Strictly Personal

Naira redesign and matters arising, By Bashir Abdullahi

Published

1 year ago

February 12, 2023

LET me begin this with a disclaimer. I am a registered card-carrying member of the New Nigerian Peoples Party (NNPP). Let me also make it abundantly clear that my party and I are not against the Naira redesign policy. In fact, no sane human will. In the 21st century, we should go the way of the world. A cashless policy is the norm and has become the mainstay of most economies, both developed and developing. I applaud President Muhammadu Buhari for his resolve, determination, and commitment to conducting a free, fair, and credible election. There is the possibility that, if conducted successfully, these might be the talk about the legacy of the president. Having said this, let me add that for a country of almost a million square kilometres, the time allotted to the policy is not just sufficient but practically impossible to cover within the period given. And this must be appreciated from the background of the level of the general inefficiencies of our system and how such reforms can be resisted, and in some instances outrightly thwarted.

Available data from the National Bureau of Statistics show that most households have an average of a minimum of five persons. What this clearly signifies is that most people struggle daily to get by. Living in Nigeria, daily, in itself is a challenge. This is something that the various political shades seeking power acknowledge hence the litany of issues they promised to do when elected into office. The 1999 Constitution as amended accounts for the equality of states as per federalism, but even the blind can see that Lagos State in the South-West for instance is not equal to Yobe State in the North-East, or Ebonyi in the South-East to Kano in the North-West. Clearly, Lagos is much more urbanised than Yobe and the same is true for Kano and Ebonyi. What this invariably means is that Lagos is more likely to have better banking services than Yobe. The same argument can be made for Kano and Ebonyi. The service penetration is not the same and the data on banking services in Nigeria clearly shows this. In a sense, the more sophisticated a banking service is the more it is urban located. This is certain of major innovations in banking services, which againfollow the logic of where money is concentrated.

While it is true that every government policy should be made for the benefit of the people, let me now quickly examine the Central Bank of Nigeria’s cashless policy vis-à-vis the unintended negative consequences and suffering it brought to the very people it claims to serve. And it must be repeated here that this is by no means an attack on the policy itself, as some have.

The governor of the Central Bank of Nigeria, Dr. Godwin Emefiele, on countless occasions, explained the objectives of the Naira redesign policy and on no account did he make claims that are of political or non-economic reasons. The policy was purely monetary with expected positive economic outcomes for Nigeria. However, as all policies do, particularly when not thought through, they tend to become victims of their unintended consequences. The apex bank may have had good intentions to deliver on an otherwise operable monetary policy, but has the implementation created enumerable situations and countless hardships? The unintended consequences of the Naira redesign policy are in the numbers, but what is amazing is the “neglect” or negligence by the Central Bank officials whilst framing the policy, the list of what could go wrong. A part of thenitty-gritty of general housekeeping of public policymaking is IF. The question must, therefore, be what could go wrong if we, that is the Central Bank, did this or that. The Nigerian apex bank missed a lot of signs, innuendos, which were obvious and in the open, and more importantly its capabilities.

The responsibility of the Central Bank of Nigeria, for example, does not include the assessment of possible social disorder, and the disenchantments the unintended consequences of the redesign of the Naira caused. This again, showed, that the bank was working in a silo, not reaching, consulting, or collaborating. Perhaps, what it is, is that the Central Bank sought glory but brought gory tales. It remains to be seen if the Central Bank of Nigeria considered what could go wrong if the Naira wasredesigned at the time, it implemented the policy. This also raises questions as to whether the three months to complete the exercise was sufficient. Three issues are clear from this. First, whether the Nigerian banking infrastructure is asbig as was thought of? Secondly, Did the Central Bank of Nigeria miss an obvious challenge or opportunity that there is still work to be done, regarding the depth and breadth of the country’s banking system? The Nigerian banking system has remained largelyu rban-biased and has evolved very little to serve infrastructures in rural areas. Perhaps, this is why the apex bank governor persistently complains about the quantity of cash outside the banking system. This clearly shows that there are gaps in the CBN’s efforts at providing banking services across the country. The banking system must innovate a new robust financial infrastructure that not only resolves many of the problems Nigerians are currently encountering but deepen and broaden inclusiveness and participation.

The question of the timing of policy is important. As much as it can be argued, and it has been, that there is no particularly suitable time to effect a change or redesign a country’s currency, the Central Bank Act is already clear on this. Thus, in some regards the monetary authority failed in the discharge of her responsibility on time, more importantly, to anticipate when. Here in lies the basis for the political interpretation of the CBN’s decision on timing. The question has therefore become about when and over what duration, and not about what. But, more importantly, policy makers must be able to anticipate the consequences, especially the negative unintended consequences. Across the country are Nigerians standing in long queues at ATM galleries across the country attempting to access the new currency notes. We have also seen videos of Nigerians stripping naked in banking halls, shouting and crying to access their own money. The comics in these, including the number of fights breaking out in banking premises and all the attendant hardships, beg the question.

The failure in the exercise can be seen in the level of exploitation of citizens who try to access their own money from POS operators and various money agents.

Nigerians’ problems have never been the lack of brilliant ideas and plans, but the implementation of it. It is against this background that I humbly call on President Muhammad Buhari to urgently address the issues caused by the naira redesign by allowing the old notes and new ones to coexist side by side, otherwise, the very people whom you want to serve will be heading to their early graves in millions as a result of the unintended hardship. By the way, the people elected you and it is profitable to listen to their cries.

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Strictly Personal

Air Peace, capitalism and national interest, By Dakuku Peterside

Published

1 week ago

April 16, 2024

Ifeoluwa Dada

Nigerian corporate influence and that of the West continue to collide. The rationale is straightforward: whereas corporate activity in Europe and America is part of their larger local and foreign policy engagement, privately owned enterprises in Nigeria or commercial interests are not part of Nigeria’s foreign policy ecosystem, neither is there a strong culture of government support for privately owned enterprises’ expansion locally and internationally.

The relationship between Nigerian businesses and foreign policy is important to the national interest. When backing domestic Nigerian companies to compete on a worldwide scale, the government should see it as a lever to drive foreign policy, and national strategic interest, promote trade, enhance national security considerations, and minimize distortion in the domestic market as the foreign airlines were doing, boost GDP, create employment opportunities, and optimize corporate returns for the firms.

Admitted nations do not always interfere directly in their companies’ business and commercial dealings, and there are always exceptions. I can cite two areas of exception: military sales by companies because of their strategic implications and are, therefore, part of foreign and diplomatic policy and processes. The second is where the products or routes of a company have implications for foreign policy. Air Peace falls into the second category in the Lagos – London route.

Two events demonstrate an emerging trend that, if not checked, will disincentivize Nigerian firms from competing in the global marketplace. There are other notable examples, but I am using these two examples because they are very recent and ongoing, and they are typological representations of the need for Nigerian government backing and support for local companies that are playing in a very competitive international market dominated by big foreign companies whose governments are using all forms of foreign policies and diplomacy to support and sustain.

The first is Air Peace. It is the only Nigerian-owned aviation company playing globally and checkmating the dominance of foreign airlines. The most recent advance is the commencement of flights on the Lagos – London route. In Nigeria, foreign airlines are well-established and accustomed to a lack of rivalry, yet a free-market economy depends on the existence of competition. Nigeria has significantly larger airline profits per passenger than other comparable African nations. Insufficient competition has resulted in high ticket costs and poor service quality. It is precisely this jinx that Air Peace is attempting to break.

On March 30, 2024, Air Peace reciprocated the lopsided Bilateral Air Service Agreement, BASA, between Nigeria and the United Kingdom when the local airline began direct flight operations from Lagos to Gatwick Airport in London. This elicited several reactions from foreign airlines backed by their various sovereigns because of their strategic interest. A critical response is the commencement of a price war. Before the Air Peace entry, the price of international flight tickets on the Lagos-London route had soared to as much as N3.5 million for the economy ticket. However, after Air Peace introduced a return economy class ticket priced at N1.2 million, foreign carriers like British Airways, Virgin Atlantic, and Qatar Airways reduced their fares significantly to remain competitive.

In a price war, there is little the government can do. In an open-market competitive situation such as this, our government must not act in a manner that suggests it is antagonistic to foreign players and competitors. There must be an appearance of a level playing field. However, government owes Air Peace protection against foreign competitors backed by their home governments. This is in the overall interest of the Nigerian consumer of goods and services. Competition history in the airspace works where the Consumer Protection Authority in the host country is active. This is almost absent in Nigeria and it is a reason why foreign airlines have been arbitrary in pricing their tickets. Nigerian consumers are often at the mercy of these foreign firms who lack any vista of patriotism and are more inclined to protect the national interest of their governments and countries.

It would not be too much to expect Nigerian companies playing globally to benefit from the protection of the Nigerian government to limit influence peddling by foreign-owned companies. The success of Air Peace should enable a more competitive and sustainable market, allowing domestic players to grow their network and propel Nigeria to the forefront of international aviation.

The second is Proforce, a Nigerian-owned military hardware manufacturing firm active in Rwanda, Chad, Mali, Ghana, Niger, Burkina Faso, and South Sudan. Despite the growing capacity of Proforce in military hardware manufacturing, Nigeria entered two lopsided arrangements with two UAE firms to supply military equipment worth billions of dollars , respectively. Both deals are backed by the UAE government but executed by UAE firms.

These deals on a more extensive web are not unconnected with UAE’s national strategic interest. In pursuit of its strategic national interest, India is pushing Indian firms to supply military equipment to Nigeria. The Nigerian defence equipment market has seen weaker indigenous competitors driven out due to the combination of local manufacturers’ lack of competitive capacity and government patronage of Asian, European, and US firms in the defence equipment manufacturing sector. This is a misnomer and needs to be corrected.

Not only should our government be the primary customer of this firm if its products meet international standards, but it should also support and protect it from the harsh competitive realities of a challenging but strategic market directly linked to our national military procurement ecosystem. The ability to produce military hardware locally is significant to our defence strategy.

This firm and similar companies playing in this strategic defence area must be considered strategic and have a considerable place in Nigeria’s foreign policy calculations. Protecting Nigeria’s interests is the primary reason for our engagement in global diplomacy. The government must deliberately balance national interest with capacity and competence in military hardware purchases. It will not be too much to ask these foreign firms to partner with local companies so we can embed the technology transfer advantages.

Our government must create an environment that enables our local companies to compete globally and ply their trades in various countries. It should be part of the government’s overall economic, strategic growth agenda to identify areas or sectors in which Nigerian companies have a competitive advantage, especially in the sub-region and across Africa and support the companies in these sectors to advance and grow to dominate in the African region with a view to competing globally. Government support in the form of incentives such as competitive grants ,tax credit for consumers ,low-interest capital, patronage, G2G business, operational support, and diplomatic lobbying, amongst others, will alter the competitive landscape. Governments and key government agencies in the west retain the services of lobbying firms in pursuit of its strategic interest.

Nigerian firms’ competitiveness on a global scale can only be enhanced by the support of the Nigerian government. Foreign policy interests should be a key driver of Nigerian trade agreements. How does the Nigerian government support private companies to grow and compete globally? Is it intentionally mapping out growth areas and creating opportunities for Nigerian firms to maximize their potential? Is the government at the domestic level removing bottlenecks and impediments to private company growth, allowing a level playing field for these companies to compete with international companies?

Why is the government patronising foreign firms against local firms if their products are of similar value? Why are Nigerian consumers left to the hands of international companies in some sectors without the government actively supporting the growth of local firms to compete in those sectors? These questions merit honest answers. Nigerian national interest must be the driving factor for our foreign policies, which must cover the private sector, just as is the case with most developed countries. The new global capitalism is not a product of accident or chance; the government has choreographed and shaped it by using foreign policies to support and protect local firms competing globally. Nigeria must learn to do the same to build a strong economy with more jobs.

Strictly Personal

This is chaos, not governance, and we must stop it, By Tee Ngugi

Published

2 weeks ago

April 10, 2024

Ifeoluwa Dada

The following are stories that have dominated mainstream media in recent times. Fake fertiliser and attempts by powerful politicians to kill the story. A nation of bribes, government ministries and corporations where the vice is so routine that it has the semblance of policy. Irregular spending of billions in Nairobi County.

Billions are spent in all countries on domestic and foreign travel. Grabbing of land belonging to state corporations, was a scam reminiscent of the Kanu era when even public toilets would be grabbed. Crisis in the health and education sectors.

Tribalism in hiring for state jobs. Return of construction in riparian lands and natural waterways. Relocation of major businesses because of high cost of power and heavy taxation. A tax regime that is so punitive, it squeezes life out of small businesses. Etc, ad nauseam.

To be fair, these stories of thievery, mismanagement, negligence, incompetence and greed have been present in all administrations since independence.

However, instead of the cynically-named “mama mboga” government reversing this gradual slide towards state failure, it is fuelling it.

Alternately, it’s campaigning for 2027 or gallivanting all over the world, evoking the legend of Emperor Nero playing the violin as Rome burned.

A government is run based on strict adherence to policies and laws. It appoints the most competent personnel, irrespective of tribe, to run efficient departments which have clear-cut goals.

It aligns education to its national vision. Its strategies to achieve food security should be driven by the best brains and guided by innovative policies. It enacts policies that attract investment and incentivize building of businesses. It treats any kind of thievery or negligence as sabotage.

Government is not a political party. Government officials should have nothing to do with political party matters. They should be so engaged in their government duties that they literally would not have time for party issues. Government jobs should not be used to reward girlfriends and cronies.

Government is exhausting work undertaken because of a passion to transform lives, not for the trappings of power. Government is not endless campaigning to win the next election. To his credit, Mwai Kibaki left party matters alone until he had to run for re-election.

We have corrupted the meaning of government. We have parliamentarians beholden to their tribes, not to ideas.

We have incompetent and corrupt judges. We have a civil service where you bribe to be served. Police take bribes to allow death traps on our roads. We have urban planners who plan nothing except how to line their pockets. We have regulatory agencies that regulate nothing, including the intake of their fat stomachs.

We have advisers who advise on which tenders should go to whom. There is no central organising ethos at the heart of government. There is no sense of national purpose. We have flurries of national activities, policies, legislation, appointments which don’t lead to meaningful growth. We just run on the same spot.

Tee Ngugi is a Nairobi-based political commentator