The Central Bank of Nigeria’s (CBN’s) circular dated June 23, 2015 aimed at conserving our fast-depleting foreign reserves has been attracting commendation and knocks from various quarters. It would appear however that the recent write-up in The Economist titled “Toothpick Alert: Desperate measures from the bank” is the most orchestrated and brazen attempt aimed at rubbishing and undermining the policy.
The CBN circular, which was signed by the Director, Trade and Exchange, CBN, Mr. Olakanmi Gbadamosi, stated that it was imperative to exclude importers of some goods and services from accessing foreign exchange at the Nigerian foreign exchange market in order to encourage local production of the items. The implementation of the policy is meant to help conserve foreign reserves and facilitate the resuscitation of domestic industries as well as generate employment in Nigeria reports The Punch.
According to the circular, the importation of these items are not banned but importers are directed to source their funds anywhere but the Nigerian foreign exchange market.” The list of 40 items include cement, margarine, palm kernel, vegetable oil, poultry products (chicken, eggs and turkey), Indian incense, tinned fish in sauce (Geisha, Sardines), cold rolled steel sheets, galvanized steel, roofing sheets, wheelbarrows, head pans, metal boxes and containers, and enamelware. Others include steel drum, steel pipes, wire mesh, steel nails, wire rods, security wire, wood particle and board, wood fibre boards and panel, plywood board and panel, wooden doors, toothpicks, glass and glassware, kitchen utensils, tableware, tiles and wooden fabrics, plastic and rubber products, and soap and cosmetics.
Strangely, the Economist’s write-up which has no by-line and is not an editorial, displayed either inverse logic or puerile mischief when it opined that the CBN has no business “puffing up its exchange rate” as “defending currencies against bloodthirsty speculators…cause untold harm to economies”
The ghost writer in the economist noted that “The naira has been hit hard by a fall in the price of oil, Nigeria’s main export. The official exchange rate has slumped by almost 20% over the past year to about 196 naira per dollar. The black market rate, a more accurate gauge, is close to 230. Instead of allowing the naira to devalue, the central bank is trying to defend it by blocking imports. It has drawn up a list of disfavoured goods, and will not grant foreign exchange to import them”. The writer however went on to claim that “economists find the policy baffling”. It however becomes clear that the writer is on to a hatchet job when he or she reveals that “Some (investors?) wonder which would be worse for Nigeria: allowing him (Present CBN Governor Mr. Godwin Emefiele) to serve the remaining four years of his term or undermining the independence of the central bank by sacking him”.
This is a most repugnant piece coming in from an otherwise respected publication like the Economist. The write-up was full of innuendoes and extremely short on facts and deep analytical fervour. Surely, it is the duty of every central bank to protect its currency and promote its economy. Japan and China for decades have kept their currencies low because they have a robust productive economy and therefore want their exported manufactured products to be competitive against the Dollar and the Euro. Nigeria with a virtual mono-product exporting economy has for decades compounded its economic challenges by unwittingly funding the unrestricted imports of all manner of products abou 90 percent of which can be produced better (and ultimately, cheaply) by local industries. The reverse is the case in Nigeria since we foolishly chose to import virtually all we can produce.
No doubt, the unidentified writer must be an agent of the many foreign and local hawks in Nigeria who parade themselves as investors but bring next to zero foreign exchange into the country while with the connivance of unpatriotic elements in the government receive licences and waivers to import every and anything they fancy and dump into Nigeria. May be the writer will celebrate the fact that in the 1980s Nigeria’s textile industry directly employed about 300, 000 staff while today there are just about 20,000, no thanks to ‘investors’ who bid for our forex to import cheap textiles and fabrics from China and Asia. The same applies to food products. It has been widely reported that Nigeria is a dumping ground for substandard/expired rice, tomato paste, chicken, spirits and even chocolates. These are usually sourced with our dwindling forex and the profits also equally converted into hard currency and quickly repatriated from Nigeria.
Informed observers cannot but commend the CBN under Emefiele for being bold enough to take this all-important step even if it is coming a little too late. The CBN must be resolute in its position and the various arms of government must be prepared to fend off the vicious and unpatriotic lobby that will no doubt be launched by these agents of Nigeria’s economic darkness who will unleash everything in their arsenal to force the CBN to revert to business as usual. The Presidency and National Assembly must close ranks to open up productive activity that will exploit our human and natural resources to rebuild our economy by further developing and executing policies that will create value and force investors to really invest in the real sector and create employment and wealth for the good people of Nigeria. Clearly, prices of those goods will increase in the short run but if the policy is not sabotaged as is the usual practice, we can become self-sufficient in the above-listed product. It is trite knowledge that ‘no pain;no gain’.
After our recent unpalatable experience with over-celebrated apologists of western economies and Brenton-Wood institutions like Dr. Ngozi Okonjo-Iweala, we should realise that only local solutions can lift us from our economic doldrums. May we be reminded that Ghana was the pride of Africa in electricity delivery until a needless intervention from IMF led to a complete degradation of its standard and today the country is grappling with keeping its citizens in constant darkness.
Mr. Roberts U. Orya Managing Director/Chief Executive Officer, Nigerian Export-Import Bank (NEXIM) captures the need to support the CBN position when he says in a recent Economic Confidential Publication that “One of the reasons why economic diversification is an imperative for Nigeria is because the country is too richly endowed with natural assets for us to concentrate on tapping just one. The one we have concentrated on – oil – is a depleting asset. And then, the production of hydrocarbon resources employs too few labour for Nigeria’s fast-growing population and huge workforce.
Therefore, the economic diversification model that the country needs is one that can help absorb fiscal shocks, fend off monetary instability, provide employment for the teeming work-age population as well as generate more revenue for the government to meet its commitments to the people…. The most important recommendation for promoting Nigeria’s agro-industrial sector is the potential for job creation across the agric value chain. The value chain of the agric sector is well capable of generating additional ten million jobs over the next decade, and it can serve as one of the centre pieces of capital formation in Nigeria’s new economy. Indeed, agro-processing promises exciting prospects for inclusive growth and social stability.”