Yemi Cardoso CBN Governor
By Segun Sanni
The Buhari government did great damage to Nigeria’s economy for the excessive money it created and threw carelessly into the economy.
We’re facing the extremely negative impact of that excessive monetary expansion through its devastating contribution to galloping inflation and pernicious pressure on our exchange rate. Unfortunately, we can’t point to much positive that the money the Buhari government borrowed and created was spent upon. The Tinubu government has taken the very wrong step by attempting to take out the excess liquidity by an unprecedented overreliance on monetary policies. Raising CRR from 32.5% to 45% and interest rates by 4% (to 22.75%) at once will produce a crowding out effect of chasing the productive sectors of the economy out of the loans market while the coast would be made clear for the government to keep borrowing massively through the high interest rates it has announced. This amounts to less money to the productive sectors of the economy and more money to the government which created the liquidity crisis in the first place. And government officials would still be taking the money to the FX market to buy more dollars and pile even more pressure on the exchange rate. There is absolutely no deterrent to their continuation of this destructive behavior. It’s a free for all. You will therefore not likely achieve the desired objective, yet would have been killing the economy by pushing it towards recession or low growth. That is what Emeka was saying, and which some of us have been saying. They’re driving up interest rates to unprecedented/crazy levels (22.75%) and crowding out the productive sectors from access to credit. Only the government will be borrowing while the productive sectors will be comatose. They desperately want to tame inflation but don’t mind pulling down the economy in the process. It’s like desperately trying to bring down a child’s fever and giving him double the adult dosage of Paracetamol. You may so bring down the fever but kill the child in the process. The interest rate hikes will kill the economy at the rate they’re going.
The fiscal/executive measures that are needed to control the excess liquidity and attendant inflation and speculative FX demand (proving deadly to the economy), Tinubu lacks the political will to tackle. We saw how single individuals (women) took huge billions in just one ministry, and the baby-cockroach concept tells me that is just a symptom to a much larger malaise. If we probe the spending of the huge debts and money created by the last government, and probe NNPC on our massive stolen oil and Subsidy frauds, we would discover and confiscate huge sums (at least $10bn to $15bn) which will curtail the excess liquidity and bring much needed ‘revenue’ and FX to the government without doing damage to the productive sectors of the economy. We all saw an Accountant General (Ahmed Idris) allegedly stealing N109bn, NSIPA woman (Halima Shehu) accused of stealing N44bn, Humanitarian Minister (Sadiya Umar-Farouq) N37bn, Betta Edu paid out N585m and gave N438m contract to Tunji-Ojo, etc, etc. These are the monies we should be going after and recovering and bringing back to the treasury and spending more judiciously in fueling the economy. But does our President have the political will to do the above? Why are we not probing NNPC? Why is Mele Kyari still running NNPC despite all that happened there? Only our President can answer that question.
Segun Sanni an economist and former banker lives in Lagos
