By Henry Boyo
The Director General of the DMO, Patience Oniha, revealed, at a press briefing in Abuja on 15th August 2018 that Nigeria’s public debt, had apparently risen from well below N3Tn in 2007 to over N22.30Tn ($73.21bn) by June 2018.
Incidentally, before Buhari’s government took over in May 2015, Nigeria’s debt burden stood at N12.2tn. Inexplicably, however, despite the bloated debt level, and the steady income from Crude oil export, over the years, Nigeria became identified, earlier this year, as the prime contributor to world poverty!
The above title “CBN Don’ Kill Us, Senate Don’ Fail Us!”, was first published in July 2007; the article examines the fundamental cause of increasing debt and deepening poverty in Nigeria. Please read on.
“The biblical verse ‘my people suffer for lack of knowledge’ will probably remain, eternally true. Lack of knowledge has clearly led to individual and collective poverty, despite the bounteous resources within our reach! Regrettably, we have managed to bring down the relative poverty rating of our people, to the bottom of the international ladder, despite the abundant blessings of nature and several years of bountiful export earnings.
However, Nigerian Senators missed a golden opportunity to improve their knowledge of the operation of the Nigerian economy, when Dr. Shamsudden Usman, CBN Deputy Governor appeared for ministerial screening. More Nigerians may not be aware that the abject poverty of our people, today, can be traced to the unorthodox self-serving manipulation of the instruments of monetary and fiscal policy by our own CBN and the Finance Ministry. The panache in the CBN’s D.G. response to a question on Nigeria’s external reserves, and the Senators timid acquiescence to failed logic, may be an indication that members of the Upper House, probably know very little about how an economy works; consequently, they clearly missed the implications of Dr. Usman’s submission.
To facilitate our comprehension, the following excerpts are from the ministerial candidate’s ‘sordid’ revelations: “If you break down this $43 billion (reserves), about $31 billion or 71% belongs to the CBN. We are like a bureau de change.
The money was earned by the federation; they brought the dollar to the CBN. We took the dollar and gave them naira and they have spent the money. So, all the three tiers of government have shared this $31 billion and spent it. It is like you go to a bureau de change: they give you naira; you go and spend it, then you come back looking at the dollar and say the money is there”.
“So, $31.3 billion of this money is not available for spending…. The only amount available in the Federation Account for distribution, which is the so-called Excess Crude is about $9.9 billion…” (D.Independent, 8/7/2007, pg. A3)
If anything, the above narration vindicates my insistent observations, in this column, of the obtuse manner, in which, our dollar export earnings are suicidally infused into the economy. But much more than that, Dr. Usman’s revelations raise a host of questions which glaringly beg for answers.
It is unfortunate that Usman appears comfortable to see the role of CBN as no different from that of forex mallams at Martins Street or Alade Market; however, what is more disturbing is his patently false claim that the dollars earned, by the federation, were brought to CBN for changing; the question is, who brought the billions of dollars to CBN, and which of the constitutional beneficiaries (i.e. the three-tiers of government and Ministries and Development Agencies) approached CBN to exchange their dollar allocations to naira?
Why would a beneficiary, who is not retarded, ask CBN to change their dollars to naira, only for that beneficiary to repurchase the same dollars, when required, from intermediaries, at presumably, higher cost than the original rate at which the export dollars were converted by CBN before the naira sum was shared?
Even a neophyte businessman, in the Senate Chambers, would have asked Dr. Usman how the CBN arrived at the applicable exchange rate or who, infact keeps the profit on billions of dollars CBN sells to banks and forex intermediaries.
The claim by Usman that CBN had paid a naira equivalent of $31bn to government is a tacit admission that the apex bank must be engaged in a continuous printing/creation of loads of naira in exchange for the increasing volume of dollars earned from crude oil export to inadvertently, suffocate the market with naira to continuously depress naira’s exchange rate! Invariably, the CBN’s role as prime supplier of both dollars and naira, is an excellent example of a grossly imperfect market! In glossing over Shamsudden Usman’s superficial explanations of CBN’s monetary operations, the Senate exhibited lack of commitment to identify the root cause of the failure of government’s economic policies, despite our bountiful resource base and increase in export revenue over time.
The Deputy Governor’s pyrrhic advice that any attempt to spend the balance $8bn in the so-called “excess crude account”, (the only dollar revenue that belongs to the federation, according to Dr. Usman’s testimony) would “create a cloud or smoke of inflation”, is also an overt admission that payment of naira in place of $31bn dollars revenue is actually, responsible for our continuous state of excess liquidity (or too much paper naira in the system) and the compelled need also to waste about N260bn of taxpayers’ money as interest payments, for the cost of borrowing perceived ‘excess’ cash from the tills of beneficiary commercial banks by our Central Bank, so as to restrain an inflationary spiral.
Our honourable Senators obviously did not see the connection between fruitless government borrowings of such magnitude and the burden of our current national local debt of about N2 trillion. If Usman had been pressed, he would have confounded the Senators with the reality that, for fear of inflation, most of the moneys borrowed, primarily from banks, and for which government is paying so much interest, is actually, just stored away in vaults and accounting records and never, applied to enhance social welfare!
Any discerning observer will conclude from the above, that CBN’s practice of unilaterally converting our export dollar earnings into naira is actually the real monster in our economy; it is the obstacle to our growth and also explains why our people have gradually become poorer, despite increasing export revenue.
Invariably, if this obtuse system continues, the poverty level of our people will further deepen inspite of higher dollar income.
Unfortunately, the Senate let the ‘real killer’ free, but Nigerians would have confirmed their fate to economic deprivation, if we all choose to keep quiet in the face of the oncoming onslaught on the wellbeing of our people!”