Ugochukwu Ejinkeonye's Peep Into Nigeria's Looting Culture

By DAN AMOR

Ugochukwu Ejinkeonye is not only a quintessential Nigerian writer and journalist, he is, undoubtedly, one of the most formidable literary and social critics in the country today. Ejinkeonye, whose birthday is today (May 27), is not only a wordsmith of note whose diction, and images capture the experiences and nebulous fancies of the Nigerian condition, he is also one of Africa's most celebrated newspaper columnists and public affairs analysts.

Now Available on AMAZON

Suicidal Defence Of The Naira

By Henry Boyo

The awareness of the correlation between lower naira exchange rates and increasing poverty motivated the “Save the Naira, Save Nigerians!” by-line in articles in this column since 2004. Despite the obvious debilitating impact of Naira devaluation on inflation, domestic industries, employment and social welfare, the Central Bank of Nigeria (CBN), recently, brazenly   declared that it deliberately devalued the naira from below N120/$1 to almost N150/$1; regretably CBN, by this act, declared a war against our welfare.

 The apex bank however, countered that devaluation was necessary to stabilize the economy and ensure that monthly naira allocations matched the projected 2009 expenditure budget. I daresay, however, that such a fiscal strategy is counterproductive; Instructively, the resultant bloated Naira allocations will still be inadequate to cover recurrent and capital expenditure which were earlier projected with at least 25% stronger naira values.

When the folly of this strategy ultimately dawned on our monetary policy makers, the CBN Governor quickly recanted and later alleged that, the devaluation was in fact, the handiwork of speculators!!   Now, let us examine his claim. The first pertinent question is, how speculators accumulated almost N2,000bn between October and November 2008 to exchange for $7bn plus from CBN?   Indeed, prior to the alleged deliberate devaluation, the monetary authorities, reportedly held internal consultations and sought President Yar Adua and National Economic Council’s approval; inevitably, prominent Nigerians with interest in banks became consequently privy to the dastardly blow awaiting the naira!

Curiously, despite the very late budget passage in October 2008, and the parallel delay in capital projects execution, the Federal Executive Council, nonetheless, authorized 100% release of all outstanding budget provisions, not minding that with Sallah, Xmas and New Year- holidays imminent, there were barely seven weeks left to 31st December 2008 to complete projects which should normally take 12 months for implementation.

Invariably, with the subsisting embarrassingly surplus Naira Liquidity, and the open secret of an imminent Naria devaluation, the banks besieged CBN with demands for unusually large dollar purchases, which they would later sell with huge profit after devaluation.

Save The Naira!! Save Nigerians!!!

By Henry Boyo

The Nigerian Public service is reportedly heavily burdened with a ghost population, who not only unexpectedly write job applications and present themselves for interviews, but who also open bank accounts and collect salaries, despite their human shortcomings! 

Curiously, the CBN’s “know your customers” directive to banks was obviously no deterrent to the establishment of bank accounts for such ghosts! Naira In a strategic move to forestall detection, these ingenious spirits discreetly also infiltrated the Nigeria Police Force, where a 2010 staff-audit revealed that ghost officers accounted for over 100,000 members, out of the officially registered 330,000 policemen.

The audit reports further revealed apparent collusion amongst the Police pay officers, and accountants as well as bank officials to successfully rob the NPF of over N36bn annually! Similarly, Alhaji Mande Lofa, Chairman of Tureta (LGA), has also confirmed that a verification exercise carried out in July 2011 by the Tureta LGA in Sokoto State led to the discovery of over 500 ghost workers.

Also, in July 2011, the Rivers State Universal Basic Education Board reported losses of N2.4bn annually to 1477 ghost workers, while the National Identity Management Commission, also revealed that, after conducting a biometric data exercise, it had uncovered 4000 ghost workers out of about 10,300 employees on its payroll.

Furthermore, in December 2011, Garba Tagwai, the Niger State Commissioner for Local Government Affairs also noted that “No fewer than 20000 ghost workers have been detected on the pay roll of the 25 Local Government Areas of Niger State”. The Ekiti State Governor, Dr. Kayode Fayemi, also observed that, prior to his administration, Ekiti State government lost over N3bn annually to ghost workers out of a projected annual budget of N80bn.

Unfortunately, the federal government is not immune to such fraudulent revenue leakages; indeed, in 2001, the incumbent Accountant General of the Federation, Chief Joseph Naiyeju, reported the discovery of 40,000 ghost workers following a man-power verification exercise. Similarly, 6000 ghost workers were detected after the completion of a staff audit, when Mallam Nasir El Rufai was Minister, of the Federal Capital Territory in 2006; revealingly, the FCT government was losing about $8m annually, due to ghost workers on its payroll.

Widening Gap Between Official, Black Market Exchange Rates

By Henri Boyo

 In December 2016, the finance minister Mrs. Kemi Adeosun responded as follows in a text message to Reuters reporters that, “The CBN is working on the elimination of arbitrage.” Furthermore, Isaac Okorafor, CBN’s spokesperson, confirmed in a press statement that the bank was working towards “ensuring there is no black market,” see Punch 21/12/16.

In January, 2017,  the Vice President Yemi Osibanjo speaking at the World Economic Forum in Davos, Switzerland also noted that “The CBN needs to close the gap between the official and black market exchange rates for the naira “very soon”, see Punch 18/01/2017.

Furthermore, the Deputy Senate President, Ike Ekweremadu was also reported in Punch Newspaper edition of 19/01/17 to have noted that: “We are worried with the huge gap between the parallel and the official market; and as it has been said by the Chairman of the Appropriations Committee, the Central Bank of Nigeria needs to do something about it, because it is one thing that is breeding corruption …. We must find a way of bridging that gap and also stabilize the exchange rate so that investors can do their own forecast in terms of their investments. We believe that something needs to be done in the area of the exchange rate.”

The above title was first published in September 2005 and the following is a summary of that article:

“The appropriate pricing of the naira, has been a subject of debate in the last 25 years.  During this period, the value has descended from more than parity to its current rate of about N129=$1.  We recall that in those days of glory, the general standard of living was well above the poverty level; indeed, Nigeria was rated among middle income countries in the world. However, our leaders soon succumbed to the apparently innocuous campaign that the naira was grossly overvalued.  The success of that campaign is the current reality of a naira that has lost over 90% of its value and reduced the real value of the earnings of the masses to peanuts. We are now rated amongst the world’s poorest nations to the satisfaction of our erstwhile oppressors, who have in a show of charity gleefully dropped a few coins in our begging bowls to now save us from outright starvation! 

Nigerian Economy: The Blind Leading The Blind

By Henry Boyo

A seemingly responsible fiscal plan will become unimplementable, in the modern era, if the underlying monetary indices are out of sync with budget projections. Conversely, the stubborn sustenance of appropriate monetary benchmarks for inflation, cost of funds and exchange rate may still rescue the performance of an otherwise bad budget.

*Buhari 

 Buhari For example, if salaries and other incomes double or triple summarily, as happened during the Udoji salary awards of the 70’s, prices will spiral beyond the comfort level of consumers, as the liberal Naira supply chase the relatively modest output of goods and services on offer. Evidently, if inflation rate for example, approaches 20%, as in our present predicament, then we would all have lost a fifth of the purchasing power of our salaries and incomes.   

The dwindling purchasing power caused by inflation will invariably erode consumer demand for goods and services, and also constrain domestic industrial output, while further investment decisions will ultimately be kept on hold. Thus, in addition to a significant loss in real income values and deepening social poverty, an uncontrolled inflationary spiral will severely challenge the implementation of any fiscal plan that does not accommodate the prevailing rate of inflation; for example, the clearly recklessly ambitious 2016 N6tn budget, has become difficult to implement because of reduced revenue and significant Naira devaluation that has increased local production cost and further spurred inflation closer to 20%.

 For the above reasons, Central Banks, in successful economies everywhere, endeavor to sustain strategies that will keep money supply at an equilibrium level that will not push inflation rate beyond say 3-4%, so as to conserve price stability. Similarly, if foreign exchange is in short supply and auctioned in a market where Naira supply is constantly in excess, the local currency will, invariably depreciate in value, and also make all imports (including industrial raw materials) correspondingly more expensive. Furthermore, the competitiveness of local enterprise will become even more seriously challenged, if CBN’s MPC decides to counter inflationary pressures by increasing the rates at which commercial banks borrow from the CBN to as high as 14-16% as per their recent position in July 2016.

The preceding narrative hopefully explains the need for best practice management of money supply to avert the disenabling and distortional consequences of spiraling inflation in the economy. Clearly, horrendous inflation rates above 20% will seriously challenge any attempt to diversify any economy or foster inclusive economic growth. Indeed, if the inflation rate remains untamed, the Naira’s purchasing power will become seriously diminished and the N1000 note may ultimately be worth less than a dollar. Price stability is threatened and the economy will invariably underperform whenever the CBN readily admits its unending engagement in a very costly battle against perceived systemic surplus Naira.

So the critical questions should therefore be, what causes the evidently systemic excess Naira liquidity and why is CBN losing the battle to wrestle inflation to best practice rates below, say 4% and protect our incomes and industries. Naira supply will obviously increase if government continuously prints more Naira or borrows heavily without caution to fund its budget, as clearly demonstrated in the 2016 budget structure. Furthermore, Naira supply also increases inordinately, whenever government’s forex receipts are directly substituted with fresh Naira supply as allocations, while CBN keeps and auctions the dollars. Fortunately, the CBN also has the option to modulate money supply by establishing appropriate cash levels which banks must retain in relation to their assets.

Wombling And Fumbling With Fuel Prices

By Henry Boyo

The Petroleum Products Pricing Regulatory Agency’s Executive Secretary, Farouk Ahmed, reportedly announced, at a press briefing in Abuja on 29th December, 2015, that a revised template for fuel pricing had been approved by the Agency; the announcement was evidently the formal manifestation of the ‘modulated pricing’ model earlier canvassed by Ibe Kachikwu, the NNPC CEO and current Minister of State for Petroleum. Thus, with the adoption of the new template, petrol price will be reduced from N87 to N86 in NNPC filling stations, while other marketers would sell at a pump price of N86.50/litre.

However, in contrast to the previous static cost template, fuel prices would henceforth be reviewed quarterly to reflect fluctuations in any cost variable. Indeed, Kachikwu had also corroborated the thrust of the new template when he emphasized in an earlier press briefing in Kaduna on December 2015 that “we are not going to be fluctuating prices day to day, we are going to take like an average, and I think that today when you look at the prices, we have no subsidy, because prices remain low and that is what we need to do”. 

Kachikwu’s statement probably suggests that the reviewed fuel price has fallen below the existing subsidy threshold of N87/litre; consequently, government decided to pass on between N1 and 50Kobo/litre discount on petrol prices to the public, despite the oppressive N2Tn projected loan required to fund 2016 budget deficit. The PPPRA’s modulated response to fuel pricing is allegedly a demonstration of government’s “honesty in being able to sell products to Nigerians at affordable prices that make sense”. Nonetheless, the Minister is certain that we still need to get out of the subsidy debacle, because, according to him “the reliability and affordability of subsidy are issues we need to get away from, whether or not you believe in subsidy”.