By: Sir Henry Olujimi Boyo (Les Leba), first published in August 2017
Last week’s article was initially published two years ago “Remove Subsidy and Die or Keep Subsidy and Die!!” the article is as its title suggests, and discusses the dilemma of the fuel subsidy situation that Nigeria continues to struggle with. It presents sound arguments for the necessary steps to take concerning fuel subsidy if its removal is to prove successful and beneficial for all Nigerians. “The Oppressive Folly of Fuel Subsidy”is another republication that mirrors similar concerns.If you missed either of these articles, they can be found using the link below.
(See www.betternaijanow.com for this series and more articles by the Late Sir Henry Boyo)
Today’s article was initially published four years ago. In light of recurring, and unresolved issues that threaten the welfare of Nigeria, it is being republished to point out the lengths that this author (the Late Sir Henry Boyo) went through in the struggle for better policies that will ultimately benefit all Nigerians. The fact that the same issues remain, is cause for concern that perhaps the right policies are not being employed by our government. It is also cause for concern that any law-abiding citizen passionate about the welfare of their nation, and armed with the wisdom to contribute towards our nation’s growth, should face so many difficulties to make said contributions. Kindly read on.
As you read through the below article, keep in mind its initial publication (2017).
Tomorrow, 22nd August 2017, will make 15years, since the advocacy, ceaselessly canvassed in this column, for a payments reform, that would regenerate and rapidly propel inclusive economic growth, was first presented to government.
Incidentally, an earlier, casual discussion of such proposal, at an ‘Old School Boys’ meeting, unexpectedly, led to an invitation to make a presentation to the National Economic Intelligence Committee (NEIC), with Prof Ibrahim Ayagi as chairman. Despite the short notice, a paper titled “A LIBERALIZED FOREIGN EXCHANGE MARKET AND ITS ECONOMIC BENEFITS,” was co-authored with a colleague, AdaighofuaOjomaikre a kindred spirit on this matter, and the solution proffered, in that paper, was later discussed during our visit to NEIC’s Abuja office on 22nd August 2002.
In retrospect, the NEIC team seemed in accord with our analysis that the subsisting, primitive, payment model, adopted by government, was the primary cause of our weak economy, despite increasingly more bountiful export revenue. Nonetheless, Ayagi personally wondered, if our prescription was in current application anywhere. The NEIC team, was obviously startled, by the response, that no successful economy, that we know, consciously captures export revenue, as our government presently does, and then proceeds to create an estimated local currency equivalent as replacement for such revenue before sharing and spending; inexplicably, the same government turns round to AUCTION their forex booty in a market, that is, already, disturbingly suffocated with excess Naira liquidity.
Ultimately, the NEIC chairman agreed that the committee would consider our paper in future discussions with, incumbent President Olusegun Obasanjo.
Regrettably, however, there was no feedback, thereafter from NEIC. Consequently, in an attempt to spur the Agency into action, additional copies of the same paper were printed and sent directly by courier, with cover letters in October 2002, to President Olusegun Obasanjo and some critical cabinet members, including, the finance minister, Okonjo Iweala, the education minister, the Secretary to Government and Joseph Sanusi, the incumbent CBN Governor.
Regrettably, there was similarly no response from the President’s office, so, in another letter dated 8th of March 2003 to NEIC, we drew attention to CBN’S 2002 “Macro Economic Review” which indicated that “the year (2002) recorded, continued excessive growth in monetary aggregates, relative to set targets.” Consequently, we concluded, in our letter, that with inflation at over 13 percent and a chronic liquidity overhang, with heavy unemployment, the outlook invariably will remain bleak, since CBN has not proposed any new policy thrust.”
In the same letter, we also observed that “the several, unfavourable economic indicators, merely represent symptoms and complications of an already, correctly diagnosed disease, namely, excess liquidity.” We also noted that, “it has been amply demonstrated that excess liquidity, in Nigeria today, is self-inflicted, as it is traceable to the faulty translation of hard currency revenue into the domestic economy.” We therefore advised that “no serious country abuses and debases its currency in that manner.”
In view of our earlier experience with regard to feedback, NEIC’s prompt response to our letter of 8th March clearly came as a surprise; an excerpt from the rather terse response dated 25/3/02 is as follows:
“The National Economic Intelligence Committee (NEIC) acknowledges, receipt of your letter dated 8th March, 2003, on the above subject matter (i.e.) LIBERALIZATION OF THE FOREX MARKET.) “The NEIC notes that you have already contacted Mr. President and the Governor of the Central Bank, on the same subject matter. This development forecloses further consideration of your proposal, by the Committee, until Mr. President concludes his consultation on the matter.”
“Curiously, there was no acknowledgement, or response whatsoever, from members of the Federal Executive who received our paper. Nonetheless, CBN’s Director of Research O.J. Nnana (Ph.D) sent a long winding response; part of the conclusion in Nnana’s letter dated 29th November 2002 reads as follows:
“We are, however, very skeptical on the level of trust that you put on the various tiers of governments regarding your proposal to fund their accounts in foreign exchange under your proposed “warrant system”. “We hope it would not be another source of capital flight and a free run on the external reserves and the naira exchange rate.”
The Director’s response was clearly a mischievous deflection, as the present payment model has continued to support rampant currency round-tripping and accommodates huge liberal forex leakages and capital flight, with CBN’s financially reckless sales of official dollars to Bureau de Change, despite the obvious financial security implications of such practice.
Nonetheless, Ojomaikre and I, refused to be deterred by the unfortunate lack of interest from a government team, that seemed so self-assured in their capacity to properly manage the economy, even when the critical indices of inflation, cost of funds, exchange rate stability and unemployment rates clearly remained out of sync with tested models for sustained, inclusive economic growth anywhere.
Consequently, we proceeded to Channels Television in Ikeja, where we asked to speak to anyone, a progressive payment reform that would revitalize and transform Nigeria’s economy. A copy of our paper was eventually left with the station’s Economic Correspondent. Unexpectedly, barely three days thereafter, the TV station invited this writer to elaborate on some aspects of our paper, which had resonated in that day’s news bulletin.
Curiously, despite the frequency of alternate media invitations that followed thereafter, the CBN, who is invariably the acknowledged villain, in the disruptive and disenabling payment system, that has continued to impoverish us, has kept mute and clearly refused to be drawn, into any debate or explanation of the disastrous anti-people impact of its convoluted monetary strategy that seemed to unduly favour the banking sector and their collaborators, at the expense of the rest of us.
However, in November 2004, this writer was invited to the Vanguard newspaper office, in Kirikiri; it was, certainly my first meeting with veteran journalist and renowned publisher Mr. Sam Amuka, a.k.a uncle Sam, who offered a lunch treat in the staff canteen, before inviting me to write, on those issues that he had seen and heard me discuss passionately and consistently on several media. I, thought he meant a one-off article, but he insisted, despite my protest that I do not have the tenacity and discipline of a regular columnist, that he actually expected a weekly column. I was, probably, flattered by what I thought was blind faith in my ability, but Uncle Sam was sure, I could do it, and it became difficult to refuse. Eventually, my first article “THE MOTHER AND FATHER OF FUEL SUBSIDY,” was published in Vanguard newspaper on 22nd November 2004; the Daily Independent and Punch Newspapers also joined in syndicating the column on 3rd May, 2005 and 23rd December, 2011 respectively.
Regrettably, in spite of over 700 articles in the print media, since 2002, with hundreds of interviews in both print and electronic media and pro-bono presentations to several trade groups, including the NLC, TUC, MAN, LCCI and the Academia, government and its economic team have remained defiant to the call for progressive economic change, even when excess liquidity still remains prominently unyielding; invariably, inflation has also sadly climbed from 13 percent in 2002 to over 16 percent today, while cost of funds to businesses is oppressively well above 20 percent; meanwhile, the Naira is also comatose, with youth unemployment rate, alarmingly, exceeding 25 percent! Will they ever learn?
Nonetheless, it would be a disservice to Nigeria and other African nations with similar liquidity challenge to halt the 15years advocacy for CBN to release its stranglehold monopoly on the foreign exchange market. The thought that this odious deceit and the collateral of extreme mass poverty will persist, is personally heart breaking. I don’t know about you!
Save the Naira, Save Nigerians.