By Les Leba
The Senate President, David Mark, while declaring open a joint public hearing on a bill for an Act to establish the Asset Man Corporation of Nigeria (AMCON), accused Chukwuma Soludo, the former CBN Governor of misleading the National Assembly on the true state of health and security of our banking and capital markets.
Sen. Mark did not, however, on the above occasion confirm whether Soludoâ€™s assurances of the soundness of these institutions were the result of a calculated attempt to deceive or if the assurances were made by the erudite professor from the disadvantaged position of genuine ignorance of the highly fragile actual reality on the ground.
Soludo has since feebly responded that he did not mislead the Senate in any of his presentations on the economy!Â However, millions of Nigerians would testify that they saw and heard the erstwhile CBN Governor on TV and radio confidently assuring us that the Nigerian economy was immuned from the global meltdown.
Only a few months before the requirement for common year ends exposed the ugly derriÃ¨re of the fowl and upturned the delicately balanced applecart, Nigerians recall that Soludo also went on to claim that Nigerian banks were stronger than ever before!!
Senator Mark recalled that on at least three occasions, the former CBN Governor painted a rosy picture instead of the reality of the destructive thorns in the undergrowth.Â The question we may ask at this juncture is who is deceiving who?Â Can Senator Mark in all honesty claim to have been really mislead or deceived by Soludo on each occasion?
Nigerians are, of course, aware that both the Senate and the House of Reps have on their payroll several professional advisers on matters relating to all facets of the economy.Â Among these advisers, presumably are tested hands and eminent academicians and technocrats, who are paid handsome salaries and perks from taxpayersâ€™ money.Â Were these experts all mislead by Chukwumaâ€™s oratory and wizardry?
Or did the experts and advisers decipher the embellished CBN presentations, but their bosses, our eminent Legislators, refused to countenance any opposition canvassed against Soludoâ€™s mirage?Â Someday, the truth maybe revealed in memoirs of participants in this show of shame!
It is pertinent at this point to also question why the 30 or more PhD Economists employed by the CBN , a year or so into Soludoâ€™s tenure, also failed to read the handwriting on the wall, especially with regard to the banking sector and the capital market!
Some critics would demand that these â€˜cerebralâ€™ CBN staff refund all the juicy salaries and perks they earned during those years as they undoubtedly failed woefully to advise Chukwuma Soludo, a celebrated Prof of Economics, himself, on the true state of affairs before he went before the Senate on at least three occasions, according to Sen. Mark to deceive the â€˜electedâ€™ custodians of our democracy!
But, can it be really true that the Senate president and other Senators and over 300 members of the House of Reps, their â€˜scholarlyâ€™ advisers and all the brains in the Central Bank were all caught napping because of lack of knowledge?
Of course, the defence of lack of appropriate knowledge will fail hopelessly if it can be demonstrated that analysis from independent and patriotic critics were already in the public domain to show that CBN â€™s stewardship over the last three decades (i.e. including the tenor of the current incumbent) has been firmly rooted in deceit, and reckless and suicidal monetary policies, such that make the achievement of the CBN â€™s core mandate of price stability totally impossible!
The evidence is there for all to see.Â Nigerians who are old enough to know will confirm that life was much better for our countrymen between 1975 â€“ 77 when there was a prevailing enabling environment of low cost of borrowing, minimal inflation and a strong and very stable naira!
In other words, records show that inflation has ravaged and rubbished the dignity of millions of Nigerian income earners, and industry continues to contribute less and less to Gross National product!Â Meanwhile, in spite of the enormous growth and expansion of the CBN and banks, Nigeria â€™s economy is yet to be healed with the appropriate tonic!Â The above reality should not be strange to any regular patron of this column â€˜Rational Perspectivesâ€™ over the last six years or so!Â In other words, it is likely that members of the Legislature, particularly those committees relating to banking and finance and the economy and all the eggheads and technocrats in the CBN and indeed the presidency do not read Les Leba!
Articles such as â€œBanks and Fraud Incorporatedâ€, â€œBanks and Money Launderingâ€, â€œHow the CBN Engineers Poverty in Nigeriaâ€, etc would have educated these eminent Nigerians, who control our lives and our welfare to retrace the path of monetary policy management to arrest the decline in CBN â€™s ability to achieve economic price stability.
The Federal Legislature would also do well to study such articles as â€œNational Assembly Fiddles as Debt Burden Cripplesâ€, â€œIncreasing National Debt: NASS Bewareâ€, â€œAn Economy on the Brinkâ€, etc. (All quoted articles can be found at: www.lesleba.com).
In view of the multiple exposures given to above articles in at least two respectable national dailies and the internet, it would be a surprise if the clarity of the analysis and confident predictions which have become sadly prophetic, have not been brought to the attention of these eminent public servants.Â Â In any event, on our side, copies of our paper XXâ€A Liberalised Foreign Exchange Market: a proposal for a liberalised foreign exchange market in Nigeria and its economic benefitsâ€ _ Boyo/Ojomaikre,XX which encapsulates the thrust of our advocacy for a redeeming monetary policy management were sent free_of_charge to strategic committee chairmen and other members in the Federal Legislature and some FEC members!
Former Governor Soludo has at least two copies of that paper, and so also does Lamido Sanusi, the current incumbent top Dog at CBN !Â I am also aware that both eminent Nigerians regularly acquaint themselves with the content of this column.Â Inexplicably, there has been no public rejoinder from any of these quarters and no serious countervailing or plausible argument has been put forward to shoot down our observations and proposals for a rapid and sustainable revival of the economy.
Thus, it would be difficult for all the stakeholders mentioned above, including Senator Mark, who pleaded â€˜deceitâ€™ on the part of Soludo for the Senateâ€™s inability to arrest the decline of the banking and other financial sectors before the deep rot set in with serious consequences for our economy and our people.
A colleague with whom I discussed the possibility of lack of knowledge being the factor responsible for the acquiescence of the Federal Legislature to the obvious shenanigans of CBN â€™s monetary policy management, uncharitably took a jibe at me for being so gullible!Â My friend is strongly persuaded that the CBN and the Legislature are working in concert just as the members of both houses actively collaborate with other â€˜lucrativeâ€™ parastatals like the Works Ministry, Defence, NDDC, etc.
My friend believes that these parastals are called on from time to time to provide funding for members of the various legislative committees responsible for oversight functions.Â It becomes unlikely in these circumstances that any serious scrutiny or appraisal of the operations of any of these parastals will be made by the Legislature!Â I cannot vouch for the veracity of my friendâ€™s observation, but he insisted that the Legislators were no fools and certainly not as gullible as to be readily misled by Soludo asÂ Senate Mark claimed.
My critic also noted that there was nothing really novel about this, and indeed recalled â€˜media reports that the CBN â€™ under Soludo had also early in his tenor given N50m of tax payers money to members of the Committee responsible for oversight functions on the CBN !
Anyway, in order to ensure that all stakeholders are on the same page with regard to the reality of monetary policy management in Nigeria, I will conclude todayâ€™s article by identifying contradictions between beneficent government objectives and the destabilising and socially destructive results and hope that the attention of all critical stakeholders will be drawn to the resolution of these anomalies so that CBN can succeed in its core mandate of price stability and our economy will be stimulated to grow with salutary impact on the social welfare of our people.
First, let us question why the nairaâ€™s rate of exchange is currently N150=$1, in spite of healthy reserves of almost $40bn, and why the naira rate fell to N120=$1 when we had reserves of over $60bn, which provided imports demand for over 36 months, according to CBN in 2007 â€“ 8, while naira exchanged against the dollar at $80=$1 in 1996 â€“ 8, when we had just four monthsâ€™ imports demand cover with our paltry reserves of $4bn at that time.Â It is pertinent to ask why increasing dollar reserves lead to a weaker naira rate and higher fuel prices locally.
The senate and other stakeholders may also wonder why CBN blames excess liquidity (surplus cash) in the system as a burden, when it also cries out that the banks do not have enough liquidity to lend to the real sector, but seem to have a bottomless pocket for onward lending to government, such that after 3 â€“ 4 years, the nation now owes the banks, primarily, close to N4 trillion.
Why, we may also ask, is there such a huge disparity with CBN â€™s monetary policy rate at about 4% while industrialists borrow at over 24%?Â Indeed, how can we preserve price stability with CBN â€™s injection of over N600bn into commercial bank coffers, and another N500bn promised for power infrastructure after the controversial movement of yet another N200bn allocated to agriculture?
All these injections can only lead to inordinate increase in money supply and worsen the scourge of excess liquidity in the system with the perennial mop up and attendant cost, which will provide income of close to N500bn to the commercial banks as per the 2010 budget!Â Why, we may also ask, should the CBN in contravention of Section 162 of the Constitution, continue to capture our nationâ€™s export dollar revenue and substitute increasingly worthless naira to states and local governments while selling over $2bn every month to bureau de change (BDC), in spite of BDCâ€™s recognition as conduit for the dollar requirements of money launderers and smugglers, whose activities kill Nigeriaâ€™s industries?
Many more of such contradictions exist; now Senator Mark cannot once again claim to be misled if the senate fails in its duty to halt the continuing decline of our people into the pits of poverty even when we earn more export revenue than ever before!Â History may not judge him and the Legislature as true patriots!
SAVE THE NAIRA, SAVE NIGERIANS!