JUST some days back, the Governor of Akwa Ibom State, Udom Emmanuel, was a guest at the Sunrise, Channels Television morning show. And we ran into it. Well we didn’t catch the whole interview, but the clips we saw showed that the guest as a powerful mind at work.
We will illustrate, quoting from memory. In explaining a question, Emmanuel said that the cost structure his administration inherited cannot be sustained by the present income and revenue profiles of the state. Well, that much sounded trite and common place enough. But that triteness we canvass is for the laity that is the rest of us, the nonfinancial types. And we will explain. The point at play is that Mr. Udom was a senior, boardroom level, banker. His storied career reveals that he was a key part of the brainbox that powered Zenith Bank. And it is well to recall that it is that brainbox that helped drive Zenith to its glory heights of financial services delivery, with recognizable franchise in most world capitals. In fact, it was said that when Emmanuel was headhunted to serve as Secretary of Government, Akwa Ibom, his home, State –– Zenith left his directorship and office open, wishing his stint as Secretary, will be a mere locum or sabbatical.
So, for Emmanuel’s speech patterns to be understood, one must read him as the ace banker he is, rather than the politician which he has become. He even said it himself in the interview: I am a professional in politics and not a professional politician.
Now, when a banker speaks of costs structures [inherited and or operated], it is a shorthand for a whole universe of things. The matter is not just about expenses, but more about the very structures which drive and necessitate those expenses. That is for the creative banker, the matter is not really about cutting costs. Rather the matter is about redesigning and reengineering structures, that will make such unwanted costs obsolete in the first place. But this reengineering must be in such a manner that the expected income and revenue streams will not be depreciated or decrease, but will rather gather a boost. The implication is that as a now leaner corporate, state or municipal entity, the reengineered player will become a greater, bigger bull in the market place. In summary, the new entity is now redesigned to achieve more with less. In local parlance, it is the magic of making more and more garri with less and lesser water.
The miracle is called leverage. But it must not be financial or bullion leverage. In fact, the greatest leverages are leverages of ideas. Of course that has been the tradition and lore of great banking. That is to posit the ideas that will accelerate the fortunes of your custom, be they body corporates or municipals.
And this is where and how the current dilemma of the APC government comes in. Suddenly, Chris Ngige, the Minister of Labor, has brought an invasive procedure to a process he is not very knowledgeable of. In an ‘open market operation’ he threatened the foreclosure of banks, for exercising their right to hire and fire, to right-size. The point is that unlike most businesses, banking acts as a signal post of the economy, banking is the radar off which international investors gauge the state of an economy. That is to say, if a banker’s license can be foreclosed as easily as a labor minister wills it, then international investors know that economy is one to flee from. This is for the fact, that at any one time your money can be trapped in a bank whose licenses have been withdrawn by government’s irrational exuberance or ukase.
However, it is important to note that Ngige’s gaffe betrays the desires of the APC to run a command and control economy. Well, to summarily dismiss the viability of a state run economy is to be uneconomical with the lessons of economic and developmental history. This is as we all make allowances that the degrees of the command and control may vary from regime to country.
The fact is that the economic miracles of Japan, Taiwan and South Korea etc., were built on a certain degree of governance playing the market. They ran the so called Capitalist Development Societies – CDS. But there is a caveat. They all did it, paradoxically with the bankers. And the bankers, everyone knows are the most capitalist of free marketer entrepreneurs.
First, a historical survey tells that the model-seed of that miracle was actually first planted and cultured by the Germans. To give a hint. In the Anglo Saxon world of America, Britain etc., it is the corporations who own the banks. But the Germans in a creatively disruptive vision upturned the ‘holy order’. In Germany it is the bankers who own the corporations.
In copying the Germans, the Japanese etc., innovated on this. They threw in their MITI and Keiretsu into the mix. To help us understand how it is the Japs succeeded where others failed, it is well we look at the criticism of command economies. It was the Austrian-English economist, F. Hayek, who finished off command management into historical dustbin. His key insight is that bureaucrats, and do-gooders like Ngige and APC, can never be seized of all the information needed to make the right decisions and allocations of capital and other economic resources and therefore will bungle things.
But what the Japanese and Koreans did amounted to a bypass. Now, whether a bypass is of the economic kind or a medical procedure, it is a very delicate operation. You don’t bring economic quacks, whose only qualification as in Ngige’s case is alleged patriotisms, to attend to tasks that requisition for supreme skills. Perhaps, Ngige who by the way is a medical doctor would have served his nation better cutting tumors at one local Nkpor Junction hospice or the other, than talking tough on matters even Dr. Hippocrates would have evaded.
To achieve a successful economic developmental bypass, that is outflanking the deficits and debits of command while retaining its gains, you need to be sober and not passionate like nationalists and other scoundrels. And that sobriety calls for bankers, who are trained in the art of solemnity in matters of cash and capital. This is what economic history tells us and the fact of it has not been upended otherwise. In fact, it may be said and without error that the failures of communist and other command economies are in their Ngige-like denigration and besiegement of bankers.
So, what APC should do now is to purchase a promissory note from Akwa Ibom State. The matter goes like this: One of the great legacies of Senator Godswill Akpabio is to have headhunted Emmanuel into governance. Yes, it is true that the Dangotes and Kalus of this world would have preferred that such a fine financial mind stayed put in Lagos, and help consolidate their slots as Forbes billionaires, but Akpabio beat them at it.
That is while we cannot do without the Dangotes and Kalus, the wealth creators, what the president should do is to seek out these dudes who have fine technical knowledge, and have rolled up their sleeves doing things, to his King Arthur’s roundtable. He should organize them into a nonpartisan, informal conclave of advisers. And most of them should be bankers in the mold of Emmanuel, that is demonstrable brains with hands-on experience. And that is to say entrepreneurial bankers, who if they were to quit Broad Street, will leave the billionaires in tears.
If the president and APC could do this, it is certain they will stop complaining of falling oil prices etc. In fact, that would have been a blessing to reengineer our current revenue profiles into a new leverage that will fire off economic development. After all, it is certain that the South Koreans did not have the luxury of the abundance despite our falling revenues, which both President Buhari and APC have, and yet the Koreans developed scarcity into gold.
So what happened? And we tell, it is the miracle of limpid financial minds and bankers at work and play. If we used up the South Korea example, the chief architect of the Korean economic miracle, Kim Jae Ik, is a banker, an Emmanuel if you liked, in South Korean names. To conclude: This government should not antagonize the bankers. They must remember that the ‘bond market’ it is said in all solemnity, is its own sovereignty. It just would not know or care if Ngige is as powerful as his talismanic goatee suggests. But if he dares it, the ‘bond market’ will discipline him and his principals.