Nigeria: Where prosperity is unconstitutional By Henry Boyo

naira

Chapter Two of the 1999 constitution as amended, defines the “Fundamental Objectives and Directive Principles of State Policy”; thus, this chapter crystallizes the inalienable duty of government to promote policies that would improve the quality of life of all Nigerians who are bound in this social contract. These objectives and directive principles are amplified in the following excerpts from the first four subsections of Chapter Two.

Section 14-2b: It is hereby, accordingly, declared that- the security and welfare of the people shall be the primary purpose of government.Section 13: It shall be the duty and responsibility of all organs of government, and of all authorities and persons, exercising legislative, executive or judicial powers, to conform to, observe and apply the provisions of this Chapter of this Constitution.

Section 16-1: The State shall, within the context of the ideals and objectives for which provisions are made in this Constitution- (a) Harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy;

(b) Control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity; Section 16-2: The State shall direct its policy towards ensuring- (a) The promotion of a planned and balanced economic development;

(b) That the material resources of the nation are harnessed and distributed as best as possible to serve the common good;  (c) That the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group;   and

(d) That suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment, sick benefits and welfare of the disabled are provided for all citizens. Clearly, any sincere observer of the current Nigerian predicament may rightly conclude that the promotion of the noble objectives enunciated above were breached with impunity by successive administrations.

It would be a hard sell to positively spin the reality that our resources have not been sensibly harnessed to promote national prosperity or an efficient, dynamic, or self reliant economy; clearly, the stress from severe poverty has sadly minimized our social welfare and happiness. Ironically, despite our abundant natural resource endowment, Nigerians are now sadly listed amongst the world’s poorest nations.

The Nigeria’s economic management has concentrated wealth in the hands of a few, thus the constitutional breaches of directive principles and objectives are probably weighty enough to warrant impeachment of all Presidents since 1999. Predictably, if the quality of governance is not urgently reformed, the accumulated failures of past administrations may just blow up in our face to further deepen poverty, and social injustice and induce insecurity nationwide.

Yet, any sincere observer of the structure of the Nigerian economy will recognize that the primary drivers of poverty are clearly, the near double digit inflation rates which erode purchasing power and reduce consumer demand. Such deprivation restrains industrial capacity utilization and new investments, an outcome which inevitably instigates higher rates of unemployment.

Furthermore, a vibrant real sector will also never emerge when cost of funds hover round 20%, while private sector driven economic revival will never materialize if government continues to accumulate huge idle loans with oppressive interest rates which are deliberately intended to crowd out the real sector from cheap credit.

Indeed, any promise of a successfully diversified economy will remain a hype so long as inflation and CBN’s monetary policy rate remain untamed above 3% respectively. Furthermore, the Naira purchasing value will inevitably contract and induce weaker exchange rates for as long as these strategic monetary policy indices remain out of gear.

Incidentally, the CBN and the Monetary Policy Committee cannot hastily dismiss the above observations, as its policy instruments have evidently failed to tame the ‘invisible’ demons of eternally surplus cash in the economy; high inflation and interest rates, weaker Naira exchange rates are all demons unleashed by what is innocuously described as excess liquidity. Yet, the clearly plausible recommendation that would minimize the relentless scourge of excess cash supply and transform our economic fortunes is overtly scorned by the CBN as unconstitutional.

In August 2007, paradoxically, after over 5years denial, the CBN made a strategy somersault when it belatedly embraced the recommendation that allocations of crude export revenue should be made in the currency in which it was earned. The CBN belatedly recognized that this approach would successfully remove the poison of eternally surplus cash and rapidly bring down inflation and interest rates, while the Naira exchange rate would also improve and make total elimination of over N1Tn fuel subsidy possible.

Thus, with this reform our economic and social welfare will become enhanced in consonance with the Objectives and Directive Principles enunciated in the constitution. Unfortunately, despite the imminent transformation of our economy which dollar allocations will bring, Michael Aondoakaa, the incumbent Attorney General, inexplicably issued a directive which suspended the payment reform as unconstitutional.

One may understand the fear that cash payments in dollars would facilitate the theft of our foreign exchange, but this would certainly not be so if dollar certificates were adopted for revenue allocation;

clearly, since dollar certificates are not legal tender, they can only be redeemed for Naira equivalent through the commercial banks at the market exchange rate, but the dollar values will remain domiciled in CBN vaults until the Apex Bank receives the instructions of respective banks to make direct payments from their separate domiciliary accounts for government’s authorized transactions!

This arrangement will certainly minimize round tripping and other malfeasance in the foreign exchange market and will also provide a transparent and accountable structure for minutely tracking and conserving our forex reserves.

Furthermore, this payments reform will significantly reduce inflation and cost of funds across the board and stimulate rapid investment, which will fast track the rate of employment. A robust economic environment would similarly provide a ready source of increasing government internally generated revenue, while also stemming the rising tide of public debt.

Regrettably, this enabling reform that is clearly in consonance with the constitutional objectives has ironically been rejected on the ground that it is “unconstitutional”. Surely, for crying out loud, no one is suggesting that we should spend dollars instead of Naira; nonetheless, CBN appears insistent on cutting its nose to spite its face, as a payment reform that would facilitate the achievement of its core mandate for price stability is brazenly rejected as illegal.

SAVE THE NAIRA, SAVE NIGERIANS.

VANGUARD