INTERVIEW: Nigeria’s Resources From Gold Can Increase Foreign Exchange Reserves To $60bn If Properly Harnessed —Alaje

Nigeria is looking for a way out of its current economic quagmire and the Bola Tinubu-led government has set out policies. In this interview with THE WHISTLER, Paul Alaje, Partner and Senior Economist at SPM Professionals Limited, spoke on the benefits and threats of Nigeria joining the BRICS; Tinubu’s loans to SMEs, and how the Minister of Finance and Coordinating Minister of the Economy, Wale Edun can work with other ministers to revitalise the economy. Excerpts…

Vice President Kashim Shettima left the country for the BRICS Summit, what are the benefits and threats if Nigeria decides to join BRICS?

Well, there will be a lot of benefits for Nigeria, but I just have my worries because Nigeria is leaning towards the West than another bloc. So, if Nigeria joins BRICS, the relationship we have with China will be more robust and will perhaps be able to revitalise some of the things we have had to do with Russia and India. The highest country in terms of population in Europe is Russia, and they are represented.

When you come to the largest nation in Africa, it is Nigeria. Unfortunately, South Africa is representing the continent and not Nigeria. Is Nigeria willing to make those policies that will ramp up economic growth and will ensure Nigeria stops experiencing economic quagmire for growth and development? These are the things that Nigerian authorities will answer, and we also need to champion direction. The policy that the Nigerian government is currently promoting is supported by those who are not part of BRICS, particularly the policy of devaluation and policy of subsidy removal. Go to developed economies, they are providing subsidy. Go to America, for example, the US is providing subsidy for cotton farmers. Why is Nigeria encouraged to remove subsidy?

Virtually, in all aspects of life, they are providing subsidy for energy and for their farms. So, why is it a different conversation when we come to the case of Nigeria?

China is devaluing its currency, and the IMF is complaining while Nigeria is floating, and they are encouraging the government to do more. What is the rationale behind their actions?

When you produce, you put yourself in a position where you become a threat to the world. When you are consuming, you put yourself in a position where the rest of the world can determine your destiny. For Nigeria, when you devalue as a consuming nation, you are saying the rest of the world should buy your products cheaper while you have to pay more for theirs and those that are giving you money in hard currency will benefit more. The last time I checked, loans from the IMF, and World Bank were to be paid back in hard currency.

As for China, when they devalue, they are telling the rest of the world to buy their own product cheaper and it will be tougher for the rest of the world. That is why IMF and World Bank seem to be against China devaluing and want Nigeria to remain dependent.

The real dependence is in currency manipulation against Nigeria. Nigeria is not ready to break free using its resources to increase production. They want to keep receiving handouts and keep listening to those who brought our nation to its knee and to a standstill so that they can be a messiah of some sort. Unfortunately, it doesn’t work like that.

Can President Bola Tinubu’s loan to 100,000 MSMEs drive the needed change in the economy?

The Nigerian President on the 31st of July announced that he was going to extend support to businesses in the form of a loan, and he said he was going to support 100,000 SMEs N1m among other sectors he will, which, of course, N1bn for 75 other large businesses. Our interest is, of course, the Small and Medium Enterprises (SMEs) because they are the driver of the economy of the nation. We have about 40 million SMEs, and Mr. President is targeting 100,000 with N1 million. The equation does not add up. We need at least 10 million SMEs to be supported by the president, and that should be only 25 per cent of the entire SMEs. It should not just be a blanket support. It should help the SMEs that are export-oriented, which will include those who want to export some resources or finished products. It could be those even selling shea butter because it is needed. These materials can be exported by those who want to sell their agro produce out of Nigeria so much that we can earn the much-needed foreign exchange that is crumbling our nation and putting us on our knees because of our import dependence.

How much support should Mr. President give them?

We are of the opinion at the SPM that the president should provide not less than N5m to each SME, 52 per cent of which should be a grant while 48 per cent of it should be paid back on the condition that each SME will employ not less than 2 employees. The implication will be that at least 20 million people will be pulled out of unemployment, and if they are earning far above N100,000, then you can say that they are effectively out of the poverty bracket. This will lead to expansion in terms of economic growth. It will also reduce unemployment, boost our foreign reserves, improve our trade balance, and so many other things.

The ball is in the court of Mr. President. I hope this can be done with the support of the Ministry of Finance and, of course, the Co-ordinating Minister of the Economy and the Ministry of Trade and Investment and many other ministries that would be affected directly.

Do you mean the N1m loan to 100,000 SMEs is not enough for small businesses to drive the needed reform?

Just before he (Tinubu) was elected earlier in the year, the N1m, I can tell you that the worth of that money has reduced by half. This is because of the unification and floatation of exchange rates that he announced as a policy in his government. So, that policy has hampered what N1m used to be just the same year. It will only make sense for us to know that whatever N1m can do before, it can only do half of it now, not because of inflation that has fallen to 24.08 per cent, but because of the devaluation of naira.

Today, at the official window, the naira is almost N750, at the parallel market you are talking of above N800 nearly N900 that is if not beyond N900. Meanwhile, by the time the president was inaugurated, it was just slightly above N400/$. When you do the math, you will realise that the value of the money that the president wants to give to the SMEs is abysmally poor and we need to do something about it.

How can the Coordinating Minister of the Economy, Wale Edun explore other resources like gold to improve dwindling FX reserves?

I’m happy that the legal luminary, Mr Femi Falana, also alluded to the fact that we cannot even account for what is stolen. Mr Falana even brought more clarity when he mentioned that $9bn worth of gold is carted out of Nigeria that cannot be accounted for. I can tell you that gold accounts for only 12 per cent of what we are losing without getting it into our foreign reserves.

So, for anybody to export gold in some countries, it must go through the banking system. We don’t have that in Nigeria. Anyone who can afford that, who has licence or those who are carrying out illegal mining can just take the mineral resources out of Nigeria because it is still under the exclusive list. There is not much that state governments can do about it, and in the case where they even mention the review of the constitution, the situation is a different ball game altogether.

So, I can tell you, there are so many other different mineral resources that are underneath our soil that we have not been able to harness for our development. Let me also be very clear to you that other nationals, Asians to be very specific, are in Nigeria right now and harvesting these natural resources unaccounted for. They give locals within the environment some money, especially the traditional leaders, and that’s all.

So, they employ the same locals to help in labour jobs with their own heavy equipment to continue to extract these much-needed resources without accounting for them in Nigeria while they take them to their countries, convert the money and it never gets recorded within the Central Bank of Nigeria. This is a big issue that we have right now.

Nigeria flows with milk and honey. The milk is the crude oil, while the honey seems to have disappeared because of our inability to monitor and account for what exactly we are missing. $9bn estimate annually. This is what we are losing in gold theft from the exploration as of today. But I can tell you that we have in fact $50bn against the $9bn we are getting in oil in other natural resources on an annual basis. Our foreign reserves never grew up to $50bn in the last 12 years. But these are monies that would have gone straight into our reserves. About $59bn to $60bn, which should be in our reserves if only we were more organised, more purposeful, and determined.

What do you think the creation of the Ministry Of Marine and Blue Economy will add to the Nigerian purse?

The blue economy, according to some of the associations that operate in the sector, revealed to us around June this year that the industry is losing in gross term, about N50trn because of the inability of the government to implement policies that have already been established by the authorities. So, if the policy that will drive the sector is not implemented, the revenue that will go to the government will also be highly impacted. The authorities need to work with those within the sector such that revenues that should go to the government should be paid to them.

So, when you look at the entire sector, it is moribund, and I think those who have been appointed to that sector have a lot in their hands. We have the former such that they couldn’t look into the blue economy. So, we have a minister in charge of Blue Economy, the former governor of Osun State. I hope there will be a complete departure from the past. He is an insurance man. So, he understands the risks attached to losses, and I hope he brings his experience when he comes in there.