“Nigeria cannot attain its true potential by simply importing everything.”
…At some point, we have to all decide what we really want for our country, and I believe that the time is now right for that deep and honest conversation” -CBN Governor Mr. Godwin Emefiele
‘The process by which banks create money is so simple that the mind is repelled’- Kenneth Galbraith, American economist
The ever worsening crisis of confidence within the ruling political party, APC, naturally captures public imagination. It seems for now it is politics or nothing! Indeed any reflection on the state of the economy seems a tall order. As the Amricans would put it; it’s the Economy, Stupid! Yet the point cannot be overstated; Nigerian economy faces crisis of capital inadequacy or simply put, shortage of scarce foreign exchange. In recent times, the value of Nigeria’s external reserves, has been on the downswing. The external reserves fell below the $30 billion mark to $29.865 billion as at March 25, 2015, according to latest Central Bank of Nigeria’s (CBN’s) figures. There was once a Nigerian econmy of 50 dollars external reserves! No thanks to reckless prolifigacy and wholesale imports financing from petroleum produts imports to tooth picks. There cannot be a better time for capital control than now. It is either Nigeria further devalues already devalued Naira to sustain the existing level of mutually destructive imports or CBN rises to its statutory responsibility to control the application of limited foreign exchange as part of the overall development financing strategy of the country. Development observers hail the recent measures announced by the CBN Governor Mr. Godwin Emefiele in managing the scarce foreign reserve through foreign-exchange restrictions on scores of frivolous imports. According to the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, in order to reduce the pressure on the naira while preserving external reserves, importers of some 40 long items comprising private jets (haba!) to rice, wheelbarrows and Indian incense, Geisha (canned fish) and toothpicks, to eggs, toothpicks, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products must henceforth source their forex requirements from private channels or the bureau de change (BDC) segment of the market instead of interbank transantions.
In a statement on Wednesday, Emefiele said the country spends an estimated N1.3 trillion on items that could be manufactured locally, “adding that Nigerians need to have a soul-searching conversation on the impact the import regime has on the economy in the areas of industrialisation and job creation”.
Paradoxically the money market operators and bankers who are declaring prohibitive profits through non-value-adding wholesale imports have risen to shoot down a worthy intervention of the CBN to rescue the econmy.
For instance, the Managing Director and Chief Executive Officer of First Bank of Nigeria Limited, Mr. Bisi Onasanya, in opposition to CBN’s exchange control said that Nigeria needs to let the naira devalue. According to Onasanya who spoke during an interview at a Bloomberg conference at the Nigerian Stock Exchange in Lagos yesterday, “People just don’t believe the Central Bank of Nigeria (CBN) has what it takes to sustain the exchange rate at the present level. “The market needs to reopen. You cannot peg the naira at a level that the whole world knows is unrealistic.” The critical question is; what will be the “realistic” of Naira when at average N200 to a dollar we are told is not “realistic” enough? At the current Naira devaluation of 18 percent against the dollar, the wage income of millions of workers (many with unpaid monthly salaries) has been grossly eroded. Devaluation has indeed increased the cost of domestic production, fueled price inflation and undermined the competitiveness of locally surviving industry leading to loss of existing few jobs. Market market operators like Mr. Bisi Onasanya should not usurp the legitimate functions of the Central Bank of Nigeria (CBN) as the regulator through unhelpful policy dictatorship. CBN should reject the least resistance of unhelpful option of further Naira devaluation. In addition the new administration of President Buhari should compliment the CBN. With proclaimed empty treasury, falling Naira and dcelining external reserves it’s time we put import ban on goods we can produce at home. Indeed there should be a concerted efforts to encourage domestic production, reduce drastically imports so as to create jobs for the millions of the unemployed. It’s also time we redirected our banks from financing underdevelopment (read; frivolous imports!) to development ( read; long term domestic investment!). Our existing delinquent banking which rests on twin legs of government deposits and foreign exchange “round-tripping” with political solutions to bail them out in case of distress is certainly mind-boggling and could have bewildered the American economist Galbraith the more if he were to be alive today. Short term frivolous financing of imports of consumables such as fruit juice, biscuits by the banks are domestic equivalents of terror financing which is wrecking havoc in terms of undue pressures on Naira value, domestic factory closures, mass job losses.
Issa Aremu mni
