SIMON KOLAWOLE LIVE: email@example.com
Just imagine: because of too much pressure on forex and dwindling foreign reserves, the Central Bank of Nigeria (CBN) decides to allow the naira to depreciate; the CBN governor heads for the National Assembly to make the announcement and seek the lawmakers’ approval before going ahead; and they debate it for a few weeks before finally taking a decision. What do you think would happen in the meantime? Immediately the CBN announces its plans on the floor of the National Assembly, smart guys would rush to buy up forex, hoping to sell in the black market and make a kill as soon as the naira is allowed to depreciate. Imagine the commotion. Imagine the uncertainty. Imagine the instability. And if the National Assembly eventually decides that the naira must be maintained at the current rate, the upheaval would even be worse.
Well, ladies and gentlemen, that is the direction the National Assembly is going with their attempt to play politics with the autonomy of the CBN. There is a bill to curtail its independence and flood the bank’s board with political appointees. It is a curious adventure, which, to be honest, is not completely curious. Ever since the CBN governor, Malam Sanusi Lamido Sanusi, raised the alarm on the crazy bills of the federal lawmakers in the form of recurrent expenditure, he has become a marked man. I don’t know if any week passes without the National Assembly summoning him to come and answer one query or the other, no matter how mundane and how irrelevant to the progress of Nigeria. At this rate, he may need to rent a house close to the National Assembly so that when he wakes up, he can just walk down to the chamber or the hearing room to answer questions before resuming work at the CBN office, and probably return in the evening to answer follow-up questions before retiring to bed.
Meanwhile, I am not in any way or any form suggesting that Sanusi has no case to answer or is above the law. I am, of course, a believer in Sanusi’s abilities, but I have also come to query some of his actions because they don’t make sense to me. Donating N500 million to the University of Benin after he got an honorary PhD is something I am still struggling with. And while we were at it, he donated N100 million to the victims of Boko Haram in Kano. He also gave N20 million to Madalla victims of Boko Haram (to balance the equation, as it were). I know the donations were approved by the board of the CBN (of which Sanusi is chairman, by the way). He would like to explain these donations away as “corporate social responsibility”—as if I was born yesterday. So I have my own misgivings about many of his decisions and actions and even utterances, no questions about that.
However, should we, because we cannot stand Sanusi’s guts, begin to destroy a very important institution like the CBN? By seeking to subject critical appointments at the CBN to political control, as well as surrendering technical monetary decisions on the Nigerian economy to an all-comer affair at the National Assembly, the lawmakers are trying to set the stage for an orderly destruction of the system. You don’t, because you dislike the face of one man, begin to pull down an institution that plays such a critical role in the Nigerian economy. That is exactly what we sought to do to the Economic and Financial Crimes Commission (EFCC) under President Umaru Musa Yar’Adua, simply because we wanted to get rid of Malam Nuhu Ribadu as the chairman. I thought we had learnt from that sickening misadventure.
Get me right again: I am not interested in suggesting that there should be no checks and control of the CBN at all; that is not desirable. But what do we want to check? What do we want to control? These are the questions the lawmakers should ask themselves. One aspect of the CBN amendment bill seeks to replace the governor as chairman of CBN with a political appointee, in addition to populating the board with other political appointees. In other words, CBN decisions that need board approval will be presided over by a political appointee and not by those who run the bank on a day-to-day basis. The deputy governors, who are executive directors, will be excluded from the board, according to the brains behind the bill.
The second amendment seeks to subject the budget of the apex bank to National Assembly approval. On the surface, there is nothing wrong with that. After all, President Goodluck Jonathan submits his budget to the National Assembly for approval every year. But the first and critical question you ask is: why do the central banks of developed economies such as UK, US and the EU not subject their budgets to parliamentary approval? Why do emerging countries such as Brazil and South Africa have independent central banks with independent budgeting? Why do our “mates” like Ghana and Kenya not subject the budgets of their central banks to parliamentary approval? There must be something about it, isn’t it?
Okay, I will help the lawmakers a bit. Central banks all over the world perform the core mandate of maintaining price stability and ensuring a non-inflationary growth—essentially through the three rates: inflation, exchange and interest. It is their responsibility to ensure a “sound and stable” financial system. Now, no other institution is so empowered anywhere in the world. These functions are unique to central banks. And because the global economy is increasingly one, what happens in Thailand’s financial sector could impact on the rates in Nigeria in a split second. These are big challenges to any central bank anywhere. For the bank to effectively and efficiently discharge its duties and responsibilities, it must be truly independent and be able to act swiftly. No political interference. Its administrative autonomy must not be diluted.
The lawmakers may wish to know that the environment of the banking industry changes so quickly that it requires urgent and prompt steps to ensure its stability. Things can change within minutes. Actions have to be taken immediately. These actions might never be anticipated in the CBN budget. Take, for instance, the banking crisis of 2009 and the injection of N620 billion bailout to contain a certain haemorrhage. It could not have been in the CBN budget. If the apex bank had needed to get legislative approval (it currently takes nearly four months for the National Assembly to pass budgets), the banks would have gone down and depositors economically bludgeoned by the time the proposal was being debated by the legislature. Even key market information that should take everyone by surprise would have been divulged on the floor of the National Assembly.
Talking about controlling inflation, in particular, if political appointees begin to preside over the adoption and implementation of monetary policies, I’m afraid we’ll be in trouble. One of the major challenges the CBN faces today is that it is not in control of fiscal policies. So while it is trying to contain unproductive spending in the economy as well as encourage savings, politicians do not want to hear anything about that. Their job is to spend the money, no matter how economically unproductive the item is. The propensity of the politicians to spend and spend and spend is a major headache for the CBN governor as he tries to maintain a balance between the fiscal and monetary aspects of the economy. Without the required autonomy, the politicians could also loosen the monetary policies and prepare the ground for a free-for-all.
I strongly believe the CBN should still be subject to some checks and controls. They should report their activities to the National Assembly from time to time. Their annual reports should be perused by the legislature and necessary questions asked and sanctions imposed if infractions are noticed. That way, the CBN knows it is not above the law. Meanwhile, if the lawmakers have a problem with Sanusi and cannot get along with him, I offer them a suggestion for free: they should make sure President Jonathan does not re-nominate him or they should not allow him to “take a bow and go” if he is re-nominated. That way, they can settle their personal scores with him. Cannibalising the CBN because of Sanusi is not only short-sighted, it amounts to suicide-bombing.
Tears for Crash Victims
It’s almost six years now since we recorded a major air crash in Nigeria. But yesterday’s mishap of Dana flight from Abuja to Lagos has reminded us once again of those sad, sad days in the past when air crashes were competing with road accidents. Significantly, yesterday’s crash affected residential buildings, the first of its kind in Nigeria (I hope my memory serves me right). I am sad over everyone that died in the crash. I still spoke with Dr. Levi Ajuonuma a few days ago and the last thing on my mind was that it was going to be our last conversation. Only God knows how many aircraft I have travelled in this year alone. So it suddenly hits you: it could be anyone. The same way I boarded a plane from Lagos to Abuja yesterday hoping to arrive safely was the same way the 153 passengers boarded Dana with expectation. This life! My prayers are with those who are mourning right now. It’s so, so sad.
Abiola Babes of Akoka
I was so downcast when I heard on Tuesday that the name of my alma mater, University of Lagos, Akoka, had been changed to Moshood Abiola University. Those who say we are denigrating Abiola by our opposition to the name change are only being mischievous: they know very well in their hearts that this is not the case. There is nothing wrong with honouring Abiola; we’ve campaigned for this for over a decade. But naming another higher institution after Abiola, with a polytechnic already in place, is not creative and presents a branding complication. What next? Abiola College of Education? If it must be a university at all cost, why not one of new ones established by President Jonathan? And may I plead with our leaders that the time has come to stop naming legacy institutions after people. Let’s get serious. Oxford University would have been renamed Margaret Thatcher University if it were Nigeria. June 12 or Abiola’s birthday can be a public holiday. That makes more sense to me.
Pay Your Fines, Please
When the Nigerian Communications Commission (NCC) slammed a combined fine of N1.17 billion on the Big Four telecoms companies for poor service, I was not too happy. As a subscriber, I wanted the customers reimbursed or compensated instead. However, the NCC is an institution and is within its legal right to impose these fines which, compared to the billions of naira these telcos rake in per day at our expense, are nothing but chicken feed. I am however worried that the deadline has passed and the telcos have failed or refused to pay. No matter how right or aggrieved they think they are, they must not be allowed to undermine NCC. If they want to go to court, they should have gone before the deadline. If they succeed in defying NCC, it will deal a fatal blow on regulation, as well as institution-building, in Nigeria. But, like I said, I would also want the hapless subscribers compensated. It’s only fair.
Doctors are about to go on strike for a day. They want to retire at 65 not 68. They are also opposed to aspects of the pension reform which they believe short-change them. But to save lives, essential services will be provided. Only non-urgent appointments will be affected. They don’t want any patient to die. Sorry, I am talking about British doctors. Meanwhile, an MP, Dr Dan Poulter, has resigned from the British Medical Association in anger. “I would never have contemplated going on strike when I was a full-time doctor,” he said. “This is going to damage the reputation of the medical profession and it’s going to hurt patients.” O yes, human life is bigger than naira and kobo—especially when you are already so well paid, far above others.
I got this joke during the week and I must share it with you. Once upon a time in a village, a man appeared and announced that he would buy monkeys for $10. The villagers went out to the forest and started catching them. The man bought thousands at $10. As monkeys became scarce, he upped the price to $20. This renewed the efforts of the villagers. Soon the supply diminished again. The offer rate increased to $25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now announced that he would buy monkeys at $100! However, since he had to go to the city on some business, his assistant would now buy on his behalf. In the man's absence, the assistant said to the villagers: “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $75 each and when the man returns from the city, you can sell them to him for $100 each.” The villagers brought out their life savings and bought all the monkeys. Thereafter, they never saw the man nor his assistant again—only monkeys everywhere! Welcome to the Nigerian ‘Stock’ Market!!