Just before the emergency economic summit part1

When, some weeks ago, Professor Wole Soyinka called on President Buhari to urgently organise an economic conference on the deleterious state of the national economic situation, the message that rang out from that call was: Mr President, you need help! President Buhari should be commended for reacting promptly and responding positively to that call. According to announcements, an economic summit is scheduled to hold next week.

However, convening a conference or holding a summit is the easy part of the game; the tough part is accepting and implementing the pertinent recommendations of such assemblies.

Over the past decades, Nigeria, as everyone knows, has amassed a huge store of think-tank research outputs, policy recommendations and resolutions drawn from all manner of conferences, summits, forums and international organisations notably the International Bank for Reconstruction and Development alias World Bank and the international Monetary Fund, IMF. In 2014, Nigeria even burned through billions of Naira of good funds to bring the World Economic Forum to Abuja for goals that were best understood by the sponsors of that jamboree. The Nigerian Economic Summit Group, a standing government think-thank, also arganises an annual economic summit.

There is little evidence that the intellectual resources garnered from all these efforts found much or any use in the economic management strategies of the past administrations. As a matter of fact, most of the viewpoints that have been repeatedly canvassed but defiantly ignored, to our peril, by successive administrations, military and civilian, after 1979, remain valid and are there for all to see.

The possibility of occurrence of Nigeria’s current situation of an unraveling economy and a melting national currency has long been foreseen and feared but the successive political leaderships have mostly pretended that it could not or would not happen. That is why Nigeria has been living a « double-life , living an unreal life in a real world.

Since the early 1970s, the leaderships had been living under the grand illusion that Nigeria was a wealthy country whereas Nigeria only had the potential to be wealthy…a potential that has now been mostly wasted. Even then, the Murtala-Obasanjo regime did not fall victim of that illusion, judging by that government’s life-style ; it adopted a «low-profile» policy. As you would recall, General Obasanjo, as head of state, rode a Peugeot 504 and Murtala, before his death, rode an old-model Mercedes 230. Yet, that period remained a most triumphant era for Nigeria’s foreign policy, with the nation enjoying high international esteem.

No sooner had power been handed back to civilians than the new rulers threw away « low-profile » and went ahead to indulge in what Onyeka Onwenu once described as the « squandering of riches ». Apart from the interlude regime of General Buhari in 1984-85, successor-governments, military and civilians, continued and deepened the squandering/looting of our commonwealth/national riches. Nigeria’s umbrella for the raining day has in effect been stolen by the devourers  and we are now only scrambling to find a solution but the rains would not stop for us to fix our problem. In the circumstance, let the truth be told : we would probably get wet first before we get dry again.

When Ms Christine Lagarde, the IMF Managing Director, visited Nigeria recently and was asked if the IMF was going to offer Nigeria a loan, she dismissed that suggestion out of hand and said that Nigeria did not need a loan. With that answer, Lagarde was telling Nigerians that if our leaders managed our resources prudently, we had no business begging anyone for loan (on their own terms, if at all). But who would lend even a defaced dollar bill to a country where 2.5 billion dollars of funds earmarked for explicit national security purposes got shared by devourers like Christmas cake or «Ileya» rams? Or where the leadership of the legislative arm of government would squander almost a million dollars to purchase super-luxury automobiles without thinking much of it? What manner of governance structure makes that possible ?

With the right frame of mind and the political will to do the right thing, the solutions to Nigeria’s conjoint problem of dislocated economy and melting Naira are fairly straight forward and simple but would initially be tough on the wealthy class. The truth is that if an economic miracle must occur to turn the current situation around for us, we must begin now to « manufacture » that miracle ourselves.

The government has a wide a leverage in dealing immediately with the currency situation and obtaining immediate (or near-immediate) result. The government knows or must be told that those putting the heat on, shooting down (the value of) the Naira, are not the genuine industrial and commercial enterprises nor the poor civil servants, teachers, doctors, market women or the parents forced by the lack of opportunities locally, to send their wards abroad for higher education. Those shooting down the Naira are to be found among the wealthy class which, unfortunately, has now been infiltratred and polluted by people who acquired wealth not by hardwork and intelligence but by primitive looting of public resources, legally or otherwise. And the amunition they are using is the Naira !

To shield the Naira from vicious attacks or at least reduce the intensity of such attacks, the government must move to dispossess the attackers of their amunitions and the way to do it is not by propping up artifially the value of the Naira which plays into the hands of the attackers and other profiteers within and outside the banking sector but the way to go is to suck out as much cash as possible from the economy.

To do this, government must take a number of bold emergency measures which might include:-following, for a brief period of time, the parallel market exchange rates and not trying to dictate an unsustainable rate to the market. By selling its own dollars at the rate the market is willing to pay, the government will suck in a lot more Naira cash, thereby reducing the stock of ammunitions available to the « attackers » in the subsequent rounds of dollar purchases.

As for costs of manufactured goods that may sky-rocket beyond the reach of ordinary Nigerians, the government can moderate such effects by offering generous tax credits over several years to genuine manufacturers of consumer goods to absorb a good portion of the foreign-exchange price shock (advantage: you cannot steal or misappropriate tax credits)
To be continued tomorrow
• Lafiaji, an economist, is a former executive secretary of the African Petroleum Producers’ Association, Brazzaville, Congo.