Dollar don cos
by Gbenga Omotoso
It is not new. In fact, a senator, who is notorious for raising false alarm and not given to intellectual exertions, had mastered it as a veritable weapon of survival before fortune smiled at him. The garrulous fellow practised it dutifully like a family trade and elevated it into a money spinning venture, reaping bountiful financial rewards.
So proud is this cantankerous senator of his strange trade that he has been showing off its proceeds – exotic cars and beautiful homes and women – in the social media.
Now, cash-for-protest, otherwise known as “rent a crowd”, has become an all-comers affair, arranged by shadowy groups for shadowy clients desperate to attain some shadowy goals.
One of such groups was at work last week in Abuja. A small crowd of old women and youths, who obviously did not know why they were protesting, carried placards bearing inscriptions many of them could neither read nor understand. Some of them looked like scavengers on lunch break from one of the city’s huge dumpsites. Others were dressed like women hassled off their beats at the throbbing local market.
The protesters were demanding the removal of Central Bank of Nigeria (CBN) Governor Godwin Emefiele. Asked why they were up in arms against Emefiele, one of them replied: Dollar don cos.
It is true that the exchange rate has gone crazy. The naira has been so devalued that many are wondering if it will ever recover. Inflation, which averaged 9.69 per cent from 2007, has hit 17.20 per cent. Consumer prices have jumped by 17.1 per cent. Lending rate, which officially remains at 18 per cent, has gone up to as much as 27 per cent.
Ask a roadside trader why his gari is so expensive, she would swiftly reply: Oga, dollar don cos. Do we also import gari?
In my layman’s view, we are all guilty of fuelling the situation that has hobbled and humbled us this badly. The government did not see the wisdom in saving for the rainy day. A massive import regime ensured that foreign reserves were quickly depleted. We all developed a gluttonous taste for foreign goods, including many we never needed. Toothpicks, lipsticks, chopsticks and lolly sticks. We imported them all. And more.
Manufacturing, subdued by high inventories buoyed by our deadly taste for foreign items and high cost of production, suffered a big slump from which it has been struggling to recover. Jobs were lost, especially in the textile sector that employed thousands. Smuggling thrived.
Successive administrations thought oil, the mainstay of our economy, would be like a Lagos party that won’t ever end. They made no effort at diversifying the economy. No thought about developing its petrochemicals, to lay a foundation for a truly industrial economy. Today, an oil producing country spends some 40% of its forex – forex that it does not have – on importing fuel for its local needs. Besides, corruption became a buffet for which our leaders and many of those in positions of trust developed a voracious appetite, gorging themselves to death. Oil price crashed from an all-time high $147.27 a barrel in July 2012 to $100 in 2014. It is now struggling at about $50 a barrel.
Nigeria could not at a point meet its quota as a new militant group, the Niger Delta Avengers(NDA) smashed oil facilities and threatened to cripple the economy if its requests were not granted.
Now we are reenacting our age-old tradition of seeking scapegoats for every self-inflicted ailment, blaming it all on Emefiele. Wrong. Damn wrong. We are all guilty.
The organisers of that protest obviously thought their push would move the government into giving Emefiele the push. That would have been rash and harsh. No government will surrender to mob mentality, closing its eyes on the international community which will lash us for being inconsistent. Besides, all the economic indicators will change for the worse and the recession into which we have plunged ourselves will get longer.
It can’t be worse than this, I can hear you say. It is true that these times test the patience of all patriots. In fact, I don’t share the view of some experts who say the recession will not last too long. It is not a 100 metres Boltean dash for speedsters. It is, indeed, a game of endurance. A marathon? Well, too early to say.
We should examine ourselves and think of the economy’s future and not the future of its handlers, including Emefiele, by personalising a national emergency. Experts claim that the sure way of exiting a recession is deploying aggressive fiscal and monetary policies, including massive spending.
Its efficacy has been proven in the American case that became a major headache in 2009. New credit lines were opened, interest rates lowered and bank debts guaranteed, among other measures. Banks were subjected to stress tests and new funds were injected into the weak ones. The government embarked on a string of stimulus measures, spending close to $1trillion.
Housing and automobile industries were rescued. Today, American vehicles are some of the best on any road. Mortgage rates went down to save housing. There were no street protests to force out Federal Reserve chair Ben Shalom Bernanke, who President Barack Obama referred to as “the epitome of calm”.
Finance Minister Kemi Adeosun says over N400b has been spent on capital expenditure as at August. About N60b more will be spent, she says. These, it seems, is a drop in the ocean. The thinking is that if the government pumps money into capital projects, more companies, especially in construction, will reabsorb their sacked workers who will have money to spend.
Simple? Not quite. The government is hampered by the twin problem of revenue generation and due process, which precludes it from spending money without following some rules – to check corruption, among other reasons.
An attempt by the President to seek an emergency law, which will enable the government to fast track its actions, has been denounced as a journey to dictatorship by critics who won’t bother about the merits of the request.
The government is, sadly, the biggest player in the economy. If it fails to spend money, the citizens will have no money in their pockets. Many states can’t pay their workers. Local debts remain a mountainous burden. Capital projects are stuck.
Many have blamed the high interest rates on Emefiele. I disagree. The CBN governor does not control interest rates. That is the job of the Monetary Policy Committee (MPC). If the banks were as patriotic as they should be, they wouldn’t jack up their interest rates too far above the Minimum Rediscount Rate (14% MRR) even as repayment rate is poor.
These times have, indeed, demystified our banks. They used to declare incredible profits, their directors-and workers living like Hollywood stars. Not anymore. The Single Treasury Account (TSA) has stripped their vaults of government funds. Now, they funnel the forex that should have gone into importing key materials to the black market to harvest naira. The CBN recently punished 10 of them. Are they repentant?
So far, the CBN has ensured that no bank has collapsed. Depositors have developed a high level of confidence in the system. It is left for the banks to show that they can still perform their traditional roles and that they are no trading posts for currency speculators and gamblers. Of what benefit are huge profits when factories are closing down? Even the banks are being restrained from embarking on massive layoffs.
Amid the hunger pangs, Nigerians have found a strange sense of morbid humour. Consider this “recession joke” sent to me by a friend: “A carpenter was travelling to the next town with a coffin in his car. His car broke down. He decided to carry the coffin on his head. He got to a police check-point. The policemen wanted some roja.
“Police: Hey, young man, why are you carrying a coffin by this time?
“Carpenter: Sir, I don’t like where I was buried, so I’m relocating.
“Come and see speed.
“Carpenter (laughing): Fools. All you know is bribe.”
Despite the shenanigans of politicians who, instead of tackling budget deficit and controlling their greed, are asking the Central Bank to surrender its independence, Emefiele has remained calm. The trouble is not with him. We are all guilty- cut-throat round tripping bankers who charge killer-interest rates that make repayment impossible, the rich and their champagne life and the ordinary folks to whom local goods, including rice, are inferior.
We should all support the tortuous battle to diversify the economy. After all, an expert, Ha-Joon Chang, once said the economics is too important to be left to economists. Little wonder Israeli-American Daniel Khaneman was awarded the Nobel in economics without taking a course in the science.
A state is set to ban the consumption of imported rice. Extremist? Well…that is neither here nor there. We need to start from somewhere. Will other states do something? After all, dollar don cost.