Economic growth and consensus

The recent decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to stay action on moving the naira closer to equilibrium through the much expected devaluation or foreign exchange liberalization may have pitched government against some analysts. The analysts had before Wednesday’s decision thought that based on the dwindling fortunes of the economy occasioned by continued fall in oil price, the CBN was going to embark on a formal re-opening of the interbank FX market – at least some minor step towards the resumption of two-way trading.

There is no doubt that last year was a wasted year for businesses in Nigeria and the revenue position for the government has not shown great prospects for the new year either. This is because businesses are shutting down for lack of foreign exchange to either import some basic raw materials or the higher volume of local currency required in exchange for the green-back following the continued depreciation of the naira. The onus is on the government to ensure that 2016 does not pass without taking the critical but painful steps required to reduce economic collapse, particularly as experienced last year and therefore, begin the tentative steps back to economic prosperity.

While we support the resolve of this government and its pro-poor stance, we are unrepentant about the need to canvass urgency in the resolution of crisis in the foreign exchange market. There must be an understanding by both analysts and government that not only is time running out, but that government revenues are also shrinking and the government may no longer be in a position to do all it desires to do.

The ministers, particularly, of finance, investment, power, solid minerals, among others must rise up to their responsibilities and chart clear paths that will lead Nigeria out of the woods. Also, Nigerians are yet to feel their real impact as no plan of action has been made available to the public to know where we are headed. For instance, how much have we been able to save through the introduction of Treasury Single Account, (TSA).There may be need for periodic appraisal of the policy in terms of reduction in average monthly domestic borrowing of the government and the usual augmentation through the CBN’s Ways and Means’ (overdraft) interventions.

We are also constrained to ask about the government’s plan for the development and systematic exploitation of the abundant solid minerals wasting away in all parts of the country even at a time that we are talking of diversification?

On their part, the distribution companies (Discos) seem to have gone to sleep on development of the sector since the monthly fixed charges come in readily. We are yet to see any seriousness in their debt recovery drive even as they seem to be less bordered about fixing the obsolete equipment as well as expediting action in installing prepaid meters.

It is true that CBN cannot give what it does not have. But at critical moments like this, it should listen to popular views on the possibility of tinkering with some of the laws inhibiting businesses. There is no doubt that the economy is under serious strain as a result of the slide in the price of oil which may well continue into the foreseeable future. What the present circumstance demands is for both government and citizens to significantly adjust their consumption patterns. Therefore, we use this opportunity to call on the presidency and the National Assembly to suspend, at least for now, the the allocation of huge sums of money for importation of luxurious cars. The leadership cannot be telling the people to tighten their belts and adjust while they continue to engage in luxurious consumptions and spending. It is time for all segments of our society to make sacrifices.

Finally, we call on the CBN to continue to do all it can to alleviate the hardship being faced by genuine importers. However, the statement by the monetary policy committee of “its unyielding commitment towards achieving a stable exchange rate regime to ensure more flexibility for sustainable inclusive economic growth in the medium to long term” should serve as some measure of reassurance. We urge the committee and the bank to work assiduously to fulfil that promise.