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I have spent quality time reading the observations of the Nigerian Economic Summit Group (NESG) about this country’s economy and the holes highlighted in the actions/inactions of the government and the Central Bank. The 15-point statement issued by NESG last Tuesday and jointly signed by its Chairman, Asue Ighodalo, and the Chief Executive Officer, Laoye Jaiyeola, was penetrating and speaks volumes about why we are not getting the desired result from the policies of the current Nigerian government and the CBN. I am glad the NESG drew attention to our bizarre forex regime and other CBN policies that are disincentives to savings/investment. I fully agree with the NESG because these actions and inactions have left our economy prostrate in the last five years, with rising inflation, contrasting GDP, dwindling value of the Naira, falling industrial capacity utilisation and frightening unemployment figures. Yet, the CBN is persisting with weird policies.
For example, liquidity and interest rate management of the country’s financial system have been horrendous in the last five years. The NESG was spot on when it said these had resulted in rated distortions, causing grave disadvantage to domestic investors and pensioners.
It adds: “This will occasion major disincentives to savings and investments and thereby, be a disadvantage to the Nigerian pensioners and long-term savers. This is inimical to this administration’s concern for the elderly, the weak, the infirmed and those who had served this country meritoriously in their prime.”
On my side, I am still struggling to understand why the CBN would slash interest on savings account to an unprecedented 1.25 per cent. All money market instruments have been deliberately wrecked by the CBN in the last 12 months. So, where is the incentive to save money? NESG argues that Nigeria needs to mobilise domestic savings and investments, even while seeking to attract foreign investment, and called for carefulness in order not to initiate policies that appear to discriminate against or discourage domestic savings and investors. According to the group, policies making average Nigerians poorer should not be encouraged.
We now have too many spin doctors, instead of economists in the CBN. Spinning liquidity and interest rate in the country’s financial system by the CBN has truly resulted in rated distortions and grave disadvantage to domestic investors and pensioners. The Pension Fund managers are in disarray; returns from the funds are now abysmally low, no thanks to the demolition of money market instruments by the CBN.
Let’s flip back to forex. We have all manner of forex windows in Nigeria, making us a laughing stock in the world. Multiple forex windows attract multiple abuses. The NESG was right by asking for forex policy reforms. It expressed concerns about how CBN carries on the business of foreign exchange transactions, loan disbursements (intervention funds) and price fixings without appropriate policy clarity, adding: “This can be subject to abuses, manipulations and significant market disruptions, reflective of a policy akin to crony capitalism. We, therefore, respectfully request the appropriate authorities to properly review this policy to restore credibility into our financial sector.”
I have also been very uncomfortable with the shrouded developmental role of the CBN in our economy in the last five years. I concur that the CBN must make its development actions see-through. This is why consumers are not feeling the interventions in agriculture. “Such roles must be undertaken in an open, transparent and fair manner,” argues the NESG.
Prices of food are persistently on the rise despite the huge amount of money pumped into agriculture by the CBN in the last five years. For me, it has been trillions of Naira down the drain while the hunger in the land is getting unbearable. Local rice now costs N28,000 per 50kg bag even with massive funding and subsidy by the CBN. Nigerians, already creaking in abject poverty and under the burden of incapacitating inflation are paying more for food. The subsidy and funding for agriculture evidently benefit only producers.
Not one Kobo spent on Rice and other agricultural produce by the CBN reaches consumers.
Instead of food prices to fall following huge subsidy/funding, they are rising. So, it means something is not adding up. This is why NESG called for the overhaul of the management of the federal government’s support for the agriculture sector through CBN’s Anchor Borrowers Programme and other related sectors. Nigerians are not getting value for the investments the government is pouring into this sector. It is the truth that must be told. The NESG was apt when it noted that despite the budgetary allocations and huge sums of money disbursed by CBN through the Anchor Borrowers’ Programme, a huge gap remains in meeting the food requirements, which has resulted in increasing hunger among the Nigerian populace. Evidently, the issues are beyond money and “therefore require a complete overhaul of the management of, and support for the Agriculture sector and all related sectors – with a view to getting more value for our investments.”
The other factor hindering food production and the resultant rise in prices is the raging insecurity in the country. Thousands of farmers in the North-west and North-east are in IDP camps, no thanks to Boko Haram, ISWAP and Fulani militias. This is the fact reiterated by the NESG, while expressing concern about the high level of insecurity across the country and its impact on the business environment and investment flows. This, NESG said, had contributed massively to the current food crisis, unemployment, poverty, increasing community clashes, rising bloodshed and the absence of peace in the land. It therefore, called on the federal government to critically re-evaluate our security architecture and take necessary actions for safety of all Nigerian residents.
The unending closure of Nigeria’s borders has brought more pains than gains to Nigerians.
Genuine Nigerian manufacturers can no longer export their produce to our neighbours. At the same time, smuggling persists. So, what have we gained? That is why the NESG wants the federal government to expedite actions on re-opening our closed borders given its negative impact on trade and employment. It stated: “It must be noted that our work in ECOWAS should not be limited to security and diplomacy, but must also effectively harness trade opportunities within the sub-region. We also call on the government to ratify the African Continental Free Trade Agreement (AfCFTA), so that we can move to full membership status and take our rightful place in subsequent negotiation rounds. We remain of the firm belief that with the necessary infrastructure, Nigerian economy and the Nigerian people, with our innovative capacity, hard work and creativity, will be one of the greatest beneficiaries of African and West African free trade. This will also enable fair competition, competent institutions, efficiency and transparency in our processes.”
The call on President Buhari by NESG to withhold assent to the repealed and re-enacted Bank and Other Financial Institutions Act 2020 is apropos. Some provisions breach the Nigerian constitution and must not be signed into law. Why confer immunity on officials of the CBN? Why exempt actions of the CBN from judicial review? Constitutionally, only the President and governors are granted immunity. NESG argues: “These are draconian, totalitarian and inimical to the development of a stable and transparently regulated financial sector. We respectfully request that the president should please withhold his assent until the bill is properly reviewed, amended and is made fit for purpose.
“We also most respectfully request that our legislative houses should subject all bills, in particular, such crucial bills, to the most efficient scrutiny necessary to assure compliance with the Nigerian constitution, transparency, good governance and the best interest of the people of Nigeria.”
This morning, my message to the CBN Governor, Godwin Emefiele, is a straight forward one: Engage this private sector-led think tank and policy advocacy group, to help our dear country get out of her economic doldrums. The pains are excruciating. The NESG guys are obviously nationalists. Their dispatch is a just and fair one. This group has shown strong commitment to working with the government to actualise an appropriate, efficient and transparent environment for doing business in Nigeria. Emefiele should also be interested in a vibrant, efficient, inclusive, secure and healthy economy.
The last lines of NESG’s memo were inspiring: “All hands must be on deck in collaboration, as we work hard and without prejudice, to achieve the Nigeria of our dreams. We have no other nation that we can call our own.” This is the way forward for Nigeria.
Rise in Petrol, Power Tariffs and Mounting Questions
I have never been a fan of subsidies because they come with all manner of corruption. More often than not, they don’t even get to the final consumers. So, I am not against deregulating supply of electricity and petrol. However, there are so many unanswered questions trailing the increases in tariffs effected few days back. In the case of petrol, I am not sorry to say that Nigerians are paying high price, largely for the inefficiency of the Buhari government and that of its predecessors.
This is the only crude oil-producing country in the world that imports virtually all the refined petroleum products it consumes. So, what happened to President Buhari’s avowal to fix the refineries within six months? Almost six years after, our 450,000 barrels refineries remain comatose. We ship crude oil abroad for processing and ship back the products. There is clearly no sense in this.
Deregulation should not be about price increase alone. Government ought to have worked on the challenges of local refining. For over five years, nothing happened. This is why petroleum products are expensive in Nigeria. Government keeps talking about forex and subsidies on petroleum products because it failed to deliver on its promise. Now, Nigerians are being forced to pay heavily for these failings. Deregulation would have been less painful if government had done its bit. The remarks of Quadri Olaleye, President of the Trade Union Congress on this are instructive. He said: “Government should fix the refineries. If we meet the quantity that we need, we won’t need to be talking about forex. The modular refinery they are talking about should commence operations; it was part of their campaign items, but till now we have not seen any in operation.”
Now to electricity. There is so much insincerity surrounding the hike in tariffs. The new prices for band A, B, C, D and E customers are hidden. We have not been told the precise figures by NERC. So, it’s an open cheque for Discos. A government that claims to be people-oriented ought to have insisted on universal metering before approving tariff increase.
How can government tell Nigerians that the hike in tariffs would be based on improved power supply? How can they tell us that tariff adjustments would be made only on the basis of guaranteed improvement in service? That only customers guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted? That tariffs for those consuming 50KW or less remain frozen? These are obviously not practicable. Discos are already charging all pre-paid consumers the new price. I live in Ikorodu West (Lagos State) where we get less than six hours per day. At times, we don’t even get supply for days. But we have been migrated to the new tariff regime. I loaded my pre-paid metre last Tuesday and was given just 217 kwh for N10,000. This is fact not fiction. Nigeria we hail thee.
Willie Obiano’s Extravagance
I was left depressed after watching Governor Willie Obiano of Anambra State Governor present 130 new SUV to 130 traditional rulers in the state. Over N1 billion tax payers’ money was spent on this worthless venture. This is happening in a state where thousands of jobless youths roam the streets.
Obiano, while handing over the vehicles, said it was to appreciate the traditional rulers for entrenching development, including security of lives and property at the grassroots. He also said it was to thank them for overseeing the successful execution of the N20 million community infrastructure (choose-your-project) at their respective communities, assuring that his administration would continue to provide for the traditional institution.
So, this is all what this governor is out to achieve? Just to endear himself to the traditional rulers at the expense of the people? How will the 130 cars presented motivate development in this state? Money that should ordinarily go to productive ventures is wasted buying cars for traditional rulers. This money would have gone a long way if used for training and providing take-off funds to jobless youth of Anambra State. It could have been given as soft loans to SMEs to expand and create more jobs. It could have been used to improve public healthcare and schools. Over N1 billion down the drain. This is a reflection of how Obiano has been managing this state. What a country!