The Central Bank of Nigeria (CBN) is the banker of the government and all the commercial banks. It’s a statutory body which the law bestows with independence in the discharge of its functions to facilitate the achievement of promoting stability and continuity in economic management. The bank’s functions include to ensure monetary and price stability; issue legal tender currency in Nigeria; maintain external reserves to safeguard the international value of the legal tender currency; promote a sound financial system in Nigeria; and act as banker and provide economic and financial advice to the Federal Government.
The Central Bank Governor is the head of the CBN and is responsible for the performance of the functions of the CBN. There’s no disagreement as to the quality of the performance of the functions of the bank, as stated above, under the APC government. One of the functions as stated above is to promote a sound financial system in Nigeria. According to Tinubu, who single-handedly brought in Buhari as President, and who succeeded Buhari under the only qualification that it’s his turn, Buhari ran a rotten financial system through his only CBN Governor, Godwin Emefiele. To buttress his point, he arrested and detained Emefiele and subjected him to trial many times even at the risk of offending his fundamental human rights.
Truly, Emefiele ran a rotten financial system because all the indices were there. Today, Nigeria is, for the first time in history, having and operating the regime of two different currencies indefinitely and without any solution in sight. In Buhari’s government, Nigerians were buying naira with naira, and till date cash in naira is still scarce. Emefiele even decided to contest to become the President of Nigeria while still being the CBN Governor and actually went to court to compel all institutions responsible for elections to allow him to contest for the post. It was that bad, to the extent that Buhari had to deploy the army to guard his CBN Governor to prevent other security agencies from nabbing him to account for his atrocities. Luck ran out of Emefiele when INEC declared Tinubu as President. The army that defended him were withdrawn and the other relevant security agencies nabbed him and he is now having his day in court accompanied by his mosaic size King James Version of the Holy Bible.
But let’s take a pause and assess the performance of the bank under Buhari and Tinubu. Buhari left the naira exchange rate at about N500.00 to a dollar official exchange rate and about N750.00 main street exchange rate. Tinubu is having N1,450.00 to a dollar exchange rate. Since he boasted that he will enact one exchange rate, this is what the exchange rate is today, and the dollar is still scarce. Buhari kept the price of pms at about N195.00 per litre but Tinubu has it now at N650.00 per litre and still counting. Buhari didn’t borrow huge amounts of money within the first 4 years to finance his projects but Tinubu has borrowed almost $15b (About N21 trillion) within 7 months of his regime and about N7 trillion ways and means, without any productive venture to point at. Clearly, as it appears, Buhari’s regime is far better off than Tinubu’s regime within the first one year in office.
The Tinubu appointed Central Bank Governor, Olayemi Cardoso, recently blamed foreign medical trips and foreign education by Nigerians as being part of the main problem of the depreciation of naira. According to him, Nigerians have spent about $40b in the last 10 years for these listed items, which puts pressure on the scarce dollars relative to naira. Coincidentally, the employer of Cardoso, Tinubu, was sitting in a French apartment in France for a medical “private visit” with a retinue of staff and spending millions of dollars for the private visit. If he genuinely wants to know who the culprits are he has the answer right in front of him. There is hardly any top politician or very wealthy person that has his children studying in Nigeria and who has his medical check ups in Nigeria. It’s very possible that Cardoso is not an exception.
Having said this, it’s a wrong diagnosis of our economic problems to cite incidences of education and medical trips as the cause. For the avoidance of doubt, there’s hardly anytime in our history that our leaders have not had their children and themselves studying abroad and having their medical trips abroad. We know it as a fact that most of our Universities were established in the sixties and before then all our first generation leaders studied abroad inclusive of Zik, Awolowo, Balewa and Ahmadu Bello. Even after then, till date, most students who complete their undergraduate studies in Nigeria, jet out to do their masters abroad, so the idea of schooling abroad for those that can afford it should be encouraged not discouraged.
Apart from the technological transfer that this country acquires through such exposure of our citizens to study abroad, some of the students eventually get employed overseas and earn the foreign exchange which they transfer back home to assist their people here. It’s not as if this government has any job for them anyway. Also, with our population, there’s no time the available tertiary institutions can cater for all the intending students of higher learning to gain admission into the schools, hence the need to seek admission anywhere in the world that have good schools to accommodate them. Nobody should be allowed to die on account of any sickness if he can afford medical treatment anywhere in the world because life has no duplicate. To cite these reasons as affecting our forex value today when other regimes earlier before this did not, shows a Governor and a regime that are running out of ideas on how to cure the financial disease they have inflicted on Nigeria.
From our experience as economists, the main reason naira is falling everyday and may continue to fall is corruption. This makes the government unable to manage even the little resources it has. The CBN Governor recently uncovered about $2.4b invalid forex claims, out of $7b fx claims, which is about 34% rate of corruption in the padding of fx claims. Assuming he didn’t discover this, Nigeria would have lost such amount of money to some so called billionaires in dollars who are producing nothing. What he failed to do was to name the persons and companies involved and mention the appropriate sanctions against them. Without this, more people will attempt to embark on the same attempts to defraud Nigeria and many will succeed in future as many had succeeded in the past. Recharge card sellers in Buhari’s regime became trillionaires simply by these kinds of corrupt enrichment. When politicians and business men acquire humongous amount of money without productivity, such money will induce inflation and put pressure on our currency as much money will be chasing fewer goods.
It’s unfortunate that Cardoso couldn’t advise his boss, Tinubu, that importing 469 suvs for the members of the National Assembly, while there are many motor manufacturing/assembling plants in Nigeria will put additional pressure on the scarce dollars. When this regime came in, it granted access to all the companies importing everything in Nigeria, including toothpicks and rice, which this country was already reaching self sufficiency in production, to collect dollars from the official exchange rate. The CBN Governor should advise his Oga to reverse the policy. The argument that these companies were allowed access to the official rate so they will be discouraged from going to the main street exchange rate is spurious as everyone has seen it didn’t work. It’s shameful that this government embarked on devaluation of naira in order to achieve one exchange rate regime rather than embarking on defending the naira and making policies that will help naira appreciate so that the main street price should measure up to the official rate price.
The correct strategy would have been for the government to keep the price of naira at N500.00 per dollar and make policies that will ensure that the price of naira becomes stable at this rate. Such policies include the government being the greatest patronizer of made in Nigeria goods, the outright banning of the importation of all the goods which can be produced locally, the repairing of all our refineries and encouragement of the establishment of modular refineries, to stop immediately the importation of refined petroleum which is the greatest destroyer of our foreign exchange. I wonder why the CBN Governor has not called out the Nigerian National Petroleum Company Ltd for failing to fulfil its promise of commencing full production of refined petroleum products by December, 2023. They deceifully pumped smoke in their Portharcourt refinery by December to claim that the refinery is mechanically completed. This is February and the refinery is yet to function. Before this deceit continues without check, let this government sell off all the refineries to private capable hands to run them before its too late. The order that all incomes of NNPCL should go through CBN will not be the answer as the corrupt officers of the NNPCL will soon find a way around that order which may even be illegal because the NNPCL is now a body corporate that is imbued with power to determine its course of action.
The CBN Governor should educate his boss that it’s only an industrial productive base and a steady export market that will guarantee the shoring up of the value of naira and this can only be achieved by boosting agricultural production through providing adequate security for the farmers. Availability of electric power and cheap pms will assist local production. The CBN Governor should stop chasing shadows of blaming education and medical trips as his problem and start tackling corruption and profligacy of government and poor policies which are the real culprits. So far, the financial system is a display of renewed hopelessness.