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COMMENCEMENT SPEECH BY DR KINGSLEY OBIORA, DEPUTY GOVERNOR (ECONOMIC POLICY) CENTRAL BANK OF NIGERIA
AT THE 2022 CONVOCATION AND 74TH FOUNDATION DAY CEREMONIES OF THE UNIVERSITY OF IBADAN MAIN HALL, INTERNATIONAL CONFERENCE CENTRE
UNIVERSITY OF IBADAN
15 NOVEMBER 2022
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Good morning your royalties and eminences, the Chancellor, the Pro-Chancellor, the Vice Chancellor, other principal officers of the university, my colleagues from the Central Bank of Nigeria, distinguished guests, graduands, current students, ladies, and gentlemen.
2. I am truly honoured to be here today, amongst this august assembly. Indeed, I am flattered to be deemed worthy to give a commencement speech at the 74th Foundational Day and Convocation ceremonies of the University of Ibadan; an indisputably esteemed, prestigious, and foremost ivory tower. To be honest, the University of Ibadan is
not just the premier university in Nigeria, but the foremost and the most prominent in our sub-region. I wish to commend the management of the
University of Ibadan for ensuring that the institution continues to improve and evolve with time.
3. Since inception, commemorating the Founders’ Day with insightful discourses has become a revered annual ritual of this legendary institution. And as such, I consider myself privileged for the opportunity bestowed on me today; especially as I speak, in my own alma mater, to an audience comprising eminent personalities and renowned academics, including my own teachers. I also want to specially recognize two of my friends and brothers who are here today: Prof. Musibau Adetunji Babatunde who was my Senior in the postgraduate Programmes here and is now the Honorable Commissioner for Budget and
Economic Planning here in Oyo State, and Prof. Eze Nwokocha who was my next door neighbor in Awolowo Hall, and is now the Dean of the Faculty of The Social Sciences in this University. I am grateful for their friendship and mentorship.
4. I also sincerely thank the Vice Chancellor, Prof. Kayode Adebowale, for his kind invitation to this event and for allowing me no choice than to accept his invitation. In fact, many times when we spoke on this matter, he will subtly remind me that my certificate was awarded based on character and learning! I fully understood what he meant by that! I most respectfully appreciate the Senate and Governing Council of this institution, and I acknowledge every single person in the university community. Above all, I congratulate this year’s graduating class, whose fantastic accomplishment I fully recognise and fervently commend.
5. Being here today brings back so many pleasant memories of the seven years I spent in this university, from registering for a Masters’ Degree in Economics in the year 2000 to graduating with a Doctorate degree in the same field in 2007. This University means so much to me because the seven years I spent here were without a doubt some of the best and most consequential years of my life! It was in those seven years that I hastened my search for purpose and direction in life, I deepened my curiosity in Economics, got exposed to some of the most brilliant economic thinkers Africa had to offer, and grew in humble confidence that I could compete favourably against students of economics from any other University in the world, including Harvard, Cambridge or Princeton.
6. But this University offered me apprenticeship beyond classroom academic exercises. It was here that I laid the foundations of impactful and practical working experience right here at the Centre for Econometric and Allied Research, I gained lifelong friends and mentors many of who are right here in this auditorium, I married my beloved wife after a 10-year courtship, and in two quick successions, I got employed by two international economic organizations, thereby escaping poverty by God’s grace! That formative period here still truly hold some of the fondest and tenderest memories for me.
7. I still recall vividly my journey to the University of Ibadan, an institution I had always viewed in awe from my distant upbringing in Delta and Edo States. After my first degree at the University of Benin, a reputable institution in its own right, providence brought me to Ibadan to serve our fatherland in the NYSC programme. You see, God has a way of aligning our ways and ordering our steps, even when we are oblivious of His divine intents for us. I was posted to the National Centre for Economic Management and Administration (NCEMA) in Old Bodija for my primary assignment. This first cognate experience in practical economics, turned out to be one of my many blessings in my future academic pursuits.
8. When I arrived the Department of Economics here, the first thing that left me speechless and in awe was the rich collection of professors in both the Department itself, and the faculty in general, and most were names that were globally recognised with journal articles or international writings that some of my previous lecturers either quoted or referenced. So you can imagine how shocked I was to be strolling down the hallway of offices in the Department and just seeing these names on the doorposts and wondering, is this real? Are they truly in existence? Would these professors open the door and step out so I can see them? I realised, at that moment, that I had, as a matter of fact, arrived at the El Dorado of economics studies on the continent. How proud I became to be accepted as an apprentice under their erudite guidance.
9. When I finally saw these men and women, what struck me more was no longer their indisputable academic accomplishments. What struck me more was their dedication to teaching, their insistence on further learning, and their willingness to help shape our futures. Indeed, their gentle but purposeful nudges in the right direction were vital in who I have become today, and to them all, I am eternally grateful.
10. To all those graduating today, I commend the hard work that you exercised to get to this point. It is a wonderful achievement to complete your degree and, today, you deserve to celebrate this feat. Your educational curricula, the training you have undergone, the so-called fire you have passed through were all lined up to help you prepare you for today’s world.
11. Some of you may already have fathomed a reasonable idea of your next few steps in life while many others are simply unsure of the outlook. In whichever category you belong, I most certainly wish and believe that you all have bright futures. But that future has to be shaped by none other than you. As Malcolm X once said, the future belongs to those who prepare for it today.
12. Yet, if there is one word that can adequately characterize the global economy in the last 2.5 years, and seems to be lurking around in our future, it would be the word “Crisis”! Indeed, the title of this year’s IMF Annual Report is “Crisis Upon Crisis”! In the last 2.5 years, the world has dealt with, or is still dealing with a pandemic, an avoidable war in the heart of Europe, unprecedented consumer prices, and a historic level of hunger across a larger swath of the world.
13. With 635 million infections and 6.6 million deaths worldwide, the once-in-a-lifetime COVID-19 pandemic quickly metamorphosed from a public health crisis to a global economic crisis as people’s lives and livelihoods were significantly affected. For policymakers, the response to this pandemic was to take extraordinary expansionary policy actions to shield households and businesses from the worst economic effects of the lockdowns, disruptions and deaths. In fact, the G20 economies alone spent over $14 trillion dollars on recovery packages in response to the
COVID-19 pandemic.
14. Although this was vital, such additional spending meant that many countries faced even more constrained fiscal space and burgeoning public debt. Global borrowing increased by 28 percentage points to 256 percent of GDP in 2020. As of today, government or public debt now represents slightly over 40 percent of total global debt, the highest it has been in 60 years. As the world economy was grappling with these realities, we have also seen inflationary pressures not only at record levels but becoming somewhat entrenched in people’s expectations.
15. This inflationary trend reflects 4 major factors:
a.Energy and food price increases aggravated by Russia’s invasion of
Ukraine.
b.Rebalancing of demand in favour of services, that are usually more expensive; and
c.Tight labour market reflecting several factors possibly including reluctance to return to pre-pandemic work styles or places.
d.Continuing lockdowns in critical Chinese cities, leading to disruptions in global value chains exacerbated by internal misalignments in their Property and Power sectors. In fact, to understand the enormity of China’s housing market problem, China’s so-called “Ghost Cities” have a total of over 65 million empty apartments, enough to accommodate the entire population of France.
16. Even before the war, global food prices were already at near record highs, numbers that were unprecedented since the United Nation’s Food and Agriculture Organization began keeping records in 1960. But the RussiaUkraine conflict made matters significantly worse because Russia and Ukraine are major exporters of food and energy products. During the 2020/21 harvest season, Russia produced/ exported 7.8 percent of global cereals while Ukraine accounted for 11.3 percent of cereals to the world. Both countries account for account for 30 percent of global wheat exports, with Russia representing 20 percent and Ukraine representing 10 percent, making them the first and fifth largest wheat exporters in the world.
17. Given these, we have seen inflation at record highs in many countries. As of September 2022, inflation was recorded to be: 83 percent in Argentina, the highest in 30 years; 85.5 percent in Turkey, the highest in 24 years, and 52.2 percent in Iran, with projections that it would stay around that number until 2024. Here in Africa, we have seen inflation at 107 percent in Sudan, 32.5 percent in Ethiopia, 40.5 percent in Ghana, and 20.5 percent here in Nigeria.
18. Even in the United States, the European Union and the United Kingdom where policymakers and the public took inflation for granted for so long, we have seen it hit decades highs at 9.9 percent in the UK, 9.1 percent in the Eurozone and 9.1 percent in the US. Although US inflation has slowed down to 7.7 percent in October, core inflation (which strips out volatile components from headline inflation) is at a 40year high of 6.5 percent.
19. That is why Central Banks around the world have launched some of the most aggressive interest rate increases in recent history. Major developed central banks delivered in September rate hikes at a pace and scale not seen in at least two decades, ramping up their fight against multi-decade high inflation with little let-up in sight. The US Fed has already raised interest rates 5 straight times this year, bringing the Federal Funds Rate to a target range of between 3.75 to 4.0 percent. But many analysts and market watchers expect
that it could continue by another 50 basis points by the end of this year.
20. In the same vein, the European Central Bank and the Bank of England have continued along the same lines of raising rates. Indeed, Central Banks overseeing 8 of the 10 most heavily traded currencies delivered 550 basis points of rate hikes between in September, bringing the total volume of rate hikes in 2022 from the G10 central banks to 1,925 basis points. Similarly, emerging market central banks have raised interest rates by a total 6,340 bps year-to-date, more than double the 2,745 bps for the whole of 2021, calculations show.
21. Taken together, developed and emerging market central banks have hiked interest rates
by 8,190 bps in 2022; fastest pace, and largest scale in two decades.
22. Emerging Markets Financial markets have also been in turmoil. At the end of May 2022, the Financial Times reported that the return delivered by emerging market (EM) sovereign bonds was around minus 15 percent for 2022, the worst since 1994. The principal factor driving this trend was the exit of foreign fund managers and investors from emerging markets assets.
23. According to the Institute of International Finance, between March and June 2022, $30.1 billion had flowed out of equity markets. In May 2022 alone, Emerging Market securities suffered an outflow of $4.9 billion according to estimates by the same Institute. These US dollar outflows as well as the increase in interest rate in the US has put persisting pressure on currencies around the world, including Nigeria.
24. The world is also facing a food crisis of unprecedented proportions, the largest in modern history, according the World Food Programme. Millions are at risk of worsening hunger, reflecting ongoing conflicts, worsening climate shocks and the looming threat of a global recession. The interplay of these drivers is making life harder each day for the world’s most vulnerable and reversing recent development gains.
25. As many as 828 million people go to bed hungry every night. The number of those facing acute food insecurity has more than doubled from 135 million in 2019 to 345 million this year. At the moment, a total of 50 million people in 45 countries are teetering on the edge of famine, according to the World Food Programme.
26. Given all these, IMF has reversed Global growth downwards 4 times this year. It now predicts that global growth will slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, with significant risks on the downside. In fact, there is a 25 percent chance that growth could fall below 2 percent this year and next.
27. In previous episodes of global crisis, we find the preeminent international political and economic organization like the WB, UN, WTO, and the IMF bring countries and policymakers together to solve these problems. While these institutions are currently doing their best to help along these lines, it does appear that many countries are acting on their own this time, without much regard to the effects of their actions on the rest of the world.
28. What we are seeing now is that countries have responded by insular, inward looking and “beggar-thy-neighbour” policies including the United States’ ban of exports of advanced semiconductors chips to China, Malaysia’s ban of chicken exports, Indonesia’s ban of palm oil exports, India’s ban of wheat exports, and China’s ban of beef imports from Australia.
29. Here at home, we are seeing the effects of these same trends as inflation has remained above comfortable levels, and the exchange
rate has been under pressure for a while now. While some have resorted to scapegoating the Central Bank of Nigeria for the recent DollarNaira exchange rate, it is important to bear in mind that the exchange rate mostly reflects our collective decisions and actions rather than policies of the CBN itself.
30. People always refer to the 1970s and 1980s when the Naira was “stronger” than the US Dollar, or at least, were at par (the same value). But the real question to ask is: what was the demand and supply of US Dollar at that time, and what is it today?
31. Since we are in an educational setting, let me provide a context that is easily relatable to everyone here. According to data from
UNESCO’s Institute of Statistics, the number of Nigerian students abroad increased from less than 15,000 in 1998 to over 71,000 in 2015. By 2018, this number had risen to 96,702 students, according to the World Bank.
32. Today, a sizable amount of the foreign exchange request Nigerian banks receive for school fees are for primary and secondary school education, some of which are for neighbouring African countries. In light of the above, it is no wonder that foreign education cost the country a whopping sum of US$28.65 billion between 2010 and 2020, according to the CBN’s Balance of Payments Statistics. Even with this staggering amount, it does appear that we all still remain ever willing to send our children abroad for education they can acquire at home.
33. According to the UK’s Home Office, which monitors student visas to the UK, Nigerian students received 8,384 visa in 2019. By June 2022, the UK had issued 65,929 visas to Nigerian students. If you assume that each of these students need about £40,000 per annum for tuition, flights, accommodation, clothing, food, educational materials and general upkeep, it means that we as a nation would need to send an additional £2.3 billion to the UK every year. These are the realities that put our exchange rate under pressure.
34. Regardless of the nature and location of the crisis I have outlined above, I believe that the worse thing than having a crisis is not to harness the opportunities they present. Whilst working to form the United Nations after World
War II, Winston Churchill famously said, “Never let a crisis go to waste”. My interpretation of his thinking is that dramatic changes inevitably uncovers fresh insight, and points to opportunities for growth.
35. But that is only for those who are prepared. Fortunes, they say, smiles on the brave and favours the bold. So for today’s graduating class, you must recognise that every challenge and every crisis holds an opportunity to prosper and must therefore remain purpose driven as you enter the real world. Parental protection and university guidance will quickly taper off. For some of you, the road to success will, as a matter of fact, have some speedbumps which you must patiently and tactfully negotiate. You must be ready to challenge some of the things that may have made you a good student here: to work on your own, to think there is only one right answer, or to avoid mistakes.
36. For those who are lucky enough to find a job quickly, you must bear in mind that advances in technology, international mobility, and workplace flexibility can make you redundant. As these trends impact demand for future jobs and inform the skills required for the roles of tomorrow, there are four tips you may find useful:
a. First, you must identify threats to your role and to your industry as a whole and ensure you are not caught on the wrong side of that trend;
b.Second, you have to dedicate private time and resources to upskilling and learning new things. Some of the skills you have acquired even from this University may already be obsolete;
c.Third, you must be willing and able to adapt to changes in the workplace, particularly those that take you out of your comfort zone. Whether such changes are regulatory, institutional, or enforced by your line supervisor, you have to ready to adapt;
d.Finally, you have to constantly improve your soft skills. You will need to focus on and fine-tune skills linked to areas such as empathy, teamwork, communication, leadership and relationship building, as these will always give you a leg-up in your job, and help you to stand out from your peers.
37. Despite the recent wave of graduates leaving Nigeria for what they may see as better life abroad, I urge you all to remember that Nigeria is your only true country. If we all leave, who will build Nigeria for us? How will the Nigeria of our dreams emerge if we are all sleeping in a foreign land?
38. Even if you find an international job that takes you out of the country, make it a goal to return home at a certain point to contribute to this land. While I was in Washington DC working on global issues, I honestly could not stop contemplating that someday I would return home to assist in whatever capacity I could. After all, like all of you here, it was in my country that I was groomed with the requisite skills that enabled me to perform on a global stage.
39. As I wrap up my remarks, I would like to leave you with the enduring words of Theodore Roosevelt, who served as the 33rd Governor of New York, the 25th vice President of the United States, and its 26th President from 1901 to 1909 . He said and I quote :
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
40. Once again, I wish to congratulate the graduating class of 2022 for their remarkable achievement on this day, as I wish them the best that life has to offer in their unknown journey ahead.
41. I thank you all, distinguished ladies and gentlemen, for your attention.
KINGSLEY I. OBIORA
Deputy Governor (Economic Policy)
Central Bank of Nigeria
