This column has consistently maintained that the root cause of our economic paradox of increasing income, with the unbridled unemployment rate, and deepening poverty will be found in the conscious but incorrect adoption of a faulty and distortional process for the infusion of our crude export dollar revenue. Hereafter, we shall discuss the related ADVERSE consequences of the Current Payments Model (CPM) against the POSITIVE attributes of an Advocated Payments Model (APM) of adopting dollar certificates for the allocation, for example, of $1bn export revenue to the three tiers of government in eight sequential scenes, in the following explanatory steps. Thus, in CPM:-1 The CBN unilaterally determines the naira exchange rate and thereafter unconstitutionally captures the distributable $1bn revenue and prints/creates in replacement (read as monetizes) N305bn as statutory allocations, which are then domiciled in the bank accounts of beneficiaries. APM:-1 The same $1bn distributable revenue is not immediately substituted with N305bn allocation; instead, constitutional beneficiaries receive dollar certificates equal to their respective allocations, while the actual $1bn remains domiciled in CBN, so that the naira exchange rate is conversely determined by, competitive market forces of demand and supply. CPM:-2 If, however, CBN's mandatory cash reserve ratio for banks is, for example, 10 per cent, the N200bn inflow can be leveraged ten-fold, to N2,000bn to facilitate additional credit and expand consumer spending power which will invariably irrepressibly fuel inflation. The recent establishment of the Treasury Single Account will, regrettably, only temporarily absorbs such cash injections, as the N200bn allocation, for example, will ultimately migrate, when spent, into private sector bank accounts and compulsively expand Naira liquidity and, banks' credit capacity and consumer demand to further inflation. APM:- 2 With strictly dollar allocations, no fresh Naira is created; thus, the naira supply in the system remains unchanged, and cannot, therefore, instigate the usual disenabling systemic spectre of surplus naira that fuel inflation. CPM:-3 In response to evolving inflationary threats, the same CBN, ironically, 'altruistically' sells treasury bills to borrow money it does not need, often, with 10 per cent rates, just to combat the challenges of systemic excess Naira and excessive consumer demand! Inexplicably, however, despite the crying need of the real sector for cheap funds, these CBN borrowings are simply kept as idle funds, while fresh cash interventions are created to stimulate sectors of the economy, despite the subsisting systemic liquidity challenge. APM:-3 Without the usual naira surplus, CBN does not have to mop up liquidity by borrowing money it does not need, often with interest rates above 10 per cent; consequently, the present N12tn ($60bn) oppressive debt and related service charges will become restrained; additionally, reduced government borrowing, would also naturally force commercial banks to chase the real sector for business and promote economic growth. CPM:-4 Since unrestrained access to excess cheap funds, will instigate spiralling inflation with adverse economic and social consequences, CBN is again compelled to respond by raising its Monetary Policy (Control) Rate (MPR) to force banks to also significantly increase their own lending rates, so that higher cost of funds would discourage borrowing, and sadly, inadvertently also reduce any prospect of industrial growth and job creation. Thus, CBN unexpectedly becomes vicariously liable for the very high cost of funds that cripple the real sector. APM:-4 In the absence of the usual excess naira supply, the threat of inflation and government’s costly impulsive borrowing with Treasury bills will be minimised; CBN would therefore readily reduce its MPR drastically; thus, with the reduced cost of borrowing from CBN, commercial banks will similarly drop their interest rates across board to a single-digit, so that businesses can access cheaper funds to finance new businesses, as well as grow existing industries with increasing employment opportunities. CPM:-5 Meanwhile, Ministries and State Governments, who require imports to enhance social infrastructure, become constrained to buy back their earlier captured dollars at a higher regulated rate from banks, who have strangely become the prime beneficiaries of CBN's dollar auctions. Ultimately, the naira exchange rate comes under threat as increasingly surplus naira is unleashed by CBN to chase the dollar rations it regularly auctions. Consequently, the market dynamics of demand and supply become unfavourably skewed against the naira, despite CBN's custody of relatively impressive 'reserves'. APM:-5 MDAs and State Governments can directly exchange for naira, all or portions of their dollar allocations consecutively through COMMERCIAL banks. Thus, in the absence of the usual naira surge when CBN substitutes fresh naira creations for dollar revenue, market dynamics will inevitably change to favour the naira, with relatively more dollar supply chasing the EXISTING RELATIVELY 'STABLE' NAIRA BALANCES. A stronger Naira rate will expectedly reduce production cost and also lower fuel prices to make subsidy totally unnecessary; furthermore, in place of wasteful subsidy, a 10 per cent sales tax on cheaper petrol and kerosene could favourably consolidate over N1000bn annually into the Treasury. CPM:-6 The less dollars sold, the larger would be CBN’s purported reserves, but the weaker ironically also will be the naira rate, as less and less dollars become pitched against the flood of excess naira that CBN earlier instigated. Ultimately, the gap between official and black-market naira rates will invariably, widen, to provide irresistible opportunities for speculation, hoarding and currency round-tripping. APM:-6 CBN’s usual monopolistic dollar auctions will cease, as the constitutional beneficiaries directly trade their dollar certificates for existing Naira balances with banks before spending, (since the dollar is not legal tender in Nigeria). Nonetheless, the dollars, will remain domiciled with CBN, irrespective of the ultimate buyer, until the apex bank receives appropriate instruction from respective banks to directly pay overseas suppliers of 'authorised' goods/services, from their dollar balances with CBN. This payment process certainly provides a more transparent usage of funds than presently. CPM:-7 In order to reduce the gap between the parallel market and official exchange rates, the CBN commits the unforced error of allocating dollars to Bureau de Change, who in turn fund the requirements of treasury looters and smugglers of contrabands, not minding the adverse economic impact of such misguided dollar allocations; (thankfully, after seven long years of this recklessness, the CBN decided to terminate this clearly obnoxious strategy of official direct dollar sales to BDCs in January 2016). APM:-7 With optimal Naira liquidity and relative dollar surplus, the naira rate would gradually improve, stabilize and promote the perception of Naira as a safe store of value. Furthermore, with little motivation for round-tripping, capital flight and speculative dollar purchases, the black market for dollars will rapidly contract. CPM:-8 The CBN, ironically continues to maintain its forex monopoly and sits on the bountiful naira and dollar reserves, while domestic and external debt accumulation and deepening poverty, inexplicably, persist, while banks, unexpectedly, simultaneously celebrate bountiful profits. APM:-8 Optimal Naira liquidity will invariably precipitate lower MPR, and therefore promote single digit interest and inflation rates below 3 per cent, with a positive knock-on impact on consumer demand, industrial consolidation as well as increasing job opportunities, with bourgeoning economic prosperity. A stronger naira will similarly drive down fuel prices and ultimately eliminate oppressive subsidies values annually. Sadly, the patriotic and rational fervour evident in President Buhari's recent affirmation, at a meeting with the Nigeria community in Kenya in January 2016, that he did not see any valid reason to further devalue the Naira, may ultimately come to nothing if the increasing pressure from local and international experts and powerful interest group persists and the gap between official and parallel exchange rates further widen beyond N100/dollar. In conclusion, therefore, the present payment system will shunt us back to the fourth world, while the advocated model will propel us amongst the top world economies within a decade. Clearly, our fate as a nation is not in our stars, but obviously in the choices we make! This article was first published in 18/03/2013. Save the Naira, Save Nigerians!!