Deploying security men to raid parallel markets offers no solution to the economic challenges
The Law Reform Commission is reported to have submitted a draft legislation to jail Nigerians who hold United States dollars beyond a 30 -day time frame. While the Senate has said it will not entertain the proposal, contingents of Directorate of State Service (DSS) officers have been raiding parallel market money changers in major urban centres like Abuja, Lagos and Kano. Similarly, the Central Bank of Nigeria (CBN) which had earlier on announced a deregulation of foreign exchange rates has made pronouncements that seem more political than practical in the circumstance.
All these arbitrary and coercive measures are united by their regimental nature that seems to be the preferred method of President Muhammadu Buhari and his administration. Yet, what is forgotten is that a fragile economy like ours, especially at a time like this, will not respond to dictation that is not backed by concrete measures. Besides, in today’s world, a nation’s economy depends on coherent and well thought out policies to produce a stable and reliable exchange rate.
It is common knowledge that with the destruction of oil pipelines and other facilities in the Niger Delta by militants and sundry criminals, our production capacity has gone down considerably. According to a recent report in Bloomberg, the problem is now being compounded by the banking industry that is facing a “full blown financial crises as failed fiscal and monetary policies lead to a credit crunch”. Yet, what is difficult to understand is the response of the government to these economic challenges.
For several months, most rational analysts had advocated the introduction of a flexible foreign exchange policy to remove the subsidy the government was paying some fat cats which almost depleted our foreign reserves. We were aware that some of the people who benefitted from the rationed foreign exchange were round tripping them and selling at the black market rate thereby smiling home with between N100 and N150 per dollar.
Even when the government eventually succumbed to the idea when it had no other choice, pilgrims were still allowed to purchase between $750 and $1000 per person at N197 per dollar in what was no more than another window of corruption. Now, brute force is being proffered as a solution to what is no more than symptoms of the bigger problem of economic mismanagement.
In an open market economy which we still claim to run, it is an abomination to go chasing economic indicators and those who determine them with guns, draconian legislations and arbitrary rules. It is the forces of supply and demand and sound economic policies communicated sensibly that ought to determine key market indices such as the exchange and interest rates. The current measures therefore resemble previous attempts under military rule to invade and abuse civic rights under the guise of instilling economic discipline.
A cursory look at the entire economy says it all. Exchange rates have continued to go up in the face of dwindling oil prices and falling crude export volumes. A lot of the existing credit facilities in the loan books of banks have come under severe pressure particularly in the oil and gas and power sectors of the economy. Bank stocks are at very low levels. As things stand today, the entire economy is bleeding. Inflation and unemployment are on the rise. GDP is on a steady decline. Many companies are responding to the recession by cutting costs and laying off staff. And several of the banks tell their customers outright that they are not lending.
Given all these and more, deploying security men to the streets to raid parallel market money changers is primitive and offers no solution to the myriad of economic challenges Nigerians now grapple with. What the economy need is a sound and stable monetary policy framework