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By: Sir Henry Olujimi Boyo (Les Leba) first published in February 2013


Two weeks ago, this column republished ‘Protecting the Dollar Against the Naira with CBN Reserves’. The title speaks for the article which delves into adiscussionon issues relating to defending the Dollar against the Naira.


(See for this series and more articles by the Late Sir Henry Boyo)


Today’s article laments about the fate of Nigeria’s economy considering the level of corruption running rampant. It goes ahead to provide recommendations for reducing corruption levels by emphasizing effective monetary policy as a reliable instrument to achieve this goal.


As you read through the below article taking note of previous events or rates, keep in mind its year of publication (2013), a clear indication that Nigeria’s economic situation is yet to improve even after all this time.


The recognition of the abysmal depth of corruption in public office is probably shared by all discerning citizens of this country; consequently, some well-meaning Nigerians have prescribed the death penalty for anyone convicted of treasury looting!  The obvious provocation of the recent slap-on-the-wrist punishment to a civil servant for stealing over N27bn of Police Pension Fund may have prompted the call for more severe penalty!


In reality, it will probably be impossible to find anyone, who has served in any Legislature in any part of the country who will come away with clean hands.  The Legislators are therefore unlikely to enact laws that would prescribe extended prison terms or the death penalty for treasury looters.


Thus, rather than the public fixation on the measure of punishment, it would probably be more sensible for us to identify and reduce those opportunities that would facilitate corruption in public office.


In response to this challenge, we published an article with the above title in April 2008; the following excerpts from that piece still remain relevant if we truly wish to reduce the level of corruption in Nigeria:


"Many years from now, historians may conclude that the most obvious defining feature of public servants in the first nine years of the third Republic was the art of ‘double speak’ or in plain language, the penchant for insincerity and deception. 


"For example, in his first term in office, Obasanjo was totally against any form of constitutional review and anyone who expressed support for constitutional amendment was labelled a traitor and renegade.  The nation, however, witnessed a total somersault when the same Obasanjo suddenly became the senior apostle for constitutional amendment so long as it accommodated the introduction of a third term in office for the incumbent!


"Obasanjo’s administration also paid lip service to the adherence to rule of law….  In reality, the former President rode rough shod over any law or judgment that was not in consonance with his personal interest…. 


"The prevailing level of hypocrisy is probably most glaring in the area of government’s declared war on corruption.  The series of revelations of the sordid and unpatriotic deals in the power sector; the mal-administration of the Petroleum Trust Fund; the huge fraud associated with COJA, the sale of undervalued government properties and common-wealth to cronies and party stalwarts, etc.; the list of malfeasance is open-ended, and at the end of the day, there can only be one conclusion, and that is, that the trust Nigerians had in public office holders was woefully betrayed and the forbearance of our people became countenanced as foolishness.


"In focused economies, worldwide, the Central Bank is the prime custodian of the nation’s wealth and treasury; the Central Bank is thus the banker to government!


"Thus, if government and its agencies did what is expedient and appropriate by placing its cash deposit with CBN, financial control and audit of disbursements by MDAs would not only be facilitated, but also become more transparent, as the convenient instrument of irrevocable standing payment order, ISPO – a system which facilitates treasury looting with the conscious collaboration of commercial banks, will become redundant.  It would also be impossible for public officers to collect up front interest on MDAs deposits with commercial banks!


"Similarly, the perennial problem of excess liquidity induced by the extended capacity of banks to injuriously expand credit whenever monthly allocations of the three-tiers of government are all paid in naira will be assuaged as less naira deposits will become available to instigate the scourge of excess liquidity in the system. 


"In the same vein, the CBN and Debt Management Office would have no excuse to condone unnecessary increase in the Nation’s indebtedness by borrowing back from the banks, funds, which were earlier deposited as naira allocations to the three tiers of the government by the same CBN!"


Instructively, however, it may be more realistic to tackle the problem of corruption by reducing whatever fuels the oppressive excess cash in the system.  The church rat, for example, remains lean and impoverished because there is not much to eat, while those rats in a bakery will become obese because of excess food in their habitat!


We have ceaselessly indicted the CBN's substitution of naira allocations for dollar revenue as the major instigation of excess liquidity, and ultimately also, for the expansion of the pool of slush funds; thus, the opportunities for blatant treasury looting would be significantly minimized, when our dollar-derived revenue is shared with the instrument of dollar certificates to constitutional beneficiaries.


In other words, CBN's monopoly of the foreign exchange market and the attendant product of systemic cash surplus is probably the major feed-mill for corruption for public officers.





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