Posted by News Express | 8 December 2016 | 2,201 times
Even though the naira was still very strong at the exchange rate of 60 kobo to a dollar (yes, in this same Nigeria!) and graduates could afford to be choosy when it came to employment and career prospects, there were tell tale signs by mid 1981 that the economy had begun to wobble. But President Shehu Shagari and his Second Republic civilian administration chose to live in denial.
However, on his way out of the country for vacation on 4th July that year, the late Chief Obafemi Awolowo released to the media copies of a letter he had sent to the president three days earlier. “There is a frightful danger ahead visible for those who care and are patriotic enough to look beyond their narrow self-interest. Our ship of state is fast approaching a huge rock; and unless you, as chief helmsman, quickly rise to the occasion and courageously steer the ship away from its present course, it shall hit the rock,” Awo warned in the letter.
Two days later, President Shagari replied, defending his government against the charges made by the man he defeated at the 1979 presidential election. But while the president was civil in the letter, even starting with an endearing “My dear Chief”, his Special Adviser on Economic Affairs, Professor E. C. Edozien, went for the jugular. “Recently, certain quarters have embarked on a campaign calculated to generate doubts about the real state of the Nigerian economy. It is clear now that this campaign is not only ill-motivated but constitutes a disservice to the people of the country who are the final victims of the campaign to destroy the economy by instilling a lack of confidence in it both within and outside Nigeria. The most unfortunate element is that it has, by manipulating easy facts and drawing illogical conclusion from wrong premises, attempted to misinform Nigerians about the true state of our economy,” Edozien wrote.
The late Chief Adisa Akinloye, National Chairman of the then ruling National Party of Nigeria (NPN), went a nudge further: “Chief Awolowo’s attempt to paint the country as economically and politically unstable is not only unpatriotic but the height of falsehood. As a matter of fact, one of the top priorities of the NPN administration is the preservation of peace and stability in spite of all attempts by Chief Awolowo-led confrontational gang of subversive governors who call themselves progressives”, said Akinloye before adding, “the Nigerian society would take Awo seriously the day he can stop his ethnic politics reinforced with hostile utterances”.
For weeks, the NPN attack dogs and all manner of hacks with some elementary understanding of “demand and supply” were let loose on Awo who, upon return to the country, addressed the media to reply the criticisms directed at him for his letter: “I say again, as I said a little over two months ago, that our economy ails critically. For saying this–which is obvious–I was abused… many of our so-called economic advisers are victims of micro-economic illusions.”
Only six months down the line, Awo was proved right when the economic problems began to manifest and the Shagari government had to come up with the austerity measures that proved ineffectual until the civilian administration was toppled by the military led by a certain Major General Muhammadu Buhari in December 1983.
That background is essential because it shows that obduracy and refusal to accept criticisms, however well meaning, is a peculiar malaise with those who superintend our country at different epochs. But it is worse under this administration where those who offer alternative positions to ill-digested policies that are clearly not working are either branded with the well-worn and meaningless tag of “corruption is fighting back” or are dismissed as “wailing wailers”. It is within that context that we can situate the current attempt to demonise the Emir of Kano, Muhammad Sanusi II, for his intervention on the state of our economy last Friday.
As a member of the NigeriaCollective, an evolving think-tank much like the British Chatham House, which collaborated with the Savannah Centre for Diplomacy, Democracy & Development to organise the event, I know it was meant to be a dialogue session for a select audience. I was not even aware it was meant to be covered by the media but with a benefit of hindsight, I think it was good it became a public event. Aside the emir, there was former Anambra State Governor, Mr Peter Obi who said most notably in his intervention on “Reducing the cost of governance” that conventional wisdom should teach those in authorities in Nigeria today that when you are in a hole, the first responsibility you owe yourself is to stop digging.
Under the theme “State of the Nigerian Economy: Threats, Challenges and Opportunities”, other speakers included former Chief Economic Adviser to the President under the Obasanjo administration, Prof. Ode Ojowu whose intervention was on “The economy: Seeking an exit from stagflation”; former CBN Deputy Governor (Economic Policy), Dr. Obadiah Mailafia, who spoke on “Monetary policy in a recessionary period”; Statistician-General of the Federation, Dr. Yemi Kale, who spoke on “The growing youth unemployment” and my sister, Mrs Fatima Wali-Abdulrahman whose intervention dwelt on the much-neglected mortgage industry. Chairman of the occasion, Alhaji Bashir Tofa simply chose to play the role of a moderator.
While the exchanges were interesting, it was no surprise that Sanusi’s presentation raised all the dusts. In a way, he himself saw it coming because at a point, he hesitated to ask the organisers about the role of the media at the event. He said he would not want to be presented as attacking the federal government and that the essence of what he had to say was to provoke a debate about the future of our country.
The emir started his presentation on the premise that the years of ‘Africa Rising’ were driven by two major factors that are no longer in contention today: A dramatic rise in the purchasing power of raw commodities and a rapid increase in public sector borrowing which was used to stimulate consumption. The implication, according to Sanusi, is that growth can only come through investment even when he admitted we made some wrong choices in the past. For instance, like many countries that rely on revenues from commodity, the growth in public wage bills has increased progressively in Nigeria such that from N443bn in 2005 it rose to N1.66 trillion in 2012.
While no one can deny that the Muhammadu Buhari Administration inherited serious problems, compounded by the falling price of crude oil, the question the Emir posed is: If we accept the conclusion that the government balance sheet is stretched and investment is the key to growth, why has the Federal Government pinned its hope of a recovery on massive fiscal expansion and a forex policy that basically deters investment?
Nigeria, according to Sanusi, introduced bold forex reforms earlier this year, and then completely failed to implement them. That yawning gap between policy and implementation, he argues, now impacts negatively on credibility. “After announcing a (managed) flotation of the naira in June, the CBN instead implemented a hard peg (at a lower level). The FX market is now split into four different segments: the CBN rate (N305/US$), FMDQ (N315/US$, but not printed since 28 November), NIFEX (N315/US$) and the black market rate (N480/US$)” said Sanusi.
The “Fair value” of the naira, Sanusi believes, is not the issue in contention today. “The current crisis of confidence in NGN/US$ comes from a lack of transparency and functionality. On a trade and inflation weighted basis, the naira has gone from one of the most over-valued currencies in the world to one that is now under-valued. This suggests that Nigeria is comparatively cheap – and indeed much cheaper than many countries with a long history of attracting capital from abroad,” he argued.
Interest rates are not the issue either, he further argues even as he admits that in tandem with its currency reforms, the CBN has restored positive real interest rates while pointing out that the changes have been dramatic: as recently as January, real interest rates were deeply negative in Nigeria. “However, local currency returns are now among the most attractive in Africa, as well as the wider frontier universe. Under a more credible policy environment, this would help draw in capital from abroad, and incentivise locals with savings to keep their money onshore,” said Sanusi.
The issue on which the emir was most critical is in the relationship between the federal government and the CBN, an institution he contends is no longer independent. “In fact one could argue their relationship has become unhealthy. CBN claims on the FGN now top N4.7trn – equal to almost 50% of the FGN’s total domestic debts. This is a clear violation of the Central Bank Act of 2007 (Section 38.2) which caps advances to the FGN at 5% of last year’s revenues. The overdrafts alone are equal to more than 10 times that prescribed limit, and are growing every month” he said.
Both the presidency and the CBN have picked on this, using the money accumulated into the Treasury Single Account (TSA) as a defence. Yet, even with my elementary knowledge of economics, I know that the money in the TSA is not a federal government reserve. But even at that, Sanusi’s intervention was not all about criticisms. He also offered his own ideas on the way forward.
On what we should be doing, the emir said Nigeria should gear its policies towards attracting investment; implement the June 2016 FX reforms which were designed to unite the market in single, transparent rate while focusing on reducing FGN debt service through greater concessional borrowing rather than increasing its spending through CBN financing. The bottom line, in his words: “Until Nigeria signals a clear change in policy it will be difficult for it to restore credibility; Until credibility is restored, it will be difficult for it to attract investment (both from at home and abroad); Until investment picks up, it will be difficult for Nigeria to return to growth.”
Other suggestions from Sanusi include closing the gap between foreign exchange policy design and implementation; shifting the focus of fiscal policy towards reducing debt-servicing costs; eliminating fuel subsidies; raising more concessional funding from abroad etc.
For sure, it is possible that Sanusi was wrong in his diagnosis of our economic challenges or prescriptions for addressing them. But I recall that he himself admitted that he could be faulted and that he just wants us to have a meaningful conversation on the way forward since most of the policy prescriptions by the government appear not to work. That, any rational person would argue, is fair enough. But the real problem is that this government enjoys shutting down anybody that as much as criticize it. Engineer Buba Galadima who, for decades, was one of the closest allies of President Buhari is now being assailed by those whose association with the president started only yesterday just because Galadima is critical of the government. And now the emir of Kano is also a “wailer”.
It is very evident that this government wants only those who will be shouting “no one but you” to the president, even while saying different things behind his back: The men and women who would be the first to flee when things go wrong. I have read from some of them in the last week since Sanusi’s intervention as they sell their dubious propositions. Yet, in his piece, “We must never forget the lesson of Orwell’s 1984”, Richard Lederer wrote about how the great novelist, in his last work on tyranny and totalitarianism “warned us that dishonest language is a drug that can put conscience to sleep.”
All said, readers of this page are well aware that my favourite Nigerian actor is Alhaji Kareem Adepoju aka Baba Wande who I consider a genius at his craft. My adoration for the great man started from the time of the late Oyin Adejobi when he was the star attraction in epics such as ‘Ekuro Oloja’, ‘Kuye’ etc. But the play that I would never forget is the one titled ‘Oba Igbalode’ which can be translated to mean ‘Modern Day King’ where Baba Wande played the role of palace jester by name Gbajuma.
The play begins with the enthronement of a new king (Tafa Oloyede) who, without consulting the chiefs, made proclamations that were clearly antithetical to the peace of his community. In doing all these, including breaking with sacred traditions, the chiefs knew the king was on the road to perdition, were hailing him, essentially because he had threatened that anybody not supportive of his ideas would be deemed disloyal, stripped of his title and sentenced to death.
However, the palace jester (Gbajuma) felt that things were not right and he confronted the chiefs about why they were misleading the king. They told him that even when they were well aware what the king was doing would eventually land him and the community in trouble, they had to preserve their own lives. But when Gbajuma could no longer stand the hypocrisy playing before him, he shouted down the chiefs who were hailing Kabiyesi, chanting: ‘Maa se nso, apa re oka’, meaning “continue, you can do anything”. Not minding that he was just a palace hand, Gbajuma said: “You these chiefs, please don’t help in pushing our king into his destruction.”
While the chiefs tried to prevent Gbajuma from remonstrating with the king, knowing the consequences of such action, he refused to listen to them. But if Gbajuma was circumspect, he would have seen from the king’s menacing countenance that trouble was lurking.
Without mincing words, Gbajuma told the king that what he was doing would end in his destruction and that the chiefs were not acting in love but purely in promotion of self-interest. Gbajuma said he loved the king and would not want to see him end up in ruins as it was bound to happen if he continued on the path he had chosen. About five minutes into his monologue, the visibly angry king stood up and cut him short. After upbraiding the palace jester for his ‘disloyalty’ and acting beyond his station, he pronounced on him a death sentence.
For ‘daring’ the all-knowing king, the town crier was to be fed a mixture of cement and garri but due to the intervention of the Queen who had affection for him, Gbajuma was saved from the death sentence. And following that near-death experience, Gbajuma vowed: “Since the king does not like the truth, all of us will join in pushing him and the town into the abyss”.
That was how Gbajuma became the number one sycophant in town; hailing the king as he desecrated the throne to the detriment of his community.
Please don’t ask me how the story ended. But it is my hope that the Buhari administration will tolerate constructive criticism of its policies, especially from friends of the administration, however unpalatable.
•This piece by Adeniyi (shown in photo) originally appeared in his column “The Verdict” in today’s edition of ThisDay. Adeniyi can be reached via email@example.com
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