By Nik Ogbulie
The way references are made to foreign exchange in the open market as the main reason why prices of goods have gone north try to create the impression that its only forex rate that determines cost in a formal market. Those who believe in this can be pardoned because the efficacy of forex in price determination in Nigeria has consistently remained a political statement unleashed by leaders who know nothing about price.
Because they have latched on forex as the major instrument of growth due to their fraudulent application of forex in all their clandestine activities, they try to find irresponsible excuses on its somewhat over’riding functions in the economy. To them, forex is the economy and has driven the economy as against developing any other workable plan that drives forex.
Talk to any manufacturer, politician, or market woman today about the outlandish pricing system that moves like lightening, and he will tell you that the forex is the reason and nothing can be done about it. Then, ask them what they think could be done; they will simply tell you that the government and the CBN should know. Their answers are not wrong. They are responding like citizens led by the nose by leaders who believe that they are really the “know all crew”.Unfortunately our president is a “bean-counter” considering his disputed background or learning. His knowledge of forex movements is limited to the extent the revenue from oil and gas provides.
To him, the solution to the forex crisis is for the government to meet or surpass its OPEC quota so that the income will rise or to pray so that their will be global supply shortfall so that prices will rise.
These are dependency or entitlement theories that Nigeria has continued to leverage on for income growth through huge forex yield.
It happened during the Gulf War of the early 1990’s.Because the government has continued to blame poor forex yield as the major problem with our situation, our economic managers like the Governor of the CBN has equally held tight to the assumptions and has refused to put his thinking cap.
We strongly believe that it is better to navigate with a new idea than insisting to function with ideas sold to the citizens by government even before the appointment of the CBN governor. If the governor can hold on to this revenue logic of politicians without driving any new idea, one may be inclined to believe that the CBN governor has been overwhelmed by the functions and duties of his office.
Cardoso’s predicament is that he has not moved the drivers of the economy to any reasonable level where certain indices would start behaving as if somebody better has been appointed. Apart from certain policy reversals which did not make any change, there has not been any robust swing from his office that enforces any change.Much as Emefiele’s interventions are now coming under severe criticism even from those who acted as consultants to the project, there were impacts that affected the forex market to the extent that people can imagine what they could pay in their next transactions like flight tickets, dollar exchanges and imports.
Today the market has become an unpredictable genre that fools any operator to the extent that production and trade activities are plotted on random consideration of the prices of the last hour.Cardoso’s landing was hailed on the basis of political expediency, not economics ; but common sense would have informed him to form a quick collage of his best colleagues from the CITIBANK alumni that can offer some more responsible plans than the political assemblage that concurs with intentions of their grandmasters.
Nobody knows if the CBN governor has a mind of his own or works with any mind that looks good for the intentions of government. It is easy for Cardoso to achieve a common ground with the forex market if he can adapt knowledge options, the same way the forex market under the NIBOR scheme was developed by NIFEX through the Money Market Association of Nigeria which was driven by the Treasury managers of Nigeria’s Deposit Money Banks.A situation where prices and forex rates are rising at the same speed every week indicates that the triggers in the economy are on negative mode and that does not indicate any growth on the investment and production side.
Let Cardoso quickly tell us the gains so far realised since his over five months stay in office and justify the reasons why the forex windows were merged other than the political explanations made by government through the minister of finance.Cardoso would fail in this duty if he continues to see the finance ministry and other ministries that became Seamese Monkies by the government the same period, as partners in progress. Cardoso should know that while his function is to be seen and felt by Nigerians , those of his political appointee-friends are purely pro-establishment.
While his duties are felt every day, those of the politicians are whatever the presidency says they are. Today, only one CBN governor remains very popular and famous on the lips and eyes of Nigerians because he made a policy happen and changed the way banking was done. Soludo ran the forex market in a way the economy listened to the market and moved forward to pull the bull’s eye with Naira re-denomination, but his constituency was in the minority.
Cardoso has three choices; his integrity, his professionalism, and his political future. The answer he gives would be the future of the Nigerian foreign exchange market.
