you are having faith we have. And they are stealing us blind. They sell dollars to themselves; they go to banks and borrow what they don’t need. Have you ever questioned this? So far I have my breakfast, lunch and dinner, which one concern me and I fulfil my editor’s role. He said fill this page and I filled it even though I have written nonsense himself doesn’t know. Every newspaper in this country must have economics heads but the economics heads themselves do not even know what is happening. They clap for those stealing us blind. Like excess liquidity, this policy is killing us.
Why is it so difficult for people to understand this and not only that they come and put their hand in your eye and tell you this is what we are doing. Soludo said excess liquidity was his problem. Sanusi went step further to say that is it a wonderful business module you take your money give to bank and borrow it back. Didn’t you hear that or you didn’t read it? Emefiele came. What did he say also? He said we give the banks money instead of giving it for the real sector. We government will go and borrow it back. They are reporting themselves as a witch confessing? Did anyone of you take them up? Please forgive the way I sound. This is just that the way I feel about it because I don’t know how we all can be so foolish. You are having faith that they have experts there. Okay assuming they have experts there, we have to judge their actions and performance and products of their actions. Are they genuine? No, have you ever said this doesn’t work, why do we have reserve and we are borrowing? Why are we sitting on idle deposit locally and yet we are borrowing some more? These are crazy nonsense.
Realnews: So how do we get out of these issues?
Boyo: If you have read my pamphlet you will understand. You see the problem and the solution so what more do you want to talk. What are the areas you do not understand then I will explain more.
Realnews: Sir, in the pamphlet you said something about the multiplicity of taxes, what do you think about the introduction of stamp duty?
Boyo: My friend you are not ready for this interview. I’m talking about cancer and you are talking of something that doesn’t make sense. Why is it a big deal for you to understand what I’m saying? They are stealing N600 billion from you every year and you are talking about stamp duty of 50 kobo or N50 as the case maybe. You are not worried about it? It is of no concern to you?
Realnews: Of course, it’s of concern to us?
Boyo: Then if you have problems, won’t you tackle the priorities first and then go down the line?
Realnews: How many people in this country know how much they are stealing from us?
Boyo: You have the responsibility as the media to have written about it, is not me. I’m not a media person. I’m a businessman. I’m an industrialist. But I’m forced into this because media is not doing their job. I’m not a journalist. You might say this man is being harsh. I don’t care what you call me. The important thing is as long as you leave here understand the truth. If you decide to deceive people after, that is your own business but at least you would have understood the truth. If that is all we can achieve I don’t care what you think about me. You don’t feed me, I don’t feed you. But if you cannot dismantle my construct then you have to listen to me.
Realnews: From what you have been able to analyse, what is actually wrong with our economy?
Boyo: My friend please stop there. Look I don’t have time for this kind of thing. I have told you what is wrong with your economy there and you are telling me what is wrong with the economy.
Realnews: We are saying for a common man because when we report….?
Boyo: (Cuts in) Look, don’t tell me reporting. If I’m a minister and shit here and use it to paint your body, you report that it’s a good thing that the minister shit and used it to paint everywhere? You know, because you have failed to use your own professional skills to be able to analyse what is going on. When you have malaria, you can take all kinds of medicine provided you didn’t take the one that will kill the malaria parasite, it will not go. So once you have taken the right pill that one attacks malaria parasite everything will disappear. And I’m telling you the root of our problem. You don’t seem to be concerned that some people have been ripping you off for so long. Taking N600 billion for doing nothing for giving your own money to them and borrowing back. You are not alarmed that the Central Bank with all the eminently qualified people there; they sustain a process of selling dollar to the Bureau De Change. It is a conscious thing. It was consciously decided that they would sell dollars to Bureau De Change so that they can loot the economy with it. If you have been abroad the people that use the Bureau De Change are people travelling and wanted to change $1000 or $2000. Will you go and buy $7 million anywhere? And you hear stories of people carrying $3 billion, $4 billion and what do they do them? They don’t jail them. They only tell them to pay 10 percent of what you are carrying and can still take your money and go.
Are this not evidence that these things are deliberate? If they do not sell dollar to Bureau De Change, will they be able to move money out of this country? God gave us intellect and everything and we don’t have to be economists to understand this type of things. And you are expecting that the economy will grow when the people running it are killing you. They tell you all kinds of lies, you believe. They tell you the naira is falling because we don’t earn more dollars, you believe. We were not able to ask them, if the price of crude oil is making naira to fall, how come when the price of crude oil was $140 per barrel and we were pumping out 2.5 million barrels per day, the exchange rate dollar to naira didn’t come down from N150 to N50. It didn’t even come to N100 or N140. It stays around N155 and N160. Did any of you ask that question? Now there is no dollar as much as before they say that is the reason. I haven’t heard any journalist saying stop there, what nonsense are you talking, when we had $60 billion and we dash Paris Club and all of them money and we were giving money left, right and centre that even Sanusi went to China, saying that we have too much reserve of dollars and was looking for where to put it. Meaning that we have surplus dollars, did the exchange rate become stronger? We should first of all ask them these questions.
Realnews: But what they told us is that we don’t produce or manufacture anything?
Boyo: Listen Mr Ojewale I have had patience with you but I don’t want you to tempt me. I tell you honestly. They tell you we don’t manufacture or produce anything, but you didn’t hear the first sentences I made when you said that. I tell you did you ask them if that is the truth. Was it that we are manufacturing so much then?
Realnews: That is what they tell us?
Boyo: If you follow what they tell you, you will end up in a very bad way. You must be confident enough to interrogate them because they know you are too intimidated to interrogate them. If anything you didn’t go there to listen or interrogate them, you are waiting for the envelope. And with that you kill your children, family and the whole country because you who are the fourth estate of the realm you are not prepared to challenge this people. That is the reality. It is not a question of what they told you. If they told you that must you believe everything they told you? If we produce 10 times what we are producing now what will we earn, is it not dollars? What did they do and the central bank said the best practice was to start selling dollars to the Bureau De Change. Even when it was reported that people are taking cash they looted from the treasury to Dubai nobody questioned it. Sir, you as journalists are supposed to report.
Realnews: How do we articulate all these?
Boyo: That’s your business. You are not used to this kind of thing so I can understand the territory which you are?
Realnews: But the CBN has stopped selling dollars to the Bureau De Change and the price of dollar is still increasing?
Boyo: My brother, don’t confuse yourself. You came here with a set of questions so I know it will take time for you to assimilate what I’m saying. Is CBN selling dollar to BDC the problem or the cause of the problem? I have already explained it that CBN has no duty selling dollar to BDC. Is it based on need or real requirement that CBN step-up the quantum of dollar it was selling to BDC. CBN is like somebody who is a drug seller, fed the BDC and we Nigerians with the appetite that there is dollar and you people should go and buy dollar. They started selling $1 million each to every BDC even though there was no need for it. But because it was like that people started cultivating the habit at any environment which you find yourself. Many people said it’s because of demand and supply for dollar that is why dollar price is high. I always laugh at them because that is not the reality. They only look at one side of the equation. What do you buy dollar within the market, is it sand? Is it tomato? Is naira that you use to buy the dollar? It is naira that you have to exchange for dollar. If you have inside a market, a room filled with naira and few dollars and that is all that is available in the market in terms of currencies? And these two currencies have to fight themselves, what do you think will happen? Which one do you think will be depreciating all the time? Is the one that is plenty.
So when you understand that we have a permanent excess liquidity for over 30 something years. I don’t make up stories. I read the same stories that you people write but I was able to synthesize what is going on. Let’s consider it to be a market, if you go into the market today as of the moment you get to the market you start seeing tomato everywhere, your mind will tell you that tomato is cheap in the market today. The day you get to the market you find out that before you see tomato it takes time, you know tomato is expensive that very day. Dollar just like tomato is a commodity. You buy tomato with dollar. You equally buy tomato with naira. If naira is strengthened in the system and you now have rations of dollars being released upon surplus naira liquidity that embarrasses everybody even the CBN confessed about it. A situation where you determinably have excess naira supply and then the person or agency that initiated that excess naira supply now offers not huge supplies of dollars, rations of dollars. Even when it was not scarce when we have $60 billion and in our reserve we still have surplus naira chasing rations of dollars that CBN throws at the dogs every week in what they called auctions.
From what we are seeing now CBN has suffocated the market with naira liquidity and then comes back and say I want to defend naira. In quoting the naira equivalent of dollars we are supposed to have in the system, if you read that thing very well you will see that if a bank has N1 and the cash reserve ratio is 10 percent it means the bank can lend out money despite N1 it has. Since the cash reserve ratio is 10 percent, when it has borrowers it goes to the CBN and borrows at a discount and then lends to the borrower. If the customer is ready to borrow at a higher rate, of course, the bank will be willing to sell but if on the other hand the bank itself recognises that of what value it is for me to say I want to lend to this man, while I can make enough money from the same person who releases money into the system or who indeed makes it possible for me to have more money by either reducing or increasing my cash reserve ratio. Because if the cash reserve ratio is 20 percent for example, instead of the man who has N1 being able to lend out N10, he will only be able to lend out N5 because the cash reserve ratio is 20 percent.
So your cash reserve ratio automatically pumps money into the hands of the banks. If you now have a situation where you pay only N1 as an occasion to the three organs of the government and that N1 goes into the banks and the cash reserve ratio is 10 percent it means that N1 becomes N10 in terms of consumer power. That is where your excess liquidity comes from and it means that if you are not now talking of N1 and you are talking of billions of dollars which you are earning, which somebody has converted to naira and at their own personally determined rate not market rate because it’s not a market determined exchange rate. And the share it with the three organs of the government and because they have no other place to go they take it to the banks. Then the banks will immediately have 10 times what they have put in.
When that happens? What do you think? They say excess liquidity and what happens? The CBN will say don’t worry I will take care of it. And they go and borrow it. Can you see its fraud? The same agency that created excess liquidity now comes back and say don’t worry I can take care of it. I will borrow it back and what I’m borrowing I will keep it idle because I can’t afford to put it back into the system otherwise it will increase the problem. Is it not madness? Forgive me if I provoke because this is a matter of life and death.
Realnews: Is TSA not supposed to move money from banks to CBN?
Boyo: TSA can reduce the amount of money in the hands of the banks only temporarily. Because the money can only remain in CBN if it’s not spent but what is the value of money that is not spent. So the moment they spend the money, who did they pay to? They pay to people in the private sector whether salary or what have you. And what happens? All the money come back to hands of the banks. In any case, to show you that there is collusion about the whole thing, if truly the CBN is anxious about reducing the excess liquidity, when they did the TSA and boasted that they have removed more than N1 trillion as a result of the TSA. Consequently, some journalists said the banks will have less liquidity, what did the CBN do to help them? The CBN reduced the cash reserve ratio from 30 something percent to 20 percent across the board. That immediately release to the banks almost N2 trillion. The next thing the CBN was busy mopping up the naira.
This is not a funny something. You people all reported these things but you didn’t report it with any thinking. You all reported it like every other story. All of you when I challenge you, you talk to me, sir, we are only suppose to report. You are dying and you are reporting inadequately. This is what is killing you and your family, making you poor in the end.
Realnews: So this idea of banning some imported goods, does it have any effect on the naira?
Boyo: You have answered your own question. You see once you have understand something, you don’t ask question on that line again.
Realnews: Is there any way we can help the manufacturers in the face of these economic challenges?
Boyo: You see I admit that you confess that you don’t know much about the economy. I know you believe we can diversify the economy because government said we should diversify. Many governments before this one have said so and the solution they always adopted is to throw money at certain sectors. What this government has done is to double the amount of money thrown at the sectors nothing different. But doubling the money will not be the answer. It will not bring the result of either industrial growth, inclusive growth or more employment because the things that drive those factors are not there. In every economy all over the world, an economy is an integrated whole. An economy doesn’t grow because the prime minister or president said he will grow the economy. When the president said he will grow the economy it means that he will provide the enabling environment for the economy to grow. How much really can a government spend in Nigeria for example even as buttered as 2016 budget is, It’s only about $30 billion. And we were told that we have a $1 trillion economy. So $30 billion is all the government is going to spend. Meanwhile, the requirement for whole thing is about $970 billion shortfall. Who is going to provide the money? But then that is why the banks are giving the authority to create money so that they can drive the economy. That is why the CBN will always give them money to support the real sector because it’s the real sector that grows the economy. How many people can government employ? But if you are expected to run a $1 trillion economy and you are depending on the spending of $30 billion that government has budgeted, then you have missed the line.
But the reality, of course, is that the economy will not grow without the pillars that support growth and these pillars are the same in every economy. That is why serious minded economy recognises the importance of inflation at not more than 1 or 2 percent. They recognises the importance of cost of fund because if you want to grow the real sector is not all about throwing money at the sector, but making sure that interest rate are across the board not more than 5 to 6 percent. Those countries where we are importing these goods from their interest rates are not more than 6 percent. Some of them even 2 percent. Agriculture in Japan is zero percent interest rate. How can you compete? Inflation is a dangerous plague. Dangerous in the sense that if you are led into a state of comforts that your inflation is between 8 and 9 percent. If it’s 8 percent, for example, it means that every five years your income looses about 30 or 40 percent of its purchasing value. Like the N18,000 minimum wage, which has remained the same. After five years now with inflation rising to 9 percent, what do you think happens to the man getting N18,000 or the man who starts work newly. What happens is that his purchasing power will deplete and he becomes poorer.
Inflation reduces the consumers demand which in turn reduces investment. Can we ever have a diversified economy when interest rate across board is 20 to 25 percent for the real sector when serious minded economies are talking of 3 to 4 percent? I told you before that economy is an integrated whole and all of you who have spoken to me in the last 14 years have never asked why it is so. So when they keep telling you we will diversify tomorrow you will say that government is doing very well. They are going to put N300 billion into agriculture. How many times have government put money into agriculture, has it ever sustained it because the factors that drive economy anywhere in the world inflation is high at 8 or 9 percent. But in any economy in Europe or America that has inflation above 3 percent most likely that government will fail the next election because they know the value of all these things. If inflation continues the way it is, God forbid, you are putting money into pension contribution you will be a fool because by the time you are collecting your money in 20 years’ time the money you are collecting will appear plenty but can’t buy anything.
And somebody said let us devalue the naira that it’s good for us. If you devalue, if you take a real case scenario to make a meaningful devaluation now you will say lest take the N200 rate and move it nearer N400 so that it will be near the black market. But what are the implications of that immediately it happens the following things will evolve, price of fuel will double. Will you be still talking about taking away subsidy by then because the price of fuel will be at N150 or N160? Do you think Nigerians will accept? Even if Nigerians accept, and say well as long as it’s available we will pay N150 per litre. Then the black market drags away again from N400 and goes to N500 or N600 within two or three months so we will be chasing them. What happens to the price of fuel, it now goes to N300 per litre? This is a real life scenario, it’s not a magic thing I’m conjuring this is what actually happens. So if you knew that beforehand would you be happy to encourage devaluation.
Realnews: You talked about dollar certificate, we don’t actually understand how it’s going to work?
Boyo: Do you understand how the present system works? No you are not even bordered to know. So how can you gain if I tell you how dollar certificate works?
Realnews: I remember in those days when we are travelling, we have something like traveller’s cheque. There is nothing like BDC where you can go and change naira to dollar to put in your pocket and travel because everything has to be documented?
Boyo: But that one didn’t pay them so they did the one that paid them. And some Nigerians enjoyed it and they sang the song that this people are great. But is it ordinary eye that makes CBN to decide that I will be allocating $1 million to every BDC every week? We have to start recognising the fact that these people are not interested in us but they believed that as long as they keep the media in their pockets and they keep paying finance editors and economic editors in all the media houses, their secret can be kept. And you are all helping to keep the secret but unfortunately your children and grandchildren would not benefit from whatever you are getting now because it is not sustainable.
Realnews: So one of our major problems is BDC?
Boyo: I haven’t told you that. Please don’t misquote me Mr. Ojewale. Your major problem is excess liquidity created by CBN capturing of the dollar revenue each time we earn dollar and substituting naira. The process instigates surplus naira in the system which drives inflation and which makes it necessary for CBN to step in to say they will reduce the inflation by making sure that the surplus money in the system customers cannot access it. So they first take part of it to reduce it and if CBN can reduce it sufficiently they will make sure you don’t borrow it because it will be foolish for you to come and borrow from them. So it is better for the economy to stagnate than for inflation to rise because as I told you inflation is a deadly plague.
Realnews: Why is it that we have so much money in the system and we are still going out to borrow?
Boyo: Now you are talking and beginning to understand what I’m saying. At least, I have turned you to an extent that it is beginning to ravel in your mind. That is a good question. How can we have huge money both in naira and dollar and we are going out to borrow. The dollar CBN is sitting upon is more than $28 billion and you are going to borrow $1 billion from the commercial market. Why is CBN keeping its own dollar in JP Morgan and places like that? What is stopping a clever investor going to borrow from JP Morgan $1million dollars at 1 or 2 interest rate and they are coming to Nigeria to lend your own money back to you and 7 or 9 percent as the case maybe. Even if its 3 percent you make out of that you make millions of dollars. He is a rich man for doing nothing, for using your own money. In naira terms also the same, the CBN provides money, the banks takes it and it goes back to the same CBN and they make money and you wonder why you are not growing. You can’t grow. You are not expected to grow with such policies. It is not the intention of all this governments to make you grow. It is not rocket science that you can’t grow with cost of fund at 20 something percent. It’s not rocket science that no economy can survive with inflation at 8 or 9 percent because every five years you have to devalue your money. There is no incentive to save because you are afraid that in five years’ time that money will be nothing. And if you do basic economics you will understand that savings equals investments. If you are not saving where are you going to borrow for investment? Food for thought!
Realnews: If you are to advice this government what will you tell them?
Boyo: Exactly what I have told you.
— Mar 14, 2016 @ 01:00 GMT
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