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Spare some kind thoughts for our national economy. Few national economies have been as battered as it is in a blind search for its rebirth; fewer still have been greater victims of economic management experiments, some of them thoughtful and some of them hare-brained; and the combination has subjected its managers to a lot of head scratching.
An economy is a people’s project; its management should be pro-people, not anti-people. By people I mean the bottom 80 per cent of the population at the foot of the demographic ladder. A national economic challenge consists in pulling them up from the bottom rung of the ladder where they merely exist as part of the national demographics, as in population census. It is a challenge our political leaders have not quite faced with consistency and determination. And so, consequently, our country continues to be the world’s poster child for its economic contradictions that befuddle the best brains in the business. A rich but poor nation is a pretty strange human construct.
We cannot run away from the fact that despite some very valiant efforts by its redoubtable managers, no one has put his fingers on what ails our economy. Why is it riddled by inflation running at 24 per cent? This alone is a serious challenge. The World Bank said recently that inflation has added five million more poor people to the 133 million poor we already have. I find that frightening. The higher the inflation rises, the unhealthier our national economy becomes and the poorer our country becomes.
The economy is weakened by the weak and progressively weakened purchasing power of the national currency. You need a basketful of Naira to buy a bunch of bananas. The chairman of the Newswatch Economic Summit, the late Professor Sam Aluko, a while back, told the editors of the magazine that his former students at Harvard told him that the Naira would sooner than later exchange at N1,000 to the United States dollar. Its slide continues unabated, taking the nation down the route we have no business travelling, given our human, natural and other resources envied by many countries. Unbridled stealing, also known as corruption, has compounded the problems of the national economy. This continues to widen the economic gap between our decent, God-fearing men and women and the indecent and devil-embracing fellow citizens.
We still depend crude oil to oil the wheels of our economic development. Crude oil still rules, subjecting the national economy to its global volatility. Gallant efforts to diversify the economy and free the nation from the clear dangers of crude oil dependency have had the great impact of lip service. They have not made the difference in our economic development. We are still what the late General Sani Abacha called a beggar nation with more than $41 billion foreign loans on our heads and the heads of our future generations who must service the loans.
We, certainly, find ourselves in a rather difficult situation. Poverty is relentless; so is the softness in the national economy. Here is one question that this nation and its leaders have wrestled with all these years: what do we do to get our economy right?
It is an easy question to ask but a most difficult one to answer, at least not in the glib manner the men currently strutting the national stage seeking the people’s mandate to serve as president respond to the question. It is too fundamental to be treated like mere politics in the language of politics.
The CBN has rolled out two policies it believes the economy needs at this time to radically improve its health. One, it redesigned the national currency. Not many Nigerians understand the significance of this in the management of our national economy. Will the redesigned N1,000, N500 and N200 notes curb inflation and free the energy inherent in all economic activities? This is purely an elitist response with perhaps reason but no rhyme. The best reason we have heard for this is that it is intended to deal with the wealthy politicians who have stockpiled large quantities of Naira at home to fight the 2023 presidential and other elections. Seems puerile in intent and execution.
The Buhari military administration changed the colours of our national currency in 1984 to stop the Naira from floating around in some European capitals. I think it worked. But no one ever suggested that it improved the health of the national economy.
Two, the apex bank has unwisely cottoned on to the cashless economy as one definitive answer to the problems of managing the economy. It has set a cash withdrawal limit of N20,000 per day or N100,000 per week for individuals. This policy can be easily faulted on several grounds, none of which does credit to the managers in the Central Bank of Nigeria. From whichever angle you look at it as a process of strengthening our national economy, this policy must rank as the most confusing and the most confused by the apex bank in recent times. It drips with sentiments that clearly act against what we require most to radically improve the health of our national economy, to wit, hard-headed economic thinking and planning that help to cut the path through the jungle of contradictions and policy summersaults to an economy with a sense of direction.
The rest of the world may be moving in the direction of the cashless economy, permitting us to indulge in the sentiment that our country cannot be left behind. But it is not wise for a man with a bad leg to insist on running the marathon race against those with two healthy legs. Nigeria will surely and eventually move in that direction and must allow itself to do so on its own terms. There is no time limit for the change. Each country must decide when it is in a position to do so. The developed countries can afford the cashless economy because they have all the necessary infrastructures in place but so far none of has gone that way.
We have no infrastructures that can aid or sustain a cashless economy. This was the point the state governors made this week in their reaction to the rather senseless withdrawal limit the apex bank insists on imposing on an economy run on cash. They argued that the policy will hurt rather than heal the ailing economy. The Nation newspaper of December 18 quoted one of the governors as offering this common-sense view against the policy: “In a country with low access to banks in rural areas and high illiteracy, how do you implement cashless policy?”
It is the question that CBN governors and his battery of economic and financial experts should have carefully considered before arriving at a policy that will ill serve the national economy, the struggling and harassed citizens, and the nation itself. It is the business of the apex bank to set fiscal and monetary policies that are pro-people and pro-economic development.
The point ought not to be lost on our economic managers that the Nigerian economy runs on and is sustained by the informal economy. It has always been so. And that is why 80 per cent of the money in circulation is outside the banking sector. Any radical attempts to change what has become an economic culture and tradition cannot but do great damage to the economy itself.
Human progress is a process. The enterprising woman roasting plantains by the roadside in Lagos is as much an entrepreneur as the wealthy industrialists. She is a creation of the cash economy. Her contributions to the economy may be seen as minimal but it is fundamental because she feeds the hungry poor who cannot afford lunch at a five-star hotel. In her own small way too, her business gives birth to a supply chain from the plantain farmer to the transporter, etc.
The POS business has opened opportunities for private and gainful self-employment for thousands of our young men and women some of whom are university graduates with good degree certificates but no job. The POS is the poor man’s bank in our towns, cities, and the rural areas. It is at the heart of the cash economy. It is not that difficult to appreciate its place in an under-banked country. The rural economy is as important as the city economy. They are partners in our national development. A sensible fiscal or monetary policy should duly recognise that simple fact.
