The best way to deal with war is to make sure it does not start (3)

In his remarks, the commandant, MLALIPKC, Auwal Fagge, noted that piracy in the Gulf of Guinea had been discouraging foreign investment.

He said weakened control of offshore areas had slowed deployment of blue economy and encouraged illicit freight and illegal fishing.”

(i). Front page editorial in “BusinessDay” newspaper on June 9, 2022

Headline: “Saving the plummeting naira”

“The nation’s currency, the naira, is facing serious pressure from all directions. From unbridled imports to low crude oil exports, the naira is not getting the support it deserves.

Another pressure point is the electioneering period that is getting more intense by the day. In the last few days, political aspirants were said to have given delegates the almighty dollars. This must have compounded the current problems of the naira.

We walked into this thing gradually without knowing; we didn’t do enough to watch our recruitment, training and promotion, and gradually, we lost some ground

Investors, businessmen, tourists, and other users who need it for their legitimate business activities are the ones bearing the brunt of this worsening naira. Some have postponed their investment plans, while others may have cancelled outright their projects in view the off-dollar scarcity.

One of the sources of the US dollar to the Nigerian economy is on the platform of exports. It should be noted that the Nigeria’s trade balance stood at N2.23 trillion in 2019 as a result of the annual imports of N16.95 trillion compared with the exports of N19.19 trillion. On the export side, crude oil dominated while on the import side, the purchases of refined petroleum products, industrial raw materials and food items dominated the list.

In 2020, exports plummeted. Nigeria ended that year with a negative trade balance of N178.26 billion. The situation got worse in 2021 as the nation’s negative trade balance rose to N1.94 trillion. Specifically, from January to March 2021, and from June to November of the same year, monthly negative trade balance rose from N63.6 billion to N873.01 billion.

Momentarily, Nigeria has recorded a positive trade balance in the first quarter of 2022. But this has not saved the naira. This is because the other complementary sources of the dollar are not living up to expectations. Capital importation is dwindling just as the desires of Nigerians to preserve their wealth in US dollars is gaining more traction among the political and economic elites.

Capital importation declined by 17.5 percent to $1.57 billion at the end of first quarter of 2022 on a year-on-year basis. The declining trend has been there since 2014, when capital importation peaked at $20.75 billion. From 2015 to 2018, the highest capital importation was $16.81 billion. A momentary relief was received in 2019 with the importation of $23.99 billion. Thereafter, capital importation has continued to nose-dive.

This investment inflow outlet is another means of providing relief to the naira as it gives the Central Bank of Nigeria (CBN) the requisite flexibility to meet the foreign exchange needs of businesses and other legitimate users.

Another investment that declines while the naira is plummeting is the foreign participation in equity trading as this relates to the nation’s capital market. At the moment, local investors have become the largest owners of most of the listed equities in Nigeria.

For instance, in 2021, foreign investors controlled only 21.3 percent of the equity trading on the Nigerian Exchange. Also, as of April 2022, foreign investors controlled only 17.4 percent, much lower than the level it was in the previous year.

The above has confirmed the general belief that the sources of foreign exchange into Nigeria, which could provide succour to the Nigerian currency are drying up. This is the reason why the naira keeps plummeting against other major currencies.

For Nigeria to grow, the exchange rate must stabilise. The current situation has already affected Nigerian manufacturers significantly. For instance, how do manufacturers who import raw materials plan in a regime of volatile exchange rates? In some of the interactions we had with manufacturers, they complained bitterly about how the plummeting exchange rates affected their planning, and put them in a difficult situation.

It is more worrisome to them because not all the costs incurred could be transferred to the final consumers. The situation has ensured that most made-in-Nigeria products are not competitive in the international market.

The highly expensive political system Nigeria operates is not helping the naira. For instance, presidential aspirants under the ruling All Progressives Congress (APC) paid a minimum of N100 million to obtain the party’s presidential form. The opposition People’s Democratic Party (PDP) paid N40 million. At the just concluded PDP convention, it was reported that delegates were paid in the dollars.

Meanwhile, the electioneering period has just begun, and now the naira is exchanged for N600/$ at the parallel market. Evidently, more money will still be injected into the political space in an election season like this. Therefore, there is no certainty that the exchange rate will not depreciate further.

Pressures on the naira are coming from many sources. Consequently, all of them require the urgent attention of government and the CBN. Nigeria must devise means to have value-added exports that will not be subject to the treatments currently meted out to agricultural produce at the international market.

The concerns that make capital importation to dwindle must be addressed. Also, ways must be devised to attract foreign investors into the nation’s capital market. The problem requires a multi-pronged solution, and it is achievable if more seriousness is attached to it.”

Worrisome earnings

“We are worried that the profit earnings of leading banks in the country do not reflect the state of Nigeria’s economy. While the economy grew at about 3.11 per cent in the first quarter of 2022, leading banks in the country, according to the Vanguard Newspaper report have about 24.7 per cent and 18.6 per cent growth in revenue and profits, respectively, within the same period. Yet, the banks’ financial wellbeing is supposed to reflect the economic health of the nation.

Perhaps the banks are more interested in profiteering from the economic challenges facing the country than helping the nation’s economic development. The banks reviewed by the report include First Bank (FBN Holdings Plc), Zenith Bank Plc, United Bank for Africa (UBA) Plc, Guaranty Trust Holdings (GTCO) Plc, Stanbic IBTC Holdings Plc, Access Holdings Plc, Fidelity Bank Plc, Union Bank of Nigeria (UBN) Plc, Wema Bank Plc, Jaiz Bank Plc, Sterling Bank Plc, FCMB Group Plc and Ecobank Transnational Incorporated (ETI) Unity Bank Plc.

According to the report, the banks recorded a combined N371.9 billion in pre-tax, an 18.6 per cent increase, compared to over N313.5 billion posted in first quarter of 2021. Comparatively, the Nigerian economy, according the National Bureau of Statistics grew at 0.51 percent in the first quarter of 2021, and 5.01 per cent in the second quarter. In the entire 2021, the national economy grew at 3.40 percent, which was the best since 2014.

While it will be unfair to blame only the banks for the poor growth rate of the economy, it is strange that while the banks’ profits are growing astronomically, the nation’s economy is doddering. We consider it an abuse of the economic intermediation role of the banks, for them to be mercantilist, without development in their philosophy. Ordinarily, their growth rate is supposed to come from the return on loan facilities given to customers, but rather, they keep their monies in their vaults, and seek duplicitous means to earn income from customers.

Without engaging in economic activities, banks levy customers all manner of charges, which the Central Bank frowns at sometimes. It is because the banks make huge profits from such distortions that they are not interested in giving loan for real economic activities, which bear elements of risk.

The banks engage in such excess and fraudulent charges because they know that most customers would not follow the tedious process of getting redress either from the courts or the Central Bank.

It is because the commercial banks are not willing to play their role that the Central Bank engages in all manner of interventions, to make loans available for economic operators. Of course, the apex bank, not being well positioned to engage in direct lending to retail customers, still relies on the unwilling banks to give out the loans and recover them. The result has been huge gaps in the performance of those loans, since the monies are not owned by the intermediary banks.

Again in their unwholesome determination to earn higher profits, most banks engage temporary staff to do the work of permanent staff. Disregarding the huge risks involved in such unfair business practice, the banks’ only interest is increase in the bottom-line.

It is also sad that despite the huge earnings in profits, the banks’ Corporate Social Responsibility (CSR) is pathetically disappointing. The huge profits ordinarily should reflect in scholarships, research grants, community-based projects, but instead, the reverse is the case.

If the nation’s economy is to grow as the banks’ earnings are doing, the government must use policy measures to force the banks to direct their attention to the real sector. Such a policy will also benefit the banks in the long run, as they cannot survive in isolation.”

(i) Front page report in “Sunday Punch” of June 12, 2022.

Headline: Annulling June 12 election was the last straw any democrat could take

-General Alani Akinrinade

Question: “But even in the military that you mentioned, there are still cases of corruption. Does that not show that Nigeria’s case is beyond redemption?

Answer: Optimism is the basis of life. I don’t think I can give up at all, but, however, the condition which you have stated now is a very sad condition. We walked into this thing gradually without knowing; we didn’t do enough to watch our recruitment, training and promotion, and gradually, we lost some ground.

Secondly, when people start misbehaving and we didn’t hold them with strong hand; we didn’t see it coming. I am very ashamed to hear that a military officer stole money because I stayed long in the army and served so long in the Ministry of Defence.

I know you cannot steal a kobo without writing or approving or to know how money got to the command and how it is spent. We had people there who were trained and knew what to do, they knew the procedures and they followed it.

So, how a military is able to get into the treasury and make away with our money, I have no idea and I don’t think anyone of my age in the military will ever understand what it is all about, but the military has never suffered in Nigeria like the civil servants.

Our salaries and entitlement were good. We had barracks with accommodation and beyond that, if you wanted to buy a car that was befitting of your rand and you didn’t have money, the government would give you allowance to buy it and pay back in 10 years and the life of the car was more than four years.

You could also queue up for housing loan because you were entitled to it, now, all these institutional safeguards have disappeared. So, how we intend to make people live on the wages they earn now is what I am not aware of.

For instance, in Osun here, some people were paid half salary for years, and I ask myself, where are the sociologist, the economist? They should let us know how those people lived at the time. Even the full salary cannot pay your bills and now, you are getting half of it and you are still coming to work. I want to know how.

This is how we have promoted corruption and people are living well above their means and nobody is asking questions, and since nobody is asking questions, it will continue but as I told you, I am eternally ashamed that military officers will ever get involved in some of the cases that we hear of.

While in the Army, I witnessed a case of a Lieutenant Colonel, who moved from one station to another, and when he was parking from his quarters, because then it was government quarters, which was furnished by the Ministry of Works.

In each house, there is a law that guides what you have inside it. When the officer left, he left with one baby cot and because of that, he was court marshalled; he had to hire a lawyer to defend him. Because of that, he was called “Colonel Baby Cot”. It wasn’t his house and at that time, it was all wooden furniture, no one was doing sofa as of then. The institutions are dying and people are pretending as if the institutions are still strong.”

Question: “What about the regimes performance in economic development?

Answer: “Talking about the economy; in fairness, if you look around the whole world, everybody is groaning about one thing or the other; inflation, lack of this and that. That is going on all over the world, especially after this pandemic (COVID-19) struck and depleted all the treasury of every government.

But seven years later, this government is still importing fuel and people are complaining about the pump price. Crude oil is sent 6,000 miles away and returned as fuel; who pays for the transportation? None of the refineries is working and that bothers me as a person and makes me ask, what can we do well on our own? We have all these fineries long time ago and by now, I expect them to have made enough money to change their equipment to state of the art.

The equipment installed 25 years ago is already obsolete. We met the Port Harcourt refinery a little bit damaged during the (civil) war, but we located a young person who had worked there as administrator or in their administrative section.

Read also: The best way to deal with war is to make sure it does not start (2)

He was from the University of Ibadan. We just grabbed him and said this refinery would work. We knew he was not an engineer, but within two weeks, we found all the people and we returned to Eleme and in one month, we were no longer taking fuel from Lagos. That refinery started working.

There were no expatriate left in Port Harcourt at the time. It was mainly people from Rivers State, because we had only liberated Port Harcourt and we found enough people to restart that refinery. In no time, we were pumping (fuel) into barges and taking it to Lagos from Eleme.

What really went wrong? And we are now talking about subsidy for refined fuel and none of us is paying for that. That is akin to colossal failure for any government to have watched that happened for seven years, especially for a President, who have been Minister of Petroleum.

He knows OPEC like the back of his hands.”