How bankers are under-developing the national economy

The inspiration for the title for this week’s article is from the award winning essayist and Guyanese author Walter Rodney’s book “How Europe Underdeveloped Africa”

How Europe Underdeveloped Africa is a 1972 book written by Walter Rodney that describes how Africa was deliberately exploited and underdeveloped by European colonial regimes. One of his main arguments throughout the book is that Africa developed Europe at the aasame rate that Europe underdeveloped Africa.

One is tempted to think along the same lines that the more the citizens invest and put their thrust in the banks, the less the banks reward them in terms of supportive developmental initiatives. That’s the only conclusion one is left with after the punishment by banks and government during the past few weeks.

The Nigerian economy is expected to grow by 3 per cent in 2023, the United Nations (UN) has said.The UN, in its 2023 World Economic Situation and Prospects report published on its website, said high inflation and power supply issues are impacting growth in Nigeria.

“But the economy will benefit from robust commodities trade and dynamic consumer goods and services markets, bringing growth to 3 per cent in 2023,” it said.

The global body said aggregate output in Africa is projected to remain subdued amid a volatile and uncertain global environment compounding domestic challenges. Our economy was growing at six to seven percent during the Jonathan years but recession and mismanagement of the economy has slowed down a lot of businesses. So ideally all hands should be on deck to bring the 3 percent predictions to reality. Our political and economic leaders are determined to call another round of recession into our lives.
This is very unfortunate indeed.
The government and banks are doing very little to stabilize the ship of state the builders of the economy are setting it ablaze with incoherent and inconsistency in their policy direction.

Bankers are known and expected to play a very pivotal role in the development of any economy. Central and Commercial bankers are doing the reverse in Nigeria and we are all wondering what’s going on here.

We were shocked to learn that the Minister of Finance, Budget and National Planning, Zainab Ahmed said that the Central Bank of Nigeria (CBN) did not carry her Ministry along in its plan to redesign and roll out new N200, N500 and N1000 notes This is autonomy misapplied.

The CBN said it was surprised by the minister’s outburst and that due process was followed in arriving at the Naira redesign project, including obtaining the approval of President Muhammadu Buhari.On the same day, officials of the CBN doused concerns about the cost of printing the new notes, saying they will come at no outrageous cost, printed in the country and within the budget of the apex bank.

Developments after this claim show that the Security and Minting Corporation of Nigeria charged with the job can’t cope, suppliers of the special papers for printing the currency cannot guarantee the needed quantity by Nigeria and has put our order on a long waiting list. Madam minister is right and CBN is wrong. This behaviour is inconsistent with what an Apex Bank should be doing for the good of the National Economy.

One wonders the type of business opportunities we would have lost while grappling with this basic challenge . I can’t wait for the growth numbers for this quarter. One is pained by how the rest of Africa would be looking at us in bewilderment for our capacity to bungle virtually everything we touch.

*EFCC & ICPC in the Strong Rooms*

Meanwhile the story why new notes are scarce have been changing like the skin of the camelion. The CBN started by blaming the Commercial Banks for hoarding currency notes.and rolled out the Economic and Financial Crimes Commission (EFCC) , Independent Corrupt Practice Commission (ICPC) & CBN officials to expose banks not putting needed currencies into the system.
The Commercial Banks saw an opportunity to exploit the system and they took it.

Media reports say N2.1 trillion of old notes were taken out of the system and only N500 billion of new notes injected . Is this as a result of limited capacity or an attempt to starve the system of cash for possible campaign purposes.

*The New Governor of the CBN*

Some governors stopped the CBN in court from imposing a stop date for the acceptance of the old note. Suddenly the Supreme Court and the Council of State are now teaching the seasoned economist his job. It would also be nice if the economist and CBN governor is focused on growing the economy instead of dabbling into the murky waters of politics. The system and people are bleeding from this lack of focus. Wondering how Clement Isong , Mai Bornu and Ola Vincent would have handle d this matter.

*Supreme Court to the Rescue*

The Supreme Court decision this past week asked that the deadline for the return of old notes be further extended has given the people some relief . The Attorney-General of the Federation, Abubakar Malami, is challenging that interim ruling by the Supreme Court and the central bank has not spoken on how it intends to comply with the ruling, thus leaving Nigerians confused. It also noteworthy that the Vice President Professor Yemi Osinbajo reminded all at the Council of State meeting mid week that it’s role is mainly advisory thus hinting government intentions to go down this hole it has dug itself into. A very interesting reaction to a national crisis that the government created.

Meanwhile Mallam Rufai assured the people of Kaduna to go about their businesses using old and new notes until the old notes are gradually taken out of circulation. That’s the ideal but the redesign initiative is beyond economics. There seems to be a political dimension that the President and the Presidency is silent about.

The Politics of the colour change of the Naira

This would be the focus of the column next week I shall be looking at the isolation of South West from the centre, the role of AD, AC, ACN in the emergence of PMB and how pay back time politics and dance is proofing difficult for the President. I would like to end by saying BATs should not be taken for granted anything that fly with heads turn upside must some stealth qualities for survival that man may be ignorant of.

Michael Umogun is a chartered marketer interested in public policy.