Kudos to Soludo on The Naira’s Strategic Agenda

by Paul I. Adujie

Professor Charles Chukwuma Soludo deserves national applause for his bold and courageous move regarding the Naira. In fact, we owe him thunderous applause 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, 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 Ni

gerians 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.

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segun August 22, 2007 - 2:47 pm

I agree intoto wth the first writer.Every policy propounded in Nigeria from Balewa to now is sound and credible.What went wrond has been implementation.Nothing has changed.The gurus are waiting for Soludo to launch his program before they conter it.It has always been like that.I just pray President Yaradua do something to STOP SOLUDO

Julius August 21, 2007 - 7:03 pm

Nice piece Mr. Paul, I'm neither a proponent nor opponent of SAP, and however I will strongly suggest that you hold off judging the SAP maestro until we see the outcome of Mr Soludo's effort. In my own view, Mr. Paul, it is not that we've had bad policies, it is the implementation that matters. We've always developed one policy or the other fashioned after the western world, it's rather unfortunate that we don't have the political seriousness to see such policies through. Before you go on congratulating Mr. Soludo you need to understand that an excellent policy if not followed with determination and sacrifice by our political elite, the result will always be the same. Although I do not see any reason why we should decimalize the naira, but at this junction I really don’t care, what I care about is doing something that will change the economy of our country, if decimalization will do it let it be, if selling off all public assets to private equities will do it, then let it be. Nigeria needs radical solution, even though based on my little economics Mr. Soludo’s effort seems like putting the cart before the horse, however, if that is what Nigeria needs then let’s give it a short, we’ve been disappointed before, but disappointment doesn’t mean we should maintain the status quo, let us try something new. And since Mr. Soludo’s effort is new to Nigeria then lets try it. Although, I know that countries like Argentina, Brazil etc have tried this same technique more than three times each, whether they are successful or not depends on whom you are comparing the countries to, but that doesn’t stop us from giving it a short.

On a final note, I pray that this new effort will yield fruit, we need hope, we need a little bit of light at the end of the tunnel. The madness must stop, I hope this will start the turn-around we so much yearn for.


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