This is quite a lengthy article but a must read for every Nigerian who loves his country. Just when we were beginning to rejoice that our economy was moving vertically upwards and that our currency was getting stronger, something seems to have pulled out the floor from under us and everything seems to be plummeting towards ground zero. I just read this article in the newspapers and feel I need to post it as it is. If those managing the economy of this country are so intent on destroying it, then we who are bound by oaths to save this country need to rise up and deliver the future. The president yesterday or today inaugurated a team that will look into and combat the financial meltdown that is upon us in the country. As usual, he has chosen a reactive means rather than a proactive one to address serious national issues.  I find this article very insightful and interesting. It doesn’t mean that the article portrays my views about the situation or that I totally support the facts but it’s really an eye-opener. It’s titled “Naira’s strategic crash”.

Naira’s strategic crash
Written by Les Leba
Wednesday, January 14, 2009

News Analysis

In August 2007, President Yar’Adua shot down the Central Bank’s proposed Strategic Agenda for the Naira (SAN) on the grounds that the Presidency was excluded from its conception.

In spite of the announcement that an adhoc economic team had been constituted to re-evaluate the proposal, nothing more was heard of the verdict of government’s economic experts.

This presumably could mean that no merit was discerned in the proposals for naira redenomination and for dollar derived revenue to be paid as dollar allocations to the three tiers of government.

Indeed, the tenets of CBN Governor’s proposed Strategic Agenda for the Naira was a complete somersault from the overt inclinations of Soludo’s prevailing monetary framework, but the proposals were surprisingly in consonance with the framework which I had canvassed unceasingly for over seven years, in spite of the indifference and open derision by the CBN!

We have always insisted that all the permutations for a development agenda, from NEEDS, to SEEDS to LEEDS to NAPEP, etc, etc, would come to naught if the CBN continued to impound federal dollar derived revenue and substitute naira allocations!

To be fair, President Yar’Adua may be excused for his suspicion of CBN’s sudden turnaround in its monetary policy framework after earlier assurances and promises that the Nigerian economy was treading the path of recovery and development under expert professorial guidance.

The issue of redenomination, as canvassed by Soludo, may also have smelt foul to Mr. President, seeing that billions of naira of public funds had just been expended in designing, producing and promoting the acceptance of new currency notes and coins!

The thought of discarding these notes and coins barely six months or so after introduction certainly would not sit well if viewed from the perspective of any rational person. Indeed, our advice in several articles that the issue is not that of new currencies but that of value or related purchasing power went unheeded!

Our prediction that the coins would not be adopted because of their meaningless values was similarly discountenanced! Today, the CBN is stuck with container loads of valueless coins for which it has now placed newspaper adverts to solicit for those buyers who may want to recycle the coins into bangles, trinkets, copper pipe and wires or other forms of designs or gift items and artworks!

Not even a hurriedly enacted legislation with prison terms and fines as penalty have induced the public to patronize the new coins or treat our currency notes with respect! (See our article “RESPECT FOR THE NAIRA”) at www.geocities.com/lesleba.

The CBN’s subdued acceptance of the government’s suspension of its Strategic Agenda for a healthy naira may be seen as an indication of Soludo’s lack of faith even in his own proposal!

If, indeed, the CBN believed in the power and relevance of its ‘new’ agenda in promoting economic development in the face of increasing poverty in the land, the CBN failed to exercise its constitutional duty to promote policies which will improve the common good and discard policies with negative or adverse consequences for the economy!

In other words, something else other than the desire to serve our people faithfully and productively goaded the CBN Governor to continue in the pursuit of defective monetary policies!

In our paper titled, “A LIBERALISED FOREIGN EXCHANGE MARKET: a proposal for a liberalized foreign exchange market in Nigeria and its economic benefits” – Boyo/Ojomaikre, we had insisted that the system where the CBN was the major direct supplier of both naira and dollar to the money market was an unhealthy monopoly with serious consequences for a market-determined economy!

Our advice that the three tiers of government be given dollar certificates (not cash) for distributable dollar derived revenue to ensure a market-determined naira rate that will stimulate economic growth was discountenanced and the CBN subsequently responded with its farcical so-called ‘liberalized foreign exchange market’, which in reality was no different from the earlier and existing market frameworks, called DAS, WDAS, IFEM, AFEM, etc.

The common denominator of all these foreign exchange market contraptions was the maintenance of the CBN’s stranglehold on the dollar market and the consolidation of a market system which ultimately instigated increasing poverty with increasing wealth!

The evidence of this correlation was amplified when our dollar reserves rose to over $60bn at a time we became classified amongst the world’s poorest nations!

In fact, monetary policy in that period became so confused that the CBN appeared embarrassed by our sudden healthy reserve balances and decided that the best way to use up the reserves was to allocate over $3bn every month to Bureaus de Change (BDCs) patrons.

Our entreaties in various articles of the suicidal consequences of this profligacy were ignored as the BDCs became an easy pool for capital flight as looters of public treasury and smugglers of contraband had a field day.

The result is now plain for all to see— divestment by such multi-nationals like Dunlop and Michelin and the suffocation of indigenous small and medium enterprises which are generally regarded as the engine of growth in all economies!

The admission of increasing unemployment and insecurity by various agencies of government can only be a confirmation that our monetary policy experts failed woefully to turn our years of plenty into meaningful welfare improvement for our people.

Now that the locust years are at hand, Nigerians should be ready to finally lay undisputed claim to the lowest rung of the world’s poverty ladder!

Indeed, in spite of the sustained increase in reserves from less than $20bn a few years back to over $60bn in November 2008, Nigerians ignored our clarion observation that the naira rate of exchange to the dollar remained resistant rather than its touted state of stability by all and sundry, including the poorly informed Chambers of Commerce and Association of Manufacturers!

Our sometimes irreverent overtures to these pillars of the private sector to see reality were unceremoniously rebuffed! Regrettably, the chickens have now come home to roost! In less than six weeks, the naira rate has depreciated by almost 50% with no end yet in sight!

The CBN has once again suddenly accepted our enduring observation that it is not in its mandate to sell dollars to BDCs, while our foreign reserves have quickly fallen by almost 15% in six weeks; at this rate of depletion, we may inexplicably have zero reserves before year end and we may need to go borrowing big time before the end of 2009; never mind the CBN’s often expressed notions of over 30 months of imports cover provided by our level of reserves!

The tragic thing about the above scenario is that the CBN Governor confidently confirms that the devaluation of the naira is deliberate and designed to ensure a balance in government revenue against projected expenditure!

In other words, the depletion in our oil revenue will be countered by deliberate devaluation of the naira so as to ameliorate any potential deficit in the quantum naira available for monthly allocation! In this wise, we may see the naira rate fall to almost N200/$1 before year end!

This would be no surprise as the government’s economic bible, NEEDS 1 & 2, had projected a naira value of over N180/$1 as the appropriate exchange level that will drive economic development!

It was a tragedy of epic proportions to watch the standing ovation by members of the National Assembly in response to Prof. Soludo’s presentation in defence of the deliberate policy to devalue the naira!

One day, one day, their abysmal ignorance or complicity in deceit will be blown wide open, but regrettably, millions of lives would have been depraved by the self interest of a few Nigerians!

SAVE THE NAIRA, SAVE NIGERIANS!

I want to say congrats to the former president for eventually getting a university degree. It’s just a pity that he got it at a time after he had ruled the country twice. Perharps, had he gotten it earlier, the country may have benefited from his experience in a higher institution. Albeit, I don’t think the receipt of a degree by a former president should have caused such inconvenience and suffering to the people of the state. The roads were blocked completely at major points in Victoria Island, Lagos on Wednesday, January 7, 2009 simply because Obasanjo was getting a Bachelor’s degree. What would happen when he got a Doctorate or if he became a professor. Bill Clinton became a visiting professor after his tenure as president of the United States of America and the Secret Service didn’t harass anybody either on or off the campus.

I really don’t understand why our leaders can’t bring themselves to be humble and empathize with the people. Why is power so intoxicating in Africa? Several hundreds or even thousands of road users had to go through near stand still traffic for hours just because a former president was receiving a Bachelors’ degree. It’s more amazing that the degree is in Theology which has one of its cardinal doctrines as Humility and Tolerance. I hope the former president would be able to practice what he has studied and may soon begin to preach. The article below was culled from The Punch.

The National Open University of Nigeria on Wednesday celebrated its maiden convocation with former President Olusegun Obasanjo refusing to speak to the press after collecting a certificate from the institution.

The former president, popularly called ‘Student Obasanjo’ by staff and students of the open university received his certificate from the institution’s Vice-Chancellor, Prof. Olagbemiro Jegede, amidst ovation from one of his predecessor Alhaji Shehu Shagari.

Present were the Vice-President, Dr. Goodluck Jonathan, the Senate President, Mr. David Mark and the Director-General, United Nations Educational, Scientific and Cultural Organisation, Mr. Koichiro Matsuura.

However, journalists, who had hoped that Obasanjo would grant them an interview on his stay in the university after the convocation, were disappointed as he refused all entreaties to answer even their congratulatory messages.

As soon as he walked out of the venue, journalists moved to his side, to comment, but rather than answer them, he walked up to Koichiro whom he had a little discussion with.

Though his security aides were civil, pleading with the press that they should give him some chance to discuss with the UNESCO boss, the former president who looked tired, jumped into his waiting sports utility vehicle.

Before he entered the black vehicle, he struggled to remove the academic gown, but when he could not, he called one of his aides to help him.

He hopped into the car after exchanging pleasantries with some of the dignitaries including the Sokoto State Governor, Alhaji Aliyu Wammako and Chief Obafemi Olopade and left the venue.

Her daughter, Senator Iyabo Obasanjo-Bello and his former Special Assistant on Media, Dr. Doyin Okupe, were some of the people that accompanied the former president to the convocation.

Earlier, while presenting his convocation speech, the vice-chancellor, had described Obasanjo as a hardworking student.

“As a student, Obasanjo vigorously pursued his studies on full time basis…He is a shinning example of how seriously a student should take his learning. Like everybody, he sat for all the examinations using anonymous matriculation numbers, and by our internal quality control and security-proof control measures, his papers were marked by different tutors located in some of our study centres including Damaturu, Minna and Yenagoa,” he said.

Jegede explained that nobody had a foreknowledge of the former president’s marks until all students’ marks were assembled and presented to the university senate for approval.

In his remarks, President Umaru Yar’Adua, who was represented by his deputy, expressed the Federal Government’s continued support for the open distance learning university.

According to him, education is a top priority in the seven-point agenda of the administration and as such, government will continue to inject funding to the university.