The apex bank’s fault lines

IT is good to observe that the Central Bank is finally responding to the compelling logic of Nigeria’s existing economic reality. The decision to exclude 400-odd import-items from the official foreign exchange window is certainly a step in the right direction.

No one, with the possible exception of self-seeking persons or organisations would fault the decision; therefore it is understandable that The Economist of London should issue a prompt broadside at the otherwise sensible decision.

Rather than discount the perceived competence of the present top management of Nigeria’s apex bank, The Economist’s illogical criticism has greatly diminished its authors’ international reputation, at least in the eyes of those who wish Nigeria well.

The regrettable criticism once again raises the recurring question: how relevant are existing economic theories to national socio-economic development? My expressed answer to that lingering, if vexed question could be found in an earlier article, The eclipse of economics, published in The Guardian newspaper of November 18, 2014.

Existing economic theories belong in the centuries gone-by; The Economist’s self-serving criticism should be so consigned. Fast forward to the twenty-first century; the Central Bank has started well on the road to fixing the economy, but a lot more still remains to be done to stabilise, and eventually grow Nigeria’s economy.

I had previously summarised my views on how to stabilise and subsequently grow Nigeria’s economy in another article, entitled, Economy: we had been here, published in The Guardian newspaper of January 29, 2015.

If the ultimate aim of the forex exclusion list is to develop local capacity for the products so listed, then an outright ban is imperative (forex exclusion listing is forex black market writ large).

A study of countries that have turned round their economic fortunes would reveal that outright import-prohibition informed the thrust of their economic prosperity.

This proposition naturally raises the challenge of manning Nigeria’s notoriously porous borders. It’s time Nigeria seriously took up the gauntlet presented by her borders for the obvious reason that near-water-tight national borders are a desideratum for all stable economies; Nigeria cannot be an exception.

One often gets a sense that Nigerians have subconsciously internalised the notion that West African Big-brother’s borders simply cannot be effectively manned against contra-banned goods.

This notion is of course erroneous. Truth is, Nigeria has not seriously made up her mind to man her borders against illegal imports as is done elsewhere. We really have treated this all-important issue with unsettling levity.

The might of the nation’s military paraphernalia must necessarily be deployed round the clock to ensure a virtual seamless borders monitoring.

I do not mean to be alarmist; to be sure, to the extent that territorial integrity is subsumed under economic stability, economic survival-struggles are a war by another means.

Therefore, make no mistake about it, Nigeria is presently fighting a sovereignty-threatening war on two fronts. Namely: the battle against Boko Haram insurgents; and the battle to save the naira.

Failure to recognise this reality portends grave danger for the national leadership, irrespective of its creative genius. Let us not forget that both Napoleon Bonaparte and Adolf Hitler were respectively exceptionally gifted national leaders, but each had been consumed by the intricacies of fighting a war on two fronts.

You simply cannot win a war when you are fighting on two fronts, therefore Nigeria must decisively win one of the aforementioned battles in the foreseeable weeks.

So, which is easier? Roundly defeat Boko Haram insurgency, or win the battle to save the naira? Saving the national currency seems to me the line of least resistance: administratively fix the naira exchange rate at a level least inconvenient to the Nigerian masses.

In points of fact, saving the naira holds many a solution to Nigeria’s myriads challenges. For an example, were the naira to be administratively fixed at N20 to $1 (I do not see why this cannot be done immediately) most of the billions of hard currencies, which were surreptitiously taken from Nigeria would invariably find their way back to the country, since it would no longer be attractive to hold huge hard currencies outside Nigeria.

What’s more, local manufacturers would be availed affordable foreign exchange market, and Nigeria’s debt burden would be rendered much less burdensome.

The cost of capital would appreciably decline. Incidentally, saving the naira would also make more affordable the purportedly needed weapons to effectively take out Boko Haram insurgency! Should more be said? Whatever for? Do not overstate your case, Mister Man! Therefore, saving the naira it is.

The Central Bank should immediately remove the fault lines in its latest policies respecting importation and foreign exchange, and adopt an aggressive (combative) approach to protecting the Nigerian economy. •Nkemdiche is an engineering consultant based in Abuja.