If the president of the world's most populous black nation is worth about $6m ( less than N1 billion) then there is not much to celebrate. He is not a multimillionaire. He falls within the middle class. His liquidity (cash at hand or in bank), is less than $200,000. And since a lot of the assets are physical; landed properties and automobiles whose valuation is suspect, the President is probably worth less. To put it in perceptive, it takes about $7,200 to achieve N1 million; using a dollar buy back rate of say N140 to the dollar. The President is asset rich and heavy because the value in exchange of his assets is far less than the reported (intrinsic) value. I am interested to know the make of Mr. President's car that his late brother gave him valued at N7 million; an equivalent $50,000.
The way and manner in which assets are valued in Nigeria leaves a lot to be desired and renders the valuation less credible. Since Nigerian banks hardly have credible and reputable underwriting department, the use of landed property as collateral to secure loans at a ratio hardly more than 25 percent of the value; means that one can only borrow a quarter of the reported value of an asset. Asset valuation in Nigeria and its attendant value is inflated and over reported. Landed property as an asset class in Nigeria does not make the balance sheet a strong declaration. In US/UK, where valuation of assets is x-rayed, checked and ranked along with other reliable economic and financial indicators, a wider array of indices are used in gauging the value of assets. This ensures that value is standardized. It's due to the standardized level and strong regulatory undertones that US/UK banks can lend up to 95 percent of an assets value.
Nigerians should not be concerned about the assets but rather the growth of the assets, while one is serving as a public official. No sitting president, governor, elected official should participate in activities that enrich their personal position either through publicly traded corporations or privately held companies. Once elected, all their assets should be put in a blind trust and managed by a third party Commission sanctioned and appointed by the Senate and the Judiciary. I don't think Nigeria is ready for such an approach.
With the wanton and rampant commingling of public resources with private ones by elected officials, determining what is public and private gets blurry and encourages stealing; basically a 'petty cash' form of accounting and use of funds. The focus should be to determine whether crime is committed via official corruption, cronyism and /or nepotism.
If gift giving is seen as customary and acceptable (Nigeria's form of public leadership is mostly paternalistic) it is hard to indict an official who breaches and abuses his role. As it is acceptable for an elected official to award a contract and then turn around and receive a gift from the contractor, fighting corruption will be hard. For instance, Nigeria Central Bank Governor Mr. Charles Soludo, after completing the consolidation and restructuring of the banks, received gifts from Managing Directors of Banks when he held a grand opening of his personal home. What does anyone make of such gifts? Mr. Soludo probably needs to declare his asset since he went from an obscure starving lecturer to Economic Adviser and now governor of CBN. I am sure his rate of asset growth and appreciation, will alarm Nigerians.
Nigeria is not ready for serious reform on how its government works with respect to finances and the PURSE politics. When that happens, it means the manner, ways and means government business is conducted by the elected and appointed will render interest in government less attractive. The ease with which persons get rich with government position fuels the penchant for stealing and lax attitudes towards public resources. Minimze and take away the 'hands-in-the-till' way of public servants, and Nigeria may experience good governance and get some mileage for its public resources.
By Ejike Okpa
participates in discussions on public finance and structure.
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