MUCH ADO ABOUT EXCHANGE RATE

By

JESUTEGA ONOKPASA

I have noticed quite a few people giving a thumbs up to the recommendation of Isaac Fayose, younger brother of Ayo Fayose, a former Governor of Ekiti State, regarding what President Bola Tinubu should do to shore up the Naira.

I don’t know how many of those applauding the pitiably pedestrian prescription he delivered vide a viral video, who are economists, bankers or even lawyers (and you might be surprised at how familiar lawyers can be with respect to economic matters if only from their expertise in law of contract, commercial transactions, law of banking and financial institutions, stock trading, mergers and acquisitions, law of taxation, etc).

Isaac Fayose wants President Tinubu to, as he framed it, force “all of us to bring out our dollar from our domiciliary accounts”!

To put it as politely as I can, all the younger Fayose’s prescription revealed to me is that he is certainly not nearly as bright as his elder brother.

According to Isaac, “Peter Obi stored $1 trillion in his bank” and I had to wonder, where in the world could this 1 trillion had possibly materialized from?

There isn’t even up to $1 trillion physical cash in all the banks in the United States of America combined (in addition to the Federal Reserve Bank)!

The total amount of physical dollars in America is just over $1 trillion and that is a combination of physical cash in people’s pockets (not usually very much individually but adding up to a substantial amount put together) plus the quantum of cash in all bank vaults and the cash held by the Federal Reserve!

Almost half of all the physical dollars in the world are, instructively, actually held by non-Americans and outside America (around 45 percent) and is slightly under (but not up to) $1 trillion!

In fact, the total amount of PHYSICAL DOLLARS in the whole world is just around $2 trillion, for God’s sake!

So how could there possibly be up to a trillion dollars in Fidelity Bank’s vaults alone (when it’s not even Nigeria’s biggest bank)?

What is the total GDP or even GNP of Nigeria that up to $1 trillion could have been saved up in all Nigerian banks put together not to talk of just one of the country’s banks?

And it is this obvious ignoramus of a guy that educated men are inclined to listen to for guidance on how to rescue the legal tender of our country?

We might as well resort to consulting native doctors and babalawos for the solution to our economic problems or what are we still waiting for?

And supposing President Tinubu even bought this idea and said everyone with a domiciliary account must “bring out” their dollar (you can’t begin to imagine how laughable such a statement sounds in the ears of an economically educated person), what then after that?

What exactly is Mr President then supposed to do with the dollars?

Set it ablaze, ferry it off to the Central Bank, ask all those who want to import machinery to facilitate local production to line up at the Pilot Gate of the Presidential Villa to come and collect or what?

Or, he should just hand it all to Peter Obi so the chief facilitator of consumption in Nigeria can import even more of the utter crap he keeps massively dumping in our country and accelerate the demise of local production, only for the hypocrite to then come out with a straight face and, with his sugarcoated tongue, proceed to try to scam Nigerians in his girlish voice that he is the messiah we need to take our country from consumption to production?

The forex in domiciliary accounts is forex that is already in circulation and, to use Isaac Fayose’s economically illiterate phrase, it is dollars that owners of domiciliary accounts have already “brought out”!

If your money is in the bank, be it in a current, savings, fixed deposit or domiciliary account, it is already OUT, Isaac!

This is all quite apart from the legal imperatives pertaining to the right to private property.

This talk about “seizing dollars”, whatever such utter nonsense could possibly mean, sounds rather similar to the utter rascality Okon Obono-Obla, SAN, once exhibited when he and others had aimed to confiscate the deposits of Nigerians on the grounds of not having Bank Verification Numbers, BVNs, which to a lawyer amounts to government turning armed robber and stealing the property of citizens; he and his goons were promptly told to shut up and respect the right to private property.

Forex is money, money is property and you just can’t confiscate private property, not even vide legislation.

It is a different matter, altogether, if particular persons have stolen public or private money, be they politicians, government officials or contractors fleecing our nation, or private money as is more often the case with scammers and “Yahoo Boys”, in which case their loot is not private property but stolen goods and liable to seizure and restoration to the rightful owners.

Isaac Fayose’s viral video reminds me of the sort of wrap, sorry, crap, we regularly hear from my dear son, Seun Kuti, who has a good heart and clearly means well but who unfortunately hardly ever seems to know what the heck he is talking about.

To the extent that forex is scarce and thus mounting downward pressure on the Naira, it is because:

1. We are not exporting enough and therefore earning enough forex, in the first place;

2. We are importing too much (therefore exporting too much forex [please help me ask Peter Obi and his fellow compulsive importers]);

3. The banks, who actually control the bulk of foreign exchange in the country, prefer to speculate against the Naira with it or lend it to facilitate imports (the line of business Peter Obi is addicted to) rather than exports and local production and substitution of imported goods;

4. There clearly is a considerable quantity of forex sitting idle in private vaults in various personal homes across this country;

And,

5. There is a substantial amount of forex with “Aboki” and since this component of forex is held in the informal sector, it is rather opaque and unwieldy, being difficult to measure or apply to economically desirable goals.

It is of course because Isaac Fayose is not sufficiently educated on the topic he decided to pontificate on that he thinks forex in a dom account poses exchange risks to the Naira.

Forex in dom accounts is in circulation, therefore measurable and trackable and (at least potentially) available to chase the Naira, rather than the other way round.

If anything, the more greenbacks you have in domiciliary accounts, the better for the Naira!

Recent measures President Tinubu ordered to be implemented such as domiciliation of NNPCL receipts at the Central Bank of Nigeria which the NNPCL boss, Mele Kyari, is commendably facilitating just as he did in the past with other programs to support the Naira, are the right approaches to the problem rather than the motor park ideas flying around.

Similarly, the recent instruction of the Central Bank Governor, Yemi Cardoso, that the banks must henceforth loan out 80 percent of their forex ought to markedly assist our national legal tender.

Clearly, this exchange rate matter is a bit more complicated than what Isaac Fayose and his likes are likely to be able to wrap their heads around, especially through a psychotropic haze.

What is amazing is that quite a few people who are far better educated than Mr Fayose and would be expected to be better informed, seem to have bought into similarly idiotic “solutions” to the exchange rate issue.

It is quite dishonest, dishonourable and unhelpful for anyone to pretend not to know how we got here, in the first place.

The Nigerian economy started becoming compromised even before an head of state claimed our problem was not money but what to do with it, back in the seventies.

By the time we sunk to the depths of constituting a presidential taskforce for the importation of rice and were falling over ourselves for access to import licences in the eighties, we were all but doomed.

We have simply not really had a well managed economy in this country for decades, if ever, including since 1999 – if anybody tells you otherwise, they are only advertising their ignorance and economic illiteracy or shamelessly lying through their teeth.

Of course it is President Tinubu’s mandate, duty, responsibility and inescapable obligation to rescue our national economy and set it on the right path but to suggest that he is responsible for what we are presently passing through is to tell a despicable lie straight from the pit of Hell.

Thankfully, Tinubu is arguably the first and only economically literate President we have ever had in this country and is already taking the right steps to fix the myriad of problems pummelling our nation and tormenting our national economy.

That these efforts may appear not to be bearing immediate fruit is not because they are not working but because it MUST take time for all such efforts to come to fruition and there is absolutely nothing anyone can do about that.

If you brought a Nelson Mandela, an Abraham Lincoln, a Barrack Obama or a Donald Trump to rule this country and run its economy, they will run away!

If it was an economic illiterate like Atiku Abubarkar or an addicted importer like Peter Obi that was on the saddle, the horse might have been dead and buried by now.

Yes, urgent steps to arrest the decline of the Naira are called for but ultimately, and if you asked anyone who actually knows what they are talking about, what will save our economy and sustainably stabilize our currency is greater production of goods and services, and whatever short term measures we implement must still be focused on achieving that all important goal.

It is quite understandable that Nigerians should be, and are, worried about our present economic realities but the solutions to these problems does not reside in the deployment of ignorance or the canonisation of economic illiteracy.

Tough measures are required at this time to strengthen and shore up our currency but TOUGH measures are not the same thing as STUPID measures.

The solution to the problem does not lie in ignorant men making idiotic suggestions but in knowledgeable experts taking the right decisions.

In short, ignorance is not a solution.

*Onokpasa, a lawyer, writes from Abuja.