BY DELE SOBOWALE

“The difference between “command” and “convince” is the difference between democracy and dictatorship.

Saul Bellow in HUMBOLDT’S GIFT.

One of the greatest mistakes ever made by people in a fledgling democracy like ours is to assume that the freedoms which constitute the real dividends of democracy start and end with the abolition of political tyranny. Indeed, democracy, if it were to deliver its majour benefit which is freedom must include religious, social, intellectual and economic freedoms as well.

Nigeria has performed relatively well in delivering the profits of democracy in areas pertaining to social, intellectual and religious liberties. Some might even raise queries regarding right to religion which in some instances has almost turned to licence.

Little attention had been paid to the growing trend towards what can only be called economic czarism characterized by the almost totally unchecked intrusion of the Central Bank of Nigeria into economic lives in ways totally unprecedented in our history in Nigeria and in the annals of free nations worldwide.

Once upon a time, few school children, even in the best secondary or tertiary institutions, could recall the name of the Governor of Central Bank of Nigeria.

So self-effacing were the occupants of that exalted seat, which combines the roles of financial adviser to government and financial institutions, monetary policy maker and that of director of economic espionage, that the typical central banker in the country was seldom seen or heard in public.

Millions of dollars up to the 1960s; billions up to the year 2000 and now trillions were subject to any statement made by them for good or for ill.

Before the world became a small village, thanks to globalisation of markets and the internet, the Governor of a Central Bank could cause panic in the financial and capital markets simply by announcing that he caught the Asian flu within months in the 1960s; within weeks in the 1980s; within days in 2000 and in less than five minutes today.

Consequently, as central bankers have increasingly become as exposed as fish in an aquarium, their need for seclusion has never been greater. In the past, central bankers crawled out of their “holes” periodically to deliver well-crafted addresses designed to render reports to the citizenry, primarily, and the world at large, secondarily, to assure that all is well with the economy; that is, if all is well.

In times of crisis, the thrust of the message aims to reduce panic and to inspire confidence by re-assuring all the stakeholders that the situation is under control even if they were not so certain themselves.

Irrespective of the situation, in prosperity and in times of crisis, the central banker was and is always expected to be circumspect with his utterances few as they traditionally are. And in Nigeria, it was so until Chief Joseph Sanusi departed giving way to Professor Chukwumah Soludo.

The era of “front page” CBN governor started with Soludo; who craved the limelight almost as much as any actor or Lady Gaga. From the time he shocked Nigeria and the world with his, now largely discredited, banking consolidation initiative, till the end, Soludo was good copy virtually everyday. For the first time in our banking history, monetary policy was being conducted in the open.

Also for the first time in our history, the Governor of Central Bank, CBN, overshadowed the Federal Minister of Finance. Even those of us who could not name the CBN governor in 1960, even at gunpoint, knew that the Minister of Finance was Chief Festus Okotie Eboh.

Like most innovations in social, political and economic behaviour which were never collectively agreed upon or questioned when they first appear, the emergence of the activist CBN governor went unnoticed. That some of the activities and utterances of Professor Soludo encroached on the prerogatives of the office of the Finance Minister was ignored.

Two examples will suffice to illustrate the point; because of the undisclosed enormous costs to the nation. Soludo, almost single handedly, re-introduced coins in several denominations and backed up the initiative with a multi-billion advertising blitz (“Give me my change, sharp, sharp! Etc).

Today, nobody knows where those tons of metals (they became merely decorated metals once they were rejected by the people) are kept or what became of them. Similarly, the decision to re-decimalise our currency which he announced at a well-attended World Conference on August 14, 2007, at the Central Bank Auditorium, was greeted with alarm by the Federal Government. It almost cost Soludo his job immediately; but it set back the country several billion naira ultimately because the measure was declared “dead on arrival” by the Federal Government.

Was the fault Soludo’s solely? Certainly not! The Federal Government, at the time, and the Nigerian financial elite; meaning experts, academicians, and even media; who should know better, either out of timidity, or indifference, or the need to avoid picking a fight with a potential source of lucrative contracts, ignored the dangerous phenomenon. No Minister of Finance raised alarm that a “poacher” was running loose on his turf.

Economic policy in any modern nation rests on two majour pillars fiscal policy and monetary policy. Ideally, the two would need to be integrated for optimum results to be achieved.

Fiscal policy deals with the regime of taxes, levies, expenditures designed to promote social, political, religious and economic welfare of the people irrespective of whether it involves a surplus or a deficit. Monetary policy focuses on the money supply with three primary objectives in mind.

These are: exchange rate moderation; control of interest rates and, as much as possible, achieving full employment. Fiscal policy, invariably, belongs in the portfolio of the Minister of Finance, while monetary policy is the stamping ground of the Governor of Central Bank. The Presidency, ordinarily, should be the mediator whenever the two leaders cannot agree on how to proceed.

What is globally forbidden is for the Minster of Finance to pronounce on monetary policy without consultations with the CBN governor; or for the CBN governor to encroach on fiscal policy without permission. That unfortunately is what started under Soludo, and that is what is happening now. And unless we put a stop to it, the consequences would be dire.

The late Justice Louis Brandeis, 1856-1941, the first Jewish Associate Justice of the United States Supreme Court, 1916-1939, once said “difficult cases make bad law”. So let me start the inquiry into the activities of the present CBN Governor by citing a “difficult” case to illustrate the dangers we face by allowing unlimited encroachment of the Governor of Central Bank into areas of fiscal policy.

Notwithstanding the recent awards conferred upon him by several organizations, we need to remind ourselves that the same organizations conferred awards on Soludo and Mrs Cecilia Ibru before everyone knew better. We need not be deterred in our inquiry by trophies and medals.

The “tough” case was the CBN governors pronouncement about the percentage of budget which the members of the National Assembly, NASS, have cornered for themselves.

Every “activist”, and even some terrorists, know that the easiest way to get applause is to tell people they have not been well governed even if the evidence to substantiate it is flimsy.

The Governor of Central Bank in that case started by getting his facts wrong! But, never mind, the NASS being generally disliked, and the people looking for people to crucify, applauded the CBN governor and carpeted the NASS for daring to ask him to prove his claim! Knowing that he had the frenzied populace behind him, Sanusi went into the NASS chambers and bluffed his way out of what amounted to intellectual embarrassment. That is the stuff of which demagoguery is made….