By Kunle Oyatomi
My very good friend Jimoh Ibrahim once suggested that the Central Bank should print new money to bail out the economy from itsÂ credit and cash crunch.
I am aware that Jimoh is not an economist but he has recorded such huge success in business that he could be considered an â€œauthority by practiceâ€ on economic and money matters.
There would have been no need for me to make public reference to Jimohâ€™sÂ â€œadvocacyâ€, but for the fact that governor of the Central Bank, Mr Sanusi Lamido Sanusi, has gone public to make his decision known that he will do what Jimoh Ibrahim had suggested – print new money to bail out the economy.
Like Jimoh,Â I am also not an economist, but based on the experiences of other African countries that have gone that route, I find it uncomfortable to buy into that risk.
In the days of Idi Amin, Uganda took the risk of printing new money to bail that countryâ€™s economy out of the doldrums. The exercise backfired so catastrophically, it has taken Museveni over two decades to right the disastrous consequences.
Robert Mugabeâ€™s Zimbabwe is still stewing in the fire of economic wreckage which was exacerbated by the decision of that countryâ€™s Central Bank to print new moneyÂ for the economy to bounce back. Each time Zimbabwe printed new money, the countryâ€™s currency dropsÂ in value. Today the Zimbabwean dollar can buy nothing anywhere in the world except in bales of the currency to buy a hamburger.
So the argumentÂ that Britain and America or any of the countries of the G8 decided to print money to get out of recessionÂ is no justification for us to do the same at this point in our own economic crisis. Our economy does not have theÂ strength to absorb such risk.
The economy is in tatters, the infrastructure which can be relied upon for growth is non-existent, or is, at best, in a hopelessly badÂ shape. Where then is the back-up for such an exercise? This is too dangerous a risk to take.
And talking about risks, I understand that Sanusi is an expert in risk management. That is splendid, but his first risk-management portfolio as Central Bank governor is already turning problematic. The turmoil that exercise is already causing in the economy was least expected. His choice of options in the banking crisisÂ appears to be springing backwards, if not already counter-productive.
With hindsight, it would appear that Sanusi has used a sledge hammer to kill a fly and in the process has smashed into smitterings the glass table on which the fly was standing. Now, that action has created a bigger problem; how to fit the broken glass together again. As a layman, I beg to disagree that the best option now would be to print new money. It is likely to send a more terrible signal out, worse than what occasioned Sanusiâ€™s â€œdamage controlâ€ trip to London, in the firstÂ instance!!
Now, we are beginning to get a sense of fear that,Â afterÂ all, this crisis in the banking sectorÂ could have been handledÂ more skillfully to avoid the so-called tsunami that is doing so much more harm than good. We appear to be confronting a paradox here in which the best of intention is turning out to be a disaster. It could be that Sanusiâ€™s actions were not thought through scientifically before it was executed.
Perhaps the public exposure of the crisis, through the demonstration of the banksâ€™ CEOs and directors, would have been done as an internal exercise. AfterÂ all,Â the crime of these executivesÂ are no less severe than the crime of bankers in the developed economies that crashed recently. Isnâ€™t it reasonable to ask ourselves why these countries did not sack a single bank executive in spite of the magnitude of their perceived crimes? The case of a better choice of options?
Perhaps the statement of Ben Murray-BruceÂ of the Silverbird Organisation would give us some food for thought.
While opening the Silverbird Entertainment Centre in Abuja on Tuesday,Â Ben Bruce expressed his gratitude to Union Bank for the help it gave Silverbird Organisation in completing the Murray- project. And, for thoughtful effect, he said;
â€œI am saying this because they (the Union Bank) are facing some problems; but they helped financed this project. I thank them very well.â€
Does that tell you the reader anything?