By Sheriffdeen Tella
The Nigerian economy is as resilient as the people. Over the last few years, the economy never exhibited some considerable level of recovery. So, the Nigerian economy had hardly witnessed a boom, even when world economies improved, hence, such topics as “Nigeria’s economy needs to reboot”, “Nigeria economy in intensive care”, “Nigerian economy in reverse gear”, Nigerian economy on neighbour’s oxygen”, and at the end of last year, the title of my write-up was “Nigerian economy winding down in negativity.” They were all exposition of the frailties of the Nigerian economy with suggestions on how to rescue the nation. The Nigerian economy remains as precarious as it was 10 years ago and probably worse for the same reasons of growing debts and debt servicing, deepening corruption, incompetence in economic management or preference of self-interest over national interest and political expediency overriding sound economic judgment.
Hope seems to be coming with the dislodgement of the economic mafia and their programmes of subsidy misdirection; the appointment of those who seem to know the problems with the promise of solution; and the reawakening of the consciousness of the labour unions that can serve to checkmate tendencies of one-party system. The other political parties are more concerned about gaining power than serving properly as opposition parties challenging policies and offering alternatives to the ruling party’s policies.
After listening to the new Governor of the Central Bank of Nigeria, Olayemi Cardoso, on the problems the country faces with respect to the monetary policy and functions of the CBN, I was happy that someone who knows his onions would be in the saddle. Central banking experience might be an added advantage for someone to manage a central bank of a country, but it might not also be a sufficient condition as I often advocate, given that there are people with the experience on ground working in the bank. What is required is to provide leadership without the arrogance to learn from them and to work with other personalities in the economic management team. Now that the Minister of Finance is also the coordinating Minister of the economy, it looks apparent that fiscal and monetary policy will be coordinated without jeopardising the independence of the CBN.
The Nigerian economy has never been impressive in the last 10 years despite opportunities offered by the global economy. The economy has been moving from one recession to another without a breather. That is because of a number of factors among which are incompetence, arrogance, corruption and lack of coordination of policies. With the new economic team put together by President Bola Tinubu, it looks like two of these major factors will be taken care of. These are incompetence and lack of coordination. The issue of corruption goes beyond an economic team but includes the government and society while arrogance is a trait that has been developed by individuals over time and may be difficult to step down without shock therapy.
As it were, the country is bankrupt. However, because it is a country, the bankruptcy cannot be as fatal as that of a company that is an entity. The Tinubu administration knows it inherited a bankrupt economy but cannot make a noise about it because it is the same party that won the election. The country was in a liquidity trap and at the same time in a debt trap. It was breathing on the oxygen supplied by the CBN loan lifeline: the inflationary ways and means of funding the budget. The country had over-borrowed from the world market and no country or international private financial institution was ready to give us another loan. That was why recently, there were reports that some foreign banks were rejecting letters of credit from Nigeria.
The country’s foreign reserves might have been shared between Godwin Emefiele and his friends. The report from the CBN said the Nigerian foreign reserve was around $34bn but we got to know from the recent report of JP Morgan that the net foreign exchange reserve was around $3.7bn in the end of 2022. Clearly, It could not have climbed to $34bn in less than six months given the low oil production in the country and low revenue from that sector which dominates our foreign income, the increasing debt servicing and payment of growing imports of all sorts apart from huge payment of estacode for presidential tours; and the unstable international oil prices over the period. So, the CBN figure was a scam among many of such scams.
There was a report recently where Emefiele claimed that on the order of former President Muhammadu Buhari, he released a poverty alleviation fund of N500m into the account of the Ministry of Humanitarian Affairs headed by Sadiya Faruq. The outcome was growing poverty. Also, N1.5tn and $9bn were traced to the account of the NIMASA Boss, Bashir Jamoh. Earlier in 2022, the former Accountant General of the Federation, Ahmed Idris, was found to be hibernating on stolen N109bn. Nigeria has $3.7bn in its reserve and a Nigerian has $9bn in his account! What a tragedy! That was one out of many. From some Department of State Services video we saw lots of foreign currencies being counted in what was referred to as Emefiele’s house. By the time we add all the foreign currencies with government officials and others in the corridor, we could arrive at $34bn. So the government must hasten to get our money back.
The Nigerian National Petroleum Company Ltd management turned itself into Nigeria’s economic manager by engaging in crude oil swap with the latest being $3bn “to stabilise the volatile foreign exchange market.” Has the naira stabilised? This will no doubt compound the economic woes and the need to stop further oil swap arrangement is imperative. The NNPCL boss did it before and seemed applauded under the governance of incompetence. The idea could be good if we look at it from the provision of a stable market for the Nigerian crude in the period of market uncertainty and the Nigerian oil output is possibly in excess of the OPEC quota without a market. In the present circumstance, the output is very low such that we cannot meet up with the OPEC quota. So the implication is that we should not expect any revenue from oil up to some period in future. The country cannot take advantage of increased oil market prices to make some money. There is a need for the present economic team to study the agreement and renegotiate the terms to free the country from financial enslavement.
Economic doldrums imply that the economy is in stagnation or recession and for now, the Nigerian economy seems to have reached the pit of recession and stagnating there looking for leeway. President Tinubu must have been aware of the state of the economy and that the haemorrhage was being managed by borrowing from the CBN, particularly to take care of the subsidy armada, with grave consequences for future management of the economy. He therefore applied shock therapy without preparing for how to tackle the consequences. We have seen from Emefiele’s mismanagement of monetary policy that economic conditions can trigger medical conditions that will lead to death. So, brainstorming exercises must precede the introduction of public economic policies to minimise catastrophic consequences.
The economic problems the country is facing now are quite many but we can narrow them down to production and consumption, debt servicing and repayment in the absence of no revenue from the oil sector in view of the NNPCL arrangement, the rising prices and dwindling revenue and corruption. We must agree to consume what we produce and produce what we consume to minimise the importation of all sorts of junk. Food is said to be a large chunk of our imports. What kind of food? The Minister of Finance should look into the import checklist and ban those products that we produce here or are not for meeting basic production and consumption. Free trade can work only in a competitive world. We are not there. Negotiate the existing loans for some moratorium to ease repayment. Rising prices need to be brought down by reducing borrowing from the CBN and the cost of power. The government should quicken trials of corrupt officials, recover the loot to our reserves and send them to jail. To promote good governance and preserve democracy, no more plea bargaining.
In this article