CBN new forex window & release of Nnamdi Kanu – signs of good tidings

We must applaud the CBN and indeed the Nigerian government for finally listening to the voice of reason. For several months, we argued that the government’s preferred options for managing the fall in crude oil price and the consequent decline in both national income and foreign exchange inflow were wrong headed. Government opted to focus on managing demand instead of managing supply. Because they were afraid that if they opened the door wide open, then the reduced dollars in the treasury would fly away, not realizing that the closed door also prevented other dollars from flowing in. Thus they started with the banning of 41 items. They banned domiciliary accounts. Then they went into restrictions and allocations. They became frigid and resorted to command and control.

We warned that command and control only works in the military and not in the economy. We cautioned that we had been on this route before and the unpleasant memories of 1983-85 (import control, import licensing & rigid exchange controls) were still fresh. We called for increased deregulation rather than a return to heightened regulation, we advised that we needed to further liberalize the economy and allow the market determine the prices of goods and services including the price of petroleum products. We insisted that the Nigerian currency should be allowed to find its level.

The government resisted and stuck to its policies and sooner than later, the consequences became evident. The economy started an accelerated downward swing, with production contracting quarter after quarter landing us into recession, the first time in 27 years. Inflation sky rocketed, doubling in one year (9% to 19%) and unemployment worsened. As government struggled to protect the Naira, the more it depreciated, until it reached 520 Naira to the US Dollar in the parallel market. Mid last year, the government was apparently forced to adopt half hearted liberalization measures – it allowed the Naira to depreciate from N199 to the dollar to about 297 Naira to the dollar. It adjusted the price of PMS from N87 per litre to N145 per litre. These massive changes shook the domestic economy but brought some release on the external economy. Capital importation and foreign direct investment which was almost grounded regained some steam but could not maintain the momentum for long because of the tentativeness of the changes.

Haven seen that the idea of pegging the exchange rate and restricting demand was not yielding the desired result, the CBN under a more progressive governmental supervision, changed gear in a more progressive way. They began to make a determined effort to increase supply, rather than pursuing the failed strategy of curtailing demand. Official weekly supply of foreign exchange to BDCs was resumed. This was followed by increased supply of forex to banks. Then a new window was opened for invisibles- school fees, PTA & BTA, medical expenses etc. All these immediately tempered the depreciation of the Naira and for the first time in two years, the Naira began to appreciate in the parallel market climbing down from 520 to about 385 Naira against the USD.

Almost immediately, the economic heat began to mellow. Inflation began to go down and production and other economic activities began to inch up. Not done with its new policy stance, the CBN opened a window for SMES to obtain $20,000 per quarter directly and then last week or so, the CBN opened the new forex window- the Import, Export and Investor window. Here the Naira is finally allowed to float. Importers of foreign exchange and investors can now sell and buy dollars at market determined rate. Hurrah! It has been a long walk to freedom. It is my hope that the CBN will continue this progressive move and soon coalesce all the windows into one big door where the rates will be consolidated into one. With that a major economic recovery plan will have been achieved. Good tiding!

That economic breakthrough was followed by another breakthrough in the political realm. Mr Nnamdi Kanu, the director of Radio Biafra and a leader of the Indigenous Peoples of Biafra (IPOB) who had been in detention for about 18 months was finally granted bail. We had written severally, many have spoken through press conferences; several delegations have gone to plead with the government. The Ohaneze Ndigbo and many other Pan-Igbo  organizations, including Alaigbo Development Foundation (ADF), the World Igbo Summit (WIS), Aka-Ikenga, Izu-Umunna, etc have pressured the federal government to release Nnamdi Kanu. But it seemed they would not bulge. Indeed several other non-Igbo groups and personalities joined in this crusade to set Nnamdi Kanu free, showing empathy and in some respects, understanding and support for the cause he was championing- the fight against marginalization, suppression and mistreatment of Ndigbo in Nigeria especially since the Nigerian civil war. The voices of Wole Soyinka, Ayo Fayose, Femi Fani-kayode, Odumakin and many others from the South west have been heard loud and clear on this matter. Other organizations that encompass the marginalized minorities in Nigeria like the Lower Niger Congress (LNC) who insist that Nigeria must be restructured through a peaceful political process (including referenda) to bring political stability and enhanced economic growth to all the regions fully joined in the campaign to release Nnamdi Kanu and the stoppage of the killing of his supporters who are only seeking for self determination – a right granted by the United Nations.

Therefore it was heart warming that at long last the government has decided to release him from detention, though the bail terms were unusually tough, biased and discriminatory. But we thank God that the huge obstacle was overcome. I know that all who wish this nation well should be pleased with the action of the government in finally bowing to the rule of law and enlightened public opinion. It is my hope that the federal government will quickly release the other three co-accused who are still in detention. Thereafter, the government should bring to judgement all the security officers who murdered the young IPOB members in Onitsha and Asaba in cold blood so that we can begin a full resolution of this problem. I also will appeal to President Muhammadu Buhari to continue in this spirit and order the release of El -Zaky Zaky and all others who are denied their freedom even after the courts have granted them bail. I believe these acts will help to start the process of national healing.

Mazi Sam I. Ohuabunwa OFR