By Dr Samson Osagie
On Tuesday 26th September, 2023, the Senate of the Federal Republic of Nigeria resumed plenary and began the screening of nominees of President Bola Ahmed Tinubu for the positions of Governor and Deputy Governors of the Central Bank of Nigeria (hereafter referred to as “CBN”) in line with Section 8 of the Central Bank Act, 2007.
The section provides:
“8. (1) The Governor and Deputy Governors shall be persons of recognized financial experience and shall be appointed by the President subject to confirmation by the Senate on such terms and conditions as may be set out in their letters of appointment “.
The President had by a letter dated 15 September 2023 addressed to the President of the Senate nominated Dr Olayemi Michael Cardoso as Governor of the CBN. Mrs Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor, and Bala Bello were also nominated as Deputy Governors, subject to confirmation by the Senate.
The CBN has a statutory duty to regulate the country’s monetary policy and ensure price stability, issue currency that is the legal tender for the nation, serve as a bankers’ bank, maintain external reserves to safeguard the international value of the country’s currency, promote a sound financial system for Nigeria amongst other things (see Section 2, CBN Act).
During the screening of the nominees, Senators asked the CBN governor to designate various questions concerning the mandate of the apex bank to which the nominees responded with an affirmative commitment to an apolitical CBN that will be a stickler for rules; and pledged to ensure compliance with regulations set out for the management of the country’s monetary policy. Dr Cardoso in particular promised to embrace compliance, assuring that under his leadership, the apex bank would remain apolitical. According to him:
“I believe that the Central Bank under our watch will have no choice but to embrace a culture of compliance,”
Of particular interest in the entire screening process were the poignant views and perspectives offered by the former President of the Nigerian Labour Congress, former Governor of Edo State, and current Senator representing Edo North Senatorial District, Comrade Adams Oshiomhole.
His perspectives about how the new management team of the CBN should approach their assignment against the background of the present challenging economic realities of our nation seem to be very radical, striking, different, and illuminating.
In my honest assessment as a policy analyst, lawyer, and former lawmaker at both state and federal levels, Senator Oshiomhole’s perspectives were not only patriotic but informed and knowledgeable. In making his submission on the floor of the Senate, he demonstrated that he is not content with the unenviable attribute of a bench-warmer, who sits and merely observes proceedings of the Senate with nothing meaningful to contribute to debates on issues touching on the well-being of citizens and the progress of the country.
With his robust perspectives, Senator Oshiomhole showed that he’s well prepared for the patriotic task of assisting in advancing the frontiers of practical policy actions for the executive to leverage in the effort to deal with complex economic challenges such as the monetary and fiscal crises Nigeria currently faces. Hear him:
“Mr President and my distinguished colleagues. Thank you for this privilege to meet those who will manage our Central Bank. I want to differ radically from what seems to be the general view. My view is that I am suspicious of people whose main background comes from commercial banking because Central banking is about policy, it is not about marketing, it is not about seeking profits.
It is about getting monetary policy right with a clear focus on specific macroeconomic objectives, whether it is job creation, stabilizing price regime, exchange rate regime, inflation regime, and all of that. When listening to the CVS, people who have managed banks that have gone into liquidation; cannot be used as positive in their favour.
The truth has to be told. I am not suggesting that any of them is responsible. The doctor who parades the number of people who died under his care cannot forward that to me as his CV for me to appoint him as a Surgeon General. I just need them to take note of that. That’s what we do in our small places of work, whether they survive or fail goes to our credit or discredit. So, they should take note.
However, sir, I think at the heart of our problem, and their views on this, is that the immediate past management of the bank emphasised their autonomy, but in the real world of macro-economic management every agency’s activity runs off on another agency.
There can be no autonomy for monetary authorities without interfacing with fiscal authorities. And even these two in my view, if they do not relate with the Ministry of Trade, Commerce, because of the challenges we deal with now, listening to everybody here, everybody seems to have … submitted completely to market forces and the invisible hands of Adams Smith to regulate and determine the value of the naira.
It is now clear after Babangida started this devaluation, that market forces can never stabilize the value of the Naira. The State must intervene. Interest rates can never be at 20 per cent or 25 per cent and you are expecting the manufacturing sector to grow which requires long-term investment, an investment that requires a long-term gestation period of borrowing at 20 per cent.
Even if you are a drug dealer, you will discover that those dealing in drugs in other parts of Latin America will be more competitive. So I think that there is need for a completely new thinking outside the box.
When the West celebrates our free market, no control and so on I am always suspicious. When they come for us that we are doing the right thing, the state is withdrawing, with less regulation at a time when we can see that even at the turn of world trade, nation-states are negotiating with other nations states to have specific trade relationships.
So, I think we need this new team; we need this new team to completely think outside the box. And I will expect on this occasion, Mr President, that all the things that many of our colleagues have spoken to including my dear brother Orji Kalu if we allow Nigerians to import everything without restrictions and you have limited dollars available, the naira will continue to suffer devaluation.
The best time that you referred to Mr President was when you reminded us of the time when the naira was equal to $1.25, I was a very proud worker at a textile factory. In those days government under the policy of backward integration prohibited manufacturers from importing certain items, even some textile items, because the game of competition presupposes equality and a level playing field. You cannot ask a featherweight champion to go and engage a heavyweight champion in the name of competition.
Nigeria needs specific tools to protect industries at home and not pretend that a man with one leg can compete in a race with a man with two legs. We need a complete radical shift, we don’t need the West to clap for us, we need Nigerians to clap for us. So I want these bankers, Cardoso I have heard of you very much, when I was in the trade union we trouble each other so much when you were in Lagos and now we will trouble you so that this President succeeds.
We need to keep interrogating our assumptions and ensure that we are not “copycatting” Washington, all this international finance capital. It is their interest, there is no such thing as a common interest.
So, Mr President, I thank you for allowing me to talk this much, because if this President is going to deliver on the Renewed Hope, he must devise new tools away from the invisible market to visible hands that can be held responsible and accountable for our collective future. Thank you Sir”.
Comrade Adams Oshiomhole’s submission on the need for a new stratagem in the management of our nation’s economy is apt to the extent that medieval economic theories of free market economy do not seem to be in tune with our domestic economic realities. And I cannot agree more with him.
For instance, in the conceptualization of a free market economy where the forces of supply and demand are seen as determinant factors in regulating economic growth and development, theorists like Adams Smith and some of his disciples like Ronald Coase, Milton Friedman, Ludwig von Mises, and Friedrich A. Hayek, never contemplated an economy where institutions like the CBN will deliberately ignore rules and embark on unconventional practices such as free foreign exchange allocation to top government officials who in turn creates artificial scarcity and thus negatively impact the exchange rate policy.
They did not contemplate access by powerful private entrepreneurs to the vaults of the Central Bank for so-called private investment to the detriment of the health of the economy.
Thus, the argument against critics of the free market economy to the extent that a free market economy has the potential of creating a robust market that can adjust or internalize the supposed market failures falls flat in the face of the broken objective economic conditions of our country in which corruption and all forms of unimaginable economic crimes hold sway.
Several persons across the divides have agreed with Senator Adams Oshiomhole’s perspective on the need for a new approach to the management of our economy. For instance, a Senior Lecturer in one of the leading tertiary institutions in the United Kingdom, Dr Victor Ebenuwa posted the trending video of Sen. Adams Oshiomhole on a platform and said “Please, listen to Oshiomhole talking at Cardoso’s screening exercise.
This is leadership talking. He knows what he is saying. He is factual and practical in marshalling out his points”
Comrade Sunny Aguebor, a businessman and a People’s Democratic Party candidate for Oredo Federal Constituency in the 2023 National Assembly elections submitted pointedly, “My dear brother, Oshiomhole is a true patriot”. Commenting on the submission, a scholar of Comparative Politics and a Lawyer, Dr Washington Osifo opined, “Sound mind in a sound body. A nationalist of high repute. This is the way to go. Courage to speak truth to power. Say it the way it is. A true friend who desires your success needs not to pamper you.
But one who masquerades as a friend, out of selfishness, often lacks the courage to say it bare. I prefer friends who constructively criticize me, they mean well to me. Well, done my distinguished leader”.
In his assessments of Comrade Oshiomhole’s eloquent submission, a Business and Finance Analyst, Dr Alexander Osarogue, who is based in Greece submitted, “Of course, his submission was apt. He was echoing the Chinese strategy of competing in the global market.
“The Chinese disregarded the laissez-faire dictates and used a bit of government interference to regulate its exchange rates. A position the Americans screamed foul play to by calling them a currency manipulator.
“China knew what was best for them and stuck to their guns even when it was against existing economic dictates. Refusing to let Adam Smith’s unseen hand determine its exchange rate created the current prosperity of China.
“However, replicating the same result as China requires us to be an economy that produces rather than consumes as the outcome would be sub-optimal if government interference in setting the rates is not done with a very concrete objective in mind.”
But beyond the eulogies for Comrade Oshiomhole’s eloquent submission about the necessity of new thinking, there lies the challenge of dealing with a high inflation rate which now stands at 22.50 per cent as of August 2023 which is the consequence of the astronomic rise in the cost of petroleum products following the removal of the subsidy by this administration.
Small, medium, and large scale businesses are daily groaning under the heavy weight of the high cost of energy with diesel cost hovering around nine hundred to a little above N1,000.
The cost of PMS is above N600, while kerosene and gas prices are above N1,200 per liter and over N11,000 or 12.5kg respectively.
On the foreign exchange side, the free fall of the Naira like an aircraft that has lost its engines is both unimaginable and catastrophic to the economic wellbeing of the citizens and the entire economy.
As of Tuesday 26th September 2023, a dollar is exchanging for more than N1,0000. Who would have thought that this would ever happen in Nigeria?
All told the nation’s economy is in a critical condition requiring extraordinary measures to revamp its ailing structural economic parameters and halt the slide into the precipice.
The good news is that this government seems to be heading in a direction that gives some ray of hope with the team of tested economic managers on both the fiscal and monetary sides to deal with the crisis.
But, unless the government finds a way to deliberately intervene in stabilizing prices and exchange rates while at the same time focusing on granting incentives for more exports of foreign exchange earnings, the consumption nature of our economy will take forever to heal.
This is the time to do what China did, by looking inward and taking drastic measures that will curtail the downward slide of our economy and reflate it for long-term economic recovery. I join others to salute Sen Adams Oshiomhole for providing a basis for this discourse.
