Why reforms are inevitable, by Herbert
Orji
By CHRISTIAN OCHIAMA
Monday, December 24, 2007
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•Dr
Herbert Orji
Photo: Sun News Publishing |
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The reform policy of the Federal Government geared towards
repositioning the economy to achieve national goals has continued
to attract comments from experts.
For most, the reform programme, intended to liberalize the
economic and business practices in the nation and bring them
in line with international best practices, is well thought
out. To that extent, therefore, a programme which its time
has come should be pursued with the desired vigour.
An economic guru and Howard University, United States of America-
trained banker, Dr Herbert Orji, is one of those who has continued
to sing alleluya that the policy is in place at last.
Orji, who is also chairman and chief executive officer of
Summa Guaranty and Trust Company Plc, insisted in an interview
with Daily Sun that the reform policy was inevitable. According
to him, “there are certain reforms that are inevitable.
For example the privatization policy”.
The former managing director of the defunct Progress Bank
Nigeria Limited further averred that the past administration
deserved kudos for introducing the economic policy even as
he asserted that it was needed if the country was going to
achieve its millennium development goals and the 2020 Vision
of being among the 20 leading economic powers in the world.
He pointed out that the policy has already started yielding
fruits in some sectors of the economy. According to the banker,
“we, as a people, have noticed that the previous administration
had economic agenda. Some of them like the privatization were
inevitable and it is still going on.”
Orji continued, “some of them have already begun to
yield excellent fruits like communications, seaport reforms,
the airlines, postal services and courier.”
In his opinion, “the fighting of corruption is also
a major aspect of the reform process. While we are not yet
close to the promised land, for the mere fact that it is taking
place at all is an indication that the government has the
resolve to carry it out, the level of perfection or imperfection
not withstanding.”
On Nigeria as an emerging market, Dr Orji, who is also a consultant
to both the World Bank and Africa Development Bank, said:
“Nigeria is a huge, global emerging market and certainly
the leader in West Africa if not the whole of Africa.”
The banker turned stockbroker and who was 57 recently spoke
on other related issues.
Life at 57
The position of most professionals at 57 is more of or would
essentially be a recap of the first 57 years, a review of
general performance, thanking God for the luck, the opportunity
to have lived in an excellent health and to have contributed
one’s quota to the economic growth and development of
Nigeria and perhaps the African continent. And, of course,
the need to also look at what the individual, that is, myself
would do for the next, let’s say, 13 years when we still
hope for a reasonably active life particularly after 65 years.
Early life
It is very difficult to go into minute details but I’d
try to summarise it. The family was at the core and provided
the platform for moral education, academic education –
primary , secondary schools and universities. The civil war
also enabled some of us, who were already in the boys company
of the Nigerian Army through our various schools to make progress
with regards to physical and mental maturity and having fought
the war for three years, right from officer trainee to Second
Lieutenant to Lieutenant, Captain and Battalion Commander,
53 Battalion Ikot-Ekpene under 62 Brigade of 11 Division,
helped our maturity and our world view. And I am by no means
the only one in that category. Senator Mike Ajegbo is one.
We went through the same military system. Chief Wilfred Nwaro
is one. He is a logistics entrepreneur in the United States.
We have the late Iyke Agulefo, may his soul rest in peace.
He did very well. We also have Chief Patrick Ene who was and
remains an excellent soldier. All of us had our start from
the Nigerian Army boys company in our various colleges. And
that moral education imbued through the family system, academic
education and then the war built us. We thank the Almighty
God for keeping us alive and allowing us to make further progress
through formal education and service to humanity through our
various professions.
Incidentally, many of us also were lucky to marry good wives,
produce children and we’ve tried our best also to give
them similar foundation that we got from our parents and the
manifestations of their successes at the various stages of
their early endeavour are collective evidence of how well
we have tried to impart some of those good attributes on them,
so we are very grateful to God for keeping all of us and hope
that we would go beyond age 57 to 75 and beyond.
Your wife once described you as an achiever
In relative terms, yes. Not the greatest achiever. Yes in
relative terms an achiever.
Early life in banking
As you know, nothing stays the same. Every society is dynamic
and the sub-sets of the society including institutions like
banking are very dynamic. They continue to change. We came
into banking as, if I might quote the governor of the Central
Bank at that time, Alhaji Ahmed Abdulkadir, as expatriates
from the United States and the United Kingdom and having been
very professionally trained after formal education. We had
our views about how banking as an industry could develop in
emerging markets. When we came in, we introduced a few things
like leasing, syndicated loans, merchant banking, that is
the wholesale type of banking and continuous training of professionals,
making it mandatory for professionals to go back to train
seriously, not just going for workshops, seminars and conferences
but actual examination related training for graduates and
people with other forms of professional qualifications and
I think that many of us who eventually got the opportunities
to be general managers, executive directors, managing directors
of banks trained many people. And from Progress Bank, where
I was, we had, at least, seven executive directors, general
managers and managing directors. A bank like IMB has produced
many more heads and top executives of banks. A bank like Chase
Merchant Bank, the name was rather short-lived but it was
the First Merchant Bank in Nigeria before IMB. It produced
its own top executives. So, we were the first group, not only
that, we brought a mix of intellectualism and robust academics
to the profession. Many other people have followed and I think
many more people would do better than what we had done. I
think by and large, we set the pace in what I call scholarly
banking.
Scholarly banking
Tremendously. Starting with collecting statistics on performance.
Knowing the history of what has happened. Decision analyses’
programmes, being able to write comprehensively and concisely
and also encouraging research and development. It has helped
both the Central Bank of Nigeria, the merchant banks then,
the Nigerian Deposit Insurance Corporation (NDIC) and, of
course, the involvement of the capital market as in the arena
of money and banking, the money and capital market.
Banking before the invasion of intellectuals
People like Dr John Abaelu came into banking from University
of Ife where he was lecturing in Economics, Abaelu is PhD
holder from London School of Economics and post doctorate
PhD from Massachusetts Institute of Technology (MIT) in the
United States of America. When he came into First Bank, they
didn’t know what to do with him. So, they gave him an
office and made him a research manager. But it took certain
changes in thinking and I must commend gentlemen like Chief
Allison Ayida, Chief Philip Asiodu and a few others to begin
to see that the economic development of Nigeria is not just
linked to the Federal Government budget but also the assistance
the private sector can give through institutions like banking,
insurance, manufacturing and so on. So, to give you an example,
Dr Abaelu moved to become an executive director in First Bank,
then went on to head Chase Merchant Bank. He brought similar
minds to Chase and many other banks particularly, UBA brought
in people like Mr Akpe, a graduate of Harvard University Business
School. Now, with Akpe a lot of us joined. The evolution was
very multi-faceted. You had the Central Bank with a lot of
very good people then. It permeated the commercial banks and
then the merchant banks.
Nigeria as an emerging market
Nigeria is a huge, global emerging market and certainly the
leader in West Africa if not the whole of Africa. You have
to link up South Africa as having been more singularly developed
by the minority regime during the time of apartheid. Nigeria,
in my mind, is to the black world, what America is to the
white world. Richly populated, endowed in material and human
resources, people who are willing to take risks, people who
are willing to change, people who are willing to work hard.
Yes, as a huge emerging market, we make mistakes some are
deliberate, some are mistakes that are unavoidable but by
and large if we can decrease incidents of corruption and increase
the basis of decision-making which should be evidence based
and also reward merit more than any other thing, I think,
we would accelerate the rate at which our development could
become more sustainable.
Reform policy and the economy
There are certain reforms that are inevitable. For example,
privatization. Like the President of Czech Republic, Vaclav
Klaus, said in his key note address at the Anyiam-Osigwe Foundation
lecture recently, we as a people have noticed that the previous
administration had economic agenda and some of them like privatization
were inevitable and it is still going on and some of them
have already begun to yield excellent fruits like communications,
seaport reforms, the airlines, postal services and courier
services, education and private universities, the excise tax
on books and motor spare parts all at a minimum. These are
reforms that have helped the government in its economic development
programme. The fighting of corruption is also a major aspect
of the reform process and while we are not yet close to the
promised land, for the mere fact that it is taking place at
all is an indication that the government has the resolve to
carry it out, the level of perfection or imperfection notwithstanding.
The other aspect has to do with infrastructure like roads,
housing. These two areas are probably areas that have to be
tackled in tandem with electricity generation, transmission
and distribution. And, of course, the pricing of energy. You
probably know that an electricity regulatory commission has
been established and became functional last year. It is based
in Abuja. It is headed by a chairman, who is also the day-to-day
head like the chairman and chief executive officer very experienced
in that type of work and he has commissioners who are also
vast in that area. The government has also gone a step further
to empower various private sector groups to build electricity-generating
companies. Typical example is the one being put together in
Aba which is one of the commercial hubs of South-eastern Nigeria.
So, that eclectic approach of restructuring NEPA into Power
Holding Company of Nigeria, giving them additional local autonomy
in the areas they are operating, empowering the private sector
groups to build more sustainable energy generating, transmitting
and distributing companies is good for the system. In the
medium term it will help to resolve our problems. The mistake
that was made initially was to throw money at Power Holding
Company of Nigeria. That was a big mistake. Half of that money
could have been used to create, help create public/private
partnerships, say on a state or zonal basis. And by now, we
would have been half way through sufficient energy both for
industrialization and to run our facilities and our homes.
It’s like the African adage which says when someone
wakes up that is his morning. We have woken up and both the
immediate past government and the current government are helping
to encourage private sector participation in the energy sector
and I think that would be the anchor of the solution to the
problem. Now, I must also mention that despite the fact that
70 per cent of Nigerians are still said to be below the poverty
line, in the last three years, we’ve had a growth rate
of five to seven per cent. Very significant increase over
the two to three per cent we used to have in the 1990s and
the early part of the 21st century. What has happened is that
agriculture, under the former minister, who held that position
for almost eight years, Alhaji Adamu Bello, he is an economist
and a banker, has improved tremendously. You need to go to
any of the five geographical belts in Nigeria to notice the
level of our output. It is real. It’s not just about
cassava or yams. It’s just about everything. If you
go to the riverine, mangrove areas, methods of fishing have
changed and the harvest is a lot larger, methods of preservation
including drying has improved significantly, including transportation.
Money has been going through financial institutions that lend
for agriculture, small and medium level enterprises (SME)
and so on. You come to the rain forest where tuberous plants
dominate like cassava, yam, the fertilizer policy which pushed
the supply of fertilizer from federal procurement to farmers
through cooperatives has really worked wonders and the preservation
through silos and through what they call dry warehouses has
made it possible for a lot that was lost, decays and rot to
be improved on for a long term yield, sustainable yield of
most of the agricultural products. Now, when you come to the
Savannah, the next geographical belt, if you go to the Benue,
Plateau-Jos, if you drive from Abuja you will see on the way
very surprising type of production for almost all the major
types of agricultural products – carrots, onions tomatoes,
water melon, potatoes, green onions, vegetables and so on.
And because of the fact that we have our airlines and our
air planes all over, people now load up in Jos and they are
in Lagos. They have dry warehouses and they are able to sell.
So, it has always been the question of continuity in policy
implementation. If you don’t get it this year, you try
very hard, and with a correct leadership to it you can get
this year or next. The government is no longer interested
in setting up large farms. The times of experimental farms
are more or less over. People already know what will do well
in the geographical and agricultural belts, various vegetation
belts. It’s now time to implement.
With the tubers, a place like Umudike now Federal University
of Agriculture has been experimented upon since the 1930s.
So, by now, they really know the ones that are good, resistant
to diseases and the ones that can be planted in, say, the
rain forest and the savannah area. So, this is the time to
do it as opposed to talk about it. And what I will encourage
the government to do is to perhaps increase the salary and
benefit package of those who are toiling away in the bushes
and farmlands particularly the graduates of agriculture who
are scattered all over the country to make it, give them incentives
to stay where they are instead of everybody coming to walk
about in Lagos and may be change profession because they are
not being paid well. If they are given priority in terms of
excellent incentives, salaries and benefits, they can stay
in Osogbo, they can stay in Umudike, Owerri, Ikumale, in the
north they can stay in Birnin Kebbi and still be fulfilled
– have a decent living, car, house, make some good money
to take care of families. They should not be promoted at a
slower rate than those who are in the head offices in Abuja
if it is federal or in the state capitals. They should be
given territorial allowance for leaving in those places that
are “less hospitable” so that they can stay there,
concentrate and do the job just as it is done in Ivory Coast
which has one of the best Agrarian policies in West Africa.
What are you doing now?
I am the chairman and chief executive of Summa Guaranty and
Trust Company Plc, a member of the Nigerian Stock Exchange.
We are investment bankers, stockbrokers, portfolio managers
and economic consultants. We also do a lot of economic consultant
for the World Bank and the African Development Bank, the International
Finance Corporation, the federal and state governments. We
are also specialized in what we call above the regular consulting
requirements, particularly for the banks in Nigeria. In other
words, some banks want to look at the quality of their risk
assets. We’ve done it for four banks. A bank may want
to strengthen their correspondent banking relationships and
reduce the cost to their clients. We also do that. Some banks
might have problems with the regulatory agencies and they
bring us in and we act as their financial advocates which
is a new area in Nigeria. We understand the problem, we understand
the financial complexity. We will be able to explain the position
of that bank to the regulatory authorities. Even if they are
not found totally free of any blames, they could be given
more time to put their houses in order. We do all that.
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