Tomorrow, August 22, 2017, will make it 15 years since the advocacy, ceaselessly canvassed in this column, for a payment reform that will regenerate and rapidly propel inclusive economic growth, was first presented to government.
Incidentally, an earlier casual discussion of such a proposal at an “old school boys” meeting, unexpectedly, led to an invitation to make a presentation to the National Economic Intelligence Committee, with Prof Ibrahim Ayagi, as chairman. Despite the short notice, a paper titled, “A liberalised foreign market and economic benefits”, was co-authored with a colleague, Adaighofua Ojomaikre, a kindred spirit on this matter. The solution proffered, in that paper, was later discussed during our visit to NEIC’s Abuja office on August 22, 2002.
In retrospect, the NEIC team seemed in accord with our analysis that the subsisting, primitive, payment model, adopted by government, was the primary cause of our weak economy, despite increasingly more bountiful export revenue. Nonetheless, Ayagi personally wondered if our prescription was in current application anywhere. The NEIC team was obviously startled by the response that no successful economy, that we knew, consciously captured export revenue, as our government presently does, and then proceeds to create an estimated local currency equivalent as a replacement for such revenue before sharing and spending. Inexplicably, the same government turns round to auction their forex booty in a market that is already disturbingly suffocated with excess naira liquidity.
Ultimately, the NEIC chairman agreed that the committee would consider our paper in future discussions with then President Olusegun Obasanjo.
Regrettably, however, there was no feedback thereafter from NEIC. Consequently, in an attempt to spur the agency into action, additional copies of the same paper were printed and sent directly by courier, with cover letters in October 2002, to President Olusegun Obasanjo and some critical cabinet members, including the finance minister, Ngozi Okonjo-Iweala, the education minister, the Secretary to Government of the Federation and the then CBN Governor, Joseph Sanusi.
Sadly, there was similarly no response from the President’s office; so, in another letter dated March 8, 2003 to NEIC, we drew attention to the CBN’s 2002 “Macro-economic review” which indicated that “the year (2002) recorded continued excessive growth in monetary aggregates, relative to set targets”. Consequently, we concluded, in our letter, that with inflation at over 13 per cent and a chronic liquidity overhang, with heavy unemployment, the outlook invariably will remain bleak, since the CBN has not proposed any new policy thrust.”
In the same letter, we also observed that “the several unfavourable economic indicators merely represent symptoms and complications of an already, correctly diagnosed disease, namely, excess liquidity.” We also noted that, “it has been amply demonstrated that excess liquidity in Nigeria today, is self-inflicted, as it is traceable to the faulty translation of hard currency revenue into the domestic economy”. We therefore advised that “no serious country abuses and debases its currency in that manner.”
In view of our earlier experience with regard to feedback, NEIC’s prompt response to our letter of March 8, clearly came as a surprise; an excerpt from the rather terse response dated March 25, 2002 is as follows:
“The National Economic Intelligence Committee acknowledges, receipt of your letter dated March 8, 2003, on the above subject matter (i.e.) Liberalisation of the forex market.) “The NEIC notes that you have already contacted Mr. President and the Governor of the Central Bank, on the same subject matter. This development forecloses further consideration of your proposal by the Committee until Mr. President concludes his consultation on the matter.”
Curiously, there was no acknowledgement, or response whatsoever, from members of the Federal Executive Council who received our paper. Nonetheless, the CBN’s Director of Research, Dr. O.J. Nnana, sent a long winding response; part of the conclusion in Nnana’s letter dated November 29, 2002 reads as follows:
“We are, however, very sceptical on the level of trust that you put on the various tiers of government regarding your proposal to fund their accounts in foreign exchange under your proposed ‘warrant system’. We hope it would not be another source of capital flight and a free run on the external reserves and the naira exchange rate.”
The director’s response was clearly a mischievous deflection, as the present payment model has continued to support rampant currency round-tripping and accommodates huge liberal forex leakages and capital flight, with the CBN’s financially reckless sales of official dollars to the Bureau de Change, despite the obvious financial security implications of such practice.
Nonetheless, Ojomaikre and I refused to be deterred by the unfortunate lack of interest from a government team that seemed so self-assured in their capacity to properly manage the economy, even when the critical indices of inflation, cost of funds, exchange rate stability and unemployment rates clearly remained out of sync with tested models for sustained, inclusive economic growth anywhere.
Consequently, we proceeded to Channels Television in Ikeja, where we asked to speak to anyone, a progressive payment reform that would revitalise and transform Nigeria’s economy. A copy of our paper was eventually left with the station’s economic correspondent. Unexpectedly, barely three days thereafter, the TV station invited this writer to elaborate on some aspects of our paper, which had resonated in that day’s news bulletin.
Curiously, despite the frequency of alternate media invitations that followed thereafter, the CBN, that is invariably the acknowledged villain, in the disruptive and disenabling payment system, that has continued to impoverish us, has kept mute and clearly refused to be drawn into any debate or explanation of the disastrous anti-people impact of its convoluted monetary strategy that seemed to unduly favour the banking sector and their collaborators, at the expense of the rest of us.
However, in November 2004, this writer was invited to the Vanguard newspaper office, in Kirkiri, Lagos. It was, certainly, my first meeting with veteran journalist and renowned publisher, Mr. Sam Amuka, a.k.a Uncle Sam, who offered a lunch treat in the staff canteen, before inviting me to write on those issues that he had seen and heard me discuss passionately and consistently on several media platforms. I, thought he meant a one-off article, but he insisted, despite my protest, that I did not have the tenacity and discipline of a regular columnist, that he actually expected a weekly column. I was, probably, flattered by what I thought was blind faith in my ability, but Uncle Sam was sure I could do it, and it became difficult to refuse. Eventually, my first article, “The mother and father of fuel subsidy,” was published in Vanguard newspaper on November 22, 2004. The Daily Independent and The PUNCH newspapers also joined in syndicating the column on May 3, 2005 and December 23, 2011 respectively.
Regrettably, in spite of over 700 articles in the print media, since 2002, with hundreds of interviews in both print and electronic media and pro-bono presentations to several trade groups, including the NLC, TUC, MAN, LCCI and the academia, government and its economic team have remained defiant to the call for progressive economic change, even when excess liquidity still remains prominently unyielding. Invariably, inflation has also sadly climbed from 13 per cent in 2002 to over 16 per cent today, while cost of funds to businesses is oppressively well above 20 per cent. Meanwhile, the naira is also comatose, with youth unemployment rate, alarmingly, exceeding 25 per cent! Will they ever learn?
Nonetheless, it will be a disservice to Nigeria and other African nations with similar liquidity challenge to halt the 15 years advocacy for the CBN to release its stranglehold on the foreign exchange market. The thought that this odious deceit and the collateral of extreme mass poverty will persist is personally heart-breaking. I don’t know about you! PLACE YOUR TEXT ADVERT BELOW:>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> How I TOTALLY Got Rid Of my POT BELLY,excess Fat and Overweight In just 2weeks.. Click HERE for Details.