EFCC, Naira Redesign and Fuel Scarcity
EDIFYING ELUCIDATION BY Okey Ikechukwu
The Economic and Financial crimes Commission (EFCC) has just announced that some state governments are poised to pay workers’ salaries in cash. Why? Are these states breakaway fraternities from the Nigerian brotherhood, which are no longer interested in transparency and proper accounting processes? No more e-banking and cashless efficiency? And, pray, where would such humongous cash volume come from?
Besides the question of whence, there is also the further question of when the monies in question here were all appropriated. From which bank(s) was it all withdrawn, and when? If the monies did not come from any banks within the period under review, who brought it and from where? See the problem? There are questions for which the EFCC must obtain answers. And it is only just beginning.
But what if those who stashed billions of Naira away now rush out and convert same to dollars? What will EFCC do if kidnappers also convert their hidden Naira cash volume to dollars? Let us look at it this way: The EFCC can always demand explanations from a forex dealer whose trade volume shows an astronomical rise in a season of national currency redesign. Right? And every forex dealer must have, and keep records of, all his customers, is that not so?
So, let us relax and watch; but without taking anything for granted. True, there is much that is wrong with the nation; including challenges with the war against corruption of financial systems and processes. But let us just watch. Let us give Bawa the benefit of doubt.
And that brings us to the presumed unwisdom of a Naira redesign. Let us first note that a nation can always redesign its currency. The reasons for this may vary from one country to another. The reasons may also vary within the same country, depending on what the fiscal and monetary authorities of that country wish to achieve at a particular time. But one thing is sure: Calls for currency redesign will always be welcomed by some people and found unwelcome by others. In our case at the moment, debate is on (1) Whether we need a Naira redesign at all; (2) Whether this is the right time for a Naira Redesign; and (3) Whether it will not drive inflation through the roof.
On the first point, there is nothing wrong, in principle, with redesigning any national currency. That is the prerogative of every sovereign state and government. It may be done to commemorate a historic national event, because someone just wants to see a new design. It may also just be a tool for some fiscal/economic objective, among other possible reasons. In our own case, the truth is that this our Naira has been around for quite a while. But that is not bad in itself. So, being around for quite a while cannot really be a good reason for changing the look of a currency. Fortunately, this fact of having been around long enough is not the overriding reason being advanced by the monetary authorities.
A point to consider, especially regarding the expectation that everything will fall apart because of Naira redesign is that our previous experience, and research into the experiences of other climes, indicates that we are likely to lose close to 20% of the actual cash in circulation by currency redesign. Reason? There will always be that tranche of cash here and there that does not make its way back into the system. Some people will always tell themselves that the old notes will always be accepted; and hence face the too late.
Some of us may still recall how some people tried to run a sub-economy on old notes in the past; after a currency change. It went on, until events caught up with them. At first it looked like the “two currencies” were welcome. Then, the value of the old notes kept declining. Then they lost more than 50% of their original value. Then people began to use massive quantities of the old notes to buy the new ones. Those who then woke up, frighteningly belatedly, faced the “too late”.
As for those who say that this is not the time for currency change, the question for them to answer is this: When is the right time? Should it be in January 2023, after the elections? Alright, after the next Ramadan Season, perhaps? And what would be the justification for any time we settle for?
The point to note in the matter of timing for a national currency redesign is this: The specific date and time of commencement of the exercise is not conclusively indicative of an irreversible total timeframe allotted for the commencement and conclusion of the exercise. If the allotted time is not enough, then it ca be extended. It is as simple as that. If you think the exercise will disrupt everything, including the rotation of the earth, please tell us how and why.
As for the currency redesign driving up inflation, that remains to be seen. What was our national experience in 1973? Did we not find less money buying more, because cash was scarce? What do traders do when few people can pay? What they do is that they either cut their profit, sell at cost price, or below cost price, in order to also get other things, they need. Losses and re-balancing take place here and there; and life goes on.
Fuel Sales in the South East
Abuja, capital of the Federal republic of Nigeria, has been under the grip of grinding fuel scarcity for about three months now. There was a reprieve after the first salvo. Then the Lokoja flood came. This flood was blamed for the new round of fuel scarcity. The waters are now long gone. Yes, the flood waters receded weeks ago, but the fuel has not found its way to Abuja. As I write, you cannot find more than 20% of the filling stations in Abuja selling fuel at any point in time. And this Abuja is where some of the presumed owners of Nigeria who live at public expense, the big boys and girls who “Divide and Share” everything, live.
The roads are still mostly empty. The black-market rate for petrol ranges from three thousand Naira to four thousand five hundred naira. And everyone is buying and grumbling. Fairs are up for commuters. But wages are stagnant. So, workers and their bosses have worked out a new timetable of who should come to work on which day of the week. And loyalty to the nation suffers, as would-be citizens work together to undermine the foundations of responsible citizenship. All because they feel shortchanged, stranded and swindled.
But the situation is different in the South East, when you think of fuel scarcity. The zone has not had fuel scarcity for a very long time. That is because the people simply pay for what they want, at any prevailing price, and get it. It is only those who insist on government subsidy that have issues with efficiency.
Repeatedly cheated, serially diminished by several governments and disinherited, but not amenable to self-diminution, South Eastern Nigeria carries on like an organism with an incredible immune system. It was observed on this page three years ago, under the title “As the South East Mourns”, that the South East has “…become a metaphor for how to exist (without really living) in a federation of supposedly equal partners. It twists and turns piteously in subdued pain. There is an unvoiced gnashing of teeth and a bitter forbearance.”
As a region, it is “Denuded, ridiculed, swindled and roundly scandalised on all fronts by an elaborate pretence at nationhood that has been to its detriment for far too long. Its gifted, energetic and bold youths are forced to scavenge around the fringes of morality and legality, because they have found themselves in a system that excludes them from what their peers and supposed fellow citizens take as a matter of course; and regard as their entitlement”. These are facts of our living experience today
It was further said, then: “… being a people resolved not to dissolve under inclement currents and the unrelenting assaults of a merciless state that seems determined to annihilate them, Ndigbo remain resilient in the face of inhuman political and economic odds. But does the rest of the Nigerian federation really know, and to its fullest measure, that thraldom and misery have taken permanent residence in the entire South East? Put differently, does anyone really care what people of that region feel, or do not feel, about everything going on around them – and sometimes in their name? I think not. And that is because everyone has been living with a badly treated South East since after the civil war in 1970. It has become normal to reckon without the people in every way.
It is a matter of fact, and record, that the South East region has remained sidelined in federal developmental projects for decades. The nation has lived with this reality for very long before the current government. The region lacks relevance in the siting of impactful institutions and major drivers of our economic environment. It is mocked by the wretched profile of its most visible political actors. Its sons and daughters in national public positions mostly live to survive their tenures. They sneak off to some recondite and narrow existence, or to their villages, once out of office. Not so for their peers, contemporaries and supposed equals from other parts of the country.
Look around you calmly and you must conclude that there is really nothing happening in the South East to warrant serious national human, economic or political traffic in that direction. It boasts the most dilapidated federal roads in the nation. It is the least considered in the new epidemic of rail projects springing up all over the nation. The second Bridge over the Onitsha end of the Niger was on the cards for decades. It became a metaphor for what should have happened immediately after the civil war, but which did not happen. The over 30 years of traffic nightmare for travellers on that route lingered and became the norm.
When, finally, approval was given for the Bridge to be built under the PDP government of yore, it turned out to be a Build Operate and Transfer (BOT) arrangement. In other words, the bridge was approved to be built by whoever was willing, able and available to put down his money for it. Yes, the builder will fund the project and then later recover the money by putting up toll gates on both ends of the new bridge. It is those using the bridge that would pay for the cost of building it; and it was not to be handed over to the government to be used free of cost, until the number of years stipulated as adequate for the builder to recover his cost, along with the accruing profit. And, mind you, there was no case of national bankruptcy; or a dearth of projects of even higher net value being executed all over the nation at the time.
But the bridge was still not built. Had it been built as initially planned, it would most probably have been the only spot in the federation where toll gates were erected so that users of a public, land transport, facility like a bridge would pay for using it. And this was at a time the federal government banned and dismantled all toll gates in the country. Only the South East must moan, groan and bleed through the nose for a bridge that should have been constructed over 40 years ago.
Now that work has finally commenced on the bridge, thanks to the Buhari government and after a protracted toing and froing on several fronts, the euphoria of this “breakthrough” has, again, exposed the myopia and infantilism of South East political leadership. An elite that clamoured, and still clamours, for an inland port in Onitsha is blind to the fact that this new bridge has been deployed as undertaker for the port project. What type of ship will pass under it. To be fair, there is enough head room for, crabs, swimmers, speedboats and rafts. For good measure, it may even endure a flat-bottomed steamer ferrying sand around the now-dry banks. But that would be all. So, we can at least commission the Onitsha inland port for some form of retail shipping, using canoes, fast swimmers and speedboats between the creeks of the South South and Onitsha”.
The region has no fuel scarcity today. It has not had any, as a region for decades now; because the people are on their own. Petrol is sold all over the region at a maximum price not exceeding two hundred and fifty naira per litre. Let others take note and end the illusion of subsidy.
