“NIGERIA’S ECONOMY IS ON THE POSITIVE” – MUSTAFA CHIKE-OBI

“NIGERIA’S ECONOMY IS ON THE POSITIVE” – MUSTAFA CHIKE-OBI

[Music] well as you said earlier we reported the breaking news that nigeria’s gross domestic product grew by 5.01 in the second quarter of 2021 the highest economic growth recorded under the mohammed bulari administration in six years the national bureau of statistics in a second quarter gdp report said the five 0.1 percent growth rate recorded year year was higher than the minus six point one percent growth recorded in the second quarter of 2020 and the 0.51 recorded in the first quarter of 2021 the mbs said the gdp figure was indicative of the return of business and economic activity levels prior to the nationwide implementation of kovid 19 related restrictions now joining us in the studio to discuss this another developments within the nigerian economy is the president of the bank directors association of nigeria and chairman of fidelity our bank plc mustafa chikyobi good morning mr chikubi and thank you for joining us on the morning show good morning reuben it’s always a pleasure good morning tundra good morning rafael i’m always a pleasure to join you well so many issues to discuss with you uh we’re really glad having you in the studio at a time when there is a breaking news within the economy and you had the introduction what is the significance of this we’re told that this is the uh you know biggest in terms of gdp growth uh since uh the last six years and that issues is an indication of improved business activity and that we are almost back to pre-covet levels uh how significant is this is this something we should jubilate about or are there things we should watch out for and are there steps that government we need to take to make sure that this is sustained well this is unalloyed good news no matter where you are you need to start progressing from some place and people are going to tell you we started from a lower base we didn’t start from a low base but the fact that we can grow by five percent from any base is very encouraging so i think this is really good news i aligned with tundu earlier who says that there’s a silver lining um congratulations to all those involved in getting the nigerian people most of all in getting back to their lives um government policies have helped the the incentives given by government have helped so this is good news and situate this with the fact that the inflation has been moderating at the same time it’s still quite high but it has not been rising it didn’t raise the last report so i think that’s from the current point of economic side this is really good news and i complement all those involved including the nigerian people who have taken their lives back after the devastation of kobe well thank you for that i want to ask you specifically is this an inflation-led growth well it’s it’s a real gdp so that is after i’ve been adjusted for inflation the nominal gdp was much higher so it’s adjusted for inflation so it’s a real growth and it’s impressive so uh the word in a lot of people’s leaps now will be yeah congratulations but can this be consolidated on i mean economies have been rebounding have been growing i think britain uh the the the the the gdp numbers that came out at the point where high because you know post covey things are coming back on a lot of people are even talking about yeah inflation and all of that but can this be sustained can we have like doctor battle was asking the other time can we have a double digit gdp growth anytime soon at the end of the year we have that as an end of the year gdp number is it possible can we go back to the early 2000s that we’re growing really high we had double digits it’s unlikely that we will sustain a five percent growth without significant expansionary policies it’s unlikely so i think that there’s work to be done on the expansionary side of the economy i think that the fiscal authorities are focusing too much on raising revenue and that will impact the economy down the road as for double digits it’s not going to happen except all hands on deck committed to double digit expansion so i expect that next quarter we’ll probably get a three percent growth and then we’ll level up around two and a half to three given current policies we are not aggressive enough in terms of expansionary policies to see this five percent sustained well let me ask you this i mean uh one of the issues we raised earlier is that the inflation rate is still high although you say something has been achieved in that regard based on mbsa statistics but i mean i say layman i would like to know is there something like an inflation-led growth in the face of inflation high inflation the type that we have you know can you really record growth well there’s uh the way gdp is measured you have nominal gdp and you have real gdp real gdp is nominal gdp minus inflationary impact so anytime real gdp is positive it’s it’s a number that has been adjusted inflationary facts have been taken off um so yes um you can have high higher inflation inflation-driven growth but it shows up in gdp gdp doesn’t real gdp doesn’t grow if inflation is very high right so i’m going to switch tech here and you know congratulations on your new appointment as um chairman of the board of banking directors association of nigeria is that correct what is your take on this um efcc instruction that comes september first that banks will also be held liable as opposed to just depositors for any institutional fraud within the banks well let me let me talk about uh bdan bank director of nigeria first and i’m very honored and humbled to be appointed the president that’s usually a role that’s reserved i believe in the past for the so-called tier 1 banks so the fact that a fidelity chairman is the president is very encouraging for fidelity i think um this is an institution that i don’t think many people know much about but i believe it’s probably one of the most important corporate platforms in nigeria and my mission is to really expand on what people have built on bidan to make sure that people know what bidan is and what bedan that biden represents the banks not just the bank directors it represents interest of the bank’s policies of the banks and we need to create a a better image of banking in nigeria and i think biden is the platform to do so so i have a number of plans that i have for bid and going forward but i’m very honored and i think that nigerians will hear and feel more the impact of bedan in the years going ahead you know by extension for wanting to say congratulations to you you know because we we consider you as somebody you know in the house to here and you’ve you’ve reinvented yourself every time you know for your days at apcon now to fidelity bank now to be then i would like to know some of the plans you’ve got for beat and that’s not going to be number one and number two will like to look at you know the economy once again because it concerns all of us you said for double digit growth all hands must be on deck i mean show me those hands being on deck what does that mean well i’ll finish with tundra’s question about efcc i think that the current chairman of efcc is doing his best to make sure people know where he stands on certain issues and i think it was a very useful statement in which he basically told the banks please whatever you’ve done in the past i will look at it but what you do in the future especially going into an election is very important to me and let nobody sin anymore and laying down the markers for what he considers priority in the banking sector i think the first word in his institution is economic and i think that he’s also a partner in the growing economy by making sure bad practices are eliminated so i i encourage the proactive dialogue he has with the banks and i think that bank mds and banks should take note that these are the things that are important to a partner in their economic growth i’m going to be then let me say one or two things because nobody should take a job like president obama without having a clear idea of where they want to go with it and one of the things that’s a problematic for banks today is the amcon levy and it’s strange i’m talking about hong kong levy since i was the initiator of the amcon levy but when we initiated the amcon levy we had a plan we had a 10-year plan for banks to contribute to the amcon levy it’s now open-ended and i think it’d be useful for the banks bank shareholders it’d be useful for amcon and cbn to come up with a definitive plan about how longer this levy will last is it another five years is it another 10 years because an open-ended commitment that’s become the second or third largest expense item for banks is not helpful and many banks today that are paying the levy were not around at the time of amcon so there’s some equity about making people pay these large sums of amount with that’s open-ended so i would like to engage the cbn and amp on particularly to come up with a plan that shows definitely when this amcon levy will seize um so that the banks can’t plan if this open-ended thing is uncomfortable for many banks and they won’t say it’s because of fear of the regulator but i think that as bid and we can discuss that all right also actually about you know our house being on deck for the economy to move forward so how do we do it how can we get all hands on deck the the thing that concerns me the most is this every government agency in some guys or the other is trying to raise revenue without considering the impact it has on the overall economy and i think that um we’ve we go out we’re arguing about vat we’re talking about raising these taxes people are overtaxed and if you overtax an economy without growth what happens in the end is that the economy doesn’t grow because government is a very useless spender of money private specters private sector spends money more effectively than the government and taking money from the private sector to hand to the government it’s not a way to grow the economy so we need to have a discussion where the private sector and the public sector do things together to grow the economy and i’m not seeing much of that synergy at this time so taxation is a key fact going to the fact that recently uh a tv company was slammed to pay 1.82 trillion and the company is saying we don’t even make that much how can we islam with that such high tax bill in the country and they say we scare away a lot of investors not only that they’ve been asked to put up 50 of that before they can appeal the decision uh again i’m sure it’s part of the of the law but the impact on the economy and impact on that particular company will be devastating and they will pass on the cost to the subscribers and so in the end i don’t see it as very productive having this high-handed revenue drive at the expense of the economy okay i mean let’s move away a bit from strictly economic issues many people may not know but in the 2019 presidential campaign process you were economic adviser to abu bakr atiku camp the pdp um are you surprised that today in terms of the management of the economy this present administration does not have even an economic advisor yet of course there is a an economic advisory body do you think that at a policy level do you think that enough attention is being paid to the economy in terms of its importance and then secondly as chairman of the uh president of the uh uh bankers directors association of nigeria how much challenge the security uh pulls to your operations because i know that even in the face of kovid and insecurity in parts of the country the banks are still reporting very frightening their balance sheets in terms of profits well let me say that [Music] i have always been surprised that the president of nigeria has never appointed a chief economic advisor [Music] it may be cosmetic or not but it’s important when you’re dealing with something that you show people you care about it so that’s always surprised me but i’m sure they have their reasons the the issue i think nigeria’s primary issue is not security it’s not corruption it’s the economy there’s no country in the world with a robust economy that has security issues there’s no country in the world with a robust economy that has corruption issues if your economy is growing and people have a hope for a brighter future they tend not to engage in criminal activity they tend not to engage in corruption activity they tend not to engage in security issues so i think that trying to do corruption and security challenges are a function of lack of economic hope lack of economic direction and i think more effort should be directed towards fixing the economy if we have the double-digit economy you spoke about so glowingly i promise all nigerians that the security challenge will be minimized corruption will be minimized and all this agitation for what is for this h regionality will be minimized so my issue is and always has been let’s focus on growing the economy at double digit let’s all get together to do it let’s get the next president in 2023 who has an economic vision um my brother kashim was here the other day i listened to you guys every day and he was saying it should be somebody from apc no you should be the best person wherever it comes from whether it has a party or not let’s get the best economic minds to run this country so that we can start resolving as serious issues and this partisan stuff that everybody is talking about has not helped us and will not help us in the future so what role do you envisage that be down will play in what you’ve just described you’ve just said that there’s a vacuum to what extent can you help to fill it well then first of all we need to project the image of banks better we also need to make sure banks are playing their role in the economy we need to partner with government agencies as as a banking group to make sure that it’s difficult to steal money it’s difficult to hide stolen money it’s difficult to launder stolen money we need to do many things as the banks to show that we are true partners in the economy growth of nigeria and not just profit making enterprises um so yes we will you know it’s a step at a time i just um started this one of the first things i want to do is to review the constitution of bidan we need to have a policy arm we need to have a research arm we need to have a legislative arm so that we can engage more proactively in all those issues so that banks are properly playing their roles in the society i mean you’re chairman of a bank i just want to get your feeling this we’ve seen the proliferation of fintechs i mean raising a lot of money op recently raised 400 million valuation over a billion that’s about 30 of the valuation of entire traditional banks in the country i mean a lot of people are looking when will traditional banks have to play big time in the fintech sector where would traditional banks have to invest in fintech companies and you guys get scared that these guys will come and wipe away your market because you talked about a research team in beta yeah these are the things you’re going to be thinking about and cracking with the research team well fintech um there’s different between fintech and fintech companies which you just said fintech is just financial technology and every bank uses it every time you do internet banking is financial technology you’re using um fintech companies in my opinion are companies are devoted solely to doing things that involve financial technology and they don’t do other traditional things that banks do traditional finance um my feeling is that eventually all banks will be using financial technologies i will be doing everything that the fintechs are doing today um there’s one or two successful fintech companies there are not many for every two or three you mentioned i can name a hundred that have failed so i we’re not as frightened of financial technologies as for sure as people think i am not and fidelity is not we will adopt the ones that make sense to us the key for us though is that central bank has to allow us to close some branches across the country because now the idea of branch banking is not as effective because now people can break and bank without going to the branches you go to many branches now the branches are empty so one of the things that we have to look at is the cost of maintaining branches as opposed to the cost of using financial technologies and i can assure you that we are fintech and we’re going to be fintech users going forward but we’re not threatened okay very quickly a number of concerns i asked you the question about you know chief economic advisor and economic policies because there are people who have expressed a similar view as yours that we need a chief economic advisor but maybe there will be some people who will say what of the uh the economic advisory group that is led by a doctor doing salami do you think that that particular body fills the gap and then when we talk about the economy oftentimes we focus on the federal government what should be the appropriate role of the state government in achieving the objectives that you talked about earlier on or is it that the state governments are also helpless of national units we will just have to depend on the federal government to get this economy moving um let me address the issue of the advisory economic advisory council which is composed of very very high-minded intelligent people i always felt that presidents are not good consumers of policy documents that of the kind that emerge from that kind of body those work outputs from them should have been going to a chief economic advisor who will sit there every day and condense their output so that the president can act on them giving the president what a briefing every three months i’ve yeah yeah and i’ve engaged president before meeting him once every three months to give him an output of three months out of meeting is not actionable so i was i was always worried that the although the council was well constituted the channels for the output to convert into action was not there and unfortunately my fear has probably to be true because they don’t seem to have had the impact we all hoped they will have when they were constituted um so i wish they would have a chief economic adviser who they would submit their output to and then that chief economic advisor would then condense it for the president’s actions so that’s my answer to that the um the problem is that federal government regulators are too powerful in this country and so in the end because of the power that the regulators wield at the federal level we don’t have the ability for states or even companies to do much without running to federal government for this approval of that approval and we look at the vat issue the courts have said clearly that states should collect that and frs is saying no keep paying it to us so until the federal regulators realize that their partners in business and they’re not dictators in business i think we’re still going to have to keep running to the federal government to [Music] help with the growth of the economy that unitary system oh you are saying something yeah i’m sad that’s unfortunate so which means the states are helpless states and private sector are practically helpless in the face of rampaging regulators yes oh dear centralization as a betina of nigeria but i wanted to go back to one of your objectives as president of bidan with regards to image with the banks what do you think is the primary concern or what is your primary concern with the image of banks in nigeria today well banks are seen as predatory make money pass the cost onto customers break the rules institutions out for profit i think that image may well have been partially justified in the past so we have to as bid and make sure that banks are doing the right thing and b and once we start doing the right thing that that image of doing the right thing is projected so it’s a two-step process internal review of our practices and how we treat our customers how we treat the economy and then a public announcement of the fact that these are the things we’re doing right and we intend to continue to do it right so the first step is an internal review process which we will undertake with all the banks as soon as possible well thank you very much mustafachi kobe for joining us this morning and once again we congratulate you on your election as president of the bank directors association of nigeria and wish you very well thank you very much [Music]
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