In last week’s article, we discussed in detail the operations of a deregulated foreign exchange market; we described the structure of the market and the process for redeeming public sector forex allocations at the commercial banks and subsequent payment for imports of both private and public sector importers.

Certainly one of the most frequently asked questions on the advocacy for the adoption of a ‘demonopolised’ foreign exchange market is how it will operate and the benefits of such a model. Therefore, let us first examine the validity of the advocacy and subsequently define its modus operandi.

These may be troubling times, but may also be seen as interesting times in the annals of our country. Just when Nigerians thought that things couldn’t get much worse after the Xmas Day mindless bombing and ‘mass’ murder of Christian faithfuls in the FCT, seven days later on 1st January 2012, Nigerians were ambushed with over 100% increase in pump price of petrol.

I am amazed and saddened by the theatrics of the government team as they push for adoption of subsidy removal by Nigerians. The tragic cast could be contenders for Nollywood Oscar Awards for superb acting skills.

It would be mischief on the part of this column if we subscribed to the bandwagon of elitist Nigerians whose stock in trade is the creation of false hope of a better year ahead at the end of every dismal year…

President Goodluck Jonathan presented year 2012 budget proposals to the National Assembly barely a week before the Christmas recess! Incidentally, the 2012 budget is the first budget crafted on the foundation of the transformation agenda “which spells out the strategic direction of Jonathan’s Administration”.

In spite of former President Obasanjo’s intimidating presence, his attempts to deregulate the pricing of petroleum products (particularly P.M.S./petrol) hit a brick wall. Consequently, the value of subsidies has steadily increased from less than N100bn a year to over N1,000bn, and may exceed 20% of the proposed 2012 budget according to media reports.

Nigerian housewives know too well, that sinking feeling when all items on the household shopping list cannot be covered by the regular budget. Our womenfolk have since become past masters (or mistresses) of the rigours of creative adjustment.

It is clear that CBN’s current monetary framework has expectedly failed to induce price stability, which is its core mandate, as per the 2007 CBN Act. It is clear that an MPR of 12% is relatively very high, and would predictably instigate high double-digit lending rates; that cannot stimulate economic growth.

“Six years after scrapping toll gates on major high ways, the Federal Government is to reintroduce them to raise funds for road maintenance in the country”. The preceding is the opening paragraph of a report titled “FG to Reintroduce Toll Gates, Fuel Tax” on page 15 in the Punch edition of 30/3/2010.

Parenthetically, calculate the successive unsolicited and unrepaid CBN loans to the three tiers of government over the years and it becomes clear that Nigeria in reality is several times more indebted than Greece.