Journalism in the service of society

The Nigerian economy: A road map to strengthening the naira and creating jobs

“We are the only country where a bank loan whether for business or personal use will attract a lending rate in excess of twenty five percent, no wonder small businesses find it hard to start or survive in this type of climate.”

NIGERIA is a great country, but has far too many contradictions alongside the inherent political corruption aided by our society’s culture of permissiveness, which has stagnated our nation, hollowed out our institutions, lay waste our infrastructures and infrastructures and pauperized the vast majority of our people. The monetary policies in the country have to a large extent been anti people and pro-corruption and pro the banking industry, thus further exacerbating the already harsh economic realities of our people.

It is in this atmosphere of economic and social malaise that the role of the Nigerian Banking System which without any doubt is more responsible along with the apex bank for the stagnation of the Nigerian economy and the economic devastation of our people needs to come under review. The Nigerian Central Bank (CBN) and the entire banking system needs to be transformed through a series of reforms that prioritizes the people, the state and the wellbeing of the national economy instead of the dictates of the world bank and the international monetary fund (IMF) alongside their cronies in the banking and financial sectors of our economy whose priorities are those of the international capitalists and making excessive profits at the expense of our people.

It would appear today in our country Nigeria that the banks and big businesses are law unto themselves without any accountability with the people at their mercy as the law makers and the political class are already in their pockets. This situation is exemplified with the numerous bank charges we pay for operating accounts in Nigeria today, to the extent that our banks are no longer engage on any real strategic investment endeavors, nor engage in innovative protocols, but essentially are now in the business of collecting bank charges. These constant and excessive charges are a burden on the consumers especially the masses whose means are limited that the regulating authority must come in and assert their authority to control this runaway exploitation of our people.

We are the only country where a bank loan whether for business or personal use will attract a lending rate in excess of twenty five percent, no wonder small businesses find it hard to start or survive in this type of climate. What kind of business will anyone do in a year or two to afford such an enormous interests and still be able to make a living? Is it executing government contracts where the payment of contractors can take a life time or is it buying and selling? It is imperative for the incoming government to tackle this head on by reforming this sector and immediately putting in place policies that will not only strengthen our national currency, but will enhance the quality of life of our people by implementing people centric policies from the ground up that will not only help in stimulating the local economy, but we the people some modicum of relief.

The incoming government must as a matter of urgency work with National Assembly to address some of these challenges by passing key legislations that will:

  1. Eliminate the dual exchange rate for foreign currencies and provide for a single Forex market with a uniform rate for all foreign exchange transactions without exception. 
  2. Establish or strengthen existing legislations on credit agencies and credit reporting including maintenance of a unified database for BVN and the NIN to ensure data integrity.
  3. Define penalties for loan defaults including denying defaulters the ability to open and operate an account anywhere in the country.
  4. Set up a small business financing unit that will make loans to small businesses and traders using commercial banks at low interest rates of not more than 5 percent. The banks can be incentivized through a commission to manage this scheme.
  5. Simplify loan and banking processes and imposed stiff penalty for fraud, and other malfeasance by financial institutions including jail time and forfeiture of assets.
  6. Eliminate preferential treatment to businesses, families with children schooling abroad and those seeking overseas medical intervention in acquiring foreign exchange.
  7. Restrict the CBN from been engaged in commercial banking activities including lending and limit it solely to regulating roles
  8. Pass legislation to discourage importation of household goods and services, by promoting local production.
  9. Codify use of state of residence instead of place of origin in all government forms and transactions to give every Nigerian a fair shake in any part of the country.
  10.  Restrict the movement of personnel from regulating agencies to institutions they regulate in the private sector to a cooling off period of three calendar years to promote transparency.

We do recognise the challenges of implementing any transformational economic policies, because of the absence of the relevant laws, infrastructures, credit bureau, comprehensive database of all residents in Nigeria, including verifiable addresses, and a unique identification number (which thank God has now been rolled out per BVN and NIN). These are essential in the deployment of a robust individual credit system that could unleash vibrant economic activities across all spectrum of the Nigerian economy by increasing the purchasing power of the people, with the caveat that any credit system is built on trust and honor system a currency that is in short supply in our country today. This is while we often preach about culture change, which if this credit financing scheme is to work, has to be fully embraced by all of our people from the ground up. While the vast majority of Nigerians are honest, law abiding and hardworking, but when the banks and financial behemoths have their KNEELS on the NECK of our people, then surviving daily becomes a Herculean task, and SADLY bending the rules and cutting corners soon becomes the preferred norm by many  for survival.

The continued use of government or official FOREX rate is bad for Nigeria, the Naira and our economy as it continuously places the Naira under undue stress and pressure that no amount of creative polices can provide any relief. It is impossible with this policy in place for it not to be abused which has been the case since its inception, by corrupt bankers, politicians and business elites to the detriment of our country and people. This policy is basically and indirect tax on the Nigerian people especially the masses who are made to bear the brunt of this corruption enabling monetary policy. While we fully understand the original intent of this policy, but given our historical legacy and lessons learned since inception of the Second Tier Foreign Exchange Market (SFEM) as it was called then in 1986 or so by the IBB led military junta to its current iteration, we now have enough ammunition to finally put it to rest for the good of our nation.

Anyone wishing to send their kids abroad to school should not be subsidized by the rest of us who cannot even buy a ticket, nor should we be subsidising unscrupulous business people who will collect the subsidised Forex and take it to sell at the black market pocketing the difference as profits. Given this current situation our economy and currency will never rise above water because the demand for the U.S. Dollar and other currencies will continue to remain high and unsustainable as our government does not have unlimited reserves of these currencies thereby leading to continuous depreciation of the Naira relative to these currencies. However, if we move to a single uniform market, for everyone including the government many of the phantom demands by dubious individuals looking to make a quick buck will disappear, so the President Elect and his team must look into this quickly and be ready to hit the ground running when it comes to revamping our economy and our buying capacity.

Finally, notwithstanding the present challenges the President-Elect and his team should begin to develop a comprehensive strategy to tackle the economy and unleash the creative potential of the Nigerian people, by not just listening to the international capitalists, industry elites, but the views of the everyday Ahmed, Chuba, Olu and Osasu who are also stakeholders with interests in the survival of our beloved country. We on our part are willing to engage the government and share outside the box ideas and proposals on how we put our people back to work. Anyone willing to work and able to work going forward in this country should be engaged productively and we have already suggested in some series of articles how we do this including:

  1. Moving to ethanol derived from cultivation of sugarcane and corn by farmers to fuel our cars and trucks.
  2. Extending the NYSC to three years, with the last two years been a skill acquisition scheme in carpentry, auto mechanic, fashion and design, electrical technician and plumbing.  Also construction management, IT technician and Farm management to mention a few, with the choices based on individual preferences and other key performance indicators. The training will coopt and extend an apprenticeship scheme and graduates will have to pass a practical and theoretical examination administered by a governing agency to become certified in the field of choice. We can create millions of jobs by introducing some of these reforms, but it must start with reforming and repositioning our banks, culture change and passing the enabling legislations to move our nation forward.

May GOD Bless you all and May GOD Bless the Federal Republic of Nigeria.

Osaikhuiwu is a project manager and trainer based in Houston, Texas, USA

Comments are closed.

Naija Times