Follow Us on Google
Former Minister of Finance, Dr. Kalu Idika Kalu, has advised Nigerian to take into cognisance the antecedents of the presidential candidates before casting their votes
In an interview VINCENT KALU, the four-time minister, spoke on the redesign of the naira and what the authorities should do.
He also spoke on the continued detention of leader of the Indigenous Peoples of Biafra (IPOB) and how the case should be concluded.
The naira has continued its free fall against the dollar, in spite of various policies put in place by the CBN. How can it be rescued?
Firstly, the naira is only one of the most significant indicators of the strength, the robustness and the depth of the Nigerian economy. Most currencies tend to depreciate over time with the ups and downs dynamics or business cycle of the economy, and its linkages to external trade and payments, non-trade transfers, and other autonomous flows of funds between currencies.
The answer to the question is therefore, that fixing, or steadying the naira value, and improving its relative strength, is not a narrow function of quick fixes of managing the supply and demand for money supply by short term tightening or loosening the supply and demand for foreign exchange through changes in money supply, interest rates, and other direct and indirect interventions in discretionary funds allocations that starve some demands in favour of other needs of scarce foreign exchange. It requires, ultimately, changes in many macro, and even micro policies, in the short, medium and long term. Most very short run manoeuvre invariably cannot capture the underlying fundamental factors that may run through the entire demand/ supply in the entire production functions of the entire economy.
Though the naira is always falling, the announcement if its redesign has accelerated the fall, exchanging for one dollar to more than N850. Why do you think this is so?
Panic announcement clearly raises concerns. One, given the security situation in the country, such crisis-prone shocks to the system would complicate the existing physical problems of returning the large cash outside the banks into the banking system (especially in the 60-65 per cent rural environment), and the associated risks of a timely exchange of the old for the new.
Secondly is the dash into buying foreign currency to limit further loss in the value of holding deprecating naira. Thirdly, in our terribly corrupt environment, cash holdings must be very high (as already indicated by the CBN) and the rush to validate the holding will entail a cost that will affect the current equivalent rate of the naira as some funds ‘fly’ into non naira holdings. That factor will further drive foreign currency parity rates up against the naira.
The redesign of the naira has received knocks and kudos. What is your position on this?
Redesigning the naira should normally be a routine and necessary exercise. One is to routinely replace dirty, defaced, and torn notes in a timely fashion without all this drama. It is suspicious that this timing is coming at this point in the election calendar. Secondly, people may wonder if it is a political ‘master stroke,’ since currency is in the sole power of the sitting government (political party) in place. Given the expected hardships for many consumers, including the political opposition, this could be construed as a political ploy, perhaps, not taking into account how it could backfire if there is widespread discontent for the hardship of the exercise.
Otherwise, it’s a normal fiduciary event, and should be planned in times of relative calm, and with the full buy-in of all stakeholders; certainly, it should not smack of an ‘ambush’. Furthermore, it would seem ill advised given the widespread and growing insecurity in the country. The government and the CBN needed to take these factors into consideration in deciding on the timing of what should be routine. I listened to a discussion on a TV channel some time ago. It is in utter disappointment to realise how shallow and naive really the economic and banking analysis of the issue. I thought and expected it was better than this. Aside the obvious dubious politics of the timing, and the rushed nature of what should rightly be a routine exercise (to withdraw dirty, torn, and withered notes from circulation), we appear to focus on the regulatory independence of the Central Bank of Nigeria. Whereas, in a development setting, the regulatory provisions, as in this case, must be consultative and coordinative within the president’s office and the Ministry of Finance on one hand (leaving aside the relevant Lower House and Senate Banking and Finance Committees), and the CBN, on the other, especially when matters of redesign are concerned; and this should be without any intent on infringing on the narrow and explicit independent conduct of monetary policy of the CBN.
It’s even more serious where a change of existing denominations are concerned. The design of the agreed new units and the serious issue of honouring past citizens by using their images on the new notes, are clearly beyond the powers of the CBN alone.
We cannot focus narrowly on the letter of the Central Banking regulations that really only define the initiation and drafting of monetary policy guidelines, which still must go to the CBN Board anyway, and on which both the Ministry of Finance and National Planning, and the Presidency are represented as the president’s primary advisers, with or without the additional presence of the president’s economic advisers.
I have not even addressed the key issue of why the focus on reducing the amount of currency outside the banking system (reportedly a whopping 80 per cent). The hoopla ignores the real fact of the matter, an indication of a failed Central Banking pricing, use of its wide ranging financial, money supply, credit and interest rate and other regulatory instruments that purportedly delimit cash reserves and money supply and other regulatory guidelines.
It’s the CBN that develops and applies these ratios and indicative pricing limits, and no one else. The attempt to demonise the parallel market, its size and operations, also fails to place the causality of this abnormality on the market efficiency of the Central Monetary Body and its monetary deposit banking institutions. The scandalous arbitrages between the so-called official multiple (discretionary rates) of foreign exchange, and various parallel market rates are all determined, interrelated with the entire economy system as a whole.
The public knows the reasons it cannot do regular banking within the limited banking services available to it, even admitting the advance in banking penetration from recent reforms.
The continuing stark low level of institutional banking facilities is clearly another factor that forces money that should be in circulation into pots, pits, pillows, mattresses and dry sewers. It should not be presumed to be the supposed preference of the holders. The big corruption is not even mentioned as a plausible factor. So much cash being held outside the ambit of CBN monetary management should not call for a holier-than-thou professional justification for the ambush style brouhaha of the planned currency exercise in the last weeks of hotly contested federal elections.
Is the 90-day ultimatum or thereabouts given for deposit of old notes enough?
Ninety days should be enough under normal circumstances, but there should be ways of envisaging full and easy compliance without severe penalties for unavoidable noncompliance.
The economy of Nigeria is still going down and inflation is at an all-time high, with rising unemployment. What should the Buhari government do to shore it up?
Improved macroeconomic management goes beyond economics and finance to improved security in all its architectural and manpower ramifications; moves to complete essential infrastructure that would boost domestic and import trades; drastic reduction in the perceived cost of this ‘democratic transition’; drastic improvement in law and order in the polity. There should be a sharp drop in banditry, kidnapping and violence, and an effective pacification of the Nigerian communities in all zones.
Nnamdi Kanu has remained in detention in spite of his release by the Appeal Court and appeal by Igbo leaders to President Buhari for his release. What solution do you proffer to end this issue in order to return peace to Igboland?
I took an initiative at the very beginning to plead the cause for a vibrant youth movement that should operate within the law (our federal and state governance structures) and the traditional institutions, such as Ohanaeze and our traditional rulers councils. The government was quietly contacted through the NSA to take it easy, as these were youngsters, some of whose parents were not even old enough to know the consequences of strife and military confrontations.
Frankly, I have not been at all happy or encouraging of militancy outside of the normal legal and politically respective framework. I pressed for humility, and a patient working through bold and disciplined leadership to fight the obvious injustices. I frowned upon any semblance of cult image and messianic blind followership that tended to trample on the very same equitable and judicious governance that it was fighting for, even though one was growing increasingly impatient with federal and state handling of the rampaging insecurities and inequities all over the country.
The federal government should have moved faster and shown more concern about the growing insecurities and violence in many deteriorating clashes all over the country. For example, I urged Ohanaeze years back to work with the South-East states to set up mutual defence for the zone, long before Amotekun was set up. This would’ve voided the need for ESN being set up by IPOB. I had pleaded for the South-East and Ohanaeze to legally defend the youth organ on the proscription, but once that was not timely taken, it was incumbent on these entities to abide by the law and still seek to de-proscribe the organisation. In the same vein, rather than announce its intention to monitor the trial, Ohanaeze should have ipso facto, challenged the highhanded rendition in the first place.
Finally, solution is to allow a quick, open, dispensation of justice and have the court deliver a believable verdict based on the facts of the case, with no political bias or undertones, and let the case rest on the merit of the evidence.
Do you see any of the presidential candidates retuning hope to Nigeria and Nigerians?
I believe the people have a responsibility to build on the three seemingly most viable candidates. We have a chance to let democracy have its sway on voters’ preferences. The ball is in the court of the voters and the electoral umpire. The secret ballot to vote one’s conscience should be respected. They should monitor rigging and other malpractices, and ensure with civil society that the valid votes do count.
Are you satisfied with the manifestoes of the three leading presidential candidates — Atiku, Obi and Tinubu
I am not sure if and what the significant differences could possibly be between the three or four major ever-fluid party agglomerations. Nigerians agree on the platform of improved governance under equitable welfare, improved resources mobilisation and efficient allocation, more efficient and caring public sector services, and the need for a vast creation of new jobs in the public and private sectors through unleashing the productive sectors of our resource rich economy, improved real allocations to health, education, and social welfare. The nuances of language may be all that really separates the manifestoes. The voter should mind the records and antecedents of the presidential gladiators. Though not easy, but we have to focus on these more than on lavish uniforms, songs and drums and attractive handouts.
What development agenda can you set for these candidates, even though they have their manifestoes?
This is already implicit in what I have said above, but for more emphasis, they should calm the polity by focusing on rebuilding the deep crevices in our communities across the entire country; bringing discipline, merit and efficiency back to the system by appropriate signals, and appointments to various public sector positions, regardless of prior political partisanship.
There should be political, as well as professional considerations to undertake major burning societal issues. Security, finance and banking management, clean up every heavy public sector remuneration baggage; to restore a minimum 60-40 budget allocation to recurrent/capital spending; a more efficient use of local, and essential and cost effective borrowed, funds, etc.
President Buhari few weeks ago beat his chest that he has performed very well and has met and surpassed his electoral promises. What’s your reaction?
I disagree, with due respect. He may not realise that we had a right to expect so much more; we have got far below the minimum, even allowing for some exaggerations by his worst critics. For all this, we should give ourselves six months to the end of 2023, to arrive at a more dispassionate verdict on Buhari.
Presidential campaigns are on. We are seeing mudslinging among media aides and supporters of the candidates. What should be the campaign issues?
We should expect the candidates to propound clearly viable approaches to attain clearly discernible imperatives for Nigeria’s national renewal; many will count this flagrantly optimistic against today’s background.
How can you rate the presidential candidates?
It’s clear there are differences in age, implicit agility, and proven competences, but the voters must decide without prejudice. Besides the individual, there are the aides, the advisers, the party phalanges, and so on. All of that come to play in determining the ultimate performance of the leader.
What should be Buhari’s parting gift to Nigeria?
There should be clean-cut effort to ensure a democratic election and a successful transition. Simple! Nigerians will rejoice, forgive and remember the durable parting gift. Above all else, Africa and the world would applaud.
