Obaseki: A governor in the eye of storm

Few days after making claims of printed N60 billion shared as part of federal allocation in March among the three tiers of government, Edo State governor, Godwin Obaseki, has drawn flaks from the federal government and the Central Bank of Nigeria (CBN). Wale Elegbede looks at whether the former investment banker will maintain his stance or ride with the tide on the controversial public finance claim


Ordinarily, when a state governor in the mold of Godwin Obaseki of Edo State, who is a member of the National Economic Council and also an accomplished investment banker, speaks on monetary or public finance issue, his submission ought not to be taken with a pinch of salt or discarded. If anything, his assertion should be an economic diagnosis for any ailing system


But the reverse was the case for Obaseki who holds a post-graduate degree in both Finance and International Business as he has come on the firing line for raising red flags about Nigeria’s dire economic state and its implication in the days to come. Addressing the Edo State transition committeestakeholder engagementlast week,


Obaseki said the federal government printed N60 billion to supplement thefederalallocationtothethreetiersof government in March. Aside from that claim, he also expressed fears on the continuous borrowing by the government, despite unclear means of refunding payments, adding that the social contract between government and citizens must be honored.


He said, “Nigeria has changed. The economy of Nigeria is not the same again whether we like it or not. Since the civil war, we have been managing, saying money is not our problem as long as we are pumping crude oil every day,” he said.

“So we have run a very strange economy and a strange presidential system where the local, state and federal government, at the end of the month, go and earn a salary. We are the only country in the world that does that.


“Everywhere else, governments rely on the people to produce taxes and that is what they use to run the local government, state and the federation.


“But with the way we run Nigeria, the country can go to sleep. At the end of the month, we just go to Abuja, collect money and we come back to spend. We are in trouble, huge financial trouble. “The current price of crude oil is only a mirage. The major oil companies who are the ones producing are no longer investing much in oil. Shell is pulling out of Nigeria and Chevron is now one of the world’s largest investors in alternative fuel, so in another year or so, where will we find this money that we go to share in Abuja?”



The governor disclosed that,“When we got FAAC for March, the federal government printed additional N50-N60 billion to top-up for us to share. “This April, we will go to Abuja and share. By the end of this year, our total borrowing is going to be within N15-N16 trillion.” In view of the FX rate, he posited that “My worry is that we would wake up one day, like Argentina, the Naira would be 1000, 2000 to a dollar, and it would keep moving.


“You can imagine a family, you don’t have money coming in, and you just keep borrowing and borrowing without any means or idea of how to pay back and nobody is looking at that, everybody is looking at 2023, everybody is blaming Mr. President as if he is a magician.” Expectedly, the governor’s claim attracted knocks and kudos in similar proportion.


Aside from the usual political colouration, economic experts also weighed in on the revelation, offering their professional insights as well. On the political front, Obaseki, whose first term as governor of Edo State in 2016 was on the platform of the ruling All Progressives Congress (APC), but had to jump ship to the Peoples Democratic Party (PDP) in 2020 to actualise his bid for a second term. He won the election and he is currently a governor on the PDP platform.



While some political analysts inferred a political point to shoot down the economic policies of the central government which is the APC, others averred that the former chairman of the Edo State Economic and Strategy Team was speaking with facts, figure and passion for the country.



According to the National Bureau of Statistics (NBS), Nigeria’s total public debt stock as of the third quarter of 2020 (Q3 2020) rose by N6.01 trillion within a year. The agency’s report noted that Nigeria’s total public debt stock constituting of external and domestic debts stood at N32.22 trillion ($84.57 billion) as of September 30, 2020.


Recently, a former Governor of the Central Bank of Nigeria (CBN) , Sanusi Lamido, lamented that Nigeria’s external debt to total revenue increased from 8 per cent in 2011 to 400 per cent in 2020, Lamenting the situation while participating in an online roundtable discussion tagged: “Debt Relief for a Green and Inclusive Recovery in Nigeria”, organised by Heinrich Böll Foundation, the former CBN governor said Nigeria has a debt services ratio of not more than 90-96 per cent but there are certain other elements of debts that analysts have not paid attention to.


But refuting Obaseki’s claim that N60 billion was printed in March to support allocation to states, Minister of Finance, Budget and National Planning, Zainab Ahmed, said the governor’s statement was very sad because it was “untrue”.


She said, “The issue that was raised by the Edo State Governor for me is very, very sad because it is not a fact. “What we distribute at FAAC is revenue that is generated and in fact distribution revenue is a public information. We publish revenue generated by FIRS, the customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true,” she said.


“On the issue of the borrowing, the Nigerian debt is still within sustainable limits. So, our debt currently at about 23 per cent to GDP is at a very sustainable level, if you look at all the reports that you see from multilateral institutions. “What we need to do as I have said several times is to improve our revenue to enhance our capacity to service not only our debt but to service the needs of running government on day to day basis.”


However, the CBN governor, tune up the discussion with his response to Obaseki’s claim, when he faulted the Edo governor for giving colouration to printing of money. Speaking in Nasarawa State during an inspection tour of the proposed $500m Dangote sugar processing facility, Emefiele said, “If you understand the concept of printing of money, it is about lending money.


That is our job. To print is about lending money. So, there is no need of putting all the controversy about printing of money as if we go into the factory, print the naira and start distributing on the streets. “It is very inappropriate for people to give colouration to printing of money as if it is some foreign words coming from the sky.


“It’s important for me to put it this way that in 2015/16, the kind of situation we found ourselves in, we did provide a budget support facility to all the states of this country.


“That loan is still unpaid up till now. We are going to insist on them paying back the money since they are accusing us of giving them loans.” But still resolute on his claim,


Obaseki in his reply to the minister said it was time to stop playing the ostrich and approach the Nigerian project with all sense of responsibility and commitment. He stated, “We believe it is our duty to offer useful advice for the benefit of our country.


“The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed should rally Nigerians to stem the obvious fiscal slide facing our country.”


For analysts, whether the claim is true or not, the claim should be thoroughly verified because, they reckoned that it was better for the economy to be in deficit borrowing than for the economic managers to print money not backed by production, which could lead to hyperinflation.


Hyperinflation, which can be extremely damaging to an economy, is a situation where there is too much money in circulation and it is chasing few goods.


While it is a fact that that governments often resort to printing money when they cannot finance their borrowing by selling bonds, but the money is not usually in circulation and cannot lead to inflation.


Analysts averred that such funds ought to be put into non-productive use. On his part, a member of the Presidential Economic Advisory Council, Mr Bismark Rewane, said Ahmed and Obaseki, might not be wrong on the allegation of the printout of N60bn in March. Rewane, while featuring on a Channels TV programme, ‘Politics Today’ on Thursday said the difference between what the governor and the minister were saying was like trying to differentiate between six and half a dozen..”


Obaseki has a rich vein of experience in investment banking and finance. He began his career as a stockbroker in 1983 with Capital Trust Brokers Limited, Lagos. He later transferred his services to the International Merchant Bank.


He moved to AVC Funds Limited, Lagos, in 1988, where he served as a Project Manager. He moved back to New York and worked as a Principal of Equatorial Finance Company, a Financial Advisory firm. He focused on Africa and provided Structured Trade Finance for African-related transactions. In 1995, Obaseki founded Afrinvest West Africa Limited (formerly Securities Transactions & Trust Company Limited (SecTrust).


He later stepped down from his position as chairman of the board of directors of Afrinvest in September 2016 to contest the gubernatorial election in Edo State. For seven years in the administration of former Governor Adams Oshiomhole, his predecessor, he served as voluntary Chairman of the Edo State Economic and Strategy Team as well as Chairman of Tax Assessment Review Committee for Edo State Internal Revenue Service (TARC) and the Committee on Micro, Small and Medium Enterprises (MSME), respectively.


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