A great American popular novelist once began one of his epic fables with the opening lines about its major female character: “There were only two things Destinee ever really wanted in life: the first is dollars; and the second, more dollars”. This syndrome is not limited to wayward characters fabricated by the fertile imagination of Yankee fabulists; it has become an obsession of the rich and mighty in contemporary Nigeria, and, indeed, throughout the world. The almighty greenback has become the god of our age. Our politicians can’t have enough of it; and so also the bankers and money-changers and captains of industry. I am told even some of the sleek long legs in skirts scouring the seedy streets of Allen Avenue in Ikeja prefer clients that are chivalrous enough to pay up in dollars.
In a time of uncertainty, people rush to buy up dollars and stack the lot under their beds and mattresses. More than a decade ago, they used to stash it away in empty water tankers atop the roofs of their palatial homes. But that trick has been busted by EFCC and other anti-corruption agencies. For those who succeed in making their funds legit, the way to do it is to set up a domiciliary account in the commercial banks. These days our so-called domiciliary accounts are busting at the seams with dollars, euros and pounds. It is estimated that more than US$20 billion of idle funds are kept in our banking coffers by Nigerian account-holders. Under CBN regulations, such funds cannot be traded with. They are just sitting there, idling away. Because Nigerians are distrustful of their government, fearful of what the future holds.
Dollars everywhere, but not enough of it. Manufacturers are wailing that they can no longer purchase the dollars needed to import much-needed inputs from abroad. Banks have had difficulty settling letters of credit owed foreign exporters. Until the recent deregulation of the foreign exchange market, the Governor of the Central Bank had more status in our country than his Holiness the Pope. Everybody was chasing after him to see if the crumbs would fall from the master’s table. The return to dollar allocation was a rude throw-back to Byzantine times.
I humbly submit that dollarization is the bane of the Nigerian economy; a factor largely but not completely, explaining the downward spiral of our naira legal tender currency. Let’s be very clear about this. Ours has been an oil-dependent, monocultural, rentier petro-dollar economy. It is a political economy that is, ipso facto, anchored on a dollarized financial and banking system.
As a result of a deal between American Secretary of State Henry Alfred Kissinger and the Saudi monarchy in the 1970s, it was agreed that world oil would henceforth be traded solely in dollars, and, in exchange, the American military juggernaut will underwrite the security of the House of Saud. It is a deal that has subsisted for more than forty years, guaranteeing the market supremacy of the American dollar while allowing the Saudi rulers to behave with wanton licentiousness like the spoilt brats that they are.
Much of our hydrocarbon patrimony was carted away by oil tankers owned by the big majors in exchange for dollars. We became drunk with dollars. In our headiness, we were importing everything dollars could buy – champagne and Perrier water from France,tomato puree from Italy, substandard generic drugs from India, Havana cigars, and custom-made vintage cars from Daimler-Benz in Germany and toothpicks from God-knows-where. At a stage, during the Gowon era, we were importing so much cement it would have taken 20 years for our ports working day and night to offload the stuff. Most had to be turned back at sea while a good number were diverted to ports in neighbouring countries. Nigeria became the world’s largest importer of rice and the biggest buyer of diesel-guzzling, high-polluting generators.
We also became the world’s number one dumping ground for old cars and all sorts of worthless Chinese goods, from pirated mobile phones to substandard steel products and dangerous baby foods. We became, in effect, a country that consumes what it does not produce and produces what it does not consume – the junkyard of the world.
To be sure, when oil prices were good, the naira at its height was so strong it was exchanging one-to-one with the British pound sterling and one-to-two against the dollar. Naira was eagerly accepted by Asian electronics sellers in Liverpool Street in London. I have been told that our Muslim brethren going on pilgrimage to Mecca and Medina could easily do their shopping with naira in the seventies. Until recently, our naira has been the de facto regional currency of West Africa. As a Nigerian living in Abidjan in those years, traders eagerly accepted my naira. It was the same in Cotonou, Lomé, Accra, Dakar and Ouagadougou. Not anymore. These days no one wants to touch the naira with a barge pole.
The turning point came sometimes after the 1982 financial crisis. The naira began the descent from its acme of glory. The first major devaluation came during the Babangida years, with its misguided shock-therapy that went by the name of structural adjustment. Babangida had the undoubted gift of charisma. But it was a case of ‘talent miss road’. He was innately a man without character.His economic policies were masterminded by ill-trained American economists who lacked both imagination and mastery. If our economy had evolved in the way India or China did, we would not be in the mess we are in today. What is worse, as the Pius Okigbo Panel showed, over US$12 billion was stolen and squirrelled abroad in so-called dedicated accounts. He may not have been guilty of directly stealing the money, but they operated an illegal ‘Dedicated Account’ abroad that was meant to finance his acolytes and the shadow government-within-the government that they operated. The likes of Commodore Okoh Ebitu Ukiwe, his de facto Vice-President, had the courage to raise questions. They were shown the door. As a former CBN Director of Research and highly respected financial expert and banker, Chief Samuel Bamidele Falegan once explained, Babangida set the printers at the Mint working day and night. This became intensified when he was under pressure to step aside. They printed and printed until they were beyond exhaustion. The money was carted off in truckloads to bribe and hoodwink an exhausted populace.
I daresay that not even the demented Idi Amin in benighted Uganda resorted to the printing press in the manner that the Babangida administration did. The man who went by the official title, “His Excellency, President for Life, Field Marshal Al Hadji Doctor Idi Amin Dada, VC, DSO, MC, Lord of All the Beasts of the Earth and Fishes of the Seas and Conqueror of the British Empire in Africa in General and Uganda in Particular”, clearly understood monetary policy better than our charming tooth-gapped Maradona. One can only imagine the highly destructive impact that such wayward behaviour had on the economy, on inflation and on the value of the naira.
Our IBB literally bribed himself into the history books. So many billionaires are beholden to him that they would do everything to preserve his image as the so-called‘architect of modern Nigeria’. Alas, the Prince of the Niger was a principality from the Other World who was brought to sink our destiny in the abyss.
General Sani Abacha, despite his tyrannical misrule, proved to be a rather astute economic manager. He called the bluff of the Western development agencies while staunchly defended the naira. Unfortunately, in an atmosphere of congenital misrule, corruption and grand larceny, the integrity and standing of the naira as a currency could never be guaranteed. The Obasanjo years continued the downward spiral of the naira, until today, when our currency, as of 31st August, stood at a shattering N420 to the dollar.
Like they say of democracy, a currency is as good as the leaders it gets. Ethically challenged regulators can never give you a currency with integrity. We shall not mince words about it. There is anecdotal evidence that, in the not-too-distant past, some people in the apex bank were in the habit of recycling old naira notes meant to be destroyed. The shocking discoveries at the Ibadan branch of the CBN were perhaps only the tips of the iceberg. Some of us had a strong feeling the thing had been going on for years. The tale has been told of one such regulator who made his hometown the place for the burning of old notes, contrary to standing policy. And then when it was time to burn the condemned notes, they would orchestrate commando operations of shadowy characters who would salvage a large chunk of the burning notes into waiting trucks, speeding away into the belly of the impenetrable night without a trace. It is not a mere fable.
There is also some suspicion, wait for it, that one or two currency printing plates from the Mint may have mysteriously disappeared. If this is true, is it too far-fetched to imagine that someone somewhere is not coolly printing naira to his heart’s content? And such people would be smart enough to print the notes in cautious quantities. They would then sell them to their own legally owned BDCS in exchange for dollars, which they would then safely keep away in farmlands somewhere in the primeval forest.
St. Augustine, Bishop of Hippo Regis — my patron saint — never tired of reminding his flocks that we live in a sinful and fallen world. How can we guarantee that some scoundrel somewhere is not sitting down and coolly minting counterfeit naira that passes perfectly for the genuine stuff? One of the universal laws of finance is that bad money will always chase out the good. And if this is indeed happening, how can you ever control inflation and how can you ever guarantee the value and integrity of our legal tender currency?
I would like to believe that at the roots of this problem is our obsession with the dollar in the context of our petro-dollar rentier to evolve strong institutions based accepted standards of civilisation. There is also the failure to take pride in what is ours – to uphold the honour and dignity of the naira. Worried by the increasing trends in dollarization, trend, the CBN released a circular sheepishly warning everyone concerned to note that “Section 15 of the CBN Act 2007 provides that the unit of currency in Nigeria shall be the Naira” (Circular 09-462 36403 of April 17, 2015). They warned the money deposit bankers and other actors in the economy to desist from the habit of invoicing customers in dollars and other foreign currencies.
Ironically, many government departments were also invoicing customers in dollars, in direct breach of existing regulations. The politicians have been the worst culprits. During the last electoral cycle, dollars were the means of settlement. Naira were too cumbersome for the business of horse trading in smoke-filled chambers of partisan horse-trading and political settlement.
I am persuaded that dollarisation cannot be good for our economy. To be sure, there are small countries that use the dollar as their de facto currency. Charles De Gaulle of France dismissed them contemptuously as ‘the dust of empires’. They include such countries as Liberia, Timor Leste, Ecuador, Panama, Zimbabwe, Marshall Islands and others. In the case of Zimbabwe, foreign intelligence services, hell-bent in effecting regime change in that country, allegedly flooded the country with fake Zimbabwe dollars as they did in Russia some years ago. Hyperinflation destroyed the currency and literally turned Zimbabwe into a beggarly nation. The grand old man called his central bank governor and they decided to unilaterally adopt the American as the de facto currency. From over 3,000%, inflation swiftly came down to 3% in Zimbabwe. However, a good number of the countries that adopt the greenback are so small that it does not make sense for them to have their own central bank or to mint their own money. Such countries are well prepared to forego their own monetary sovereignty in exchange for a stable dollar guaranteed by the almighty American Federal Reserve Bank.
For countries such as ours – with our size and potential – dollarization comes with a heavy price. For one thing, it is an affront to our economic sovereignty as a nation. Secondly, it places our entire economy under the vagaries of a foreign power and its central monetary authority. Thirdly, it compounds the difficulties of implementing monetary policy. Fourthly, it places the integrity of our own legal tender in jeopardy. When politicians, governments and private companies prefer dollars and choose to invoice customers in dollars, it makes the local currency weaker and eventually bastardises it. My experiences in banking and international high finance have taught me that the currency of a country is not only a symbol of its stature; it is a vehicle for projecting economic and financial clout. Beyond the economic fundamentals of industrial output, GDP and dominance in international trade, the determinants of a currency’s power is shaped by the quality of the leaderships that drive economic and financial policies. A leader who talks down his currency and his national economy will soon end up in dire straits. Such is the power of communication in mass media in our new digital age. If we teach our people to take pride in our naira and to valorise it psychologically as well as financially, it will increase in value and standing.
I dream of a naira that is strong, stable and beyond reproach. A currency that is as unassailable in value like the Swiss Franc. I also suspect that there is a lot of fake naira in circulation being manufactured by Lebanese and other shadowy vultures. There is more than meets the eye regarding what has befallen our naira. It is not too far-fetched to imagine some shadowy international economic hit men who, armed with a US$1 billion war chest, have been under executive orders to bring down our naira through speculation and currency warfare. I am not alarmist, believe me. But I have been far enough into the inner sanctums of the world of high finance to know a thing or two.
There are hedge funds and private equity firms that control more than US$1 trillion under management. For example, more of our oil is traded in the derivatives market by investment bankers than actually takes place through normal traditional trading. Commodity price manipulation is not beneath them. And so is currency manipulation, especially aimed at countries that fall outside the good books of our Babylonian world masters. These same people may have sponsored insurgents and shadowy militia herdsmen to destroy our agrarian sector and ensure not only famine but also a religious war that will dismember our great federation. They will because God has a purpose and a divine destiny for Nigeria. We will stop them by force, by thunder. This is an economic war we are in, and let the true patriots stand out and be counted.
I envision our naira becoming a progressively semi-convertible international trading currency. We need a strong naira that is also flexible and responsive to market signals and opportunities. We need a naira we can be proud of; a naira that reflects the potentials of an economy that may reach the one trillion dollar mark in the coming decade. We cannot achieve this feat under present arrangements. The first step to change is to put an end to dollarization of the economy by all means necessary.
I shall conclude with an anecdote. A good friend of mine, a senior Ambassador in the Foreign Service, told me recently that he gave US$100 bill gift to someone during a visit to Cape Town, South Africa. After a few days, the person came back begging for my friend to go and change the money into rand. The reason: no South African citizen can easily go to a bank and change dollars into rand. They would need to explain how they came about those dollars. All tourists and business visitors coming into Madiba’s country are required to go to the nearest bank and change their foreign currencies into rand before they can buy anything in South Africa. Any trader who accepts dollars over the counter is likely to face the wrath of the law. South Africans takes great pride in their national currency and are jealously protective of its integrity and standing. This is why the rand is listed in the forex market in New York, London, Frankfurt and Paris. Our naira, by contrast, is as far from civilisation as you can get.
In the words of the 20th President of the United States, James Garfield, “Whoever controls the volume of money in any country is absolute master of all industry and commerce”. His predecessor, the great Abraham Lincoln, declared that “No duty is more imperative for the government than the duty it owes the people to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labour will be protected from a vicious currency”. We in Nigeria must gradually wean our people from this obsession with dollars while propping up our naira with pride and honour. If you bastardise your money you bastardise your honour, your riches, your heritage and your future. This is the shape destiny assumes on the earth.
Obadiah Mailafia
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