CBN, STOP THIS NONSENSE 17042006

A fortnight ago, in a piece titled "BOGUS LIBERALIZATION = CAPITAL FLIGHT” in this column, we discussed the implications of the Central Bank’s recent decision to make it easier for any Nigerian to convert his or her naira to dollars for the settlement of overseas obligations and also for use as pocket money for holiday or business travel expenses.  

The Apex bank has since released further details of its ‘easy dollar’ project and a closer evaluation of the raison d’etre and the framework adopted reveals serious contradictions to expectations of improved mass social welfare and national economic independence.  It is of major concern that the inspiration for the new ‘easy dollar’ regime came from our ‘friendly’ foreign creditor ‘the Paris Club’.  In case you have forgotten, these are the same people who recognize that we are the 6th poorest nation on earth with severe deprivation in the areas of drinking water, food, health, security, etc and yet had no compunctions in squeezing out $12.6 billion from our tattered pockets for settlement of loans of dubious computations and origins!  Meanwhile, members of this elite Shylock club hold billions more of our dollars stashed away in their vaults by our nimble fingered autocrats and their cohorts in the civil service and the political elite.  Even where some of these loots have been acknowledged, the beneficiary banks have never contemplated payment of any form of interest on the sums held while they, nonetheless, demand a pound of flesh for our own ‘debit’ balances.  According to Dr. Mailafia, Deputy Governor of the CBN, the Paris Club demanded the implementation of an ‘easy dollar regime’ as a precondition for their widely condemned spurious debt relief to Nigeria.

Again, we recall that most members of the Paris Club have been badly hit and most believe ‘unfairly’ by the same source that funds our increasing dollar reserves – i.e. rising prices of crude oil.  Under such scenario, it would be appropriate ‘business’ strategy if they could in turn confuse us or manipulate our economy so that we actually receive less value for each dollar we receive from them!  Readers will note our current predicament as a nation whose poverty level deepens inspite of increasing wealth expressed as over $32bn reserves (the highest reserve level ever in Nigeria’s history; note, South Africa has a paltry $20bn reserve by comparison, but has a relatively higher per capita income and better mass social welfare).

The spectre of oil prices approaching and exceeding $80/barrel in the next six months may appear daunting for members of the Paris and London Clubs, but their pointsmen, both local and foreign experts strategically stationed in the heart of our Finance Ministry and our Central Bank will ensure that their huge payments to countries like Nigeria for crude oil will sooner than later return to accounts in Europe through ample opportunities created by ‘progressive’ or liberal government policies to facilitate capital flight.  It is no secret that the IMF and other international neo colonial institutions currently pay the salaries of critical members of our government’s economic team and we must remember that he who pays the piper dictates the tune.  It is also no secret that it is difficult to identify a single economy in Africa which has been transformed by close ‘bedroom’ collaboration with the IMF and World Bank!   Meanwhile, the IMF and the Paris Club are overtly acting in concert with regard to Nigeria’s monetary policies!

We recall that the Nigeria economy had suffered most each time so-called IMF experts become engaged at the commanding height of our economy!  Some of our readers will remember the IMF seconded men of timber and calibre who ran the Nation’s economy aground with the SAP programme, which at the time of its implementation was touted as the magic wand for our ailing economy.  At the end of the day, our economy was laid comatose and we have yet to recover till date.  The days that a family could live on N250/month soon disappeared and N250 may today buy you just two loaves of bread, no thanks to our IMF and World Bank gurus with their Structural Adjustment Programme which practically diminished the value of our naira!  In the end, Nigeria which had little or no debt in the mid 1980s soon became a chronic debtor and our resources were frittered away with little benefit to Nigerians.  It appears it is once again déjà vu.  The vultures are once more at the heart of our treasury.  The modern slogans are NEEDS and a 13-point bank reform; Nigerians are once again caught napping, while their national wealth is quietly siphoned away via voodoo economic policies!  The implications of some of the measures adopted to make forex easily available should worry well-meaning Nigerians; for example, according to new CBN guidelines, the erstwhile requirement for foreign borrowing by our banks for local on lending to be “tied to projects that are capable of conserving forex through local production have been waived!"

In other words, banks can now borrow from abroad and lend directly to plain importers and distributors who add little or no value to the economy.  Furthermore, those ‘special’ Nigerians with excess naira can buy official dollars so they can buy stocks and shares in stock exchanges abroad.  One would have thought that this would be a disservice to the Nigerian stock exchange which could do with such funds, especially if we are to inspire external confidence in our economy by investing our own excess funds locally!  

The new guidelines which also allow anyone with overseas property, foreign guarantees or even a savings account from an offshore bank to use that as a collateral to obtain loans from Nigerian banks is an arrangement which may subsequently undermine the Nigerian banking system, as this will encourage movement of speculative hot money into Nigeria in search of high returns from our lucrative government sponsored bonds and treasury bills offerings with up to 17% returns as opposed to conservative returns  of about 3% in serious and focused economies abroad.

What is clear from the IMF-induced CBN guidelines is that our monetary authorities have once more positioned the resources of our nation for capital flight and the renewed accumulation of spurious foreign debts; debts which will once more balloon unnoticed for some time until our ‘benevolent’ overseas creditors decide once more to demand another round of economic restructuring with another set of IMF schooled monetary wizards, both indigenous and foreign planted once more at the heart of our treasury!

As a fine example of profligacy, the CBN in a fruitless attempt to bridge the widening gap of almost N20/$1 between the official and black market rates of exchange, will now supply each registered Bureau de Change (BDC) (with the sum of $200,000 twice weekly for onward sales to off-the-street customers who do not have to show any need or supporting documentation to access official forex.  There is no evidence that this level of freedom exists in the forex market anywhere in the world.  If for example, there are 300 registered BDC in Nigeria, CBN’s ‘dollar party’ will reduce our national reserves by almost $300m every month!  Some observers say that these are good days for both the small and the elite groups of smugglers of contraband into the country.  With such ‘easy dollar’ party in place, our emaciated local manufacturers may soon be singing Nunc Dimitis and it really may be truly over for them, unless good Nigerians everywhere wake up from their slumber and tell the CBN that enough is enough!