The Emerging APC (2)

I published the first instalment of this article on February 27, 2013 intending to write the concluding parts as the emergence of the All Progressives Congress (APC) fully crystallised. I also made commentaries on the APC in subsequent articles-“Nigerian Political Party System” Parts 1 and 2 (September 18 and 25 2013) and “Person of 2013” (January 15, 2014). I considered my comments on the APC and the political party system as friendly advice, but I do not think the articles made a convivial impact on the recipients judging from the subtle and not-so-subtle responses from the politicians and their “intellectual wing”! In “The Emerging APC” I wrote that “The incipient APC however appears to be the first serious challenge to the PDP’s hegemony-if the planned merger of the ACN, CPC, ANPP and elements from the All Progressives Grand Alliance (APGA) and Democratic Peoples’ Party (DPP) is successfully consummated and the emerging entity is internally cohesive, prospects are that the PDP will face its toughest battle yet in 2015!” hinting at the absolute necessity for the APC leaders not to sacrifice internal cohesion as they sought to build a large party that could challenge the PDP. In the same article I warned that “there will yet be fights over control of party structures and positions; and there will be severe jostling over selection of electoral candidates; the party runs the risk of presenting controversial candidates and inheriting voter prejudices and perceptions”. The recent party conventions (and the earlier entry of the defecting “new” PDP governors has somewhat destabilised several state chapters of the party (Ogun, Kano, Benue, Adamawa, Sokoto, Edo, Kwara, etc.) and aspects of its national structure. I also noted in that article that “the emerging party will face strenuous efforts at sabotage, from outside and within; and it could itself self-destruct!” In “Nigerian Political Party System” Part 1, I wrote that “it is not certain what the merger of all these disparate elements into the APC would produce-the party could re-create a social democratic grouping with progressive credentials or less cheerfully a form of sectarian-populist fascism could emerge.” In this quote, I was already (as far back as September 2013!) anticipating the fact that the emerging APC was making itself vulnerable to charges of sectarianism in its composition and leadership and dissecting the options the group faced as being one between genuine progressive social democracy and what I characterised then as “sectarian-populist fascism”. It doesn’t seem obvious to me (and probably to most objective Nigerians!) that the party chose true social democracy! I stressed this point further asserting that the party “…has a window of opportunity to position itself as qualitatively different from the PDP by focusing on policy and integrity, and putting its best foot forward. It is not evident that APC will do this, as it concentrates on attracting defectors from the PDP and risks pushing unviable options to the electorate.” In my view, the APC has so far chosen the short cut to power rather than the rigourous but sustainable path of building a formidable ideas-based, policy-defined, progressive social democratic party! I subtly lamented this in the second part of “Nigerian Political Party System” thus, “…we are yet to evolve a political party system in its normal characterization in which there are clearly defined parties with contrasting visions, ideologies and policy platforms and with stable membership and programmes. Instead the parties have fluid and fluctuating members... and there is very little discussion around policy and ideology”. Sadly there was no intelligent response, even from the self-characterised “intellectual wing” of the APC! Indeed someone sought to justify the undiscriminating composition of the APC based on the UK Liberal Democrats alliance with the Conservative Tory Party! Let us hope that the outcome of all elections the liberal democrats have subsequently participated in does not predict the fate of the APC! When a party has a base of supporters which it has cultivated based on some ideological standpoint, it cannot presume to still retain that support whenever it has or is perceived to have abandoned that platform without permission or consent of its base! I believe I also expressed (what I later discovered to be) widely-held reservations over the APC’s non-ideological evolution through other less-public mechanisms within the presumed base and support system of the party. I re-assert that view that the APC may be punished by its base for leaving what they may consider to be the substance while chasing elusive shadows (“arodan” I believe is what the Yorubas call such enterprise!). In “Person of 2013” in which I reviewed economic and political developments in the last year, I noted that “politically the most significant development was the creation of the All Progressives Congress, the opposition coalition which, in spite of its many limitations, promises to make our politics more competitive. It is a pity that its success in deepening political competition was probably somewhat undermined by the cynical manner in which it seeks to inherit, through a wholesale political “organ transplant”, the heart and soul of the PDP!” I went further to state that “Asiwaju Bola Tinubu would clearly be the pre-eminent political actor of 2013 forging APC out of disparate interests and challenging PDP’s political hegemony. It is debatable if he hasn’t sacrificed his new grouping’s credibility as a truly “progressive” party in the process and may be taking some of his core constituencies for granted, but his impact on Nigerian political development in this dispensation has been huge.” I hope the APC’s loss of Ekiti in its first electoral test under that brand name (following on its precursor’s similar loss in Ondo) is not the first sign of a political base taken for granted!!!

The Nigerian SWF

Sovereign Wealth Funds (SWF) are state-owned investment funds typically (though not exclusively) funded through revenues from commodity exports or foreign exchange reserves held by central banks which invest in real and financial assets-stocks, bonds, real estate, infrastructure, precious metals or alternative investments such as private equity and hedge funds. The term “sovereign wealth fund” was reportedly first used in 2005 by one Andrew Rozanov in an article titled, “Who Holds the Wealth of Nations?” in Central Banking Journal, even though such funds have existed for over a century. The number of SWFs has however dramatically increased in the 2000s. While some nations’ SWFs may be said to be discretionary to the extent that they are funded from non-commodity budgetary surpluses and the nations have little or no debt, the logic of sovereign savings is more compelling for nations (such as Nigeria) who are dependent on raw material exports such as oil, copper or diamonds given the volatility and unpredictability of their prices and exhaustibility of the resources. SWFs may thus be for savings, stabilization, economic or even strategic objectives. According to some figures I obtained on-line attributed to the Sovereign Wealth Fund Institute, assets under management of SWFs increased for the fifth year running to over $5.78trillion in 2013 with an additional $7.2trillion held in other sovereign investment vehicles such as pension reserve funds, development funds and state-owned corporations funds, and $8.1trillion in other foreign exchange reserves thus indicating that SWFs and their associated sovereigns potentially control over $20trillion of global investible resources. Many of the major global SWFs subscribe to the “Santiago Principles”-a set of 24 voluntary guidelines jointly formulated by the IMF and the International Working Group of Sovereign Wealth Funds (IWG-SWF) now replaced by the International Forum of Sovereign Wealth Funds (IFSWF). The key objectives underpinning the Santiago Principles are maintaining a stable global financial system and free flow of capital and investment; ensuring compliance with regulatory and disclosure requirements; investing on the basis of appropriate economic, financial risk and return considerations; and ensuring transparent and sound governance, controls, risk management and accountability in SWFs. The Nigerian SWF known as the Nigerian Sovereign Investment Authority (NSIA) was established by an Act of the National Assembly and Presidential Assent in May 2011 to receive, manage and invest in diversified portfolio of medium and long term assets, revenues received from the federal, state and local governments of Nigeria as well as the federal capital territory. The NSIA has an acceptable and sensible fund structure comprising a Nigeria Infrastructure Fund (NIF), Future Generation Fund (FGF) and The Stabilisation Fund (TSF) ensuring that the fund meets economic (infrastructure finance), savings and stabilization objectives. The FGF which pursues savings and growth for future generations receives 40 percent of NSIA funding; same as the NIF which invests in domestic infrastructure projects (including up to 10percent of its funds in social infrastructure in underserved sectors or regions); while TSF receives 20percent of NSIA resources for provision of a buffer against macroeconomic instability. In terms of governance, the NSIA’s 55 person Governing Council represents the ownership and stakeholder groups in the fund-the President, 36 state governors, ministers of finance and national planning, Attorney General of the Federation, CBN Governor, Chief Economic Adviser, Chairman of Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) and twelve individuals representing private sector, civil society, youths and academia. However while the Governing Council and the NSIA board were constituted with regard to the ownership and stakeholders in the Fund, the same cannot be said for its management, especially top management! Unfortunately the NSIA has been bogged down in ceaseless controversy and litigation as the governors remain implacably opposed to its operations and funding. To the best of my knowledge, no additional resources have been transferred to the fund since the initial $1billion seed capital funded from the so-called “Excess Crude Account”. I support the concept of a SWF for Nigeria. As I noted earlier, given our acute dependence on oil and the risk factors consequent thereon-budgets, foreign reserves, exchange rates, inflation and even domestic liquidity and purchasing power are all substantially dependent on oil earnings-sovereign savings are a necessity and not a luxury for Nigeria! However Nigeria is a federation and our SWF must recognize that essence in its fund ownership structure, governance and management. Funds held in the SWF must be held in trust for the owners, with the title to the fund resources clearly ascertainable at all times, and the management of the NSIA must reflect the ownership diversity and interests since there is no doubt that the quality of human resources required to properly manage such a fund reside in all parts of the country. Meanwhile the president and state governors must show the right vision and statesmanship to negotiate a sustainable existence and funding for the Nigerian SWF-a fund of $1billion would not serve the savings, infrastructure financing and stabilization needs of a $510billion economy!

Memo to Godwin Emefiele

I will not attempt to be unduly prescriptive in this memo-you are a first class banker of many years standing and you have worked in one of Nigeria’s most successful financial services groups for over two decades getting to the top thereof. My preferred approach will be to raise issues which I believe you will have to address and suggest what I think the critical variables are. I believe as governor of Nigeria’s Central Bank, you will have every resources at your disposal to enable you set the right policies once the right questions are asked. I will outline first what you are NOT as CBN Governor as recent developments may have obscured the role and implications of that position! You are not a politician, philanthropist or media celebrity! Neither are you a leader of an NGO or social activist. You are supposed to enjoy autonomy from the executive especially in relation to monetary policy and financial sector supervision, but you are not an alternative or parallel government! You are certainly not an ethnic, religious or regional crusader. And you are no longer a staff of Zenith Bank! You are now charged with managing Nigeria’s reserve banking and monetary policy, contributing to its economic development and supervising its financial sector. In this role I believe the key underpinnings are or should be achieving sustainable economic development and diversification; dealing with Nigeria’s socio-economic crisis of poverty, unemployment and inequality; and growing a safe, strong and competitive financial sector that discharges its primary role of financial intermediation and economic development. Given this background, I completely endorse your initiative to focus on employment as a key macroeconomic variable to be tracked by the bank and its monetary policy committee and commend your recognition that growth and employment along with stability perhaps, but certainly not stability alone and for its own sake should be the primary goals of macroeconomic policy in our current context. I also understand why you seek the other objectives you outlined in your inaugural speech-reduced interest rates; strong foreign currency reserve buffers; stable exchange rates; and probably low inflation as well. The problem as I’m sure you understand is that macroeconomic management involves difficult trade-offs and the agenda you have outlined will clearly involve you and the Bank having to make some tough ones, sooner or later! It certainly will be difficult for you to simultaneously reduce interest rates, maintain exchange rates at current levels, and “aggressively” grow external reserves! It is probably impossible so to do! I suspect that you may have to choose which of these objectives you are willing to sacrifice and to what extent in the weeks and months ahead. The substantive questions you have to answer are whether current exchange rates are sustainable and how? What is the cost and opportunity cost of keeping exchange rates and inflation at current levels? Is our reserves management strategy sensible and optimal given that reserves have largely been dissipated to support the currency? How can we boost economic growth and make it more inclusive? What policies within the ambit of the central bank can help generate large scale employment and reduce poverty? I wholeheartedly support your strategy of supporting micro, small and medium enterprises based on the aforesaid. I have for instance advocated that banks and financial institutions may be encouraged to voluntarily (or otherwise!) agree to increase lending to SMEs such that each bank’s lending to that category of borrowers must be equivalent to their share of deposits. I am reluctant however to endorse specific programmes you will adopt to encourage lending to MSMEs until you unveil their details because I am wary of a situation in which the central bank becomes a retail lending institution or active participant in the retail lending process. The role of the bank must in my view be leveraging policy and appropriate instruments to influence the flow of finance to such targeted sectors. In terms of sectors I share your desire to see increased flow of capital into some sectors-power, oil and gas, agriculture, health and manufacturing. My personal priorities are growing housing and mortgages; sustaining and deepening agriculture reforms and manufacturing; and boosting local and international investments in solid minerals, construction and hospitality sectors. I am particularly interested in these sectors in addition to some of those you outlined because of their potential for large scale employment consistent with your priorities. My reservation in terms of not turning the CBN into a primary lender who distorts financial markets (and potentially becomes a source of moral hazard) however applies to whatever mechanisms you decide on for targeting sectors. In relation to sectors, I wonder whether it is within CBN’s remit to consider the competitiveness of our economic sectors as I fear the slow but steady emergence of monopolies and oligopolies within many sectors. I have written of the need for a competition law and policy regime to prevent monopolies and anti-trust behavior in Nigerian markets. I will also suggest that you revisit the merits or otherwise of the Soludo proposal to pay allocations to sub-national entities in foreign currency. With regard to financial sector supervision, I am quite impressed with your resolve to grow sector-specific specialization within the central bank as a tool for improving risk management and supervision in the industry as well as your intention to strengthen risk-based supervision. The most important challenge of the CBN is relation to financial sector supervision is actually to match the high standards the regulator often sets for the industry with equivalent efficiencies and innovation in the bank itself. The other recent trend which I hope you will reverse is the inclination of the last two governors to dictate the strategy of all banks within the industry from the central bank. The financial sector regulator’s role is to impose minimum regulatory standards and enforce them not to standardize firm strategy and create a homogenous and undifferentiated industry!

Maya Angelou 1928-2014

“All my work, my life, everything I do is about survival, not just bare, awful, plodding survival, but survival with grace and faith. While one may encounter many defeats, one must not be defeated” It was Bill Clinton that introduced the world to Maya Angelou in 1993 when she read her poem, “On the Pulse of Morning” at his presidential inauguration. Clinton has been described, with justification, as “the first black President” of America in spite of his evident white ancestry for the compassion and genuine friendship he brought to his relationship with the African-American community during his Presidency. One may in fact assert that Clinton was closer to the pulse of black America than Barack Obama! Maya Angelou’s words that inauguration day were poignant as she connected America’s difficult history of slavery, segregation and discrimination with its promise of unity and reconciliation, “…So say the Asian, the Hispanic, the Jew/ The African and Native American, the Sioux, / The Catholic, the Muslim, the French, the Greek/ The Irish, the Rabbi, the Priest, the Sheikh,…The privileged, the homeless, the Teacher. /They hear. They all hear/ The speaking of the Tree.// You, who gave me my first name, you/ Pawnee, Apache and Seneca, you/ Cherokee Nation, who rested with me, then/ …You, the Turk, the Swede, the German, the Scot .../ You the Ashanti, the Yoruba, the Kru, bought/ Sold, stolen, arriving on a nightmare/ Praying for a dream.//Here, root yourselves beside me.//I am the Tree planted by the River,/ Which will not be moved.//… History, despite its wrenching pain, / Cannot be unlived, and if faced/ With courage, need not be lived again.” Born Marguerite Annie Johnson in St. Louis, Missouri, second child of Bailey Johnson, doorman and Navy dietician and Vivian Baxter Johnson, nurse and card dealer, Angelou was nicknamed “Maya” by her older brother and appeared to derive “Angelou” from an entertainment branding-inspired tweaking of her first husband, Tosh Angelos, a Greek electrician’s name. Her parent’s marriage ended when Maya was 3 years old, and she was sent to her grandmother who exceptionally prospered during the great depression and Second World War. Angelou’s life was a pot pourri of occupations and activities-fry cook, street car conductor, prostitute and Madame, night club dancer and performer, opera cast member of “Porgy and Bess”, coordinator of Southern Christian Leadership Conference (SCLC), journalist and writer in Africa, civil rights and decolonization activist, actor, writer, director and producer, teacher and university professor, author and lecture circuit speaker! According to Wikipedia, a reviewer wrote about Maya Angelou’s eclectic, eventful and complicated life that “to know her life story is to simultaneously wonder what on earth you have been doing with your own life and feel glad that you didn’t have to go through half of the things she had”! At eight she was raped by her mother’s boyfriend who was subsequently murdered, probably by Maya’s uncles. She remained mute for five years, her young mind feeling responsibility for the villain’s death but in that period developed a passion for books and literature, and her ability to listen and observe the world, as well as her exceptional memory. Angelou’s life reinforces the notion that one is likely to learn more by silent observation and introspection. Angelou, who never obtained a university degree, went on to become a reputable author and poet, global personality, professor and recipient of America’s highest civilian honour, the Presidential Medal of Freedom! After the rape, she returned again to her grandmother where she met a teacher and family friend, Mrs Bertha Flowers who helped her speak again and introduced her to the works of Charles Dickens, William Shakespeare, Edgar Allan Poe, Douglas Johnson and James Weldon Johnson and black female artistes like Frances Harper, Anne Spencer and Jessie Faucet. In 1957, Angelou produced her first music album, “Miss Calypso” which inspired a film “Calypso Heat Wave” in which she sang and performed. In 1960 she met Martin Luther King, became SCLC’s Northern Coordinator and acted as a fund raiser and organizer for civil rights causes. She moved to Cairo with a South Africa lover, working as a journalist, and when the relationship ended, to Ghana as an administrator at the University of Ghana and editor and writer. She met Malcolm X in Accra and returned to the US to help him build an “Organisation of Afro-American Unity” but sadly Malcolm X was assassinated shortly thereafter. In another tragedy, Martin Luther King Jnr was killed on her 40th birthday in 1968 after she had teamed up with him. Maya Angelou wrote seven autobiographies-“I Know Why the Caged Bird Sings” (1969); “Gather Together in My Name” (1974); “Singin’ and Swingin’ and Getting Merry Like Christmas” (1976); “The Heart of a Woman” (1981); “All God’s Children Need Travelling Shoes” (1986); “A Song Flung Up To Heaven” (2002); “Mom & Me & Mom” (2013). She also wrote several books of essays, poetry, two cookbooks, many plays, movies and TV shows and received by some reports up to 50 honourary doctorates. In 1981 she became a university teacher at Wake Forest University, Winston-Salem, NC and lifetime Reynolds Professor of American Studies. President Obama awarded her the Presidential Medal of Freedom in 2011. She earned several Grammys, Pulitzer and Tony nominations, a National Medal of Arts and a Lincoln Medal. In spite of poor health and advanced age, she was working on another autobiography focused on her experiences with national and world leaders when she died on May 28, 2014 at 86.