In view of the seemingly difficult national economic situation widely painted by the Federal Government, it is necessary to always bear in mind that Nigeria became and has stayed poor because of the wrong policy choices by the political, fiscal and monetary leadership as indeed the double-dealing International Monetary Fund (IMF) and World Bank advisers readily retort self-defensively even though the Bretton Woods institutions force the government choices behind the scenes. Hence it is appropriate to examine the core poverty-deepening policy choice by government by recalling that on August 7, 2007, the Central Bank of Nigeria publicly presented the Strategic Agenda for the Naira (SAN) for implementation. Admitting CBN’s dereliction of its responsibilities until then, the then apex bank governor said, “The Central Bank intends to give greater emphasis to the most important function of central banks everywhere in the world, namely, to issue legal tender currency and defend its value (domestically by ensuring low inflation and externally by ensuring appropriate and stable exchange rate regime).’’ Among the expected fruits were laying the monetary foundation for, and achieving a prosperous economy that would become Africa’s financial hub with the naira as the reference currency while the country would become one of the world’s 20 largest economies by 2020. Sadly, the apex bank, nay, Nigeria missed the set objectives by the target year. Instead, by May 2018, the country became the world’s poverty capital where double-digit inflation alone in 2020 pushed seven million Nigerians into extreme poverty according to the World Bank.
Disappointingly, the fate of the Strategic Agenda for the Naira, it has turned out, hung on the observation by the Attorney-General that former President Umaru Musa Yar’Adua had not received beforehand a procedural request for presidential approval of the included purely cosmetic reform regarding the redenomination of the naira. As a result the projected benefits of the SAN were and have remained suspended till date. So that effectively became the government policy choice. Just assume one of the three apex bank governors in the last 14 years either subsequently requested unsuccessfully for presidential approval of naira redenomination or they made no request. By implication, that Federal Government policy choice has led those three CBN governors to knowingly deprive Nigerians (inclusive of the three tiers of government) of the most important function of a central bank together with the related duties. Yet it was (is) binding not just on the CBN governors but on the various presidents and National Assembly (NASS) alike for the relevant duties to be performed as enshrined in the CBN Act 2007, the Fiscal Responsibility Act 2007 and the yearly Appropriation Act.
Now, some of the objectives of SAN, shorn of the missed target dates, not only remain desirable but have even become very urgent economic measures that should be undertaken. Nonetheless, with the benefit of hindsight, the initial SAN proposal deserves amendment. Considering money illusion weighed heavily in the public perception against the proposal in 2007, the essentially cosmetic aspect of naira redenomination should be dropped. That would pave the way for CBN to face the real agenda of ensuring abidance by the existing fiscal and monetary laws without any interference.
Furthermore, the more or less permanent suspension of SAN has made it impossible to achieve any of the objectives set for 2020. But several lessons have become manifest. They include, in no particular order, one, prolongation of the termite-like weakening of the entire fabric of the naira economy through the multiple currency co-habitation of the legal tender naira currency and non-legal tender foreign and alien dollar currency via domiciliary forex accounts. Needless to state, all versions of the enabling law of the apex bank from its inception mandate the Central Bank of Nigeria to issue (a single) legal tender national currency. But the Abacha military regime introduced multiple currency practice by decree for the operation of domiciliary forex accounts in 1995.
The introduction of multiple currency practice requires a little detailed explanation. Note that Western countries, which openly expressed dislike for the military regime and secretly supported anti-Abacha measures, had their invisible hands in foisting the operation of domiciliary forex accounts on Nigeria opportunistically under Abacha. Thus in truth, the operating of domiciliary alien currency account is an economic Trojan Horse and one of the secret weapons which anti-Nigeria hegemonic Western interests employ to undo the Nigerian economy regardless of the political headship. In 2003, the NASS absent-mindedly rubberstamped inherited decrees as Acts of parliament. However, CBN’s exclusive mandate to issue legal tender currency remained unchanged as evidenced by the Central Bank Act 2007. So the continued operation of domiciliary forex accounts after the exit of the military regime in May 1999 is illegal, unconstitutional, null and void. It is therefore imperative for multiple currency practice through operation of domiciliary dollar accounts to cease forthwith to prevent further undermining of the naira financial /monetary system and thereby guarantee a strong monetary foundation for a successful Nigerian economy.
Two, instead of the envisaged national prosperity, by May 2018 this country, as earlier noted, had sunk into the poverty capital of the world with very high under-employment and rising unemployment rates of over 33 per cent. This fact belies the official alibi that the COVID-19 pandemic, which emerged in Nigeria in 2020, was responsible for the poor economic state. Three, the Federal Government policy choice sank instead of elevating the naira to the reference currency in Africa. At SAN’s planned takeoff, the naira exchange rate stood at N125/$1. But the suspension kept in place the erstwhile military regime legacy of dictating artificial exchange rates arbitrarily.
• To be continued tomorrow.
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