How rhetoric despoiled Nigerian economy in 2021
In spite of the disruption of the world economy by the COVID-19 pandemic from 2020, the Nigerian economy exited recession in the second quarter of 2020. However, Nigeria’s GDP grew by 0.51 per cent in the first quarter of 2021. But Nigeria’s inflation rate slowed for the first time since 2019 in April 2021. But this brought no substantial relief to consumers who still had to contend with high prices.
Even with little respite from price inflation, Nigeria’s ill advised border closure started in August 2019. It merely exacerbated inflation like a measure instituted to despoil a people in order to cow her. Southern border closure was ostensibly crafted to boost local production of goods which we import. We never planned any import substitution industries, neither did we build any infrastructure to accommodate such strategies. Whereas it is hitherto cheaper and faster to ship asbestos from London to Kano than to ferry rice from Lagos to Kaduna.
The mindless closure of the southern border skyrocketed inflation to 18.12 per cent in April 2021. It is a lesson in how to impoverish a people in order to dominate her. The World Bank reported that inflation pushed eight million Nigerians into poverty between 2020 and 2021. The report was made all the more incontrovertible when the Central Bank of Nigeria (CBN) stopped the sale of foreign exchange to Bureau De Change (BDC) operators. The bank explained that the parallel market had become a conduit for illicit forex flow, graft and money laundering. It therefore stopped processing applications of BDC licences.
Thereafter, CBN channelled weekly dollar sales through commercial banks to meet legitimate demands. A week after the new foreign exchange regime, the Naira fell from N505 to N525 per dollar. And according to data from Nigerian Security Tracker (NST) there were 2,943 abductions and 5,800 deaths due to insecurity between January and June 2021. According to an intelligence report by S. B. Morgen (SBM) an estimated N10 billion was demanded by kidnappers in the first six months of the year. Thus, the high risk Nigerian business environment continues to discourage inflow of foreign investment into the economy.
But seven years ago, the Rand Merchant Bank ranked Nigeria the second most attractive investment destination in Africa. Sadly, Nigeria now ranks 14th. What’s more, Nigeria’s public debt rose to N38 trillion in the third quarter of 2021, according to the Debt Management Office. The data include both external and domestic debt of the Federal Government, the states and the Federal Capital Territory (FCT). The DMO explained that increase in debt was largely accounted for by the $4 billion Eurobond issued by the Federal Government in September 2021.
Indeed, the breaking economic news is the acquisition of Union Bank of Nigeria by the two year old little known Titan Trust Bank. The Federal Government injected N300 billion to stabilise Union Bank sometime ago. Another N239 billion was used by AMCON, an agency of the Federal Government to buy off toxic assets in the bank’s books. It is therefore incorrect for the government to end up with only 21 per cent ownership of Union Bank while foreign investors walked away with a 64 per cent stake when it only invested $500 billion in 2011.
Union Bank has now been sold for a fraction of money sunk into it. If Parliament isn’t asking questions, we the people are demanding accountability. Tunde Lemo was CBN deputy governor during the transactions. Isn’t he disqualified by corporate insider information provisions as chairman of Titan Trust Bank at the moment? In 2011, Union Bank was a conglomerate of seven companies; now reduced to a single entity without recourse to satisfying the provisions of Company and Allied Matters Act. What happened to the assets of the subsidiaries? Who acquired what and under which terms?
Faruk Gumel is the current chair of government owned Nigeria Sovereign Investment Authority (NSIA); at the same time he is Group Executive Director of Tropical General Investments (TGI), the core shareholder in Titan Bank. This transaction doesn’t qualify under the relevant corporate provisions. It should be investigated. We need clarifications from AMCON, the CBN, the Federal Ministry of Finance and the erstwhile Managing Director of Union Bank, Mr. Emeka Emuwa. Politicians have deceived Nigeria enough, we will not allow them befuddle the nation this time around.
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