“Nigerians await dividends of Yuan deal,” the title of the quite documentary-article written by Ibrahim Apekhade Yusuf and Daniel Adeleye, of The Nation newspaper, on Sunday, May 1st, 2016 has given fire to different coals of thought relating to the currency swap agreement between china and Nigeria. In other words, concerns are greatly on the rise as to if the move will make the lives of Nigerians and the country better or worse. That is, a cross-section of Nigerians, particularly public officials, who are either completely sold-out the idea of currency swap or are not buying any iota of the initiative have aired their opinion. And so, the question remains; Do Nigerians await dividends of Yuan deal? With my argument, position and disposition on this big question, I intend to analytically go about the answer by dissecting the matter finely and shining light on the dark areas that may have increased confusion and the chance to be misled as a nation. Furthermore, I intend to proffer best-practices solution that would promote and enlist Nigeria and our naira as one of the largest economy and fastest growing currency in the world respectively.
First, what is currency swap?
Agreement between the government of two nations that allow a central bank in one country to exchange currency, usually its domestic currency, for a certain amount of foreign currency. The recipient central bank can then lend this foreign currency to its domestic banks.
Accordingly, given the recently signed deal between the Industrial and Commercial Bank of China Limited (ICBC), the world’s biggest lender, and Nigeria’s central bank on currency swap deal, a re-occurring question in relation to the move is if the agreement signed between Chinese President, Xi Jinping and President Muhammadu Buhari the sustainable path way to go for the economic recovery our nation.
Truly, “You can’t tell who’s swimming without a bathing suit until the tide goes out.” Nigeria being a mono-product economy with over 70 percent of the nation’s foreign revenue -dollar- gotten from oil, many can now see and tell our nation has been swimming without a bathing suit following the tide that went out on the price of oil as determined by the international market.
Consequently, dollar has become increasingly scarce and has greatly appreciated in value, causing a down-sizing effect on naira which has grown so weak and has been ditched and flushed down the drain of the foreign exchange market. In other words, bearing in mind our country is quite ‘dollarized,’ the scarcity of dollars and its high demand has steadily fast-stopped the economic activities in the country. That’s naira has increasingly lost its discount value against major international currencies, particularly the dollar.
This is worsened by the inconsistent and non-inclusive monetary policy seldom spearheaded by Central Bank of Nigeria that has reduced access to foreign currency (dollar). The new policy has left Nigerians, particularly the private sector in the dark as they can hardly produce at commercial capacity.
In efforts to resolve the difficult situation the nation has found herself in relation to the dollar, President Muhammadu Buhari having sought $2 billion loan from the Export-Import Bank of China and signed a $6 billion deal to fund joint infrastructure projects with government of china also signed a deal on yuan transactions in an agreement that was reached following a meeting between his excellency and Chinese President, Xi Jinping.
The unfolding of the new-turn of alliance between Nigeria and China has emitted from the surface and exhumed from the underneath diverse mixed feelings within the nation and across the globe. Of course, there are two sides to a coin but there can only one right side which, in fact, is the essence of this article.
The truth is China deal must be accessed, assessed and addressed on its merits. In light of this, different pros and cons in relation to Nigeria-china tie and the yuan deal have been publicized by both public and private officials.
Cheapness of dealing with China
Finance Minister, Mrs. Kemi Adeosun recently hinted Nigeria was looking at Chinese panda bonds- yuan-denominated bonds sold by overseas entities on the mainland- because the bonds would be cheaper than Eurobonds. In other words, the cheapness in price of the bond is, in fact, the deal’s point of attraction instead of it overall cost/effect both in short-term and long-term. Bearing in mind that about 80 percent of short-term solution turn out to be an accrued negative solution on the long run, we have got to worry.
Obviously, the choice may be taken considering some biting conditions in the nation like financial tightening that has probably blindfolded us from the long term effects of our decision as nation. However, we ought to remind ourselves that small errors during short periods of time can create huge distortions, even on the long run.
Bilateral Trade Growth with China
Likewise, it is argued that the move was motivated on the ground that the business and trade tie between Nigeria and China have grown astronomically in the last decade with bilateral trade volumes rising from $2.8 billion in 2005 to $11.76billion in 2014 and to $14.9 billion in 2015. This statistic looks quite beautiful but it uninspiring if you x-ray its basis and composition.
Accordingly, the swap arrangement is being established in the context of the rapidly growing bilateral trade between China and Nigeria. In others words, the swap arrangement was swung into action without giving due and diligent thoughts to the conditions that truly indicates or should define the growth of our bilateral trade with china. It is conclusive to think in this way given the following analysis;
Noteworthy, irrespective of the volume of trade, consideration as to whether Nigeria is a stronger or weaker partner in the bilateral trade arrangements is actively being undermined and over-sighted. Presently, Nigeria is more of an import dependent economy unlike China which is an export driven economy – going by the issue of regional trade, that is, consumer, wholesales and distributing trades, the global importation to Nigeria today shows 87.3% of our total imports in regards of distributing trades are coming from Asia tigers. And this 87.3% coming from Asia tigers, 72.1% is coming from China alone.
Band-Wagon with China
On another note, the move is powered by band-wagon effect as we only playing to the gallery since the solution doesn’t give preference to the ingenuity and originality of our problem as a nation. How do I mean? since the financial crisis of 2008, central banks around the world have entered into bilateral currency swap agreements with one another- particularly with China. For the records, China can boast of having signed swap deals with nearly 30 countries since 2008 with the biggest being the 400 billion yuan currency swap with Hong Kong in November 2014.
In the same vein, many developing countries like Ghana, Mauritius, Zambia, Zimbabwe, are already enlisted or are queuing up to sign currency swap agreements with China as Sino-Africa ties continues to expand. Consequently, following the fact that some countries that utilised the three-year swap line offered by China opted for renewal, it was therefore recommended that it is in the sustainable interest of Nigeria to join this growing club of countries seeking to “de-dollarize” the country by diversifying risk in foreign exchange management.
That is, without discovering and analysing the ingenuity and originality of the nation’s problem in relation to the solution of currency swap, our leaders jumped the gun by deeming the effect of the trans-border currency exchange to be palliative on our ailing economy.
South-South Trade (SST)
In Commutation to band-wagon effect is the South-South Trade which is a diplomatic language for emerging economies. South-South Trade is a term used in the circumference of import and export and it suffices that the quality of what is produced in a country (Nigeria, for example) must be acceptable locally before it can be exported. And if it is to be exported, it must to countries within similar level of development/quality or lesser. Illustratively, If Nigeria produces doors and its local market is not satisfied with the products, the doors cannot be processed as an export product to a country like Turkey who may have higher quality of doors but may be an export product to Benin Republic who probably have less quality doors.
As such, the term is reflective of quality within group(s) of nations- who may be region-based- who are into import and export trade among themselves. That is, trade of quality within a smaller circle of a larger circle of the national and international economy. For instance, when our textiles factories were working, what Nigerians had against other countries was the quality of the yarns. And so, we were exporting it to developed economies. In contrast, if ordinarily, the quality of what is produced is not acceptable locally, we won’t be able to export it.
In light of this, it is held that in the past few years that have witnessed the trade volume between Nigeria and China grow so fast. So, trade has left America and Europe as the hope of Nigeria is in the south-south cooperation or region. How true?
Since China broke into the global market by producing at lesser quality, it is given that trade has left America and Europe as opposed to South Korea and Japan who were then seen by developed nations as a base for low-cost labour which allows low production cost that translates to low prices of goods.
However, the issue of quality is further at stake by South-South Trade given the complaints of substandard products china is known for making. Generally, most of the products “made in China’ have short life span and irreparable when damaged. Whilst other developed economies like Europe and America may be able to compel china into making some level of quality due their strong-hood in the partnership, we have been unable to do likewise as we a weaker partner in our bilateral trade.
More so, given our closed market approach and concentration of trade with china, there have been increase of China-Nigeria cartel as the issue of substandard China products can be traced to the indecent and unscrupulous activities by some Chinese officials and Nigerian who are always bent on ripping-off and raping our economy. Further, the issue of substandard product is aggravated given the lack of due diligence often displayed by quality enforcement agencies like NAFDAC, SON, CPC and Customs we country is at higher risk.
Succinctly, the fact that we are trying to be a part of South-South trade and promote the benefits of the arrangement shouldn’t give us room for withdrawing from the global best practices as it concerns trade of quality in goods and services. By so doing, we would end up shooting ourselves in the leg as quality would be increasingly written-off our economy.
Diversification risk in foreign exchange management
The currency swap is said to be an effort to diversify risk vide foreign exchange. Accordingly, the government claims the currency swap is aimed at diversify risk in foreign exchange management. This is quite hilarious as we are a country who has failed and played down on diversification of production-industries to increase export. Yet we are advancing the diversification currency vide risk in foreign exchange management. We are only playing with a very consuming fire as currency swap is unsuitable for the flexible currency exchange which we run and its unsustainable in reference to world best practices.
Truth, the concept of economy diversification to push economy in different aspects is generally sustainable in industries but it is increasingly difficult to manage the diversification of risk in foreign exchange vide currency swap. In other words, cautiously, the quite slim chance the swap agreement may be advantageous to our nation is anchored on those saddled with the leadership of the economy and the correctness of the sound management practices and principles that will ensure nothing is left to chance as far getting the country back on track. That is, it’s a risky adventure yet we can’t afford to miss a step, else we will be wiped out in a one swipe. In other words, we are don’t expect to get stained by the sand, yet we are playing on the sea shore. How possible? It is like fitting a square peg into a round hole. Economic recovery is not a rat race; rather than address the bull by it horns, some our leaders are going about the recovery of our economy like a colony of rat who are unwitty in tracing and getting the cheese.
Faithfulness and good-faith of Chinese government.
Also one stipulated conditions that guarantees the well-meaning of the currency swap is if the government of China can remain faithful the agreement. On a global scale, the Chinese government has been tested and their report sheet is not very encouraging.
For instance, very recently, Chinese government was accused of ‘raping the United States’ with their trade policies as the over populated nation is also alleged to be responsible for the greatest theft in the history of the world.
In 2014, China overtook the United States as the world’s largest economy when measured on a Purchasing Power Parity(PPP) after the IMF estimated the country’s GDP at end of 2014 as $17.6 trillion using purchasing power parity method. That was equal to about 1% larger than the U.S. GDP of $17.4 trillion.
China preferred to use the PPP model otherwise called the adjusted-GDP – a method that is generally Inappropriate and unacceptable to earn the crown of the world’s largest economy. Rather than use the nominal GDP at the current exchange rate which is vested with more accuracy in calculating GDP. China felt more at home using to the ill-method to conjure a world largest GDP. Measuring GDP at purchasing power parity takes into account the differences in prices that people pay for goods and services in different economies. By implication, since the price level in China is still much lower than in the United States, a dollar in China buys much more than a dollar in the United States.
Also china made use of a method that calculates China’s GDP data, in terms of value and growth rates, from cumulated figures rather than actual economic activity of a particular year.
However, in their attempt to put their economic blueprint right, sometimes in 2015, China’s statistics bureau said it has changed the way its gross domestic product data is calculated. It has now adopted the international standards to improve the accuracy of Chinese numbers. It is exemplary and encouraging that the chinse country has shifted to a more accurate method in measuring the economic activity and have become more sensitive in capturing information that are consistent, seasonal and unusual economic elements like fluctuation.
However, we ought to be economically cautious about china as even at their topmost government level, there has long been an increasing widespread scepticism about the reliability of Chinese data. For example, China as the world largest economy in 2014 had unemployment remained low even as poverty rate remained high. Today, as the second largest economy in the world, there are recent move to cut capacity in bloated industries like coal and steel. By implication, many laid-off workers from old-economy sectors have been shifted into lower-paying government jobs, cleaning up offices – good for political stability but bad for economic growth and recovery.
Convincingly, you would agree that It is not strange or surprising to think that China may be trying to draw -in Nigeria into their unrealistic and unsustainable economic approach in an attempt to augment and patch-up their shortcomings and backlash resulting from the precedential false method they have adopted to fine-tune their economic data. We need to be wary of the move and motive of the loan because at some point in the nearest future, when the water of our economy is levelled, we shall then know what proportion of dry land is left.
It will be unwise as a nation to be caught unaware as it is usual for the Chinese government to recover its markets from financial crisis by increasingly seeking the tamping and ramping of market expectations during protracted economic slowdown.
China and Nigeria oil in the dollar market
In furtherance, the chemistry of currency swap and the oil industry in our nation is also crazy. Accordingly, by reason of the currency swap, Nigeria will be using the Yuan to import from China, while they (China) will use the naira to buy crude oil from Nigeria. And then China will take the oil to sell in the market to get dollars. In other words, china will be boycotting or siphoning the dollar (foreign revenue) we ought to be getting to make the nation strive. This newly created chain in international oil market is in-built with a mechanism that will successfully short-change our economy and shorten the life of the nation’s prosperity.
So much so, the currency swap will mortgage the sustainable solution provided by The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu. Accordingly, the group Managing Director of the Nigerian National Petroleum Corporation, replaced the crude-for-products exchange arrangement popularly referred to as crude swap with Direct-Sale–Direct-Purchase (DSDP) arrangement having discovered that the crude-swap was an unsustainable practise in the economics of the oil industry because it was costly, quite accommodative of middlemen and their activities and it limits the circumference of NNPC to take control of sale and purchase of the crude oil transaction. According to him, this was done in other to introduce and entrench transparency into the crude oil for product transaction by the Corporation in line with global best practices.
However, going by currency swap and the newly created chain of transaction in the international oil market, middlemen and their activities have resumed with china on board as intermediary. Also high cost and limited latitude of nation to take control of sale and purchase of the crude oil transaction will be reinstated and re-instituted. Opacity will equally re-introduce and re-entrenched into the crude oil for product transaction. Worse still, the process will not be in line with global best practices as it will also limit our fight against scarcity of fuel. Thus, rather than learn from the man who is actively bent on turning things around in the oil industry, the government are mitigating the effects of his solution. In others words, the government is re-introducing at a higher level, a fight that has earlier been won at the lower level. Quite pathetic.
Retracing and retracting our steps as nation, the problem is simply that Nigeria’s dollar income is increasingly reduced. In other words, Nigeria’s pocket has been ‘under-dollared’. As such, the solution is to increase the actual flow of dollars to Nigeria and not otherwise. That is, the nation cannot be suffering from headache while the administered medication to cure it is for stomach ache.
Diversification of our economy to increase its exportation well over its importation is simply the chlorine injection that would get rid of any malaria symptoms the body of the nation may be suffering from. It is not the reduced importation without any increase in exportation that would deliver sustainable solution. Neither would any short-cut arrangement in line with reduced importation and zero/low-exportation deliver a sustainable solution. “De-dollarization” is not the solution but diversification.
Consequences of currency swap
The consequences of currency swap remain at large, elusive to most and exclusive to few. One, our trade will be actively concentrated in the hands of one country, china. This is dangerous for our economy as the growth of our trade is now greatly dependent on china. Nigeria will be using the Yuan to import from China, while China will use the naira to purchase goods and services from Nigeria. Consequently, this will pose the danger of making Nigeria more dependent on China.
Though the framework on currency swaps between china and Nigeria will only make it easier to settle trade deals in yuan, it will exponentially make it difficult to settle trade deals with other major economies that could be more advantageous to us than china. That is, currency swap will strengthen the naira with yuan whilst weakening it against other currencies of developed economies, particularly the dollar. Truly, Naira’s relationship with dollar has been like a cat and rat chase. The more we chase and pursue the dollar, the more the dollar is running away from us which makes the naira to keep getting weaker. And so, though there is a lot of catching up for us do, it doesn’t mean we should give up on the race that’s has defined the future of our economy for so long.
Particularly, given that Nigeria’s economic has been dollarized for so long, it has made our growth strategy from the scratch to be conditioned by the dollar. Thus, a sudden and sharp change with a currency that not in any way compatible or comparable with the dollar in foreign exchange market is seriously hazardous to our economy. Because we have been rejected by other countries with comparable currencies, it doesn’t mean that we should reject ourselves. A currency swap between our country and another that is has a more comparable currency with the dollar might have been a good alternative, not yuan.
However, without bagging a secondary school certificate, it is obvious that the option of currency swap won’t necessarily increase the actual flow of dollars into Nigeria’s purse. Why adopt it as prescription that would recover our ailing economy? That is, albeit the agreement reached between Nigeria and China on a currency swap is proposed to strengthen the naira by reducing the strong demand for the US dollar in the country, it won’t in anyway increase the flow of dollar into our economy. This makes it a poor solution as it won’t treat our economy of its diagnosed disease or ailment.
The implementation of the currency swap doesn’t mean that our economy will be successfully diversified, it only means that our trade is more and more concentrated in Chinese goods. In other words, rather than diversify our economy, we are only ‘dual-izing’ it which is a cousin to the mono-product economy that grounded economy to a halt.
The currency swap won’t sustainably reduce importation from the rest of the world as it is projected because we remain an import-based nation that is always in need of different goods and services from different nations that can provide them. In other words, since we don’t produce diversifyingly at export capacity and quality, we remain reliant on other producing economies for our need. For instance, a man whose need is a car from Germany or USA is going to import it with the country’s respective currency and not the yuan.
Inadvertently, the currency swap option will increase expenses for the federal government as all the cost elements of middlemen will be resurfaced. It will also limit Nigeria’s stretch to take control of sale and purchase of the goods and services in the global market. Also, under the currency swap arrangement, our currency will be exchanged for yuan at a pre-determined yield or ratio rather than through an open bidding process that also it is in tandem with global best practices. We would have a Nigeria-china cornered/closed market as opposed to open market. By implication of the pre-determined yield pattern, we will be fixing our exchange rate system as opposed to flexible exchange system operational in Nigeria. That is, we will be distorting our exchange rate system at the detriment of our economic free-running.
Naira will become more and more weak and a less stable currency that is progressively internationally inconvertible. In other words, it will increasingly discourage host of nations, particularly developed economies, from wanting to do business with Nigeria. Already as of today, nobody wants to even touch the Nigeria naira. Not even in Benin. They are rejecting it now. Very sad.
Currency swap is an option that once started, it has no end because we will be having to block the gaps it will continually create in the economy. Nigeria may end up like Zimbabwe who joined a growing list of countries in Africa and the world using the Chinese currency, yuan, as one of its official currencies after its central bank added the RMB, the Japanese yen, the Australia dollar and the Indian rupee to the existing basket of currencies. Also, this initiative will infuse opacity into the international-trade exchange system.
By the same token, following the inclusion of yuan as against the dollar in our foreign exchange reserves, our reserves will be fast depleted since yuan’s discount value viz-a-viz the dollar value is weak in the global foreign exchange market.
However, the precedential step taken in light of the currency swap with the motive of strengthening the naira is a ‘de-dollarizing’ policy made by CBN to reduce access to dollar for importation. However, the policies are quite inconsistent and non-inclusive.
CBN policies and activities
On an inconsistent note, in 2015, the governor promised unfettered access to your dollar account (cards) but assured withdrawal limit from Naira debit cards abroad will be reduced to $300/day to a total of $50,000/year from where it stood at thrice that: $900/day and $150,000/year. That is, though CBN had supported banks’ decision to stop acceptance of foreign currencies earlier because their vaults were saturated and posed more risks to the industry in the form of cost of keeping idle funds and insurance, they are now going back on their support by telling the deposits banks to make sure that as they accept foreign currency deposits, they should equally have enough of the denomination to backup demand by making adequate provision to honour the resulting demand of their customers and many Nigerians because CBN is no longer a haven they can run to and get their needs their met.
Policies relating to foreign currency deposits in banks and weekly foreign exchange intervention at the Bureaux De Change (BDC) are increasingly inconsistent as the things different from before, when deposit banks commit and run to CBN to ask for dollars to settle them when they need dollar. In other words, then, dollars deposited in cash could be used for the settlement of import bill and could be withdrawn in cash from the bank. But new rule, dollars deposited in cash cannot be used for the settlement of import bill, “but can only be withdrawn in cash as well from the bank. There is a stoppage of weekly foreign exchange intervention at the Bureaux De Change (BDC) as banks are responsible for their customers’ dollar deposits and can no longer resort to CBN to ask for dollars to settle them when they need them.
On a non-inclusive level, coming at a time when many Nigerian businesses are at a cross road due to inadequate foreign exchange to fund their businesses, the governor of the Central Bank of Nigeria, Godwin Emefiele, pledged his support for the richest man in Africa, Aliko Dangote, by providing him with foreign exchange(dollar) for the importation of equipment. He further promised to give the billionaire Naira, at concessionary prices, for the importation of equipment.
It goes to say that in our CBN polices is not anti-monopoly driven and its legislation doesn’t enhance fair competition. In many advanced and prosperous economies, there are anti-monopoly policies and agencies. In the European Union, for example, there is a fair Competition Commission. In America there is antitrust legislation. President Buhari should be inventive enough to set up an antitrust-legislation in order to fair competition in the open market of our economy.
More so, it is funny that dollar cannot be accessed to facilitate importation that would guarantee the production of companies and the foreign currency businesses of the banks. However, it can be accessed and used to make round trips where people buy from abroad and sell here at huge profitable prices. That’s it cannot be accessed at a commercial level but can be at a subsistence level as anyone (private sectors) who needs for commercial purpose should sought it from secondary and external sources.
The inconsistency and non-inclusive nature of the policy has jointly made it inconvenient for businesses, both local and foreign direct investment to plan and have a sustainable strategy that can adjust to the harsh economic realities that is facing us. As such, Nigeria has become a high-risk region for anybody who wants to do business as foreign investors don’t see some degree of stability in the economy and are therefore running away. It’s an unfortunate experience for us as a country since we have not been able to raise money on our own through internally generated revenue and through the sale of oil products, the area we could look at is the foreign direct investment which has been bastardized by inconsistent and non-inclusive monetary and fiscal policies that is increasingly inconvenient to Nigerians and inconclusive to solving the problem of the nation.
Devaluation of Naira
However, also in light of strengthen the naira, we have been led to the taunted demand for naira devaluation. Like currency swap, devaluation is strictly in reference to the fixed exchange rate system which might make it not option not the best for us but it doesn’t mean it is worse than currency swap. Accordingly, Nigeria’s exchange rate system is based on the flexible exchange system which makes solution not quite compatible with the nation. However, though the devaluation of naira was an option that was eased out by our leaders, we are not any better with the currency swap. In fact, it is given that devaluation is better than currency swap if it seeks to eliminate the differential between the official rate and the parallel rate.
Solution: currency swap, naira devaluation, and CBN policies and activities
Solution on the three-pronged subject of currency swap, devaluation of naira, and CBN policies of reduced access to dollar for importation is nigh.
Increasing dollar inflow in our economy is the blood tonic the naira needs to strengthen-up with dollar. Reduced access to dollar is not the dosage that will strengthen the naira. In actual fact, the reduced access to dollar vide the currency swap agreement is further strengthening the dollar against naira.
First, finding our way through naira devaluation, we will need to depreciate it by eliminating the differential between the official rate and the parallel rate. Given that Nigeria has a flexible exchange system, it is more appropriate to depreciate rather devalue the naira as devaluation is strictly in reference to the fixed exchange rate system. Right now, there is a differential between the official rate and the parallel rate. The parallel rate is about N320.00 and the official rate is still around N199.00 to N200.00. So long as that differential exists, there will be continued to be ill-rent seeking activity. Having eliminated the differentials, it will be more expensive but the process or adjustment will give access to those who truly need foreign exchange to import in order to develop their businesses at the market rate.
CBN should stop malpractices with polices and in their activities in their immediate jurisdiction and at the mint section. The awful issue of people taking money that was meant to be destroyed is long standing which ought not to be as It didn’t start from yesterday. In fact, as revealed by an ex top executive in CBN, it was alleged some years ago that one of the mint plates disappeared. This shows the integrity of the naira is at stake as the integrity of the central institutions for managing monetary policy, for managing our currency have left rooms for serious doubt. A lot of rot in the closet of CBN should be cleaned out so they can forthrightly preserve our naira and grow it with all diligence. We can only achieve a better Nigeria that we crave when there is integrity transparency and effectiveness in the central institutions that govern the monetary system – particularly, the Central Bank and the mint.
Likewise, enormous power is being abused as a result of opaque economic policies. The CBN governor has become the biggest and the most powerful man in Nigeria because he controls the allocation of foreign exchange. His role is now more or less the sole voice to the market as he turned deaf and blind to the signals and call-out by other economic experts. Companies are unable to produce and banks are unable to make foreign currency transactions because they’re unable to access foreign exchange cheaply. They are begging and grovelling, trailing the CBN governor. This should not be so.
Further, our government need to look inward in their approach to recovery of our economy especially because the problem they are creating is supposedly unintentional. In other words, the outcome of the polices are frequently in divergent to their intention. Their economic policies have been increasingly faulted as opaque, archaic and a command and control economic system.
They need to remind themselves that the world has moved past the era people believed in controls in the role of the state in commanding heights of the economy. Now, market forces are the predominant determinants of the shape of the economy. As such, collective wisdom in line with democratic approach is needed to address our economy in hard times like this.
Further, the body language of Mr President raises suspicion of being a more analogue than digital in his leadership. However, in this age, in the school of leadership, a leader is more effective when he is more digital than analogue in his approach. The policies being implemented is adversely affecting the poor and the vulnerable in the society as inflation is spiralled, jobs are reduced, economic growth is dipped and so on. In a year we have lost our single digit inflation status. The opacity of their economic policies is further reflected in their implicit approach. That is, the government prefer an implicit approach in which Nigerians get to know what their plan is by the actions and pronouncements as they go along. In other words, though the government have their plan, they don’t want them articulated clearly before the Nigerians. One bad thing about this approach is that it gives rooms for back-doors deals that can be very dirty. For instance, top executives at both the central bank and other domestic bank may have plans to restructure a bank, they go borrow billions to buy shares in that bank which they plan to restructure. After the restructuring like the merging of banks takes place, the value of the shares will quadruple which would translate to abnormal profit.
However, in this day and age, economic plans are very good because they serve as rallying point for all stakeholders. The government should be more explicit in their approach as it promotes foreign or external investors as they are able to anchor their expectations. By doing so, the government would be more upfront about their economic blue prints and their set objectives in the short, medium and long terms.
Likewise, the government must be mindful of transparency in their approach and the engagement of the media. They need to know within themselves that what whatever they must have achieved or plan to, if it is not well presented to the public especially their vulnerable, the value would be less.
In the time of economic distress Nigeria is going through, the participation and the contribution of the media are very vital. The media fracas between the NNPC boss and ‘CEO’ of APC was incorrect and unnecessary in the way it was done.
In summary, the current administration has yielded to the temptation and pressure to swap our currency. For the records, it is one of the worst turn we have made as a country. Whilst some may feel currency swap between Nigeria and China is a deal that is long overdue, I make bold to say it should have never seen the light of day. In other words, currency swap is not the elixir that would literally heal the wounds plaguing the economy. It actually making matters worse by increasing inflation and hurting the poorest Nigerians the most. As a result of the government’s bad economic policies, the middle class will be eliminated as our economy will definitely be pauperised, pulverized, powdered and sublimed.
More so, we are clogging the wheels of the global recovery which has been described as to snail-paced, fragile, short-termed and risk-laden. This is so because the many approaches to economic recovery is in similitude or correspondence to the outcome. That’s, our approaches are increasingly subduing the growth of the nation and globe.
With signing of the “Budget of Change’’ which is deliberately said to pursue an expansionary fiscal policy despite the huge decline in government revenues(dollar) from crude oil exports, currency swap is a lose-lose. China’s only about to take all of Nigeria’s wealth and give us ashes for beauty.
However, there is always room for improvement if our leaders stop playing with mirrors else, the refraction from the mirrors will protract the nation into an economic red-sea if we choose to remain blind and inactive at the consequences of currency swap.
Conclusively, concerted efforts to reflate the Nigerian economy must buy into comprehensive formulae that factors- in all necessary elements, the short, interim and long-term interest of all stakeholders -particularly the vulnerable- in the nation.
Leave a comment
No comments yet.
yemilluminati 
Leave a comment