On the Travails of the Naira

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Guest Columnist

By Kingsley Moghalu

We must begin with the end in mind: a stable (but not immovable) currency, the exchange rate of which broadly reflects both an approximation of its true market value as well as Nigeria’s broader economic interests. Which raises the question: between a fully flexible exchange rate (full float) and a peg or a managed float of the currency, where does Nigeria’s national interest lie?  Answer: whichever will make Nigeria’s economy more efficient and encourages production.

Before we proceed, let’s be clear about two things. First, with extremely few exceptions such as Canada and the United States, the central banks of the advanced industrial economies that mainly use flexible exchange rate policies manage their currencies through occasional interventions in financial markets to stabilise those currencies. They also carry out occasional competitive devaluations, in this case because they are productive, export-oriented economies.

Second, the naira’s (and our economy’s) woes were exacerbated by the Central Bank of Nigeria’s prolonged pegging of the naira to a fixed, artificial exchange rate of 199 naira to the dollar, when all the rational economic factors that previously sustained this exchange rate had collapsed, rendering the peg unsustainable. This contributed to black market devaluation-fueled inflation, and unemployment, as manufacturers could not access forex at the official rate and output productivity dropped sharply.  We are now in a recession.

But that is water under the bridge.  With its policy decision in May 2016 to move to a fully flexible exchange rate, the CBN capitulated to reality, heralding a more rational policy direction that significantly addressed widely held economic and market concerns. Nonetheless, the naira is not out of the woods. Forex liquidity constraints persist because foreign investors remain on the sidelines, and the gap between the parallel and interbank markets remains wide. Typical of our national patterns, we are seeking “quick fixes” to the currency’s malaise without fully assessing the interlocking challenges that confront it. The naira’s problems are symptoms of deeper economic, governance and institutional malfunctions. Without confronting these problems, our quest for “solutions” may be skirting the real issues. There are eight specific challenges we must address.

The fundamental problem is the absence of a productive economy. Two most important aspects of this challenge are electric power to support the growth of a productive, manufacturing industrial economy, on the one hand, and removing the obstacles international trade policy places on our industrialization prospects by stymying the viability of our local industries, on the other. Cheaper foreign manufactures have easy access to our markets. Conversely, our own manufactures are unable to access foreign markets because value-added goods from our country are blocked by high tariffs imposed by our trading partners (but our raw materials for their own industries are welcome and attract low tariffs!). Quality standardization concerns also dog Nigerian exports.

What is the solution? We need to shift from the never-ending quicksand of gas-based power to a focus on renewable (solar, wind, geothermal and biomass) energy for household consumption and hydro and coal-based power for industrial production. And we need to impose “smart” protectionism through high tariffs that can be justified under the rules of the World Trade Organization, on imports from foreign markets that are snuffing out our local industries in several sectors such as textiles. Absent these two policy approaches, we are treading water. If we combine these policies with a flexible exchange rate policy that makes export-oriented value-added products more profitable than importation, the naira will ultimately realize a beneficial effect from its inevitable devaluation. This is the answer to President Muhammadu’s Buhari’s (and many other Nigerians’) understandable concern about the absence of any benefits from prior devaluations. Those devaluations, though involuntary because of external shocks to which the nature of our economy exposes us, only imported inflation. That reality was not offset by any benefit because of there were no complementary policy actions in other economic sectors outside of finance.

The second problem is the absence of a well-articulated, medium to longer term economic strategy to take us forward in light of new realities. The 2016 budget, or the budget for any particular year, cannot be such a strategic plan. This kind of strategy, which needs to be multi-year and have clear, interlinked components with timelines and accountabilities, would be an ideal backdrop against which the CBN can situate medium term monetary policy thinking.

Third, and related to this, is the evident absence of a strategic linkage between fiscal policy, which is the role of the Ministries of Finance and Planning/Budget, and monetary policy which is the central bank’s domain. A central bank can contribute to national economic policy, but does not on its own make such policy in the holistic sense. Rather, monetary policy complements a robust fiscal policy by maintaining monetary and price stability. This role can be a defensive one where fiscal policy is deficient. For instance, a central bank may raise interest rates if it believes there is excessive, politically inspired “fiscal dominance” that can trigger inflationary trends. The absence of a solid, comprehensive fiscal strategy is one reason why the CBN is overburdened with quasi-fiscal functions and ever-increasing development finance interventions.

Fourth, the CBN itself needs to develop a more strategic approach to monetary policy and financial stability, even within the limitations of the absence of a larger national economic blueprint. The Bank’s responses to the challenges of the past two years have appeared short-term, reactive, episodic and experimental, and without a larger plan of action that is evident to all Nigerians, the financial markets, and foreign investors.

Fifth, adequate understanding of basic economic principles that should inform public policy is lacking in our country’s populace. Populism often reigns as a result, as emotional passions take hold and get translated into the “national interest” or that of “the masses”.  Zimbabwe and Venezuela offer sobering examples of this kind of approach to economic problems. Meanwhile, other oil and commodity producers have made (certainly painful) adjustments to their currencies in response to changed fundamentals in the past two years. Even the great British pound sterling sharply lost value as a consequence of Brexit.

Sixth, the modern world and the fickleness of its financial markets requires highly adept communication by central banks. The CBN cannot escape the need to communicate effectively to Nigerians the fundamentals of the naira’s travails, and its plan to meet evolving challenges. The new forex policy is a good basis to build on.

Seventh, the institutional and policy autonomy of the CBN has increasingly become compromised. It is unclear whether these challenges have been self-inflicted or externally induced, or both. There are very sensible reasons why the laws of Nigeria provide for the independence of the CBN in the exercise of its functions, as in the case with the central banks of many nations that are making economic progress. Recent negative trends in the Nigerian economy have borne out the foresight in this principle. It is the duty of a central bank to tell a political leader not necessarily what he or she wants to hear, but rather what the leader needs to know. This is what the national interest and professionalism require. It also is a foundational basis for a serious response to economic crisis.

The CBN should educate Nigeria’s political leadership class, for example and especially in connection with devaluations of the naira since 1985, on the global implications of the evolution of the international monetary system since 1914. Fixed exchange rates worked well only when the whole world used them. Currencies were pegged to gold from 1870 up to 1914, and then to the dollar which itself was backed by gold, after 1945. This was abandoned in 1971 when the US dollar became unable to maintain its value of $35 for one ounce of gold. Countries progressively adopted floating exchange rate regimes of various shades and complexities, and fixed exchange rates were completely abandoned by most countries in 1985. Nigeria’s economy was of course not left untouched by this evolution.

Eighth, as the International Monetary Fund noted in a recent report, investor confidence in the Nigerian economy is low. All the seven factors above have contributed to this reality.

Today, we know that fixed exchange rates, though they may appear to provide an appearance of stability, are largely inappropriate for the nature of the contemporary world economy, and tend to cause currency crises as we saw with Mexico in 1995 and the Asian and Russian currency crises of 1997. Flexible exchange rates, on the other hand, can also engender instability, especially for developing countries. This is why many countries have a “managed float” of some sort or the other. That is therefore not abnormal. We have done this for many years, but the circumstances today differ fundamentally from yesterday’s. First, therefore, let us find the naira’s true value and narrow the gap between the interbank and parallel market. Then, the CBN can intervene in the markets as may be necessary, but from an evidence-based standpoint.

The economy will be the loser otherwise, as dollar liquidity shortages continue, driving the naira ever downward and foreclosing the prospects of its recovery in the absence of better news for oil. The economic precept that no central bank can have at the same time a fixed exchange rate, free movement of capital, and an independent monetary policy (a choice of two of these must be made, while markets determine the third) still holds sway. Floating exchange rates, despite their risks (which can be managed) serve the very useful function of letting monetary policy serve purposes beyond certitude. In the case of Nigeria, it can play the key roles of attracting much needed forex liquidity in the markets, and nudge the economy towards a more productive state when combined with effective trade and industrial policy.

• Prof. Moghalu is the President of   Sogato Strategies LLC, and was a Deputy Governor of the Central Bank of Nigeria from 2009-2014.

  • Thompson Iyeye

    Reneweable power source has nothing to do with our energy problem apart from environmental consideration. To proffer it as a solution is grossly misleading. If anything, renewable energy for now, is expensive for an economy such as ours which is struggling. Moreover, the technology is relatively not mature, with improvements occurring with time. The bulk of energy supply in the world still comes from fossil fuel such as oil and gas. All we need to do is run our thermal plants properly making sure gas sources are available and not interrupted.

  • FrNinja

    When discussing Nigeria’s blunders on exchange rate policy, the mistake is attributing it to lack of central bank independence when truly it should be blamed solely and squarely on the same institutional weakness and corruption that mars performance of practically every arm of government. For the truth is that the CBN fails in its intellectual leadership and discourse, it fails in its regulation of the banking sector and it fails in basic administration.

    After all one should see that the CBN of Emefiele was as disastrous in forex policy making as the CBN of Sanusi was in regulation which left us with AMCON or yet another government bailout for bad habits of banks that ordinarily shouldn’t be tolerated. The CBN of governor soludo woefully scored an E in banking inspection when the good, bad and ugly of Nigerian banking were approved to scale.

    The CBN is also one where old naira notes supposed to be destroyed find their way back into the monetary system. It is one where its lower denominations are made of paper not metal requiring huge sums to be spent each year printing new notes and it is one that uses the 5 naira note as its smallest denomination an induced form of inflation if there ever is one.

  • Dele Awogbeoba

    Nice that you confirmed that the CBN fixed exchange rate policy (when the basis of such a policy had long fallen away) was the cause of our economic woes. That said, fiscal policy at the moment will only have limited impact because fiscal policy involves using goverment spending and tax policy to stimulate the domestic economy. We know that sabotage by the NDA has depressed FG revenue and CBN policies has depleted FG revenue from customs, ports and FIRS. What you should have spoken about but omitted, was the need to reduce interest rates and CRR to rates that would help stimulate the domestic economy in view of the limited impact that can come from Fiscal policy.

  • 0swal0

    Attending to and solving the Niger Delta question through restructuring the federation is a faster and cheaper way to generating more power than producing power through alternative means. We can not keep glossing over these divides. Our failures are clearly linked to our inability to truly look our problems in the face and grinding out a solution. If we continue like this, any smart numeric can calculate when our oil money will run out. Perhaps we should just wait for that day.

  • AriaFada

    Nigeria is a country that is centralised in both mentality and structure. The president is seen as the King and his higher advisers and officials as courtiers of a royal court. Challenging high authority within the Nigerian context is frowned upon and can lead to vindictive retribution. This is also combined with the phenomenal material rewards for official conformity. With this mindset, it is hardly surprising that truth is rarely spoken to power. The writer elucidates solutions that have been obvious for well over a decade during which time he was in a position of policy making influence. What did he do then to create or embed the solutions he now advocates? or is this a Damascene conversion from a prior economic view point.

    This is what leads to mistrust of the Nigerian technocrat, the lack of positional consistency between when ‘in office’ and when ‘out of office’, raises questions as to whether their public admonishments are more reflective of an attempt to gain public traction as well as attention from the ‘powers that be’ and thus more a display of political ambition than an articulation of deeply held economic conviction.

    In truth, Nigeria practices what I can only describe as ‘Owambe’ economics or owambenomics for short. This definition describes official and government profligacy in the parlance of local spendthriftery, where if there is money we spend until it runs out, then we borrow. The lack of political will to invest or save cuts across the entire political spectrum. As the writer acknowledges, the political – particularly the legislative, leadership lacks economic understanding which they misunderstand as budgetary and accounting probity.

    Nigeria has never defined its economic objectives. The average child can lay claim to a better life plan than the Nigerian state. Economic and social objectives are aired as if their very utterances would produce the magic to effect their creation. Neither capital – in the form of squeezing recurrent spending for savings, nor Labour – in the form of mobilising the population beyond radio and TV jingles, are effectively enhanced even towards basic objectives such as rural road building and electrification. Instead officialdom prefers awarding commercial contracts.

    The discourse on economic affairs, needs as the writer acknowledges to be raised beyond political partisanship and blame games. The rot and inadequacies in the national economy are the result of multi governments. The Nigerian public needs to be educated – especially through news media – on the interrelationship between monetary policy – interest rate and money supply, fiscal policy – in particular in its expansionary form and type, capital markets – private and public sector debt, so that it interrogates officialdom accurately and without prejudice.

    • RumuPHC

      Very aptly stated!

      I really like your description of ours as ” owambe economics”. There is no better description befitting our national malaise called economic management.

      It reminds me of our neighbours when I was growing up in suru-lere, and they will throw big owambe parties with much merry making but will starve prior and fight off creditors after.

      You are dead right. Until recently, no one talks about economic management in Nigeria talk less of monetary and fiscal policies. It was all about bogus budget presentations followed by awards of inflated and many times, none existent contracts at state and federal levels. Thanks to the huge revenue from crude oil produced by SHELL and other IOCs.

      Change usually start with the right talk and comments from informed sources. Let us not be quick to harangue the writer: whether it is to be noticed or genuine contribution – it’s still in out best interest.

      With more people better informed, it will be difficult for the political leadership not to do the needful, eventually.

      Political leadership is not as powerful as people think. In actual fact they are the most insecured. The right pressure and forces will certainly make them bend. Buhari used to be one of the greatest critique of removal of subsidy on fuel…..

      • jideofor Madu

        Rumu is right. The reaction that is so much part of our culture, that well-informed people express opinions to be “noticed” by the leadership is a crude one and is one reason why we are not a policy-driven society. This piece is brilliant, in my view, and should not attract cynicism to the extent it is an informed and well-articulated opinion. It is even more so coming from this particular respected professional. I doubt that Prof Moghalu needs to be “noticed” when he already has held high office. Even if that were his intention, what’s wrong with engaging our political leaders? It can only help if done well, and I think this piece and others he writes does that from a unique perspective.

        • RumuPHC

          Moghalu like Soludo with all their perceived ” imperfections ” are my favourite central bankers.

          Both are confident, well spoken and educationally qualified with appropriate mix of academic and professional certificates plus foreign and local experiences in monetary matters.

          More importantly, both have Doctorate degrees in specific economic related fields. A PhD and professorship from recognised foreign institutions is certainly a badge of honour and a statement of the highest level of accomplishment. Such and only such is what we need for the leadership of our economic management team.

          Imagine a Soludo as MoF and a Moghalu as CBN governor?

          • jideofor Madu

            That would be a dream team! But in Nigeria today and in PMB’s universe, they come from the “wrong” ethnicity. It would be nice if PMB would shock his critics with such a progressively, genuine “national-interest” set of appointments to such important portfolios.

          • Dele Awogbeoba

            Sorry to say but Soludo’s management of the Banking system was so shambolic and almost led to the collapse of the banking sector causing Nigeria to spend trillions of naira through AMCON to stabilize his oversights. In respect of Moghalu, that he confirmed that the CBN fixed exchange rate policy (when the
            basis of such a policy had long fallen away) was the cause of our
            economic woes. He has failed to realise that fiscal policy at the moment will only have
            limited impact because fiscal policy involves using goverment spending
            and tax policy to stimulate the domestic economy. We know that sabotage
            by the NDA has depressed FG revenue and CBN policies has depleted FG
            revenue from customs, ports and FIRS. FG has no money to spend. Udo Udoma disclosed today that the FG is a trillion naira below budget estimates. Nigeria also have a 1.45 trillion naira debt service obligation a year (not including additional debt taken on during 2016). What he should have spoken about
            but omitted, was the need to reduce interest rates and CRR to rates that
            would help stimulate the domestic economy in view of the limited impact
            that can come from Fiscal policy at the moment..

          • jideofor Madu

            An opinion to which you are perfectly entitled. But as I saw it from reading this piece, Prof. Moghalu did not set out to analyse the whole Nigerian economy and offer solutions to every single problem within the space limitations of the Thisday back page, nor did he set out to discuss fiscal policy primarily. The article was squarely aimed at his perception of the management of the exchange rate of the naira, the role of the CBN, and how to improve it. He brought in other relevant dimensions, including a mention of fiscal policy but not in detail because that was not his target. Fiscal policy in the sense you discuss it in your comment relates more to monetary policy or the overall economy. The artice was focused on the exchange rate.

          • Dele Awogbeoba

            Actually, his article was not as limited as you think it is. It was not limited to the naira. It covered economic policy as a whole and talked on monetary policy supplementing fiscal policy and trade and import tax policy on imports. The writer indicated that high import duties should be placed on imports and more emphasis placed to to support local industries. There is no relation between fiscal and monetary policy at all. It is also weird that Moghalu asserted that the CBN is perfroming the FG role by doing quasi fiscal roles. CBN does not perform government spending nor set taxes. So he is wrong on that score.

  • RumuPHC

    It is quite clear that there is a huge disconnect in the management of the national economy. This fact has been made more obvious by unfolding events especially between 2014 when the slide in crude oil price began to manifest to this moment when there is great consternation and confusion as to where the economy is heading.

    Prof Moghalu’s incisive contribution is just a further confirmation that all is not well within and between the twin pillars responsible for tweaking and propping up the national economy. Coming from an ex Deputy Governor of the CBN and member of the Monetary Policy Committee , this “feed” is rather unpalatable. It sounds too little and too late. Why did economists and other well meaning policy experts allow us to fall to this low level?

    We can blame it on President Buhari if it will give us succor. However, the fact remains that those responsible for managing the fiscal and monetary policies of the country have consistently dropped the ball and failed Nigeria. These people are not politicians but acknowledge graduates and experts in their proven fields. Some have only appeared brilliant in the past simply because the quantum of foreign exchange available from the proceeds of earnings to government during periods of oil booms. This perhaps covered for their inadequacies and ineffectiveness as managers of national economic policy.

    The blame rest with these privileged individuals and not the political leadership. Technocrats resign to protect their hard earn professional reputation when it’s obvious that political leadership is not abiding by suggested or informed and researched position. No minister of finance or CBN governor has resigned under any administration in Nigeria. None appear to be contemplating stepping aside despite the unmitigated disaster that has befallen our national currency and economic growth over the past couple of years.

    The duo of Mr Godwin Emeifele and Ms Kemi Adeosun ought to resign. The CBN has failed woefully to even appear convincing that it understand and is capable of applying necessary corrections to restore calm to the economy while the Ministry of Finance appears so lost and confused on what is required to stabilise the economy and move it forward. Unlike how the Councillor of the Exchequer and Governor of the Central Bank step out and step forward to calm the markets in Britain on the wake of the Brexit vote and collapsing political government , Emeifele and Adeosun appear so timid and frightened that nothing they say will calm anybody with dire consequences for the economy. They should just pack and leave!

    Interestingly, Emefeile’s CBN is composed of individuals appointed during the administration of Goodluck Jonathan while Adeosun is the only new hire by this administration in MoF . The implication of this is that President Buhari is running his economic team with a whole crew of the previous administration. This I believe is the real blame Buhari deserve.

    We are in dire economic straits akin to war; PMB need a battle tested economic team. It’s time to reconsider the leadership and composition of the management of monetary and fiscal sectors of the economy.

    President Buhari is long overdue to do the needful by sacking Emeifele and Adeosun, and rejuvenating the CBN and MoF for the numerous battles ahead. After all, the buck stops at his desk as President!

    • 0swal0

      Does he have Economic Advisers? Have you considered the fact that the President may have been stubbornly refusing the advise of the few smart people around him (not Adeosun)?

      Moghalu has not said anything new. A lot of people have been saying the same thing since last year but all to no avail. Buhari even dissociated himself from the currency ‘floating’ done by the CBN. It is not just a matter of moving people around, Mr President ought to be able to understand the imperatives of running a globalized economy like ours in the 21st Century. And I strongly doubt that he does. This is the problem.

      Simon blamed GEJ yesterday (and your 2014 reference attempts to do the same) forgetting that our travails could have been better managed if Mr President knew anything about modern economics or appointed an economic team that he could listen to. There is hope, but this can only come about from a revolution in the mind of PMB and his handlers!

      • RumuPHC

        It is with the belief that Buhari including many others before him lack in depth understanding of economics that we insist that the institutions of state constitutionally charged with managing the economy are led and manned by competent hands to make them stronger and much more difficult to be disregarded by politicians.

        GEJ’s administration nominations was only an example and to bring home the point that we have never cared much about important appointees. It is just about who becomes president ,governor and LGA chair.

        We keep mute when the post of CBN governor and appointment of Hon MoF are just jobs for vested interest to award to their cronies under a Presidential seal. We should also be silent when they perform below par and remain subservient to Mr President when the constitution clearly stated their independence from the executive.

        True, it’s only PMB, and his handlers that can bring about this fundamental change in paradigm. That is exactly why I suggested he sack the current economic leadership and strengthen both critical institutions by bringing onboard credible and qualified individuals who have enough reputation to want to protect, and will easily resign if they consider that their opinion do not count and independence cannot be guaranteed .

    • AriaFada

      I have tended to agree with you on most things, but I differ that the change in personalities as you advocate, creates better outcomes. We’ve had numerous individuals come and go and as you rightly acknowledge they have “only appeared brilliant in the past simply because the quantum of foreign exchange available…”.

      This in itself informs us that we are dealing with a structural problem and not one of personalities. Economic decision making and implementation is operating within a vacuum that is delivering sub-optimal outcomes.This means no matter the personality, the outcome would remain the same or to use the input/output parlance of computing irrespective of whether garbage or quality is put into the system, it outputs garbage.

      • RumuPHC

        Quite valid point you’ve made here. Still, to correct the structural inadequacies, it will be necessary to change the personalities. The change in any organisation struggling and not delivering usually begin by changing the CEO who then head-hunt his/her management team.

        Certainly the appointment of who heads the CBN and who is in charge of the MoF had always been based on shallow and myopic considerations. This has also been the considerations for the executive management of the apex bank and members of the powerful all important MPC. Same can be said of the career civil servants responsible for fiscal matters in at MoF.

        As you rightly pointed out, garbage in will naturally result in garbage out in the computer axiom. But a different outcome could probably be the output if it is not garbage that is the input.

        Nigerians have trained and excellent manpower at home and abroad. It’s time to seek them out and get them into positions where there knowledge can do good for the country.

        Only people that know what a functional structure look like can make the right pitch to change the structure.

        • AriaFada

          The Nigerian system has a way of grinding down even the most well intentioned returnee. God knows, I know of many by personal experience who returned in the commodity boom years who now regret the decision.

          By its very nature the Nigerian system, does not accommodate those who return from abroad into positions where they can effect meaningful change from sub optimal performance.

          Nigeria needs change at the very top, not in the middle and not at the bottom. That change is enlightened educated leadership that is au fait with international best practise and has an understanding beyond political sloganeering of the economic challenges and functional structures required.

          Not a damn Phd in zoology – it never fails to make me wonder whose joke it was to make the Nigerian president a zoologist, when other nations appoint people with qualifications concerned with the governance of humans – or one in law, the language of grammatical equivocation, but one who understands economics, Nigerian and the wider world.

          If the Nigerian King (re President ) – in the face of a cacophony of conflicting and self interested advice, is unable to discern what is effective and appropriate economic advice. Then we have no choice but to ensure that those we appoint to such an office come equipped with the undiluted tools to make such a discernment.

          Anything less and the occupant becomes a plaything for ambitious officials!

          • RumuPHC

            It still boils down to functional and strong institutions.

            The fiscal aspect of the economy is necessary political. Being political does not mean the president calls the shot alone. A president can wish for whatever spending but the national purse is under the legislature who must necessary approve funding for his budget.

            So even if the president is not savvy enough on economics, it is expected that the parliament will briddle his antics. The question however is: how many legislators are well informed enough or have the necessary staff to advise them properly even if they suddenly break ranks and wish to tackle the president?

            On the monetary side, the independence of the CBN is stated clearly. The only power of the president is his ability to appoint the Governor and two other members of the MPC. That is where his influence ends. But can the appointees really be independent when they practically begged and lobbied to be nominated?

            I know a banker that was to be nominated for a ministerial position by Jonathan. He gave Jonathan a long list of dos and don’ts and was promptly dropped.

            Clearly, the structure is there but those running them put their interest first. That is why we need people to call them out. Check out the qualifications and experiences of the leadership and compositions of the legislative committees on appropriation in NASS and CBN and you will get my drift.

            There is no economist in the top management of the CBN while the Senators and Honourable members are busy padding the budget. Who then can challenge Mr President?

          • AriaFada

            If you try debating economics with Nigerians at any level, you would see that consensus is rarely achieved. I also comment on well-known british and american financial media and the difference is that one easily arrives at a consensus on economic prescriptions.

            Not so with Nigerians, conversation and discourse is approached like football so much so that it appears to me to intrude on their mental processes.

            Thus opinion must be tackled by fair and foul means, as if it is a football match where one is playing an opposing team. Opinion is challenged because either the adversary thinks it is being raised to score some social or political point or the manner the opinion is expressed invokes some kind of inferior complex in the adversary.

            In to thIs, one can imagine a Nigerian President being subject to conflicting advice such as “No don’t devalue that is a Bretton Woods plot to destroy the economy” or “Don’t listen to so and so he is a textbook western economist”, and then unable to make an appropriate judgement on what policy decisions to take.

            A president should not be a person wishing for any budgetary appropriation like a child wishing for sweets. He should be aware of the implications of expansionary fiscal activity on monetary policy and consequentially inflation.

            I thus no longer share the view that it is just economic advice that is lacking, it is also the ability to make appropriate discernment on the best policy advice. After all, if I were to – with no prior expertise, attempt to pilot an aircraft on the basis of conflicting advice, I would be unable without consensus from my advisers to discern how to control the aircraft.

            If I am then subject to an aircraft licensing (re parliamentary) evaluation from individuals with the same or less understanding, I would no doubt be approved as a pilot despite my obvious failings.

            As to structures, I am yet to meet a structure that Nigerians cannot corrupt, especially ones that fail to dynamically adapt to the venal character of Nigerians. It appears to me that senior decision makers do not have the organisational confidence or competence to restructure divisional entities to meet required objectives.

            In fact as a matter of personal research interest, I even look forward to the future of artificial intelligence and decision support tools as part of a methodology that would reduce the human venal role in organisational delivery part of policy implementation.

            Maybe only then would we as a country be able to have functional government structures without the distorting input of venal characters.

          • RumuPHC

            Interesting submission. I am in agreement with almost every point with you except on the required hand standard you propose for any person desirous of leadership.

            While such level of education is most desirous , it would be rather discriminatory and undemocratic if leaders are only those with the highest level of educational attainment. The right to vote and be voted for is a fundamental human right and must not be shackled by conditionality like the possession of an MBA from Haravard.

            Going by your proposal , we should then require a military or security expert for president since insecurity in Nigeria is even more of a challenge to the country than the downturn in the economy. Presidents are not lawyers or medical experts but they don’t joke with legal advice from the AG or their personal physician . Why then should we believe they discountenance the opinion of the Governor of CBN or Hon MoF ?

            I think the contrary is the case; the confidence to advice is lacking while the quality of advice is poor. It is all about those appointed to technical offices.

            It is logical that a president cannot know it all. I suppose that’s why the institutions are given constitutional and legal backing to assist the president. The president is there and the institutions are in existence, what appears to be the problem is the process of developing the management teams of these powerful bodies. This is where the solution to the embarrassing incompetence of government lies.

            We must re examine recruitment and career development in the civil service while we need to call on politicians to be more circumspect when it comes to nominating appointees to head public agencies. A poor choice for office is equivalent to millions of dollars in lost income for government and bad for economic growth.

          • AriaFada

            Ultimately it is what we as a country desire. Legal and Medical advice does not have the same national impact as economic advice. My only interest in who governs Nigeria is that such a person does so for the overall well being of the country.

            If our country lacks the institutional framework, we cannot neglect the educational standing of aspirants. Countries such as the UK and US have strong institutions such that a graduate of history can be Chancellor of the exchequer – finance minister, because he has the institutional backing and integrity of the civil service. To lack both institutional framework and aspirant grounding is a recipe for economic failure.

            Several countries, after having military dictatorships in the 70’s and 80’s, moved towards having technocratic leaders – not just advisers. I had cause to do a quick perusal and it appears to me that their move from military leadership to economic technocratic leadership resulted in discernible economic improvements and performance.

            Countries such as the Phillipines (from Marcos to Gloria Arroyo), Mexico(Calderon), Brazil(Cardoso and Rouseff), Colombia (Santos), Chile(Lagos) etc. There is almost no country outside Africa that has not had an economist as head of state. The restructuring they are able to effect on institutions outlast their term in office.

            In Nigeria, we run the country and aspire to 18th Century Sokoto caliphate standards of governance, yet we expect 21st century economic results.

            How educated Nigerians continue to believe that they can cowardly stay on the sidelines of governance as advisers and expect good governance and the courage to push true ground breaking initiatives from leaders who cannot be made to understand simple economic concepts beyond the price of oil and thus cannot prioritise what is truly important for economic well being from the frivolous.

            No person with an iota of economic knowledge would have sat back for 6 months while oil prices were falling, knowing the country faced an existential economic threat, before choosing a cabinet team. The British took 24 hrs from the installation of the new prime minister to announce ministers. Nor would an economically self aware president proclaim to the world and the investment community, that he does not believe in devaluation, when faced with dwindling export income.

            What it shows is both lack of seriousness, lack of urgency and at worst a lack of caring for national well being. This is not the behaviour of serious leadership and it occurs not because the president intends it, but because he is ignorantly unaware.

            The website http://wwwdotbusinessinsiderdotcom/what-the-worlds-leaders-studied-2013-12?IR=T, shows what world leaders study.

          • RumuPHC

            Yes, someone like Moghalu will get my vote for president before any of the usual lot including the incumbent.

            Unfortunately, our desires for who should be president apparently won’t count for much; it’s what is practical in our environment that determines who is elected president.

            In our democracy today, there are two stark realities. First is that every Nigerian can contest for president in an election as long as he has just first school leaving certificate . The other is that it is the majority votes cast by eligible voters that determines who is returned as president . Considering the fact that an MBA is not required to contest and that there are more illiterate voters than informed graduates, it is logical to predict that high level educational qualifications will not be a great influence in who is nominated as presidential candidate by party, and such will equally not be a determinant for the preference for president by the poor uneducated folks .

            It will be undemocratic and also illogical to question the premises on how presidents emerge in Nigeria no matter how flawed we view the process. All we can do it to live with this reality . We can however do a lot to moderate whatever deficiency a president has by insisting on the quality and qualifications of appointees for public institution. In this regard, our quest for academic excellence for higher offices is supported in most cases by the constitution and other laws setting up the departments and agencies.

            Apparently we can’t do much about who becomes president but we can do a great deal to get the better qualified individuals to run the key institutions that must necessarily develop policies for government , advise presidents and implement key development objectives of any administration.

    • Dele Awogbeoba

      Moghalu has failed to realise that fiscal policy at the moment will only
      have limited impact because fiscal policy involves using goverment
      spending and tax policy to stimulate the domestic economy. We know that
      sabotage by the NDA has depressed FG revenue and CBN policies has
      depleted FG revenue from customs, ports and FIRS. FG has no money to
      spend. Udo Udoma disclosed today that the FG is a trillion naira below
      budget estimates. Nigeria also have a 1.45 trillion naira debt service
      obligation a year (not including additional debt taken on during 2016).

      What he should have spoken about but omitted, was the need to reduce
      interest rates and CRR to rates that would help stimulate the domestic
      economy in view of the limited impact that can come from Fiscal policy
      at the moment due to the acute lack of funds available to the FG to
      exercise a stimulative policy from a fiscal perspective. He should have
      stated that high interest rates and high CRR in order to combat falling
      Naira induced inflation will not curb inflation but will cause high
      inflation and a very weak economy.

      His third point seemed to have been made without an analysis of the current fiscal limitations under which this FG has to work under. It was therefore an academic piece
      devoid of input of practical realities.

      As an fyi, fiscal policy is controlled by Udo Udoma (minister of budget). Adeosun does not control fiscal policy. She effectively manages the revenue generating agencies of the FG and acts as a book keeper of the FG.

  • UOU

    Sharing create laziness, productions makes everyone viable and productive, that’s my take on this and people who don’t want to work should stay on their own, while people who want to work should also be left to go on their own. Anything less than this will keep the space perpetually at chaos, whether some people want to face the truth or not, I don’t know why God will create a human being and that human being will not want to work or earn a living or some will not want others to work or earn a living, God forbid

  • KWOY

    Wonderful! You recognize someone who knows when he speaks! This is the type of articles we want to be seeing here, not ethnic champions fighting ethnic causes. We want ‘educated’ contributions.

    That said, your assertion that “Absent these two policy approaches, we are treading water”, could never be truer! It conforms with what I have always believed! Without ‘PRODUCTION’, it is all futility! I have lived in Europe, & with all I experienced, I understand what you mean. Europe is a producing continent where one million engines hum round the clock. With SHARING Nigeria WILL NEVER get anywhere! The first indispensable step to growth & prosperity is to cancel the philosophy of ‘sharing’ & substitute it with ‘production.’ All the sections of Nigeria resisting restructuring in order to continue to get a larger share of oil money will only continue to hold the country down.

    Of course the angle of international trade politics is also clear: The greatest beneficiaries of ‘non-negotiable unity’ are actually the international controllers of this system for whom Nigeria is only a big market, apart from being a source of energy! And in their bid to sustain the status quo, they will always encourage, promote & support inept leadership here who will not turn the table or cause major changes!