Opinion

Memo to the Vice President

Mr. Vice President, Professor Yemi Osinbajo I crave your indulgence to address you through this medium following your now accustomed brilliant presentation during the midterm review of the performance of President Muhammadu Buhari ministerial team.

 

It was by all account an impressive outing which I suppose continues today as we read that the review is a two-day affair.

 

Mr. VP I listened to your comments yesterday and I have since been inundated by friends who know my stand on some of the issues you broached during your presentation with regards to the rate of exchange of the naira and the need for collaboration between the monetary and fiscal authorities and the need for us all to keep hope alive on the ability of this administration to deliver the goods.

 

I have taken the courage to send you this memo in my firm belief that we all have a shared interest in the future prosperity of Nigeria; in deed to capture this sentiment more succinctly, we all have an insurable interest to do so.

 

And also to offer an alter  native narrative on discussions on the Nigerian economy. If you like to play the devil’s advocate with the firm intention to leverage on experience to plead for caution. Mr. VP I expect you must have heard my name as I have engaged in the Nigerian public space since the mid-eighties when I returned to this country with my doctorate degree in Business Administration from the prestigious Manchester Business School, England. Before this time I had studied Mathematics at the University of Lagos. So like you I am a proud Akokite. I also passed through King’s College, London where I studied Operations Research (Applied Mathematics) for a master’s degree. Not being a dyed in wool economist I am fortunately neither hoodwinked nor enamoured with the theoretical postulates of economics as most of my other colleagues are. As should be expected from my background I am an unrepentant pragmatist who would only allow himself to be guided by the light of experience. Here are some basic incontrovertible facts about the naira’s exchange rate. It is the safest thing to wedge a bet on the progressive fall in the rate of exchange of the naira. This rate since 1986 when this country introduced the Structural Adjustment Programme aimed at achieving a diversified productive base of the Nigerian economy to reduce the unwholesome dependence on oil for foreign exchange inflows and to enthrone market forces for the allocation of resources thereby achieve the elimination of all subsidies has maintained steady fall. We recall that the rate was N22 at the official window and N86 at the alternative in 1986! And Mr. VP this trend is not likely going to change very soon. You would recall that when your administration came into office that the rate was around N160 to the dollar. Today at the official window the rate is above N400 to the dollar. This is the equivalent of over 150% loss in the value. And the opposition as you must have experienced will use this metric to taunt you as evidence of the extent to which the economy has been mismanaged under your watch. Yes we must all factor in the pandemic experience but some of the loss in value arose from the attempt by the Central Bank to answer to the criticisms by multilateral financial institutions such as the International Monetary Fund (IMF) to allow the market to determine the rate of exchange in line with the recommendation you have just made. Mr. VP there is no market for dollars in Nigeria and that is the unadulterated fact.

 

And regardless of what is being said now, the fact is that on a number of occasions in the past the Central Bank served notice of its intention to withdraw from the market to play the role of swing supplier of foreign exchange.

 

But there were no alternative sources and the naira continued to progressively lose value only for the Central Bank in response to return to the market to continue with its demand management approach.

 

Mr. VP, believe you me all this talk about devaluing the naira to release dollars held by individuals and to attract investors would only have one predictable consequential result – further loss in value in the rate of exchange which will only exacerbate the misery index in the land.

 

I don’t know to what extent you are in tune with the inflationary pressures today in Nigeria. It is alarming and we might confront unrest if the scenario of worsening rate of exchange becomes an existential reality.

 

 

 

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