Tuesday, September 04, 2007
Chairman, defunct National Economic Inteligence Committee, Prof. Sam Aluko, has condemned the "Strategic Agenda for the Naira," proposed by the Central Bank, but which was suspended by the Federal Government.
The economist and scholar, in a statement on the ill-fated policy, described it as "another bang in the arsenal of those foreign-imposed gimmicks that have dominated the so-called reform programmes of the Federal Government since May 29, 1999."
According to him, the new proposal to decimalise the naira, by removing two zeros from the current dollar exchange rate runs counter to the avowed advocacy of the CBN, its governor, Prof. Chukwuma Soludo, bankers and their collaborators, that the exchange rate value of the naira could not, and should not be fixed but be left to market forces.
"It is an admission of the failure of the country’s entire exchange rate policies since 1986," Aluko declared in the statement which critiqued the successive official efforts at revamping the economy and strengthening the nation’s currency.
The economist was annoyed at what he described as the Central Bank’s conceit and practice of non-consultation in the exercise of its so-called independence to foist on the nation a monetary system, remarking that, that was how it foisted on the nation N500 and N1,000 notes against rational advice "in the ecstacy that they were the best things that had happened in Nigeria."
"The CBN got the accolade of the gambling bankers, their collaborators and their foreign sponsors. Later, at great costs to the nation, it minted coins of various denominations which are yet to be fully accepted in the market. It promised that in future, in view of the need to prevent the holding of many currency units of small values, it might print N2000 or N5000 notes. A pliable nation applauded then. Now the CBN plans to abandon them for smaller units!
"Similarly, without consultation, and oblivious of the ill-effects on the rural population where the majority or our people live, have their being and provide food security for the population, it abolished the People's Bank, the Community Banks and their ilk and replaced them with what it termed micro-financial institutions, as if the People’s Banks and the community banks are not also micro-financial institutions.
The CBN also abolished the 89 banks that existed and replaced them with 25 quarrelling, consolidated banks by arbitrarily increasing capitalization of banks from N5 billion to a minimum of N25 billion. Without due consultation it also increased the insurance companies minimum capitalization by about 10 times. All these anti-people ‘reforms’ have violated not only existing laws but also Nigeria's constitutional provisions.
The overall effect is to concentrate wealth in the hands of a few at the expense of the majority of Nigerians. Soludo has been congratulating himself, had been lauded by the few beneficiaries, and has received accolades abroad, because he is a tool of international finance capital. Today, more than ever before, the financial and economic systems of Nigeria have been captured from the people by foreigners who masquerade as development partners.
Foreigners now dominate not only the most important arms of our government, but they also control the thought processes of our leaders. They deceived the national assembly to grant independence to the CBN, as if they are not aware that monetary policy direction is the responsibility of government and that the monetary policy must be in tandem with the fiscal policy of the federal, state and local governments acting in concert," said Aluko.
He, however, contended that: "The Central Bank is to operate and execute the monetary policy of government. The government is not to operate the monetary policy of the Central Bank. The government owns the CBN, the CBN does not own the government.
"In its characteristic malevolence, before the Yar-Adua administration settled down, as in Obasanjo administration in 1999, the CBN has somersaulted on Nigerian Monetary Policy by decimalizing, in reverse, the naira foreign exchange rate and its domestic denominations by merely knocking out two zeros from their current face denominations without consultation or due process."
He expressed surprised that the: "Ministry of Finance which is really supposed to oversee the CBN on behalf of the governments, defended the CBN, that its law grants it independence to act so unilaterally, and if I may say so, irresponsibly," adding that: "The Central Bank is the governments' bank. Its Governor, deputy governors and its board of directors are appointed by the president of Nigeria, in consultation with the executive and the legislature. Government’s money is what sustains the CBN. Most of its lendings are made to the government. Its establishment was by the Nigerian government. When some of us argued that the CBN cannot, and should not be independent of government but that its activities should be reactive, and complementary to the policies of the Nigerian governments, eyebrows were raised, that it was an attempt to politicise the CBN.
"But the CBN Governor for whom not a single electoral vote was cast at any election, has become not only a financial dictator but also a danger to the stability of the Nigerian economy,"
Aluko lamented. Condemning the CBN, he said further: "It has been largely responsible for the successive devaluations of the Naira since the early 1980's. It has been responsible for much of the distress in the financial sector in Nigeria. It has been the chief cause of the instability in the foreign exchange market and, consequently, for the slow growth of the Nigerian economy. It has been deceiving the government and the people that it has succeeded in bringing down inflation, when, in actual fact, the masses of our people continue to be plagued with galloping inflation. The new plank being touted by the CBN Governor is focused on foreign exchange than on the stability, management and domestic health of the naira."