By Paul Adujie
Monday, 20 August 2007
Professor Charles Chukuma Soludo deserves our collective rounds of national applause, for his bold and courageous moves regarding his Naira Strategic Agenda; in fact, we owe him thunderous applauses for his purposeful audacity!
The Governor of Central Bank of Nigeria is a regulatory activist, who has just successfully pursued and completed, his much criticized and demeaned, banks consolidation policy. Professor Soludo is a man that I admire and respect. He is a person who is actively engaged and focused on Nigeria’s fiscal-financial health. He has, through his vigorous pursuit of financial health, with rigorous public policies. He seeks to put and place Nigeria in good fiscal-financial stead.
Rapidly, he has been rolling out reforms in the financial sub-sector, which always seem to roil and keep his critics nonplussed, dumb-founded.
Governor Soludo’s detractors are inattentively oblivious of other Central Bankers in America and Europe, who often resort to activist modes of actions, to keep their national economies in perpetual growth and upsurge.
Whereas, too many Nigerian economists and fiscal “experts” seem to suffer time-warps, as they appear to bury their heads in Business Schools social science abstract academic theories, theories that are quite often, not applied in real terms in everyday real life situations, even in countries, where some these arcane ideas, were first propounded and postulated in the first place! Originators of sundry economic theories and abstract models, seem to be very comfortable in adjusting and sometimes, jettisoning their own theories altogether, in obeisance to their national interests.
While too many Nigerian economists apes and mouths antiquated or mundane free market theories, spouting demand and supply rules, as if these are the sole factors determinants, in the realm of modern economies. Market forces, market forces and market forces? Please!
Why are too many Nigerian economists so adept Pavlov-dog regurgitations of abstract economic theories that the have wrought extreme pains and sufferings, upon Nigerians by the wayward policies of SAP? Even while Americans and Europeans, are quick to relegate to the abyss of bad theory history, whenever their national economic interest is at stake.
Kalu Idika Kalu and Olu Falae, brashly critical and dismissive of Governor Soludo’s proposals last week. Nigerians ought to ignore these men, they are reminders our sordid past policies. These persons should be the last to criticize Professor Soludo, Kalu in particular, is public policy throwback of our painful Structural Adjustment Programs or SAP era, and we must ask, whether there have been any positive benefits from SAP, unless pain, suffering and hardship are considered benefits?
These prominent Nigerians, parading as fiscal policies “experts” appear lost in time and space, and they are the same persons who presided over the two-and-half decades old free-fall and downward spiral of our national currency, the Naira; this, bestowed upon Nigerians and Nigeria, with physical, fiscal and even psychological damages that are now all to obvious, damages that are deep in consequences and are far reaching in ramifications.
Among the physical, fiscal and psychological hemorrhaging damages, are, capital flight, mass migration, brain drain, un-quantifiable national loss of faith and trust in the worthiness of our national currency, the Naira.
A re-denomination, or, a revaluation, will lead to a resurgent and resilient Naira. A resilient Naira will be the backbone and engine-room of a rebound, robust and vibrant Nigerian economy. Countries in America and Europe are quick to intervene, interfere and bailout their currencies and their economies and the economies of countries to which they are friendly. And here are some examples.
In 1994, massive bailouts in billions of dollars were offered to Mexico, to stabilize its economy from a near bankruptcy from financial crises. It was an activist-interventionist economic or financial rescue, a big rescue of Mexican economy. It offered Mexico a soft-cushion, a soft-landing. Market forces theorists, be damned!
In 1997, billions of dollars in bailouts were similarly offered to a then backpedaling of the so-called Asian-Tigers, tigers that were at the time, literarily, crouching! As we all know, these tigers that were hitherto, before crouching, were actually galloping, in growth and the toasts of the so-called new market boom. These rapid-response bailouts averted and staved off, the feared Asian contagion that loomed at the time.
Soon after the collapse of the Soviet Union, Russia, its successor-survivor, of the USSR empire received injections upon injections of massive bailouts cash in billions of dollars from their American and European new friends, who were mortal enemies during the frigid cold-war years
Again, and again, bailouts, upon massive bailouts, were the rule rather than policy exceptions, during the period under consideration. Israel also received massive bailout of more than $20 billion dollars in loan guarantees. Unconditional loan guarantees, without the “usual” stringent, stifling and growth retardant strangulating conditionalities. Conditionalities are reserved for, and are only fit, for countries like Argentina, Brazil and Nigeria or such.
Thereafter, the events of September 11, 2001, arose, and the American government rammed through, panoply of fiscal policies, replete with bailouts, rescue packages in the trillions of dollars. There were quadruple hundreds of billions of dollars, were reserved for airlines or America’s aviation industry, which was understandably hard-hit, as it took a direct hit from the hijacked planes and indirect hit, as the American general public developed cold-feet toward flying and sudden lukewarm attitude to flying, after the fatal flights on September 11, 2001.
In the recent liquidity crises and credit crunch precipitated by the sub-prime lending woes, which was brought upon us by irregular lending practices, and greed. The Federal Reserve of America and Central Bankers in Europe, in trepidation, injected more $200 billion dollars as a bailouts, rescue or shock-absorbing packages to steady the financial markets in America and Europe, to stave off the worst-case scenarios, of what could lead to or be a worldwide economic depression.
Structural Adjustment Program or SAP is not September 11, for Nigeria; but the effect of SAP on Nigerians is worse. The pains, the sufferings and the magnitudes of hardships inflicted on a massive scale, upon Nigerians and Nigeria is worse than September 11, 2001 was and could ever be on Americans. Generations of Nigerians have been forcefully, involuntarily scattered and dispersed all over the world. The social dislocations and national disenchantments caused to Nigerians and Nigeria by SAP is incalculably sad, they are widespread effects, which are felt nationally by all Nigerians. It is a debacle with effects more severe on Nigerians. The direct impact of September 11 on the Americans, were on World Trade Center in New York, the Pentagon, in Washington DC and a field in Pennsylvania; it was for the most part physical to these three cities, and psychological to all Americans.
SAP on the other hand, caused structural and psychological damage to Nigerians and Nigeria, across the board, nationwide and worldwide.
SAP, clipped our national collective sense of ourselves. SAP clipped our swagger. SAP sapped our national pride. SAP was inflicted upon Nigerians and Nigeria by those ensconced in the art of aping and mouthing morose and antiquated Business School Models and concepts of how things are “supposed -to-work” in real life, but never does.
SAP was imposed on us by those, who seem to have rote-learned models and concepts, which often have no practical applications in real life, even in America and Europe, where Adam Smith, John Keynes, Paul Samuelson, Jeffrey Sachs and other old and new economic theorists sprouted. And where economic theories, frequently touted by Nigerian fiscal “experts” originated; theories, that are too quickly, too gladly swallowed by too many Nigerian slews of “modern” economists. I take the view that we must examine economic models, concepts and sundry theories with keenness of mind, with a view to deconstruct such, for local relevance and applications to immediate conditions or circumstances
Too often, it is as if, our “experts” are credentialed to be in hot-pursuits of some sorts of catch-up game, with ideas and propounded concepts of foreign experts, this, even when such foreign experts and their countries of origins, operate frequently outside these Business School Models or parameters, theories and concepts. Do Nigerians swallow old unworkable concepts, hooks, lines and sinker?
Must Nigerian experts dogmatically and robotically continue to pursue abstract, academic and textbook theories? Even when it does not suite our local conditions and circumstances? Must we pursue public policies that are clearly inimical and at variant with Nigeria’s short-term and long-term national interests? Must Nigerians zombie-like, swallow theories because such theories sound good academically? Why must we follow models that do not benefit our nation?
Why must any Nigerian, and in particular, in this fiscally wounded and still hemorrhaging generation of Nigerians; Nigerians who still suffer mightily from SAP’s obnoxious and debilitating policies, ever want to listen to Idika Kalu or Olu Falae? And for that matter, why would anyone want to listen to the old guards, who had one or the other thing, or something and anything to do with our national policies flowing into, within and from SAP?
I am willing to concede that it is acceptable to ask certain specific questions of Governor Soludo on his policy initiative phase II, as he describes it. What beyond logistical concerns determined the gestation period of one year August 2007- August 2009? Could this long time span not afford vile plans on the parts of those who wish Nigeria ill?
Secondly, Why was it necessary for the CBN to recently promote the redesigned larger Naira notes? The same notes that will now be withdrawn? Was this streamlining always part of CBN’s phase II? Or was it an afterthought? What necessitated the switch? We are not privy to all the facts and indices, which the Central Bank of Nigeria has relied.
Additionally, there is a development, since the policy announcements, that makes me have some reservations. A ringing endorsement by the World Bank gives me leery feeling about all this. Can CBN policy be good for Nigeria? Should Nigerians be very suspicious and be wary, of a policy, when a policy is so liked, almost instantaneously by the World Bank? Weren’t the World Bank and the IMF the architects of SAP, the cause of our present and persisting fiscal wounds and fiscal nightmare? Are the Breton Woods institutions now reformed or “born-again”? Even still, I am unwilling to dismiss Governor Soludo’s reforms and innovations.
Nigerians worldwide must be aware that Professor Charles Chukwuma Soludo is an activist economist for good cause, our nationally worthy fiscal cause. And those who swear by market forces, demand and supply’s received immutable theorems, should be aware that Professor Ben S. Bernanke, chairman of the Federal Reserve Board of the United States, is an activist too. Bernanke has, as recent as last week, intervened in the financial market, with cut and slice in the lending rate, as well as pumping billions of dollars into the financial market, instead of waiting for manufacturing base or market forces of demand and supply to solve the credit crunch and liquidity crises which America currently faces as a result of the mortgage meltdown.
Only last week, America and European Central Bankers, injected hundreds of billions of dollars in the financial system to stem the downward spiral of the dollars and the American economy, in the wake of the sub-prime lending scandal with the attendant molten meltdown in American mortgage industry sub-sector.
The Europeans followed the Americans with its activist-like, interventionist-like actions, to spur and nurture demand and supply, or market forces to act in sync, or cajole demand and supply to follow the orders of, American and European written scripts of national interests. Professor Soludo is, in my view, pursuing Nigeria’s national interests, just as his counterparts in America and Europe have always done and just what they did again, only last week, with direct intervention in the financial markets. It was the infusion of subsidy-like $200 billion dollars.
In America and Europe, official actions negate notions of freewheeling, or cavalier and laissez faire market forces of supply and demands. American and European officials obviously see such concepts as separate from real life economics and global developmental competition. Past and recent actions by American and European central bankers are clearly indicative of where their priority lay, between theory and practical actions for their national interests.
Nigerians experts can do no less for Nigeria.