I was at a dinner in Port Harcourt recently and most of those present had harsh words for the Central Bank of Nigeria and its leadership. As the diners lambasted the CBN Governor, Godwin Emefiele, in turns, my attempts to make them see the apex bank as almost helpless in the present situation fell on deaf ears until I said, “All of you caused this problem”!
There was silence. They sought to know how. Then, I started. Most of the men wore imported shirts, shoes, watches and ties. They used imported mobile phones and sat on imported furniture while watching the Arsenal/Man U match on imported TV sets being broadcast by another imported medium (DSTV).
The CBN needs to begin a massive public enlightenment programme. It also needs to start engaging the authorities in both the private and public sectors in a firm and unambiguous voice.
There is a strong feeling out there (among the public) that it is either the CBN is just being mean or simply unable to tackle manage the foreign exchange problem. Because of this, the sympathy of a lot of people is not with the CBN. The negative feeling has gone sky high on the back of the “suspension” of PTA/BTA, the restriction of the usage of debit/credit cards from January 2016, the sharp fall of the naira exchange rate to N280 in the parallel market, and the revelation that the CBN paid out dollar cash to the embattled former National Security Adviser, Sambo Dasuki.
The painful thing is that these feelings are largely based on ignorance and lack of education. A lot of education can swing the ill-feelings against the CBN to sympathy and even support.
The public must be told in clear terms that the apex court does not manufacture dollars and is not sitting on a pile of dollars which it has refused to release to importers or manufacturers.
The public must be reminded that the crude oil price in June 2014 was $112 per barrel compared to less than $40 that it is as at the time of writing. ýHey! Oil contributes 90 per cent of Nigeria’s foreign exchange and its price has fallen by almost 70 per cent!
It is not the “CBN policy” that has made dollars dry off. It IS the mighty fall of crude oil price and the penchant of the Nigerian people to import everything ranging from finished products to leisure. ýWell, we cannot control the price of oil but we can sure work on that curious penchant.
The Nigerian public needs to be told that their breakfast or lunch is made from imported eggs, palm oil, coconut, tomatoes, okro, rice, frozen chicken/turkey, beans, cabbage, lettuce, etc. Nigerian women wear imported hair, eyelashes, artificial fingernails, make-up etc. The men and women drive imported cars that run on imported petrol. Many members of the public will be shocked and the shock may push some of them to take advantage of the immense business opportunities.
Thus, it is the public that “manufactures” dollars through its collective action and inaction. The “CBN policy” is not responsible for the free fall of the naira. The CBN only manages or keeps the dollar stock, created from the collective habits of the public, as external reserves. Do you deserve to spend dollars when you do not earn enough of the greenback?
The public must be educated that the external reserves will soon be depleted if the “demand management” of forex by the CBN is stopped. And by then, the situation would be so bad that the country would not be able to import essentials like drugs or critical raw materials.
The public must be informed that devaluation is not an option because the country does not produce anything in substantial quantity. Devaluation will only throw more people into poverty and misery.
The public must be engaged to change its lifestyle if it wants the external reserves or the naira exchange rate to appreciate. You cannot make omelet without breaking eggs.
It was not everything my friends said that were misplaced though. Nigerians cannot understand why their debit cards will be stopped from making retail payments overseas while the same CBN is doling out dollars to the BDCs twice a week. I am not aware of any country in the world that does that.
The dollar bazaar to the BDCs has to be stopped immediately if indeed ýforeign exchange is scarce.
The government must aggressively tackle the problem of the refineries and lure companies with juicy incentives to invest or set up in Nigeria. They should target companies that can produce or assemble mobile phones, cars and other forex-consuming products. This is very urgent. The same urgency must be applied to the removal of fuel subsidy. A pro-Nigeria and development-friendly trade and industrial policy must be announced without further delay. There is no time at all.
The Federal Government and the states must urgently substitute imports and frenetically promote exports. Imagine if we could achieve a national dress code from local fabric for people to wear to offices. This will conserve a lot of foreign exchange spent on importation of shirts and suits and also create employment for actors in the local dress-making value chain.
If the Federal Government wants to save the country, this is the moment, more than ever before, to return to true federalism. Restructure the country and watch the states become creative and imaginative. The ensuing healthy rivalry which drove development among the regions in the First Republic will be resurrected. It is an unparalleled shame for about 30 out of 36 states to be so broke to the extent of being unable to pay salaries!
The return to true federalism will have far-reaching spin-off benefits for key institutions like the police and generally for our infrastructure. It will also most likely kill off the calls for secession or self-determination in some quarters. So many sectors like education, health, agriculture will also fare better. The Federal Government should focus on just a few “federal” matters – immigration, external security, customs, central banking, etc and stop over-reaching itself.
This is the way to prevent the country from an imminent economic collapse which will have severe implications for the political stability of the polity. The states must wake up. The days of oil are gone. Oil revenue in the N6tn budget for 2016 is only N850bn.
Yesterday, the strongest reason for true federalism was political. Today, it is economic. There may be no tomorrow without it.
PUNCH
END
Good talk. True federalism or we are just chasing shadows
True federalism? Not on Buhari and his northern oligarchy’s watch! They’ll rather have the country collapse than embrace that reality. And sadly too, no one is talking about it anymore from the West now that they’re part of the Buhari government.