Obasanjo and our poor Naira

By 

Kingsley Osadolor

The most significant intervention of President Olusegun Obasanjo's government in the fate of our national currency, the Naira, has been in the printing and launching of higher denominations. Every year since 1999, we have had a new bank note: N100, N200, and N500. The introduction of the N100 note was a fiasco because it bore a material misstatement of geographical fact by assigning the location of Zuma Rock to the Federal Capital Territory, instead of Niger State. Three weeks ago, President Obasanjo and his ministers grinned from ear to ear at the Federal Executive Council meeting at which the latest of the notes N500 was unveiled. The spectacle inside the council chamber was a grim reminder of the homily to a child who celebrates the dawn of every new day without realising that he is gradually inching towards his grave. If the highest denomination of the national currency was N20 when Obasanjo handed over power in 1979, he needs no prompting to apprehend the ghastly fact that the Naira is now virtually a living-dead.

Yet, after nearly two years in office as a civilian President, Obasanjo does not strike Nigerians as one leader who has economic management as one of his priorities. His economic discourses are few and far between with no memorable issues or a wake-up call for economic renaissance. His mantra is privatisation and apparently nothing more. His campaign for debt relief is at best an adjunct of his foreign policy forays. The anti-corruption crusade, if it succeeds, will not result in economic rejuvenation. True, our foreign reserves have swollen; but so have oil prices. Still, the Naira is emaciated and the people are poor, hungry and jobless. In less than two years since the advent of the new administration, our currency has lost more than N40 against the US $, exchanging for over N135 at the parallel market, as against N85 or so under the kleptocratic junta of Sani Abacha. What is wrong?

Last week, President Obasanjo summoned bank executives to Aso Rock where he delivered his riot act on the resuscitation of the beleaguered Naira. "I will not sit down here and allow Nigeria to haemorrhage to the point of death on the altar of liberalisation. There will be no runaway devaluation here," he told his audience. The President further appealed to the patriotism of the bankers, urging them to refrain from speculative trading in the national currency. The Central Bank followed by raising the Cash Reserve Requirement (CRR) and the Minimum Rediscount Rate (MRR), in order to suck in some of the excess liquidity which the banks had been unloading on the forex market. Last week's conclave at Aso Rock marked the first time that serious presidential attention was panned to the Naira and the economy, and the hope is that it will stay focused on it. President Obasanjo has had an embarrassing share of photo opportunities with small-time managers and business chieftains; the time has come to roll up the sleeves of his caftan and sort out the economic mess.

It would be naive for anyone to expect the bankers to heed the President's patriotic appeal. Banks are driven by the profit motive, the hunger of shareholders. To the extent that they are not on the wrong side of the law, they would continue with their speculative dealing. But the government must show that it is in charge. And it can do that effectively by the strict enforcement of laws and regulations governing the financial system. The round-tripping we hear about is an infraction for which there are no scapegoats whose bitter experience should be a lasting lesson to potential outlaws. The CBN itself must be competent and willing to play its enforcement role. If President Obasanjo appointed Joseph Sanusi to overhaul the apex bank, the result after nearly two years is appalling; otherwise bankers would not sneer at the CBN. The reality of the CBN-bankers relationship is that most of the bankers are far more exposed and competent, with the net effect that they can easily manipulate the apex bank. In the medium to long term, therefore, the government must enunciate and implement a policy of recruiting and handsomely rewarding the best and brightest to man positions in the CBN; otherwise the latter would remain a toy in the hands of bankers.

However, the implementation of the foregoing alone will only be palliatives for a diseased Naira that is a strong reflection of the unhealthy state of the economy. The Naira will be fragile to the extent that ours remains an import-dependent economy. Unfortunately, the government does not see this in emergency terms, to reverse the unflattering profile of the economy. In less than 24 months, the government has had three ministers of industries who have been changed not on account of disagreement over policy issues but rather on the grounds of political expediency. It does not require a genius to take a panoramic view of the economy and see that the Naira will be under pressure for a while. Take government spending, for example. Did the government not require the forex equivalent of what it cost to purchase the 774 jeeps, via the accounts of local governments, for the police? To the alarm of the rest of us, the government is stubbornly proceeding with the construction of a needless stadium at Abuja. Will the cement and other inputs not cost forex?

President Obasanjo looks resplendent in his brocade kaftan; so, too, does his wife, Stella, in expensive lace. Everyone else also wants to look and feel good. Those fabrics are imported; they cost forex; they put pressure on the Naira. Nearly every urban household or business office in this country has a gen set, because of the inefficiency of the public power supply system. Those generators and their spares are forex guzzlers. Go to the wharf and see the vehicles (pre-owned and new) that are pouring into the country, not for free, but for forex that the country earns predominantly from oil. Some time last year, imported food was banned at Aso Rock, after embarrassing comments were made about a photograph in which the President was caught at his breakfast table munching imported cereals. Good news, you might say. But one cannot imagine any other country with such plenitude of imported items. Visit Oke-Arin or any other shop in Lagos or for that matter any urban area. Their stalls are brimful with imported biscuits, cornflakes, sardine, fruit juices, bottled water, wines and spirits. Toothpaste, toothbrush, detergent, toilet soap, you name it; it is imported. That costs forex. Ask: what percentage of drugs and medicines are wholly sourced in Nigeria? If this is one of the net effects of globalisation, then we are doomed.

One hopes that the government does not interpret its quest for privatisation as an excuse to abdicate its responsibility to formulate and faithfully implement beneficial industrial policies for the country. Who says cars and other vehicles cannot be made in Nigeria by franchise? Volks is dead here all right, but are the Japanese unpersuaded to set up shop in the biggest market in Africa with affordable labour? Who says machine tools cannot be fabricated here? Everyone is excited about the coming GSM, hailing its potentials for opening up the economy. But GSM will be another forex guzzler: we will import the handsets and transmitters and we will pay in forex the satellite transmission charges. But can't we have at least a plant here for the making of telephone handsets? This is as much a task for the Executive as it is for the Legislature which, regrettably, seems more interested in personality squabbles and perquisites than in the key issues that define our existence. Almost every critical sector of the economy is comatose; we are being sustained by imports which our poor Naira is finding increasingly burdensome.