Vice President Yemi Osinbajo, SAN, took time off after a detailed session with private sector chieftains last week in Lagos to engage journalists also on the direction of the Nigerian economy. Below is the full question and answer interaction between him and some newsmen. ExerptsHow has the government been creating an enabling environment for the Private Sector to thrive in its efforts to re-build the economy?

Well let me say that our engagement with the private sector has been consistent and quite robust. There may be situations where people may say that even that is not sufficient but i must say that it’s been robust. For example I’ve met with the Manufacturers Association of Nigeria(MAN) not less than three times at various times. I’ve met with farmers, with wheat farmers, with rice farmers on an individual basis about three or four times. We’ve met with segments of the business community, the professional groups and all that.

I am here at the dialogue of the Lagos Chamber of Commerce and Industry(LCCI), and the Minister of Budget and Planning was in Lagos just last week engaging on the medium term expenditure framework. There’s a great deal of engagement with the private sector. As you can imagine the private sector is huge, it is a large segment of the Nigerian society and you would always find an individual or a group who say well this isn’t quite enough because we haven’t been spoken to yet.

But i think we’ve tried to create the right platforms for engagement and in any event we have no choice, we’re committed to engaging with the private sector. How do you have any kind of economic environment without active engagement with the private sector? The private sector is business, they are the economy and so it’s inevitable. In any event, we will engage with the private sector and we’ve been doing so.

I think that we intend to also continue to do so, we’re going to have our quarterly briefings with the private sector beginning next quarter, we’re going to continue with a briefing and there are several engagements.

Can you speak to may be specific initiatives that have come out of those discussions?

First the initiatives, before those initiatives can even take root and have effect there would be a gestation period. There’s no way that you can have a dialogue today and expect to see a tremendous change in the economic environment tomorrow. But practically every step that we’ve taken so far, for example the ease of doing business, our ease of doing business initiative is one of the most important initiatives of the government and it is led, the technical committee of our Ease of Doing Business Council, which i chair, the technical committee is headed by a private sector personality Mr. Seyi Bickersteth, who is a principal partner in KPMG. Of course that is a very robust platform for engaging the private sector and several other ways in which we’ve engaged the private sector.

For example looking at tariffs; the whole issue of tariffs in various sectors of the economy. We’ve engaged the private sector trying to look at the issues around tariffs, even with the budget, (we are having) extensive consultation for undertaking of the budget. Look at agriculture for example, the wheat farmers, the rice farmers, the Anchor Borrowers’ Programme which is a CBN programme was on account of engagement with rice farmers.

For example we’ve discovered that many of the rice farmers did not prefer subsidies on fertilizer but to be given credit so that would enable them to buy their own inputs and use their own inputs when they preferred to do so. In Kebbi State, because we were able to implement the Anchor Borrowers’ programme on their own terms, we saw a tremendous increase in the hectare-age of rice. It moved up from something like 3.5 tonnes per hectare now to about 7.5 tonnes per hectare. And also in Kebbi state they’re doing close to a million metric tonnes of paddy rice now and that is again on account of engagement with the private sector, on wheat production also. There are so many ways as i said. It’s practically impossible really, you can’t make policy outside of those who those policies are meant to affect and we’ll continue to engage.

 Your Excellency, many people are quite impressed with the federal government’s mantra of diversification of the economy but some are worried that that has not been seen in the policy direction. In the 2016 budget for example, and i don’t think we have up to 1 percent of the capital for agric, that seems to be antithetical to that diversification effort.

Vice President: Let me say that first, the diversification efforts of the federal government -those efforts- are actually rooted in the reality of our circumstances. I’m sure you would agree that the question really is not that the economy is not diversified, it’s really more a deepening of that diversification because when you look at it, agric and services are the largest contributors to GDP (Gross Domestic Product).

I mean, oil that we talk so much about, is about the third contributor in terms of size although it is the largest revenue earner, so in accurate terms the economy is actually diversified, the real question is how to deepen that diversification and enable this to be much more fruitful.

Aside from budgetary allocation, there are issues that need to be dealt with so just looking at budgetary allocation for a particular sector in isolation isn’t enough. For example, if you look at the agricultural sector, one of the key issues is infrastructure, rural roads, the road network generally, rail for movement of agricultural products and all that.

So a lot of what is being spent on infrastructure obviously will benefit the agricultural sector and the reason why so much is being spent on infrastructure including irrigation is because we expect that these will benefit the agricultural sector as well, just taking the agricultural sector as one area.

Power is absolutely important for the entire economy and you can’t really diversify without power. As of February 2015 we had peaked at 5,000 megawatts of power, the highest in the history of the country as of February 2015. But of course you’re familiar with the fact that the forcados export terminal was bombed in February, that was 40 percent of gas production lost in that single incident. Several other bombings have taken place, several other sabotage of pipelines have taken place since so there has been a drastic reduction in power supply which obviously affects all the other diversification efforts into manufacturing and all of those.

So the efforts of diversification have suffered somewhat from some of these acts of sabotage and some of these problems that we’ve had especially in the power sector. But all told, there is no question at all that the government is completely committed to diversification, that’s why we have the ease of doing business- the presidential council on Ease of Doing Business, that’s why we are trying to speak to the whole agro-allied value chain aside from just agriculture itself. That is also why we are paying particular attention to even developing the petrochemical industry, supporting massive investments into tomato, supporting, by incentives, and all of that, massive investments in tomato, massive investments in the production of rice, production of wheat and several other agricultural products, with a view to deepening the diversification of the economy.

So i think we’re on course in terms of the general framework for diversifying the economy, there are many challenges but i think we’re on course in terms of the framework.

You said we are still owing N400 billion to local contractors. One would think that if we begin to pay the debt, it will actually help in job creation. What would you say to that.

Vice President: Of course you must recognize that these are legacy debts, these debts were owed prior to the current administration and we have been talking to the construction industry and trying to find ways of addressing that concern.

We are actually committed to ensuring that those debts are settled, their claim as I said is for about N400 billion and we’ve been looking at several different options for making that payment and they are also engaged with us in looking at the options for payment. I think that for the first time they are reasonably confident that they will be paid, it’s really more a matter of form and when, but certainly they are reasonably confident that they will be paid, which probably explains why they themselves are so willing to go back to work on various sites even with payment of some of the sums that have just been released following the 2016 budget.

Has the 8 billion dollars in cash-calls (oil sector JVC partnership) been paid?

No, 8 billion dollars in cash-calls is still owed, again these are legacy debts. When oil prices were a hundred dollars, a hundred and fifteen (dollars), rather than pay those debts the government at the time did not pay the debts. Oil prices are now down to sub fifty and 8 billion is owed, so it’s certainly a massive drawback in terms of what it is that the oil industry itself can do and what the federal government can muster at this time.  But again we’re talking to the IOCs, we’re talking to our joint venture partners and we are getting reasonable responses from them, our ultimate objective is to be able to move out of the whole cash-call regime and be able to get the JVs(Joint Ventures) to borrow on their own account rather than make this necessarily the responsibility of government. So we’re working with them to find ways of settling the debts.

Your Excellency sir, talking about the bailout to states one would expect that federal government would have talked about restructuring the states. In the last tranche of the N90 billion, did all the states meet the fiscal responsibility requirement as agreed before it was disbursed? Is the bailout really achieving the purpose for which the federal government is disbursing it?

Vice President: Let me say first that as of about 3 weeks ago, 27 states or so had met the conditions of the fiscal responsibility plan and disbursements are only made when a state has met those conditions, so we can say that 27 of them have met the conditions so far. I’m not so sure whether between then and now anymore have met the conditions but that number at least have met the conditions.

Sir, in a recession as we are experiencing, do you see the action of government being sufficient enough to wriggle us out of the crunch considering even the expenditure pattern of the states, a legislature on recess, (and judges on vacation)? Don’t you think there is need for a kind of coordinated approach to what the government is doing in terms of communicating to the people?

Well, let me say that the fact that the distinguished senators and honourable members of the national assembly are on holiday, or that the judiciary is on its annual vacation is not necessarily a major economic problem. I must say that perhaps sometimes it is useful in terms of rest and perhaps they’re doing so, but quite seriously the plan-and I’m sure that you’ve heard this repeatedly and read it- in our strategic implementation plan for the 2016 budget that what we plan to do is an expansionary budget that’s the whole idea.

Now that of course has various implications and there are drawbacks, there are problems, there are challenges. One is meeting revenue targets and of course I’m sure that you’re familiar with the fact that there is some difficulty with meeting revenue targets in particular because oil revenues have dropped drastically, most of that is on account of the sabotage that’s going on in the Niger Delta. I mean, I think we’ve lost close to 60 percent of expected revenues in oil, that’s a very huge drop in our revenue expectations from oil although we’re getting some good signs from non-oil revenues especially from the FIRS; taxes, VAT, etc and other non-oil sources. But the huge drop in revenue obviously is a major drawback and that of course will impact the possibility of being able to achieve all of our objectives in an expansionary context. So there are difficulties there, but there is no question at all that there is an understanding of what needs to be done; deregulation has taken place in the downstream sector, a very important policy measure because it ensures that we’re no longer expending the kinds of resources that we have been expending in that sector.

There’s of course a flexible exchange rate policy as well which to a certain extent helps the market determine the value of the Naira, and help exports.  I’m sure you’ve heard of some of what is going on even in the North with a lot of export of grain going on, although we need to ramp up grain production. But because of the depreciation in the value of the Naira, there’s a fair amount of grain that is going out of the country now by way of export so there are major advances to what is going on, but you would agree that given the circumstances we are doing the very very best, as possible within the constraints of revenue.

Are you seeing any early signs of investments coming anytime soon?

Vice President: Oh yes!

Can You mention some of them?

For example, General Electric is about to make a very significant investment in the country. There are investments that are already coming in for railing stock for railways and obviously the reason why this is the case is because we’re doing two rail lines; the Calabar-Lagos rail line and the Lagos-Kano rail line. So investments are coming in for railing stock, there are many such investments that people are looking at , because really, when you look at it this is a country of 170 million people and a very very vibrant economy for that matter so investment people certainly are looking at investing in the country. And this is so even in agriculture, there’s an initiative, a major Mexican company in fact possibly their leading farmer, producers of agricultural produce from Mexico who has come in to Nigeria is already investing in 10 states, especially pineapples and bananas, vegetables and fruits. I think the scope for investments is there, the appetite is there and I believe that what everyone is looking forward to is just signs that things are stabilizing, that the environment is one where there is governance and that there is consistency in the policy. I think that’s what people are looking for.