Nigeria’s economic resurgence cannot occur within the IMF exchange rate determination model. To revive the naira, what is needed is a recalibration and pegging of the naira at a predetermined value and necessary policy framework to enable it sustain its pegged value in the open market, coupled with controlling government expenditure levels, reasonable import control policy and immediate stop to sharing funds to other tiers of government in any other currency than the naira.We must also first develop a national, disciplined culture and strong regulatory institutions as foundation for efficient market driven capitalism.
Historically, the fate of the naira is intrinsically tied, not to free market forces or crude oil price, but to the level of corruption in the government of the day and the concomitant consumption indiscipline of Nigerians at the time. In the instant case, naira finally plunged steeply when the craze of looting it to buy dollars in order to hide the loot got out of hand. It is not true that the recent plunge in the value of the naira is due to the fall in crude oil prices.
The fact is that since Nigeria swallowed the IMF and World Bank pill, naira has been on continuous depreciation over the past 30 years, from N5.00 to a dollar in 1986, to around N250.00 to a dollar in 2015, regardless of crude oil price or the volume of dollars we earn. For over 10 years prior to IMF model, naira exchanged at a pegged rate of 68 kobo to a dollar. Naira remained at N85.00 to one US dollar all Gen. Abacha years, despite low crude oil prices because he limited treasury looting to himself. But as the loot circle increased under President Obasanjo, the naira depreciated to N110.00 to a dollar despite improvements in oil prices until he put the EFCC to check corruption and the slide halted, and naira recovered and exchanged at about N105.00 to one dollar.
Conversely, despite high oil prices that created unprecedented foreign exchange earnings over the past eight years, the naira has been steadily depreciating from N110.00 to N158.00. The IMF-dictated depreciation of the naira is the cause of the slow industrialization of Nigeria over the past 30 years compared to the industrialization momentum in the 1970s when the naira was pegged and defended by policy. When a currency is on a continuous depreciation path as the naira has been for 30 years, there is no confidence in saving in it as a long term store of value. This sabotages internal capital formation capacity and creates a situation where long term capital projects cannot be funded from local household savings. The country is thereby tactically reduced to a consumer of imported manufactured products.It requires thinking outside IMF and neo-economics theorists’ circle. It takes political courage to break out of this economic bondage. India and others did it.
Please reject it and all advice for either devaluation of the naira or surrendering its fate to market forces. It will never recover or stabilize; as you can see from the data above. In fact, it is immoral to do so. It suggests mindlessly impoverishing millions of ordinary Nigerians to pay for the sins of treasury looters. As has been stated, the value of the naira was stolen by treasury looters who could not care how many tons of it they dumped in the forex market in exchange for a few ounces of US dollars. They could not care because it was stolen money, not worked for. The effect of their criminal callousness is that a year ago, the ordinary Nigerian whose saved life toil was N70,000.00 (seventy thousand naira), had a free market value equivalent of almost $500.00 (five hundred US dollars) for his life toils in his account. Today, it is worth just about half of that.
The only crime he committed is that he left his money in naira, the national currency of a country ruled and managed by elected and appointed rogues and their collaborators who simply stole the value of his toil and left him with papers whose future value is totally unpredictable, if something drastic and creative is not done. The massive impoverishment that follows means that ordinary Nigerians are no more in a position to afford in 2015 the few basic things for their families as their counterparts in Kenya, Cameroon, Ethiopia, Zambia and even Burundi could afford in 2014. They are economically disempowered and set back by government.
This is exactly what devaluation means to the ordinary hard working men and women. If the Nigerian government cannot protect the hard earned wealth of its citizens, then of what use is it? A return to currency control is not the answer either, because it will unavoidably breed its own brand of corruption both at the CBN and the commercial banks. Nobody should dictate for the other in 2015 how he should spend his honest income, where or in what currency. Telling Nigerians that they cannot operate domiciliary accounts funded locally is retrogressive. The problem is to stop theft of public funds, not how people choose to spend their legitimate income. Many Nigerians do not want to go through the frustrating experience of trying to source a few thousand dollars from CBN to pay their children’s school fees and other personal expenses.
The first step to take is to embark on total war against all the criminals who have looted the treasury over the past 16 years and recover the loot. Mr.President, in the world’s economic intelligence institutions and circles, it is well known that our problem is moral. Any time we talk of our economic problems, the international watchdogs and financial institutions diplomatically reel out the names of Nigerian leaders and officials (and their business surrogates) who have several billions of dollars siphoned from Nigeria into foreign banks. Let me also respectfully state, Sir, that let bygones be bygones will not cure or deter the mental disease of kleptomania in Nigerian leaders.
Nigerians expect no less from you than a Jerry Rawlings, but to do so through constitutional due process of law. Anything short of that is a dereliction, a moral abdication and political betrayal. Those who voted for you did so mainly because they want a once and for all thorough cleansing of the moral decay epitomized by impunity of corruption across the land. The last cleansing of the Nigerian Augean stable was after Shehu Shagari Administration.Thereafter, every other criminal has not only escaped justice, but was allowed to keep his loot; thereby enabled to use it with impunity, dictating what the rule of the road should be for his puppet successor which he often hand picks. And the chain continues unbroken, but rather gets stronger and worse with each succession. This is also exactly what happens at the states tier. The impunity is such that in many states, governors did not just steal every penny in the treasury, but they also cornered and stole future federal allocations for their states by borrowing them in advance from colluding banks as high interest loans, knowing the incoming governor will shut up. In one state, a fraudster used his loot to buy votes and was thereby able to impose a kleptomaniac as his replacement (2007 – 2015) who, having learnt the game, looted even more than his predecessor in office and left the state with more debts than he inherited.
Mr. President, let me categorically state that as much as Nigerians wanted autonomy of the states, nobody expected it to degenerate into governors becoming overlords with absolute power over their fiefdoms. Nobody opted for a situation where members of a governor’s family controlled public policy and funds.
Nigerians wanted local governments as a vehicle for addressing local problems. Nobody wanted its budget to be the pocket money of governors. As much as Nigerians respect the doctrine of fiscal federalism, nobody wants it to mean that governors shall be allowed to run amock with the sums allocated to their states from the Federation Account without accounting for it. Nigerians understand that some degree of immunity is necessary in order to enable state executives to function without being distracted by frivolous law suits, but no one wanted it to mean acts of criminal impunity being unchallengeable. As much as Nigerians crave democracy, no one expected the level of corruption and callous impunity in the National Assembly. All these reckless perversions are not what the relevant constitutional provisions intended and the constitution avails no cover for such criminals. They must be tried and punished. Loot recovery should be priority number one to revamp the economy and give value to the naira.
By providence, there is an enabling legal precedence for you to stand on to democratically cleanse the Nigerian Augean stable from top to bottom and from left to right without violence to Due Process or Rule of Law. In bringing the then Vice President Jonathan to act as president where there was no handover as provided by the constitution, the National Assembly imported or invented the doctrine of necessity on the rationale that a national crisis shall be averted by whatever means necessary, even if such means are not specifically provided for in the constitution.
Today, corruption has created a national economic crisis that is ravaging the lives of millions of Nigerians and menacingly reducing the naira to the fate and status of the Zimbabwe currency if something drastic is not done. Given this threat to national economic security Mr. President, it would be perfectly justified to invoke the very same doctrine of necessity by our Judiciary borrowing anti-corruption measures democratically promulgated as part of the laws of any country to compliment ours.