I would like to apologise beforehand to law-abiding Nigerians going through the pangs of what we’ve termed an economic recession with my cast headline for this article, but the truth needs telling. There is no genuine recession in our land; what we’ve been experiencing is a contrived recession by forces who do not desire a change in the system and would rather want President Muhammadu Buhari (PMB) to carry on with the corrupt practices that have bedeviled the nation for several years.
Repeatedly since February of this year, I’ve written articles to alert Nigerians of the likely slow-down or measure we would experience through the course of the year, due to the activities of these dark forces who want to weaken PMB’s drive against corruption and force him to drop his tough hands against their most profitable industry for years. Thus they starved the economy of dollars (knowing the economic system they have created in the last 30 years depends solely on dollars as oxygen) and also engineered a crisis in the Southern oil producing states through so-called Niger Delta Avengers and numerous other splinter groups, to keep damaging oil production facilities so as to reduce government’s earnings from oil exports (which accounts for 90% of government yearly revenue).
Thus its clear to anyone who has an iota of thinking cells in their brain that our kind of economic recession is contrived and has nothing to do with, say, a financial crisis in the banking industry, a collapse of the housing industry through mortgage debts, a massive stock market crash etc. – factors that in most economies are the real triggers for economic recession (negative growth and being financially skint). If I want to be spiritual, I did say the reason God has allowed this plumb-line measure over the nation is due to many years of our acquiescing to corruption and hailing corrupt men as good people. We’ve thrown away our values and joined the bandwagon, amassing ill-gotten wealth and failing to help our fellow citizens in any way. Thus, it might be the reason why we’ve gone through this measure for this long, but it is time to bring it to an end. To be clear, all the compromised voices and economists presented to the President as having a solution are just simply what they are – compromised. The solution to this contrived recession does not lie in printing more naira (Quantitative Easing), as that is simply confetti to be thrown at the rich one percent that would fuel inflation; neither does it lie in spending our way through it.
The problem we have is not a shortage of Naira, but an economic system that has been created in the last 30 years that is dependent on dollars. Either through importation of essential products like food and oil, or through corruption and looting that makes the corrupt ones prefer to store their value of wealth in dollars and hide it abroad, or through currency speculators who prefer to make a run on the naira and also store their value of wealth in dollars. Add to that the CBN’s style since 1985 under IBB of auctioning scarce dollar earnings against the naira either by selling it to banks or the parallel market who then round-trip on it to make profit, thereby creating an illegal industry that has seen the rise of Bureau De Changes (BDCs) to a staggering number of over 2,800 BDCs. Also, the CBN constant substitution of earned oil exports in dollars with naira equivalent before distribution to the three tiers creates a system of excess liquidity (Naira supply) which they then buy back with Treasury bills, bonds and different Open Market Operation (OMO) instruments they have created at rates as much as 15% in a ponzi pyramid scam not different from the popular MMM.
This ponzi scam built into our monetary system since the 1980s, especially under IBB, has ensured only banks (with corrupt individuals as their main shareholders), super rich elites, CBN directors, portfolio investors, and Politically Exposed Persons (PEPs) are the main beneficiaries, leaving millions of Nigerians in stark neglect and stifling the development of our nation. Our monetary policy system has been developed since 1985 to strictly cater for corruption and treasury looters; if you want to fight corruption, deliver long abandoned Nigerians and lay a foundation for the nation’s long-term economic prosperity.
The foundation we have at the moment is only good enough to build an underdeveloped bungalow, which is what Nigeria has looked like since independence. The best way to lay a long-term economic security and prosperity plan for the nation is by remaking this foundation. We cannot build a superstructure on the present foundation we have, as it wouldn’t support it. The foundation we have in the country at the moment was built since 1985 to support corruption and at best in terms of development build a slanting bungalow. The way out is to change our monetary policy completely, and add to it fiscal policy changes (which is a continuous process to stop corruption and block leakages). But without changing our monetary system we cannot truly fight corruption, neither can we lay a solid foundation for long-term economic prosperity in Nigeria.
As a change scholar and manager, I’ve looked at different change models and frameworks that can work in government, particularly the Kurt Lewin (Unfreeze, Change and Freeze) model, but realized that would have been more suitable for a military era like when we had the Buhari/Idiagbon regime, as it would involve suspending the constitution (the unfreezing stage if we were to apply it to governance in Nigeria). I thus settled for a more suitable one in the McKinsey 7S Framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. It talks about the Hard S’s like Strategy, Structure and Systems and Soft S’s like Shared values, Style, Staff and Skills. While these might sound like management tools used for organizational change, some of it if not all can be adapted for the kind of change needed at this point in time to end this contrived recession, lay the right foundation for our long-term economic security and move the nation forward in the right direction.
If adapted, we can, for instance, look at the main systems that run any nation’s economy and no doubt the first thing you look at is its monetary system. I’ve mentioned some of the issues wrong with our present monetary system, which has kept Nigerians in poverty. Make no mistake about it, Godwin Emefiele, the present CBN Governor, did not create the system. In fact, he met it in place since 1985. But if we carry on with it, there is no getting out of this fake recession unless PMB stops his anti-corruption drive, which is what the forces behind the contrived recession have been calling for either directly or indirectly through Niger Delta Avengers. Thus, to get out of this mess, we would need to change our monetary policies. The first start to that is to redenominate or redecimalise (whichever one you call it) the Naira by moving two places to the left. An announcement of this monetary policy would cause Nigerians who have been storing their wealth in dollars to change it into naira and use our legal tender as their store value of wealth thereby massively bringing down the price of the dollar against the naira and stop these fake recession.
Also, we would have to change the way we distribute foreign earnings from oil exports to the three tiers of government. Rather than change it into naira equivalent, all the tiers of government can have domiciliary accounts opened for them at the CBN (we have a law in place that supports that) and then issue electronic dollar certificates that show the amount each tier of government is entitled to from foreign earnings. They then exchange it at agreed or prevailing rates at their banks (for States and LGs). Their banks give them naira and get dollars from the CBN, while the CBN exchanges that of the FG. When any arm of government needs to make a foreign payment, they inform the CBN who pays their suppliers or creditors directly from the dollars in their domiciliary account. This would save state governments or any arm of government from having to exchange distributed naira back into dollars, thereby putting pressure on the naira. It would also put a lot of check on corruption and treasury looters. Side by side with these changes would be the closing down of over 2,800 BDCs, which serve no economic function other than to depress the naira and aid round tripping.
In their place, genuine well recognized BDCs like Travelex (who have the capacity to bring in their own investments, financial technology, etc.) and other BDCs with large branch networks and capacities can be retained. In the end, not more than 5-10 BDCs with large branch networks, financial technology and capacity would be retained. Their role is to sell dollars to Nigerians for genuine economic activities like travels, low-level importations, etc. They would not be allowed to sell more than $10,000 to any single individual and would have enough automated capacity to be monitored and evaluated by the CBN. Any Nigerian who wants to buy more than $10,000 would do so through their respective banks, thereby putting an end to these illegal and inefficient parallel markets that have existed for too long with no benefit to the nation. There would be silly talk about making people jobless by the cancellation of these BDCs, but there is a more formal and better way to absorb them. Some of them can merge or be acquired by the genuine and well recognized BDC’s like Travelex following well laid down guidelines, including human capacity and financial technology to monitor their transactions. But most importantly the FG can cash in on the market by licensing NIPOST to start a travel exchange and savings business for Nigerians. NIPOST Travel exchange would be a money transfer operator (MTO), a BDC for exchanging travel money, as well as a limited savings and loans bank. It would also serve as a means of paying retired pensioners in rural areas who have accounts with them. They could also go into mobile money for people in non-urban areas. I believe they have the facility rotting away across the country they can use with adequate technology invested in it. They can also have franchises with former BDC operators ready to provide agreed facilities for the travel exchange as well as other NIPOST/EMS services.
This would create a lot of jobs as we can use the Post Office to not only serve as a travel exchange but also deliver parcels, letters and online goods to Nigerians across the country. It would take some planning and that calls into question another of the McKinsey 7S model, which is Strategy. President Buhari would not only have to listen to voices like mine (if he gets to read this) but also involve non-compromised people to help plan the strategies that would make all of these work towards changing the system and getting us out of this recession. The current crop of hands at the CBN would no doubt be unable to make this kind of change.
There are voices like mine in this country that have been calling for similar kind of change in our system like these. It would also involve a lot of changes on the fiscal policy side. For example, it is an accursed thing for a senator, representative, permanent-secretary, etc. to receive such high salaries and still be paid newspaper and wardrobe allowances. Many Nigerians, including low-income earners and roadside sellers, buy newspapers themselves. Why would you be so cursed to earn N1million a month and the nation still has to buy you newspapers? These kinds of crazy allowances have to be weeded out of the system, and I must say it is not only in the National Assembly, it is everywhere in government where since 1985 under IBB our nation has had a culture of entitlement where we award ourselves all sorts of allowances that make us look the other way when the bigger looters steal from the treasury. It needs to stop forthwith.
The change in our monetary system would also include putting a tax on domiciliary accounts of Nigerians. In February of last year the CBN mentioned domiciliary accounts in the country having just over $1b in them, by April of this year the figure now sits at $20b. This is wrong and shows Nigerians have stored up dollars as their store value of wealth either to escape the prying eyes of the EFCC, or deliberate hoarding. With the announcement of the redenomination of the naira by moving two decimal places to the left, and imposing a monthly 3% tax on domiciliary accounts, individuals hoarding dollars would have to convert it to naira and that would crash the price of the dollar against the naira and end this fake recession.
The FG would also set up an overseas infrastructure bond of about $25b that can be floated on the stock exchange of foreign countries like the Irish or Australian exchanges, that Nigerians in the diaspora or those with dollars in the country can buy offering them about 4-5% interest on it. These infrastructure bonds would be used to develop the Niger Delta, build new cities across that part of the country, invest in passenger and freight rails across the country, complete the second Niger Bridge and build new roads, invest in power and energy as well as manufacturing, etc. They must be projects that are feasible and economically viable that would make returns and pay off the bonds in future. It would also include getting people in the Niger Delta to form cooperatives to build new modular refineries.
The model I’ve mentioned in this article would also look at our structure and rather than the restructuring noise being made by politicians looking to set a trap for the president. The main structure that needs changing in the country is our local councils and administration at that level. Our local councils need to be removed from the apron strings of the state and the FG needs to work directly with many of them to develop the grassroots and bring development to Nigerians. That is the structural change we need the most, but there is still more. We need an industrial strategy that would be aligned with our educational system. Once we know the kind of industries we need and want in the country, then we would have to revamp our curriculum from the high schools all the way to tertiary schools. We also have to change our educational structure, and stop the idea that the only way to develop and be prosperous is through Higher Education alone. There must be room for further education like adult education, national numeracy and comprehension skills improvement for Nigerians who would work in low-skilled jobs, technical education for electricians, plumbers, builders, etc. who would be certified, make provisions for experienced technical people and technicians like radionics, mechanics, refrigerator repairers to be able to have certified further education and progress on to Higher education without having to sit for JAMB or going to through the rigors of admission like younger students.
Most of these changes, like the change in our monetary system, which would also include breaking down the banking and financial services supervision into two or three regulators, especially an Ombudsman that deals with financial complaints and poor services from banks, would deal a massive blow to corruption, end this contrived and fake recession, as well as get the nation moving. There is plenty of work to be done and the earlier we start radically, the better. I hope the president listens and gets enthusiastic hands in and around his cabinet so as to make these changes. Seriously, I wish I could get the president’s ears directly and spill out a thousand and one ideas in a strategic, intellectual and philosophical way that would get the nation moving quicker and end this fake recession. There is no time to stand and stare!