‘’I Will Tackle The Challenges That Stagnate The Economy’’ – Tinubu

 By Suleiman Umaru

 It is no longer news that  Asiwaju Bola Ahmed Tinubu, a former governor of Lagos state and now President of the Federal Republic of Nigeria and Commander-In-Chief, C-In-C, of the Armed Forces,  has promised  to tackle headlong   oil subsidy  and multiple exchange rates, implemented by the erstwhile Muhammadu Buhari’s Administration  that had had stagnated the economy within the last eight years.

The Lagos state born Nigerian President was said to have directed the Central Bank of Nigeria, CBN,Godwin Emefiele, to streamline the country’s multiple exchange  rate policy . The Nigerian President  may have used the opportunity of the  meeting with the All Progressive, APC, governors  at the villa,  on Friday, June 2, 2023,  to restate that ‘’the decision foretell good intentions for the economy’’.  He was emphatic.  ‘’We will not have ‘’multiple exchange rates anymore’’.

Note that in a multiple exchange rate system, there both fixed and floating exchange rates in the market.  According to a CBN, source, the market is divided into many segments, each with its own foreign exchange rate, whether fixed or floating. It was not surprising why   importers of certain goods essential to the economy   were made to have different exchange rate  while importers of non-essential or luxury goods were made to have discouraging  exchange rate.     

There are indications that ever since the former Lagos state governor   volunteered information   to streamline the country’s foreign exchange market,   the Nigerian Currency, the naira,  ppears to have appreciated significantly at the black market. This is evident as the naira which exchanges at N770.00 to one North American country of the United States, US, dollar was said to have dropped, to N757, at the parallel market. Until Tinubu’s Administration took the bold initiative to streamline the country’s forex market, the gap between the official exchange and the black market rates of the US, dollar to the naira was a little above N300.00.

Mohammad Sanusi, a former governor of CBN, and the deposed Emir of the ancient town of Kano, by Abdullahi Gandunje, the immediate past governor of Kano  state had said what this means  if  someone  can get $100,000, at the official exchange rate market and round trip it , you  make a profit of N30 million. He further stressed that if the person gets a million dollars, at the official market and sell at the parallel market, you can make a profit of N300million without doing anything. 

Sanusi: Immediate Past Governor of CBN

An ggrieved Sanusi had said that there is no country in the world where the government create this kind of opportunity for rent seeking and you expect  people not to take advantage of the rent  and make Hcheap money and you are asking them not arbitrage.  ‘’I know something that I can get for N400.00 and sell a N700.00,and should not arbitrage .  Appearing on the Channels Television recently, the no nonsense former CBN, governor, had said that there is no way the government can create such opportunity for people and ask them   not to arbitrage.

The former CBN , governor  had repeatedly said that the problem of Nigeria is of the government making but nobody s to have listened to him. It was not surprising why the erstwhil CBN, governor had reapeatedly said that that the problem of the country is of our own making. He was emphatic that there is no way that the government through the apex bank would be selling the US, dollar, at below the market rate and not expect arbitrage and graft.

He has lamented that that is why a small number of people become multi-billionaires overnight for doing anything but arbitraging foreign exchange. He had said that ‘’it is the same thing that happened in the oil sector with the oil subsidies.  

The deposed Emir of Kano , who had repeatedly unbarred his mind since 20211 and now, had said   that the problem of the  country is the multiple foreign exchange  rate and the subsidies free-for all, describing as the major sources of revenue leakages in the country and which must be blocked by the incumbent President Tinubu.

   Even the Nigerian Economic  Summit Group, NESG,  was said to have asked  the CBN,  ‘’to address  the  challenge of the multiple exchange rate windows in August 2022   as a way to improve the inflow of foreign investment  and diaspora remittances .The Group had said that  the multiple exchange rate windows being implemented by the Buhari’s Administration  creates room for’’ speculation, round-tripping, cronyism,  and outright graft’’, confirming what Sanusi, a former CBN, governor had said. The NEG, was said to have made it clear to the CBN, Authorities that there is no better time to harmionize the country’s multiple foreign exchange markets than now but that was how far it could go.

  The International Monetary Fund, IMF, and the World Bank, were said to have long advocated that the counry’s forex be streamlined and oil subsidy to free funds for infrastructural development of the country. But former Buhari’s Administration had turned a deaf ear to such appeals and   had continued the implementation of the revenue draining policies.

The  pressure of the IMF and the World Bank  including other Financial Institutions on  the Nigerian government  to jettison   its  multiple foreign exchange rate system and  maintain  a single  exchange policy was so pronounced in 2022, that  that Emefiele , was said to have responded  that ‘’the country cannot afford  to operate a floated  exchange rate system’’.

The Nigerian apex bank governor was said to have made it clear to David Malpas,  the then President of the World Bank, , IMF and the World Bank, that  different countries  were facing  diverse economic challenges and thus,  must develop  a framework  peculiar  to their economic situation  and not tell Nigeria to jettison the multiple exchange  rate policy.

Emefiele: Governor Of CBN

Emefiele may have  had his reason for insisting that the country will not jettison the multiple exchange rate policy  on the ground that if it is freely floated , it will have  some  impact on the exchange rate itself  as it will have some uncontrollable  spiral effect  in the country’s exchange  rate’’. The question on the lips of most people was: Will he still maintain the position now that the President has asked him to go back to the drawing board and come out with a single exchange rate for the country. Your guess is as good as mine.  

Financial analysts had said that there  was nothing wrong  with the multiple exchange policy, describing it as transitional in nature  and used to alleviate  excess pressure  on  foreign reserves  when a shock hits a country’s country  and  causes investors to panic  and pull out. They noted that it is also a way ‘’to subdue inflation and importers’ demand for foreign currency’’.

They further stated   that ‘’it is a mechanism by which governments, can quickly implement control over foreign exchange transactions. But economists had said that it can lead ‘’to economic rents’’, confirming what Sanusi, the deposed Emir of Kano had said.

President Tinubu, who had said that government is a continuum and that he has’’ inherited the assets and liabilities’’ of the previous Administration but would not complain, may not have wanted to make the same misstate like former President Buhari, as he may have refused to give room to the rent seekers in the system or and loses in foreign exchange transactions, by urging the CBN, to unify the multiple exchange rate policy.  This may have informed why the apex Bank printed more money during the then Buhari Administration to make up for the loses in foreign exchange transactions and the resultant effect was  the rise in inflation in the economy.

There are four major exchange rate systems that have been recommended by the World Bank that   that could be implemented by any country. They  are the freely floating, the fixed rate , pegged float also known as  adjustable  peg, crawling peg, basket peg or target zone  or bands and  managed float  rate but the two most common types implement by countries   are the fixed rate regime  and the floating rate regime.

Given that  the Trade Union Congress , TUC  and the  Nigerian Labour Congress, NLC, opposed to the removal of the oil subsidy  by the Tinubu’s Administration   has threatened  to mobilize members on  Wednesday , June 7, 2023, to protest against the government economic  policy,  Vice President Kashim Shettima, who incidentally  was a former governor of Borno state ,   was said to have called on  the governors,  ‘’to rally  around  the President  as he tackles  the challenges  facing the economy   like the vexed  issue of  oil subsidy  and multiple  exchange rates  to free resources for development  of the states’’.

Uzodinma: Governor, Imo State And Chairman, APC,GF

Senator Hope Uzodinma, governor of Imo state and Chairman of the APC,  governors Forum,  who may have spoken the mind of the  governors at a recent meeting with the President at the villa ,  was said’’ to have pledged their loyalty and support  to the  former Lagos state  at this trying time of the country’’. 

Even Seyi Makinde, governor of Oyo state, on the platform of the Opposition People Democratic Party, PDP, who was said to have accompanied Nyensom Wike, immediate past governor of Rivers and James Ibori, a one-time governor of Delta state, on a recent visit  to the Villa,  to see the President  may not have  seen anything wrong with the subsidy removal or planned streamlining of the foreign exchange  market, but  has asked Nigerians ‘’to support the implementation’’.

Notwithstanding the overwhelming support which President Tinubu currently  enjoys from the ruling APC governors, over the reversal of the removal of subsidy and proposed unification of the country’s multiple  exchange  rate policy,  Femi Falana, a  Senior Advocate of Nigeria, SAN,  had said that Mele Kolo Kyari, controlled Nigerian National Petroleum Corporation , NNPC, now baptized Nigerian National Petroleum Corporation, NNPCL, with the passage of the Petroleum Industry Bill , PIB, by the National Assembly which has been signed  into Law  by the former Katsina state born Nigerian President, in August, 2021, has no powers ‘’ to increase the pump price of fuel but the President’’. 

The Legal Luminary  noted that ‘’since the current government is yet to appoint a minister of Petroleum Resources, such responsibility of fixing the pump price of fuel rests squarely on the President’’.  He asserted that NNPC,  which has metamorphosed  into a Limited Liability Company,  as NNPC limited,  is like Total, EXXON- Mobil, and Shell Petroleum Development Company, SPDC,  operating in the nation’s oil industry,  and therefore , cannot announce  an increase  in the prices of petroleum products, insisting the power is invested on the government.

 The Lagos based SAN, who could not hide his feelings   would want Tinubu, to take advantage of the NLC’S ultimatum to embark on strike over the hike in petrol prices by NNPCL, ‘’to review his position on the delicate matter’’.  

Recall that NNPCL, in the wake of President Tinubu’s Administration’s declaration that  subsidy payment ha has ended  during his inauaguration on May 29, 2023,  at Abuja, the Federal Capital Territory, FCT, had reviewed its pump price for petrol from about N165.00 to over N500.00.

 Aware that the planned protest by the organised labour next Wednesday, over the removal of the oil subsidy and the subsequent hike in petrol price may not tell good of the new Administration may have informed why the government has initiated talks with the Leadership of Labour, to see reason for the removal of the subsidy and  the steps so far taken to cushion the adverse effect on the  workers and Nigerians in general. How that would persuade the organised Labour to sheath their sword remain to be seen.  

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