Transcript
Speaker: This is Ballots and Beyond, a deeper dive into Nigeria's elections with Timi Sholeya and Toby Lawson.
Speaker: Good day.
Speaker: This is Timmy Scholler.
Speaker: I'm here with Toby Lawson.
Speaker: And this is Ballas and Beyond, which is powered by the Ideas Uncapped podcast.
Speaker: Today, as our guest, Michael Famoroti, who is the co-founder of Steers, essentially the most pioneering information and news outlet that Nigeria has come up with the last five years.
Speaker: They have caused quite a stir with a poll that they have completed and then analyzed and released the information on, which looks at the prospects of the presidential candidates, particularly from the three major parties in Nigeria, for the election next weekend.
Speaker: and we are hoping to get a little bit of insight as to not just the poll in particular, but our attempt about public opinion in Nigeria, about measuring factors that sway people in Nigeria one way or the other, about the ways that we can look at the entire country from the economy through public opinion through the lens of data.
Speaker: All right.
Speaker: Thanks, you guys, for having me again.
Speaker: My name is Michael Famerati.
Speaker: I'm one of the four co-founders of STAIRS.
Speaker: Day-to-day, I run our intelligence team at STAIRS, meaning I'm primarily responsible for all the awesome content you see or don't see coming out of STAIRS.
Speaker: I'm honored to be here.
Speaker: Yeah, thank you.
Speaker: So primarily, we want to discuss maybe two broad areas.
Speaker: The big thing we want to talk about basically is maybe we clear up some of the misunderstandings around the poll, and then we move to issues around budgets and federal government's fiscal position generally, which you have written quite a lot about in the last five years.
Speaker: So I guess where I would start with
Speaker: like the public service information.
Speaker: Nigerians are generally distrustful.
Speaker: That's my perception of pulling, right?
Speaker: That's what I've seen.
Speaker: That's my gauge of the public receptiveness of this information.
Speaker: And some of the critics go like, oh, Nigeria is very complex.
Speaker: It's heterogeneous.
Speaker: There's no way you can accurately...
Speaker: have an informative poll if you do not sample in all the seven or seven four local governments.
Speaker: So I would ask you, give us like a brief, broad eye view of the STS poll, particularly the methodology, our informativeness, and perhaps your answers to some of these misconceptions.
Speaker: So I think the first thing that I'll say is...
Speaker: I believe you're absolutely right about one response or one set of responses that we've gotten to the poll.
Speaker: It wasn't a surprise at all.
Speaker: I think one thing that is striking about it is how similar Nigerian exceptionalism narrative is when you look at economic policy.
Speaker: The reason I say that is because polling is a science.
Speaker: Polling has been done for at least a century now in the Western world.
Speaker: It's a science.
Speaker: And like all good scientists, there are principles, there are rules, and most importantly, it continues to evolve.
Speaker: However, Nigerians or a cohort of Nigerians, both when it comes to economic policy, polling, and I would say science and social sciences in general, they allow that Nigerian exceptionalism to reign supreme.
Speaker: Well, as we have seen when it comes to economic policy, even Nigeria, our great country, is still subject to the same rules of economics.
Speaker: It's still subject to the same rules of the market.
Speaker: And therefore, it's still subject to the same science or polling.
Speaker: Any idea that that is not the case is founded in Tunisian.
Speaker: is completely founded in delusion.
Speaker: Now, that's very important because essentially polling just leverages statistics.
Speaker: That's just what it does.
Speaker: And numbers are no respect of your location and your community and all that stuff.
Speaker: Having said all of that, when it comes to our methodology, actually pretty straightforward.
Speaker: This is not the first and will not be the last to run a national poll, specifically for the elections.
Speaker: When you're running a national poll, there are a few things that you need to ensure.
Speaker: The underlying thing is that you are able to use a relatively small sample size to draw conclusions about a very large population.
Speaker: And this is where science and statistics come in.
Speaker: because anybody who's done statistics beyond, say, secondary school level will be familiar with things like the law of large numbers, normal distribution, t-test, hypothesis testing, and so on.
Speaker: Amidst all that jargon is one of the most beautiful and most powerful results in human history.
Speaker: And that is the idea that as long as you craft your sample deliberately,
Speaker: and setting assumptions about your population hold, you can actually take a relatively small number of people, say 5,000, and make inferences about millions of people.
Speaker: And that is not an opinion that I am sharing.
Speaker: That's a fact.
Speaker: A lot of the technologies and machines that people use and rely on day-to-day were created using or leveraging this reality and this fact.
Speaker: So at the heart of what we did is leverage a century or even millennia old reality that you can craft a sample of 5,000 or so Nigerians that can speak to the views of 90 million people.
Speaker: Now, of course, the difficulty is then ensuring that your sample is well crafted.
Speaker: And that's what I'll spend a little bit of time talking about.
Speaker: So the first thing is identifying the right target population.
Speaker: And for us, that needed to be the INEC PVC voter database because everybody has a potential voter.
Speaker: So that population was what we wanted our sample to look identical to.
Speaker: Now, part of this is simple.
Speaker: As long as you have enough resources, you can stratify your sample by states, gender, even senatorial districts.
Speaker: You can take other things like religion, ethnicity, ethnicity into account, and you can essentially target a certain number of people from these different groups.
Speaker: And that's what we did.
Speaker: So our sample was stratified all the way to senatorial district level by gender.
Speaker: And we had target numbers for each senatorial district in each state for each gender.
Speaker: Now, that allowed us to essentially craft a 6,000-something person sample that looked
Speaker: almost identical to the underlying photo database.
Speaker: There's two things that we needed to do further though.
Speaker: The first is, all we've done is set targets.
Speaker: How do we ensure that we actually meet those targets?
Speaker: Well, the first thing is ensuring that you are not excluding certain people, right?
Speaker: And for us, that meant conducting the interviews in multiple languages.
Speaker: But also, it meant targeting the largest cohort of Nigerians that we could find.
Speaker: And in reality, that is people with mobile phones.
Speaker: There is no other classification that you can use that would expose you so efficiently to more Nigerians.
Speaker: There are more Nigerians with mobile phones than there are people online in Nigeria.
Speaker: Which is certainly true.
Speaker: I remember one of your colleagues, Jay, said that there was a pool of 30 million mobile phone numbers that you used as the basis for this, right?
Speaker: Yeah.
Speaker: I'm curious, and again, it's just me asking, where did those numbers come from?
Speaker: So those numbers are linked to the NIN database, right?
Speaker: So proprietary data sets that have been built over time allow polling and market research services to take place, right?
Speaker: It's standard practice across the world.
Speaker: Again, still nothing done by the likes of Gallup, UGOS, Ipsos, and so on.
Speaker: except you're building a panel yourself and managing your panel that a few polling companies abroad do.
Speaker: Again, like YouGov has about, well, they claim to have about a million registered UK residents on their own proprietary panel.
Speaker: Anybody else that doesn't run that kind of system, if you're doing market research or polling services, you're tapping into a verified and vetted database of households or residents.
Speaker: I remember doing a project with Ipsos maybe 11 years ago, but I know that their databases biased quite strongly towards consumers.
Speaker: They wanted people who had market power in some way, shape or form.
Speaker: And I remember we were working on something to do with Nigerian breweries and then another thing to do with Dufill Toleram.
Speaker: So do you feel that possibly because the database was built for more, let's call it marketable, like the results are more for a chief marketing officer of an FMCG group or NSE top 50 company, that perhaps that they're excluding by design people who do not have economic clout.
Speaker: Because I'm trying to get further into this question of like, okay, well, I completely understand why you went with people who have mobile phones, cell phones, right?
Speaker: But is there an implicit bias in the sample?
Speaker: Because it is basically built of a certain segment of the population.
Speaker: Yeah, so I would say that that is true abroad.
Speaker: I think less so in Nigeria.
Speaker: And it's a very interesting comment because when we first started thinking about polling, which was a couple of years ago, we were actually thinking about it along the consumer research lines.
Speaker: And what we found actually was the genesis of polling in Nigeria, unlike Ipsos and so on, isn't heavily skewed for market research or consumer firms, but it's actually mainly for governance and similar issues.
Speaker: So you find that the original users of polling information or these data sets were people interested in the public space.
Speaker: So I think because of that, you are less likely to see the kinds of biases that may exist abroad.
Speaker: So are you saying your contention is that because like, oh, the Bill and Melinda Gates Foundation and McKinsey were early customers, that you really do think it has a broader approach than it would elsewhere, the polling database?
Speaker: Definitely.
Speaker: And this is something that we saw ourselves practically because, like I said, we started off thinking about polling from a consumer side and
Speaker: One of the reasons why we didn't dig deeper into the idea was realizing that in terms of ready-made consumer data sets, we don't have them as well in Nigeria.
Speaker: So put simply, it's a lot easier to run a national poll on the elections than to run a national poll on whether people like Milo or Bonvita.
Speaker: So that was a very interesting thing that we found that actually is contrary to, again, our perspective of how polling has evolved, especially in the UK.
Speaker: And for us, we still see it as an opportunity for data and research companies to tap into.
Speaker: Because right now, I do think that the 2023 elections have been a watershed moment for political and governance polling in Nigeria.
Speaker: And we will likely see approval ratings and those sort of things will
Speaker: I believe we're likely to see them going forward.
Speaker: But what we have not yet seen and what even the most reputable polling companies don't have as much experience doing in Nigeria is consumer polling because their institutional framework and their data sets are not optimized for consumer polling.
Speaker: A data set of 13 million phone-owning Nigerians can represent the underlying voter distribution.
Speaker: I don't think it can represent the underlying spending power and spending distribution, right?
Speaker: So you need to be more intentional about creating those data sets.
Speaker: And from what we know, that wasn't the case.
Speaker: So if anything, it's the opposite problem here where...
Speaker: if we were trying to poll for market research companies, the data sets would not be ideal and we would have to be more intentional about building samples from those data sets to do what we want to do.
Speaker: So you really do feel that this is a Vox Populi data set in the group of people that you found.
Speaker: And so the reason I'm asking these questions, like this is a non-partisan podcast, that what we're trying to do is we're trying to get to some idea of whoever wins,
Speaker: when they win and what are the topics and issues that they can think about.
Speaker: And one of the things that we're so grateful for the Stairs information about is like, well, you know, you can kind of come in like a Liz Trust and you can kind of have your idea of what the country should look like.
Speaker: But one would hope, and this is what we're trying to extract from Stairs in a long, long way, is like they should be
Speaker: Also a listening president, which I feel this administration hasn't been fantastic at.
Speaker: So if we can have a source of data as to what people really think, I hope it would be useful for an incoming administration.
Speaker: Yeah, just on your issue, which is a, I guess, it's a very practical issue.
Speaker: I'm not concerned at all about the sample frame.
Speaker: You know, we throw words out like 30 million, 50 million, each extremely large data sets.
Speaker: Extremely, extremely, extremely large data.
Speaker: Like the sample frame of 30 million people is incredible in any part of the world.
Speaker: So I have no issues with that.
Speaker: If anything, where I think we should pay a lot of attention, the credibility of all polls in Nigeria is non-response bias.
Speaker: Because it's one thing to have a sample frame of million people.
Speaker: It's another thing to craft your sample such that it is identical to the underlying content.
Speaker: For the people who are sampled, if they're reading, they're more willing to talk to you.
Speaker: than the other people.
Speaker: Because across the world, you find that poll response rates are like somewhere between 15 to 30 percent.
Speaker: So there's a bunch of people who don't agree to speak.
Speaker: Some of it is practical.
Speaker: I mean, if somebody polled me, I'd be like, I'm busy in my office.
Speaker: But some of it could be systematic.
Speaker: And I think because polling is so early in Nigeria, we don't have any precedent to tell us anything about these non-responders.
Speaker: And the high level of silent voters that we've seen
Speaker: tells us that people need to talk and that that is unevenly distributed by candidates, by region, by gender, I would think that
Speaker: the non-response problem we will have to learn a lot more about and try and solve over the next decade, right?
Speaker: I think that that is the critical fault line of all the polls.
Speaker: And there's nothing a pollster can do about that.
Speaker: Even 538, you go, they have non-responses.
Speaker: So, I mean, I was listening to Galen Druk talk about the good use of polling.
Speaker: So between Vox and 538, they do a lot of analysis about the bones of polling.
Speaker: And there's this political scholar, PhD candidate, Mezbolos Beliosage at Stanford.
Speaker: And, you know, she was looking in depth at the poll, right?
Speaker: Trying to coalesce as a non-expert, a coherent question to ask, right?
Speaker: Particularly with this non-response question.
Speaker: I'm going to ask, why were undeciders, right, lumped in with won't say?
Speaker: Because that, when I read through the entire thing, and when I read through the analysis of it, seemed to me to be the biggest rate in this particular poll.
Speaker: You know, we can talk abstractly about future polls, polling in Nigeria, the political thing.
Speaker: But if we're looking at just this horse race poll that we have in front of us,
Speaker: that predicts a Labour Party win in the event of a high turnout.
Speaker: It just seems to me that I won't say who I'm voting for and I don't know who I'm voting for are actually such distinct answers from one another that they cannot be interpolated.
Speaker: This is just something I think.
Speaker: So I would wonder what you would say to that proposition.
Speaker: Again, one of the things I like about data is that it matches all preconceived notions.
Speaker: And Nigerians, even the most well-educated, we have a tendency to hold on to preconceived notions, but particularly when we fall victim to confirmation bias.
Speaker: So a couple of things that I'll say about that.
Speaker: One is we didn't lump together undecided and wincing.
Speaker: We presented them together, meaning that right now on my laptop, I have the data where they're separate.
Speaker: But when we present them in charts, it's like, hey, we model for both
Speaker: You know, since the 2015 US elections, the concept of the shy voter has become a political preoccupation, right?
Speaker: So it looked to me as if there was a shy voter and then there was an undecided one.
Speaker: And I could not make that distinction looking at the presentation.
Speaker: Yeah.
Speaker: So, like I said, we didn't initially lump them together.
Speaker: In all the data sets, they are separate.
Speaker: From a presentation perspective, we did make the choice to put them together in one silent voter category.
Speaker: And that's mainly because when we then ran the analysis, one preoccupation that we had was bucketing the different people into groups, right?
Speaker: Because we needed that for a model.
Speaker: We had to bucket people into vocal voters, silent voters, undecided ETCs.
Speaker: And for us to build models and apply on the different groups, we had to run tests that check, are these people fundamentally different in certain ways?
Speaker: Because if your vocal voters are fundamentally different from your undecided, and they're also fundamentally different from the won't say, then you can't apply your models across, you can't lump people together, it is it.
Speaker: When we ran these tests, essentially what we found is that, look,
Speaker: These people all look the same.
Speaker: Our survey had about 22 questions.
Speaker: There's one question that was the main thing, which is who will you vote for?
Speaker: And that's where people can say, won't say, or undecided.
Speaker: You look at a bunch of people, they answer questions, the other 20 questions, the exact same way.
Speaker: Let's say 20 people answer the other 20 questions the exact same way.
Speaker: They all happen to be from Kebby, male, same age.
Speaker: They all happen to answer the question, same exact way.
Speaker: And then when it comes to the question of who will you vote for, half of them say undecided, half of them say won't vote.
Speaker: Now, when you see that sort of thing occur over and over again, you start to question to what extent these are different things, because there's nothing else about the respondents that suggests, and again, this is a modeling thing.
Speaker: I'm not saying that there cannot be anything else that suggests that they are different or that they aren't seen differently, but it looks more like these people saying, won't say, and undecided are essentially similar.
Speaker: And when you then look at their other questions and the way they answer other questions, you see again a penchant for if I say I'm undecided, I use that same phrase when I'm answering every other question that has that kind of option that it doesn't necessarily warrant.
Speaker: So the underlying thing here is
Speaker: Although, in theory, and we had this discussion in the team where there were a number of people who felt quite strongly that, oh, these people should be different, the data essentially suggested quite strongly that it was a personal choice to say if I'm undecided or won't say, and that undecided isn't legitimately undecided.
Speaker: It is an unwillingness to say, which is similar to the people who just say, I wouldn't say.
Speaker: The exception, and oftentimes in statistics and data, your argument is more strengthened when you see exceptions.
Speaker: The exceptions were when it came to the gubernatorial races,
Speaker: you did see quite systematic differences between the people that were saying that they're undecided and the people who said that they won't say.
Speaker: They actually look different, right?
Speaker: And you could draw inferences for why these people are still undecided and why these ones just won't say.
Speaker: And the incredible thing is that those state data sets were smaller and yet you were still able to draw more significant inferences that these guys are different than at the national level
Speaker: with a much larger data set, so a lot more power, essentially saying, hey, these guys look the same to me.
Speaker: So in as much as I may agree or disagree with the idea that undecided and would say are different, when it came to answering who you vote for at the presidential level, the data and the models that we laid on top both independently suggested that that wasn't the case.
Speaker: Because we expected a lot of the conversation to be around why we lumped them together.
Speaker: That's why in the analysis, we still kept them separate, right?
Speaker: Because it's just a thing of having two columns and not one column.
Speaker: But we were very intentional about the communication that, hey, these guys are silent voters, right?
Speaker: Because that in itself is a result.
Speaker: The fact that these undecided are not really undecided on the data in itself is an important thing to communicate.
Speaker: Not every Nigerian needs to agree, but again, it's not a state's opinion.
Speaker: They're simply saying this is what the data says.
Speaker: And time will tell to what extent we have been good at reaching those conclusions.
Speaker: Thank you very much, because that clarifies a number of things in my mind.
Speaker: You kind of led off with, you know, polling is a science, and I think it falls into the category of what we're going to call the dismal sciences with economics, which is sciences with, let's call it, like a high amplitude of success and that are extraordinarily subjective to any number of things happening.
Speaker: So that makes me think, which is that even though you do make a distinction, can we concede, or I'm trying to make the point that sometimes polling can, to some extent, be the tail that wags the dog, right?
Speaker: You know, I'm like reading the tweet, and it says the Stairs poll predicts Peter O.B.
Speaker: victory by nine percentage points in a high turnout scenario.
Speaker: and a tighter Bolatinubu victory in a low-turnout election.
Speaker: Hashtag Stairs Paul.
Speaker: I'm just trying to wonder how, particularly considering the constellation of judgment decisions that you've had to make,
Speaker: and judgment calls, how you deal with the fact that your polls, which have now led the New York Times, The Economist, The Guardian, to say unlikely front runner, Peter Obi.
Speaker: And it's not just your poll, right?
Speaker: So I'm not trying to place all the responsibility and impetus at your feet because ANAP has agreed, Bloomberg has agreed, even though vastly different methodologies are
Speaker: like different sample sizes, different processes.
Speaker: The idea of momentum coming from these polling initiatives and constructions, the idea that like not only is your polling taking the temperature, but it is actually also feeding into the election, right?
Speaker: Because if people don't think Peter B can win, they're not going to get up and vote for him.
Speaker: So he's definitely not going to win.
Speaker: But if you're providing polling confirmation bias and people are like, oh, well, I will in fact get up and go and vote for him.
Speaker: And then maybe he does win, but partly because he was polled that he would.
Speaker: Yeah.
Speaker: What you've described is essentially the essence of polling all around the world.
Speaker: You're absolutely right.
Speaker: 100%.
Speaker: And the thing is, like, that's what change brings.
Speaker: That's what data, technology, progress, ETC brings.
Speaker: So STAIRS has been working in and with election data since 2019.
Speaker: Well, technically 2018, right?
Speaker: So six months before the elections.
Speaker: And what I can say is given how important elections are in Nigeria and given the amount of money, billions, hundreds of billions of Naira spent in this area, the paucity of data is shocking.
Speaker: It's abysmal.
Speaker: Probably the funniest is still 2007 results are still not publicly available apart from like at the aggregate level.
Speaker: So there is an insidious culture, I would use that phrase, an insidious culture of opacity when it comes to Nigerian elections.
Speaker: And I think that Nigerians have sometimes...
Speaker: overlooked that too much and instead focused on, oh, we understand the country.
Speaker: We have all these preconceived notions about how elections and politics work.
Speaker: So we don't need the data.
Speaker: So for us, from 2018, when we started experiencing the unavailability of data and the challenges that that caused us as a company, we have been diligent and focused on ensuring that we play our part in changing that culture.
Speaker: And I said it in the
Speaker: We started off with past data and we said, okay, let people be able to even see what's going on real time.
Speaker: The election results that we provided were just one thing, right?
Speaker: We did a lot of incidents reporting and other things in 2019.
Speaker: And a lot of it was focused on real-time data, letting people see what was happening real-time.
Speaker: For us, this cycle was all about how can we give people a glimpse of the future.
Speaker: Now, we are well aware, we are smart enough to know that that is and will always be the most valuable, but also the most dangerous piece of information to give somebody.
Speaker: It is the same reason why in financial markets,
Speaker: there's so much emphasis on clamping down on insider trading.
Speaker: Because when you have information about what's going to happen, you're in a very powerful position.
Speaker: Things can get messy.
Speaker: It's something that we have to accept and build institutions to ensure that information is useful good.
Speaker: I've seen so many takes on this turnout issue.
Speaker: Some have said, oh, you're giving people scope to then do a lot of voter suppression.
Speaker: Some have said that you're encouraging people to go out and vote.
Speaker: I think all those things are true and more.
Speaker: But this is the reality of giving people data and information.
Speaker: Polling cannot just serve the average man.
Speaker: Politicians will also see the polls.
Speaker: I don't know how many Nigerians know, but political candidates have been polling in Nigeria for years.
Speaker: And their sample size are huge.
Speaker: Because they have the money.
Speaker: So they've had access to this kind of information.
Speaker: There's nothing... Bell Pottinger, David Axelrod's company, they've been doing it every election.
Speaker: These are the real stakeholders in this.
Speaker: It's literally their bread and butter.
Speaker: They've been doing it privately.
Speaker: That's the point I'm trying to make about the tale that wags the dog, which is they've always been doing this themselves because it's their business.
Speaker: If polling enters into the more mainstream and becomes a host race, I'm just wondering what your thoughts about how it influences the actual outcome now.
Speaker: Right now, I have no idea.
Speaker: And that is not a political answer.
Speaker: You would think that having done the polls, having spent probably the last six months living and breathing a lot of data about the elections that I would have or we would have a clear picture, but we don't.
Speaker: And that's why so much of our work is based on scenarios.
Speaker: Those who have been talking to me for the last month, there's a phrase I've used more than any other phrase.
Speaker: And it is that the voting value chain in Nigeria is fraught with risk.
Speaker: It is just so hard to predict.
Speaker: On the day, even up to now, we are still only 99.9% sure that the election will hold next week.
Speaker: Not because anything has happened, but because it is Nigeria and anything can happen.
Speaker: And something as little as that, you know, you look at the IRF system, that is potentially the most impactful thing that would happen in 2023.
Speaker: If it does pan out, how it's supposed to pan out?
Speaker: Or will it?
Speaker: Who knows?
Speaker: How will it work?
Speaker: All the things.
Speaker: A lot of our work is based on IRF.
Speaker: So we are vested in it working brilliantly, but we have contingencies.
Speaker: IRF is INEX Results Portal.
Speaker: It's a live results portal.
Speaker: So as soon as a polling unit has collated its results, normally what happens is that the collation agents or whatever at the PU will lift up the sheet of paper and read out the results.
Speaker: That will still happen.
Speaker: For now, the additional thing is they take a picture of that and upload it onto iRED.
Speaker: So in theory, as soon as a polling unit is done, the result of that polling unit gets onto the island.
Speaker: Exactly.
Speaker: Yeah.
Speaker: So that essentially means it's real time collation.
Speaker: And we saw this happen a little bit in Osho last year.
Speaker: And I believe, I mean, it wasn't a flawless system, but it was working.
Speaker: Well, again, it depends on what your bias is.
Speaker: It's not a question of bias, like actually, I'll say this, because I'm teleological about this, right?
Speaker: Which is, if the purpose is not just the process, but the purpose is the outcome, Australia has been a disaster.
Speaker: It essentially has no government at the moment, right?
Speaker: The process has led to something that means that no one will ever agree as to who the legitimate governor is.
Speaker: The thing is, it's not a process.
Speaker: I think that that's cause and effect thing.
Speaker: I would go as far as saying that regardless of who won, well, who won, quote-unquote, the Osho elections and whatever process was used, we would be in this same position.
Speaker: That is the culture gubernatorial off-cycle races in Nigeria, particularly in the Southwest.
Speaker: IKT, since 2005 to 2020,
Speaker: They were perpetually in court, haggling over who was right to win multiple elections.
Speaker: So the process will be scapegoated.
Speaker: But if you're familiar with elections in the Southwest, these governmental races, there is a budget in your campaign for post-election court fees.
Speaker: That is just part of the process.
Speaker: Yeah, the election law is always the richest people you know.
Speaker: Exactly.
Speaker: Exactly right.
Speaker: So it wasn't this process itself.
Speaker: Any other process would have been subjected to the same treatment and we will still be in this case where they're dragging each other to court and they're arguing.
Speaker: That is the culture.
Speaker: But you're absolutely right that it does create
Speaker: this thing where there is a credibility issue attached to certain governors or certain leaders and there's a general question of has this person actually been giving the mandate of the people if it is a court that rules that they are the rightful winner you know so but those are things that irev and inek and polling council these are more cultural things in how we do politics in nigeria
Speaker: I'm going to ask one last thing and then I'll be quiet, which is that, Michael, I wonder, so what is Stairs doing next in terms of the election, numbering, polling, credibility?
Speaker: Because one of the things we want to focus on is not just the horse race and who you're going to vote for, but after you've voted,
Speaker: what then right or after people have voted or whilst people are voting like we're trying to do the podcast is called ballots and beyond and we're trying to take a little bit of a longer horizon view so i'm curious as to what initiatives you're pushing for what it is that you would like to draw people's attention to or think about for us to go from saturday to what maybe monday tuesday is
Speaker: if all goes well, to provide complete transparency over election collation and results in Nigeria.
Speaker: What that means practically is we are tracking results at the polling unit level, to ward level, to local government level, to state level, to presidential level.
Speaker: And people should be able to see that granularity.
Speaker: Because again, this is public data.
Speaker: It's just Nigeria is a country that makes it hard for this data to be accessible.
Speaker: But it is our democratic right as citizens to have access to this data at any time.
Speaker: So for us, that is a big thing.
Speaker: We say we want to be your...
Speaker: companion during these elections because once you vote, the only thing that you can really do is wait and see what's happening.
Speaker: And we've built the tool to allow you watch as seamlessly and easily as possible and track whatever results you're interested in, be it the Senate seat in Ondo North, and you want to see what were the votes in my polling unit, what were the votes in my ward, what happened there, right?
Speaker: So that's what we're focused on.
Speaker: there's.co slash elections.
Speaker: And essentially, you can just track and visualize all the results as they come out, as they announce.
Speaker: Like I said, we have many contingencies.
Speaker: All of them are official Annex sources.
Speaker: But Annex, until the day, you never quite know where the results are going to come from.
Speaker: The source that everybody knows has to come out is the state results that are announced by the Annex chairman at the end.
Speaker: But for us, that isn't enough.
Speaker: The state is not granular enough.
Speaker: So that's why we put a lot of work to do the infrastructure to allow us to track results at a much more granular level and then showcase those results to Nigerians that are interested in them.
Speaker: That's the big thing that we'll be doing over the course of the world, the election period, as well as, of course, sharing as we get this data real time, we're analyzing it.
Speaker: So we will continue to share snippets with people.
Speaker: There's going to be a live blog on the day.
Speaker: that will essentially just be focused on saying, hey guys, this is what is happening resort-wise.
Speaker: This is what is happening in different polar units.
Speaker: This is what is happening in different parts of the country.
Speaker: So it's essentially giving people a lens to see what's going on in the country because on that day when you're at home, that's when you're in darkness.
Speaker: So it's about bringing that light to see this is what's going on.
Speaker: These are the results.
Speaker: These are the issues and so on.
Speaker: Thank you very much, Michael.
Speaker: So quickly, now, whoever becomes president,
Speaker: Of course, all the presidential candidates have made promises.
Speaker: And after the elections, whoever wins will start trying to mobilize resources to execute some of these promises, which then leads us to the question of the federal government's balance sheet and the budget.
Speaker: Like I said, you've written quite a lot about this.
Speaker: One of the candidates have said they are going to delink revenue and spending.
Speaker: Some are saying they are going to save money from subsidy, which is not going to be any kind of savings, even if you get rid of it and redirect post-education.
Speaker: You know, a bunch of promises, right?
Speaker: And this came up on the Andrew Nevin episode, and I'm sure Timmy has quite a lot to say here too.
Speaker: If you look at the fiscal state,
Speaker: of the government itself, you begin to wonder why anybody would want this job, right?
Speaker: So briefly give us an overview of the federal government's budgets and
Speaker: address two things quickly, which is whoever becomes president, how do you start tackling the deficit, which is such a huge, huge issue.
Speaker: And then secondly, revenue.
Speaker: People say, oh yeah, we have a revenue problem.
Speaker: It's not.
Speaker: So the revenue versus growth problem, what is the appropriate heuristic you then take to that problem as a president?
Speaker: Because yes, government has raised record revenue
Speaker: It has not tamed the deficits in any way.
Speaker: If anything, it's growing bigger, right?
Speaker: So what should the next guy do differently?
Speaker: Toby, I mean, you know, we've spoken about this many times and you know how badly I feel about Nigeria's public finance situation.
Speaker: I try not to talk about it because I like to focus on positives in life.
Speaker: But I mean, I don't think there's anything new to add.
Speaker: In 2018, I wrote an article for Stairs called Nigeria is Going Broke.
Speaker: In 2021, I believe, I wrote a follow-up article titled Nigeria is at a fiscal cliff.
Speaker: And that's not even the worst thing.
Speaker: I think now, 2023, I would say that we're toppling over.
Speaker: We're freefall towards what could look like Ghana, what could look like Lebanon, what could look like Argentina, what could look like Greece.
Speaker: Who knows, right?
Speaker: If anything, I know it's that Nigeria will always surprise you and bring a twist of its own.
Speaker: And so it should be, if we do end up there, it should be a crisis like we've never seen before.
Speaker: But once the elections are over, we'll face the reality of the truth that Nigeria's public finances have been mismanaged to the point of seemingly no return at the moment.
Speaker: When it comes to fixing this and then touching on your question of balancing, you know, revenue growth and so on,
Speaker: I would say that the fundamental thing that people need to understand, that whoever comes in, president, finance minister,
Speaker: economic advisor, ETC, they must understand and accept that the budgetary decisions made by the budget office and the fiscal authorities are a matter of finance, not economic policy, especially at this point.
Speaker: It does not matter how many children you have out of school.
Speaker: It does not matter how many bridges you want to build.
Speaker: It does not matter what laudable economic ideas and ideas and policy that you have.
Speaker: This is a question of finance.
Speaker: You are the CFO of the largest black company in the world.
Speaker: How do you balance the books?
Speaker: At this point especially, that needs to be the mindset.
Speaker: Because we're going to have to borrow.
Speaker: We're going to have to restructure debt.
Speaker: We're going to have to bring in additional sources of revenue.
Speaker: We're going to have to tame spending.
Speaker: All these things are decisions that are made and work that is done by the most lauded CFOs in the world.
Speaker: Economic policymakers need to leave the room.
Speaker: Fiscal policy is impotent for the next five years to pursue your economic goals.
Speaker: Any attempt to use public finances to pursue economic goals in terms of any sort of expansionary fiscal policy will just worsen the situation.
Speaker: The boat is sinking.
Speaker: Stabilize it first.
Speaker: It does not matter which direction the boat is going.
Speaker: Let it just stop sinking.
Speaker: When the Titanic was sinking, it doesn't matter if it was facing the US or facing the UK.
Speaker: What matters is saving the boat.
Speaker: And that's where we are.
Speaker: And I don't think we've seen that yet.
Speaker: I think across the manifestos, there's still this idea that we can manage the fiscal situation while still pursuing the goals and ambitions that they have.
Speaker: For me, whoever comes in,
Speaker: Your four years is a clean-up job.
Speaker: Clean up the books.
Speaker: Because without that, Nigeria cannot go forward.
Speaker: And a lot of people will hear this and consider it quite drastic, quite doomsday-ish.
Speaker: Frankly, I could not care less.
Speaker: Because this is the same rhetoric that we were pushing in 2018 and 2019.
Speaker: And again, it seemed unnecessary.
Speaker: But like I said right at the start, we are subject to the rules of finance.
Speaker: We are subject to the rules of economics.
Speaker: We are subject to the rules of the markets.
Speaker: And right now, your public finance situation is a mess.
Speaker: So for me, there is no trade-off to be made here.
Speaker: Growth will come.
Speaker: But growth will only come if the fiscal situation is stabilized.
Speaker: Anything beyond that is a pipe dream.
Speaker: Anybody selling you that idea is either delusional or deceptive.
Speaker: You need to balance the books.
Speaker: I'm not saying that we need to run surpluses or even not run deathly.
Speaker: No, no, no, no.
Speaker: I'm just saying not hemorrhage trillions of Naira every year.
Speaker: That's a basic thing.
Speaker: And that's where we need to go back to.
Speaker: And like I said, it's going to require a lot of restructuring of your debt approach.
Speaker: Those are our most immediate sources of revenue right now.
Speaker: Anybody that talks about plugging leakages, raising taxes, stopping the subsidy, those are a drop in the ocean.
Speaker: Even petrol subsidy now is a drop in the ocean compared to our deficits.
Speaker: So destructuring debts, debts is still what will tide us over.
Speaker: It just has to look different.
Speaker: It cannot be ways and means.
Speaker: It cannot be euro bonds.
Speaker: My grandchildren are going to ask me what I was doing when the government was saddening them with 8% dollar denominated debts.
Speaker: I'll stop there.
Speaker: But the key thing is recognizing that this is a deep finance problem that we need to address.
Speaker: It requires a very tough hand.
Speaker: And the reality is, there will be pain.
Speaker: I hope by now Nigerians have come to understand that there will be pain.
Speaker: Like Razia Khan and the IMF are like, oh, raise VAT.
Speaker: So you said, no, it can't really be tax raises.
Speaker: You said, oh, it can't be plugging leakages, right?
Speaker: It can't be the end of the petrol subsidy.
Speaker: It can't be euro bonds.
Speaker: It can't be ways and means.
Speaker: So I'm actually curious.
Speaker: Could you say what it is then?
Speaker: Because you've kind of crossed off the list of all the things that people would say that someone coming in should do.
Speaker: Yes, so what I mean is that none of those are the silver bullets.
Speaker: None of those are the way out.
Speaker: The way out, the fundamental way out, is attacking this as a finance issue and kicking economic policymakers out of the room.
Speaker: Any attempt to engineer the public finance or fiscal policy in pursuit of growth will fall flat.
Speaker: And that is because if you try and do that and raise VAT and remove subsidies and do all these things, nothing will happen.
Speaker: Because we have been raising taxes in the last few years.
Speaker: We have been plucking leakages.
Speaker: I think it was Toby that mentioned we have gotten record revenues.
Speaker: I particularly have been impressed by the right in independent revenues.
Speaker: Because for many years, the federal government had unrealistic projections.
Speaker: So I got very cynical and said, these things are never going to rise.
Speaker: But in the last few years, they have made stride there.
Speaker: So we are going to need to raise taxes, right?
Speaker: There's a lot of headroom of VAT, exercise duties, petrol taxes, ETC.
Speaker: But on their own, those are not the points.
Speaker: Those are technical levels that can be pulled, right?
Speaker: So yes, we're going to raise taxes.
Speaker: We should remove something.
Speaker: You know, all those things.
Speaker: The fact is, and maybe it takes an economist to see this sometimes, none of this stuff is particularly hard to figure out.
Speaker: Optimal tax theories from like the 70s in the US.
Speaker: Every country knows how to design its tax system.
Speaker: It's about the will to execute it.
Speaker: There's nothing that Nigeria is going to do that hasn't been done a hundred times.
Speaker: So it's not about us kicking out any of these solutions, although there are some that should be.
Speaker: Like Eurobonds, we have enough.
Speaker: That's fine.
Speaker: We don't need any more dollar denominated debt.
Speaker: That is so long term right now.
Speaker: But a lot of the other obvious and clear policy suggestions are fine and they can be used as a cocktail.
Speaker: But the point is on their own, unless the underlying issue is addressed, there is no point.
Speaker: And I will end it by saying that it's sort of like this Naira redesign policy in that Nigeria has a penchant for pushing a policy lever without addressing the structural issues.
Speaker: And what happens is that the policy just backfires because it sounds good on paper.
Speaker: It's like, yes, we should do this because this.
Speaker: Yeah, but have you prepared the ground for the policy to work?
Speaker: No, then don't do the policy at all because people are just going to suffer.
Speaker: Right.
Speaker: That's what we've seen and we'll continue to see if the underlying issues.
Speaker: And it's a very, very simple thing.
Speaker: Right.
Speaker: Bringing in a team, bringing in a finance minister with expertise in this sort of area, that's their focus is on cleaning up our books.
Speaker: That is their focus.
Speaker: That's it.
Speaker: Because everything else will follow.
Speaker: The tax decisions, the subsidy decisions, all those things will follow.
Speaker: But you will not have a finance minister that has been hamstrung into pursuing a business and empty case-call policy that is leading Nigeria to nowhere.
Speaker: That is the fundamental problem.
Speaker: That has been the problem since all prices crashed in 2014.
Speaker: And we did not read the room and decided that, no, we will force this economy to rise with money that we don't have and pretend like we're not subject to the laws of basic economics.
Speaker: We need to let all of that go and start afresh.
Speaker: So practically now, I want to ask you, Michael, if you are the special advisor or something to the next president, what is the one thing?
Speaker: You would advise practically one policy proposal that you would put forward as a way to deal with this problem.
Speaker: Because, yes, I take your point.
Speaker: Fiscal policy has more or less reached its limits in terms of trying to make it lead growth.
Speaker: There really isn't any room for spending anymore.
Speaker: But if you look at the budget as well, like a friend was pointing out to me, you cannot find an obvious way in the FG's budget where you can't cut $1 trillion.
Speaker: Every couple has been spoken for, like WF said.
Speaker: So what is the one practical proposal that you would put forward if you were in the room with the people that would decide on these things?
Speaker: It's very simple because it's a very simple equation.
Speaker: Spending minus revenue equals deficits.
Speaker: Revenue is a lagging variable.
Speaker: That's the reality.
Speaker: I cannot touch that.
Speaker: And that's the thing policymakers don't like to accept.
Speaker: You cannot come in and double revenues in six months.
Speaker: It's not going to happen.
Speaker: It's a lagging variable.
Speaker: And oftentimes, it's in response to what you do on the spending side.
Speaker: So you have to face spending.
Speaker: That is the reality that as Nigerians, we are still not accepted.
Speaker: Nigeria is currently spending beyond its means.
Speaker: The solution to that is not spending as much beyond its means.
Speaker: That is the reality.
Speaker: Wherever it needs comfort, the comfort that it's spoken for, it needs to go back to where it came from.
Speaker: That is the reality.
Speaker: If I were currently owing people money,
Speaker: And I was spending beyond my means.
Speaker: And my children were in school.
Speaker: And my debtors, creditors, whatever, come to me and ask me for their money.
Speaker: And I point out that, look, my money is tied up in school fees and in houses and in this.
Speaker: You look at me like I'm crazy.
Speaker: So what's?
Speaker: That is why I say that this is a finance question.
Speaker: It does not matter what economic activity.
Speaker: It is that economic activity that you've invested in is actually killing the economy long term.
Speaker: These things are true.
Speaker: I say I want to borrow and build a bridge, but I don't have that money and I have no way of paying back that money.
Speaker: That bridge is a curse on the economy long term.
Speaker: It should not be built.
Speaker: And then you ask, oh, then how will we build the bridge?
Speaker: Well, we'll figure it out eventually.
Speaker: But what will happen if we build that bridge is we're done.
Speaker: That is where we are today.
Speaker: And it is that discipline.
Speaker: That is why the phrase is fiscal discipline.
Speaker: And I'm sorry if I'm raising my voice because this does get me being riled up.
Speaker: It is fiscal discipline.
Speaker: We have lacked it.
Speaker: It does not matter what you're spending on.
Speaker: You need to rein in that spending.
Speaker: If you don't have the money, you cannot spend it.
Speaker: It's basic.
Speaker: You don't have the money.
Speaker: You can't spend it.
Speaker: Nobody's willing to lend to you cheaply.
Speaker: You humble yourself.
Speaker: That's what you do.
Speaker: So it's a very, very, very simple thing.
Speaker: Now, I cannot tell you up front, I cannot tell you, oh, cut this governor's budget or cut this university's budget.
Speaker: That is the kind of suggestion that I don't have visibility enough to say.
Speaker: But any finance minister who goes in, or budgets off his head, who goes in after six months can speak to their finance minister and make the hard calls.
Speaker: They will be hard calls.
Speaker: They will get some of them wrong.
Speaker: But those calls need to be made.
Speaker: But the idea that we are locked into the spending that we have is false.
Speaker: Even debt repayments, and that is why I say that a big part of this will require debt restructuring.
Speaker: A debt servicing that is consuming, what, 80% to 120% of our revenues, that need not be the case.
Speaker: That need not be the case.
Speaker: It can, in a year, come down to 30% if we're able to strike the right deals.
Speaker: But that only happens... So you're talking about debt restructuring?
Speaker: It is exactly what you said.
Speaker: It's debt restructuring.
Speaker: It is debt restructuring.
Speaker: To the Nigerian saver, right?
Speaker: It's not just Paris Club, etc.
Speaker: You would have to restructure debts that you owe.
Speaker: Like the money you've borrowed against my pension, right?
Speaker: And some of that money, etc.
Speaker: You would have to restructure that.
Speaker: Like the people who take the haircut will be the Nigerian citizens, right?
Speaker: Yes.
Speaker: And again, that's why I keep on going back to, I don't think people have realized that we've crossed the Rubicon.
Speaker: There is no non-painful way out of it.
Speaker: Every way out of this is going to be bloody painful.
Speaker: That's the fact.
Speaker: That's what happens when you enter a fiscal crisis.
Speaker: But if you don't take the very painful medicine and keep going, you're only making it worse.
Speaker: And that's why I started off my answer by saying in 2018, I wrote an article saying Nigeria is going broke.
Speaker: I thought that was when you could make changes and not harm the economy too much.
Speaker: The Greek crisis costs 25% of Greece's GDP.
Speaker: 25%.
Speaker: That's an extremely well statistic.
Speaker: Essentially, take all the assets in Nigeria, take everything you see, the businesses, the cars, take out 25% of it in a 10-year period, just gone.
Speaker: That is how bad things can get.
Speaker: I don't know if you've been reading the Lebanese, like, that is how bad things are.
Speaker: Yes, you're going to have to go hand in mouth to your PFAs, to your diaspora, to your international investors.
Speaker: Some will turn you down.
Speaker: Some will give you extremely harsh penalties.
Speaker: But what is the alternative?
Speaker: The alternative is to keep going and pretend like you don't have a cancer.
Speaker: It's chemo.
Speaker: I think that's the best example that I can give here.
Speaker: The kind of treatment that is needed is similar to chemo.
Speaker: You need to kill off a lot of things to have any hope of survival here.
Speaker: Again, it sounds very dramatic, but that is the reality.
Speaker: I don't think Nigeria understands that.
Speaker: It's true.
Speaker: Chemo is where you just pour poison into your body and hope it kills the cancer before it kills you.
Speaker: Because this will kill us.
Speaker: And it goes back to that Nigerian exception.
Speaker: Nigerians don't genuinely believe that we'll end up like Argentina or Lebanon or Greece.
Speaker: We will.
Speaker: It's just a matter of time.
Speaker: You cannot have a fiscal situation where your deficit is almost growing to be double your revenues every year.
Speaker: It's only a matter of time.
Speaker: And then you lay in an FX liquidity crisis.
Speaker: And that's why I say that this is a finance thing.
Speaker: You need the most skilled financier for person to, how do I fix this problem?
Speaker: What you're saying is that Nigeria is Enron or it's FTX, right?
Speaker: It needs like John Smith.
Speaker: It needs like a bankruptcy expert to come in and just look at everything rationally.
Speaker: And basically not think of it as a going concern?
Speaker: No, FTX is just before everything blew up.
Speaker: Because the irony is that when things blow up, a lot of the interventions that seemed impossible suddenly become on the table because, well, she does hit the fan and you have nothing else to lose.
Speaker: It's often the most difficult to push through these changes when people still think there is hope.
Speaker: That is why FTX, people read stories and say, but how could they have thought?
Speaker: How did they think?
Speaker: Because they thought there was hope.
Speaker: They deluded themselves, okay, we'll be able to get this thing.
Speaker: Eventually, time will catch up to you.
Speaker: So you're absolutely right.
Speaker: That is how drastic things are.
Speaker: That's why I don't talk about public finances in Nigeria again, because it's a very doomsday thing.
Speaker: But again, I tell people when I was a research analyst and I would walk back in 2015, I would project the Naira going to 400, 500 people in the room, MDs and CEOs who laugh, this is not going to happen.
Speaker: The Naira is at 800.
Speaker: We're moving.
Speaker: Even I'm like, wow, even I didn't expect that.
Speaker: The laws of economics will hold true wherever there are human beings buying and selling.
Speaker: That is what's happening.
Speaker: So just to close off on this,
Speaker: It's chemo.
Speaker: That's what a public finance is.
Speaker: There is no easy way out.
Speaker: It's job cards, slashing things.
Speaker: It's painful.
Speaker: It is painful.
Speaker: That is why you need somebody who knows what they're doing.
Speaker: Because the worst thing that you could have is to bring somebody who just takes a sledgehammer and says, okay, I just want to slash government spending by 40%.
Speaker: And there is no head or tail as to how that is being done.
Speaker: And then it's just pain without any benefits.
Speaker: So it does require skill.
Speaker: But however skilled you are, even the most skilled cancer physician, their patients will go through pain and suffering.
Speaker: But the idea is that it is in that person's hands that they have the highest likelihood of survival.
Speaker: And that's where we are when it comes to our public finances.
Speaker: That is how bad things are.
Speaker: Thanks, Michael.
Speaker: That's
Speaker: Fascinating.
Speaker: So with that sobering note, I want to thank you very, very, very much, Michael Famaruti, who is one of the co-founders of Steers Business Intelligence, which is, I would say at the moment, Nigeria's premier digital information, particularly economic and business information platform.
