By Dele Sobowale

“Allow an untenable situation to go on for too long; and suddenly, there are no good options left.” Arthur Burns, 1904-1987, Chairman US Federal Reserve Bank from 1970-1978.

For some of our readers, it is necessary to point out that the US Federal Reserve Bank is the Central bank of the United States; and the Chairman is the equivalent of our own Governor of Central Bank of Nigeria, CBN. Having a good hand in charge of monetary policy in any country at any time is important. However, these are times that actually try men’s souls. 

A competent Governor at CBN is more vital than even a president now. That was why I was alarmed when absolute economic illiterates and political slum gutter dwellers tried to stampede Godwin Emefiele out of the bank with the dubious promise of making him President. 

My article titled GOVERNOR EMEFIELE, STAY AT CBN TO THE END, published in late February this year was meant to save Nigeria from a worse calamity than we are inevitably going to experience this year and next. It was also meant to warn Mr Emefiele against the tricks of political hustlers; who only wanted to separate him from his money. 

He ignored my advice at first; but thank God, he now knows who his true friends are. He would never have clinched the presidential ticket of the All Progressives Congress, APC. Certainly, not after it was revealed that he was a card-carrying member of the party all along. His reputation is stained, but he is still the best CBN Governor we can have right now. 

Throwing the baby out with the bath water is not wisdom. I am happy to see him still at CBN.

Furthermore, I am aware that those who had grudges with him will take the opportunity of his mis-step to now attack him unfairly. Undeniably, all the economic indices – inflation, exchange rate, interest rate, job creation, balance of trade etc — by which the success or failure of monetary policies are assessed are not favourable. But, the CBN is as much a victim as the rest of Nigerians. We don’t have a Federal Government which can formulate and implement sound fiscal policies. 

The CBN Governor is forced to do his job as well as those of the President, Vice President, Minister of Finance and Agriculture. Under such circumstances, something has to give way. Right now in Nigeria, everything is giving way. The economy is on auto pilot and falling freely.

Most people ask why the CBN is not doing something; specifically, they wonder why the exchange rate keeps going up. The answer to that is very simple.

CBN can’t print dollars

“You can’t give what you don’t have.”

As the exchange rate escalates and the gap between the official rate and parallel market rate widens, many individuals and organisations, including those who should know better like the Manufacturers Association of Nigeria, MAN, are turning to the CBN asking for relief.

 They will get none from the bank; because the bank has nothing to give other than what it has been offering. The Central Bank in any country cannot print dollars at will. 

At worst, it can print its own currency and flood the economy with it. But, dollars, it cannot print.

Naira devaluation can only be halted when the following things occur – not necessarily in the same order. First, the FG should start executing its 2022 Budget as presented to the National Assembly, NASS,and passed into law through the Appropriation Bill. 

That budget was based on crude oil exports of 2.3 million barrels per day. Those of us who raised objections that the figure was unrealistic were ignored as usual. Well 2.3mbpd of crude meant that the Executive branch promised to deliver so many dollars to the Federation Account. The NASS which actually has the constitutional power to query the bogus figure failed to do so. Crude oil export remains our major source of foreign exchange. That is the estimate on which the Presidency and the NASS should be more truthful. Instead, it was the estimate on which they were very irresponsible. They promised dollar inflow which the country could not generate.

Stolen crude means dollars not earned by FG

“Nigeria loses N1.22tn to deficit oil production.” Report May 9, 2022.

“Scandalous oil theft: Nigeria loses N3.038tn in one year.” — Report May 15, 2022.

Those two reports in May summarise how and why we are in our current predicament with respect to exchange rate. They point to the millions of dollars which the CBN needs to operate sound monetary policy; but, which the bank has not received and might never get.

Instead of 2.3mbpd, Nigeria has been averaging 1.5mbpd crude production. That is bad enough. A lot of the crude oil produced is stolen, sold and the dollars accumulate into private pockets. Problems of low production and massive theft are not for the CBN to solve. They are for Buhari and Osinbajo to address urgently. Instead of facing the jobs for which they were elected, the President and Vice President are spending our time and resources playing politics. 

The Governor of the CBN cannot complain publicly because he had made a cardinal error of allowing himself to be co-opted into helping to formulate fiscal policy e.g. Anchor Borrowers Programme, ABP. 

He, therefore, cannot complain if the fiscal policies are in total disarray and the economy is heading for a crash. But, it is not too late for him to return to the traditional role of central bankers. Stay away from fiscal policy matters and let the Executive branch carry its own luggage. As it is now, the fiscal and monetary policies are so muddled up, many of us don’t know who to hold responsible for the calamities confronting us.

As for me, it is quite clear who is responsible for rising exchange rates –Buhari. If the President can deliver 2.3mbpd of crude sold and money paid into the Federation Account, exchange rates will start climbing down. Not before.

NBS and food price inflation

“Selected Food Price Watch for the month of April 2022.” NBS Report.

The National Bureau of Statistics, NBS, released a report which merely confirmed what most Nigerians already know. According to the Bureau, food prices recorded 42% surge in 12 months. They then liste some food items and the price escalation associated with each one.  Below is the table for quick reference.

Sorely, the reader must be curious regarding the absence of two food items from the list. What happened to the prices of bread and rice? These are the real staples which Nigerians consume the most. I can accept the omission of bread as inadvertent. But, the exclusion of rice was deliberate.

As Nigerians would recall, several eminent Nigerians joined President Buhari standing in front of rice pyramids. It was said to be proof of our outstanding success with rice production. So, why were the comparative prices left out? Again, the answer is obvious. The price of rice has risen embarrassingly from N36,000 per 50 kg bag to N60,000 during the period under review. But, NBS does not want to embarrass Buhari and the Minister of Agriculture who staged the show.