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| CBN Governor, Godwin Emefiele |
We all want freedom, but sometimes when the price is high, we justify servitude. A few western clerics in the slave trade era found portions of the Holy Bible to anoint an economic system that put whites and blacks apart, except when the blacks groaned under the whites.
“When everyone is free, no one is free,” wrote Nicolo Machiavelli, who had no patience for liberty. The notion of freedom has come to play in our economy today. It was easier to define in the Goodluck Jonathan administration because our foreign reserve was robust with the price of oil cresting at $114 for a barrel. Nigerians were free to import as much as we wanted, from Ferrari to toothpicks. We could afford them. Oil dividends glittered in our pockets and lifestyle, although it was mainly the lifestyles of the rich, the footloose political class and their conniving business elite. Day after day, they are making headlines for the billions of Naira they stole in the Babylon the Great of the Jonathan era that has now fallen.
Now the story is different. Nigerians cannot shop on the streets of London or Manhattan with the swagger of a few years back. Their ATM cards may not be honoured. Even their children schooling in the tony colleges and universities abroad are not attending classes because their parents cannot transfer funds. But that is not the only story. Investors are fuming. They cannot buy or sell, and they cannot import even materials they usually ferried into the country like clockwork.
Now here is the grim story. Between June and December 2015, we spent over $180 million on BTA and PTA. The airlines gulped $584 million and school fees lapped up over $284 million. In 2014, the foreign reserves stood at $38.3 billion, while today it is about $28 billion.
What this means is that our unending quest for toothpicks, flowers, shoes, textiles and even imported cowhide known as pomo, has placed extraordinary pressure on our currency and reserves. It is such that we demand about $4.6 billion monthly for foreign exchange, while we only cart in about $1 billion. If we continue this trend, we shall see our reserves dwindle until they crumble. When the price of oil soared, we had no such quandary about whether to import certain items or open our liberal doors.
Now, the Central Bank of Nigeria and the Buhari administration decided to take a few measures. It was to place restrictions on foreign exchange. Many groaned and caviled, and proponents countered with the logic that it was time to rein in our appetite. The alternative: Look inwards.
It has challenged our economists, especially as we see the value of the naira cascade so steeply that at the last check, the naira exchanged at the parallel market for over N300 to a dollar. Only a year ago, we wept when it exchanged for about NI65 to a dollar. In spite of this, the call for devaluation has hit the rafters. But the Buhari administration says no. Devaluation has its costs.
Devaluation will make foreign purchases less attractive because they will be expensive. But it will fire up local inflation and create a social crisis of its own. Many will lose jobs, and those who cannot pay house rents might look glumly into the streets. The scenario appalls the conscience. Devaluation does not also guarantee that we shall rake in enough foreign exchange to shore the present deficit. Countries that work its monetary policies with such confidence do so with the backing of a buoyant economy. But here we rely predominantly on oil for foreign reserves and the price of oil hovers around $30 a barrel.
What this means is that the market is not free even for the rich anymore. If it has not been for the poor, it is even worse now. If we have to buoy our foreign reserves, we have to run a productive economy. We have not been doing. We had oil to thank for that.
The CBN reversed its measures under pressures and allowed the old regime of allowing our companies and individuals buy forex and send them abroad. But it still has its problems. We cannot sell when there is no dollar backing, and we cannot buy for the same reason. As Isaiah says in the Bible, “as it is with the seller, so it is with the buyer, as with the lender, so with the borrower.”
The danger is that we shall have to look inwards. For starters, the refineries ought to be revived locally. In the aftermath of the fuel subsidy riots in 2012, the Jonathan government promised what it called ‘greenfield refineries.” A nifty phrase.
But we had neither green fields nor refineries. Now, importation of refined fuel consumes 40 per cent of our foreign exchange earnings. If we want to free our economy, it is not from foreigners or the west; it is from our greed and lack of planning.
The only way to boost the economy is to focus on what is termed comparative advantage. Already reports have it that the locals have stepped up the output of eggs, rice and other poultry products basically because imports of some items have been discontinued because they endanger our health. Before they arrive here, some of the imported rice is stored in Asian warehouse for years and the poultry products are preserved with the same chemicals used to keep corpses from disintegrating.
The CBN has to keep our foreign reserves from falling, and its quandary between allowing the foreign market to reign or rein in our excesses can only grow.
The world economy is not showing any promise. The U.S. economy stopped bleeding, but its recovery has not led to individual prosperity, and it is the same in Europe. China’s inability to match internal consumption with a sunny endogenous profile has led to negative growth with its reverberations around the world, including Nigeria. We need a Nigerian economy, and that comes when we rely more inwards for what we need than outside.
The irony of globalisation, according to political scientists, is that it has made nationalism more potent. A globalised economy works when a nation prospers within the rubric of laissez- faire. We have to make internal productivity work for us by stressing our areas of strength. The Buhari government’s talks up agriculture but we are still waiting for its blueprint or vision. America and Europe developed theirs. They even over-produce. The U.S. pays farmers not to produce. In our agriculture belt around Benue State, we record phenomenal losses in yams, plantains, tomatoes, onions, etc, because what the farmers produce, they never sell. Yet we import them. Recently, newspapers reported that we import tomato paste worth billions of Naira yearly. Shall we say we have free enterprise? No, we have chaos. By our conduct, we are saying, “flee enterprise.”
It is not free enterprise for the local egg farmer when “killer” eggs are imported to overwhelm nutritious local alternative. When between 2005 and 2015, the nation’s import rose from N148 billion to N917 billion, it is not free enterprise for the locals. It is greed. That is why our forex policy is problematic.
Source: The Nation
