22nd November, 2011
The reply of governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, to the puerile suggestion of the IMF expert to further devalue the naira was a diplomatic way of calling off the bluff of the financial institution from arrogating to itself, as the only organisation which has the sole antidote to solve the economic problem of Nigeria which it actually caused in the first instance in 1986 and which has refused to abate up till today.
In fact, all Nigeria’s economic woes that have become pandemic was as a result of the stupid acceptance of the illogical proposition of IMF to devalue the strong naira currency.
The so-called IMF financial experts merely used Nigeria as one of guinea pigs to experiment their new found economic sabotage to impoverish those developing countries that acceded to their new monetary policy.
Application of this economic suicide called new monetary policy did not augur well for Nigeria, it was the beginning of the economic meltdown of the country. The devaluation of the local currency was not based on any known international economic indicators as nobody could explain how CBN arrived at the black market price to determine the value and devaluation of the naira.
Everything was shrouded in mystery, Nigeria’s economy was very buoyant in West Africa to the extent that you need not carry dollars to any of the countries because the naira was preferred to the dollar as a medium of exchange, but the wrong step taken to devalue the local currency crumbled Nigerian economy like a pack of cards and it has never recovered since then. Whereas our neighbouring country, Ghana, which also agreed to practise IMF monetary policy had recovered from the economic mess since August 2007.
However, the non-recovery of naira value was the fault of Lamido Sanusi because if the CBN governor had taken to our well-researched advice in a recent article on revaluation of the naira, the Nigerian economy would have long bounced back. We stand by the fact that devaluation of the naira was not based on any known economic indices, therefore, its revaluation could not based on any known economic parameters. Therefore, Sanusi should go back to 1986 to find out the values of one naira and one dollar. That is what the value of naira should be today.
For the past 25 years of devaluation and bastardisation of our good medium of exchange called the naira leading to the destruction of the ebullient and growing economy, the CBN, represented by the then Prof. Soludo, in 2007 thought that by August, 2008 the local currency would regain its proper value. In those days, the naira was acceptable throughout West Africa by traders who preferred to take it instead of the dollar. When we travelled to Ghana or Cote d’Voire or any other country in the 1970s, our traveller’s cheque bore the naira, not the dollar because of its strength. But when the IBB junta came in 1986, it stupidly accepted the Bretton Woods Club’s theory which resulted in the devaluation of the naira, a local currency which is not recognised internationally.
Nonetheless, we were not surprised when Soludo announced that naira and kobo would be restructured and revalued in August 2008, even though he had been cautioned by the power that be, that one year monetarism of the naira would have been belated. It is an economic suicide against the Nigerian nation if Soludo’s proposition was to be allowed to have its way by then. Or how could CBN defend the devaluation of the naira which was not based on any known economic indices since 1986?
Permit us to delve a little bit into the political and economic development of Nigeria since 1986, when IBB started to destroy the fabric of our economy through the devaluation of the strong naira. Megaforce of blessed memory, in his comment in our article to him on Wednesday, 22 January, 2003, on the state of national economy, the Bretton Woods Club of IMF chose Nigeria as one of the soft areas of the world and a foolish country to experiment their new idea of monetary policy and Nigeria was sheepishly ready to swallow, line, sinker and hook, this useless monetary system.
The CBN started devaluating our naira, using black market as yardstick to determine its rate to the dollar. It started the exchange rate of N3 to $1, which was the black market rate. On the second day, the black marketers raised their own exchange rate to N7 to $1 and within three years of the exercise, the exchange rate had become intractable.
It was recently, during the era of Obasanjo, that the CBN had to peg the rate of naira to the dollar, simply because CBN didn’t use any known economic parameter to devalue the local currency. There is no amount of naira you carry to the market that will buy you anything tangible. That is the brand of economy the CBN is operating as at today.
Even the pegging of the naira to N116, N126, N146, N158 to $1 could not hold when the global economic meltdown of 2009 blew its ill wind across the already unstable Nigerian economy.
For the past 25 years, Nigeria has gone through the worst economic hardship. In the beginning, Structural Adjustment Programme (SAP) was introduced which sapped everybody, except those in control of government treasuries. In essence, the adoption of SAP and devaluation of naira and kobo destroyed the Nigerian economy and the result is unemployment of our able-bodied youths, who roam the major streets of Nigerian cities in search of jobs that are not there, while insecurity is feasible everywhere and armed robbers operate with impunity, leaving on their trail, blood of innocent people and police men who they perceive to disturb their operations.
When the PDP president, Obasanjo, took over the mantle of leadership in 1999, he promised to restructure the economy in his inaugural speech. He promised to make sure that the value of naira appreciated considerably. By the time he became president, the value of naira to the dollar was N80. As at today, naira to $1 is pegged at N158, whereas it is about N210 to $1 in the black market, sorry, at parallel market, where you can really get it to buy.
In this circumstance, many small and medium scale industries have been forced to retrench their workers who have to join the pool of jobless able–bodied Nigerians. The big manufacturing companies that manage to continue producing are doing so at low capacity because the quantity of naira needed to import raw materials for manufacturing is not readily available and the little amount available can only be used to obtain small quantity of foreign currency at the black market in most cases. The result is inadequate production of the so much needed goods in the capital market.
The CBN believes that market forces would shore up the value of naira, forgetting that they cannot work in a growing economy like ours and that it is only in advanced economies like USA, Europe, Japan, etc., where people appreciate dignity of labour, unlike in Nigeria, where people are ready to loot the commonwealth for their own selfish interest. Fortunately, the Prime Minister of the United Kingdom was in Nigeria in 1986 when their new economic theory was propounded. She warned the Nigerian government at the Murtala Muhammed Airport that “no nation leaves its economy to market forces and survive.â€
The great sage, Chief Obafemi Awolowo, also warned the government seriously to shelve the idea of devaluation of naira. But like the proverbial dog which will get lost because it will never listen to the whistle of the hunter, they did not listen to him because they are behind black marketers for the regular supply of foreign currencies. The mismanagement of the economy by CBN has led to the devaluation of the naira and hyper-inflation on capital goods in the capital market.
The Federal Government didn’t help the situation as the PDP government of Obasanjo increased pump price of petroleum products 11 times in eight years of his dictatorial rule. All the increases had multiplier effects on capital goods, which also resulted in hyper-inflation. Nigeria had never experienced such economic disaster in recent times, but the CBN continues to assure us that the economy has improved, the GDP has increased and that everything will be alright.
However, a government that cannot provide food for its people cannot guarantee security of lives and property, not to talk of provision of job for the jobless, is not a good government. In short, the monetary system of the last civilian government of Obasanjo has impoverished the majority of Nigerians, while it produced sophisticated armed robbers, who are always on the rampage on daily basis, particularly on banks, attacking policemen and civilians in their dastardly act with great fire power, always leaving the scenes of robberies with pool of the blood of their victims. In addition, assassination of both the lowly and high was rampant in the eight years of the Obasanjo era. During this period of our fledging democracy, the number of Nigerians who died violently are uncountable. All these killings, violent armed robberies, assassination and economic instability, were the end results of the poor economic system being imposed on Nigerians by our past so-called rulers.