N5000 note as omen of hardship . #naija

First, it was the Structural Adjustment Programme in 1986. Then head of state, Gen. Ibrahim Babangida, in trying to redress the external debt crisis facing the country, stirred up socio-economic problems when he agreed to the loan conditions given by the International Monetary Fund.

Developing countries, in exchange for obtaining loans from the IMF or World Bank, or for obtaining lower interest rates on existing loans, must fulfill some conditions given by the Bretton Woods institutions. These conditions, commonly known as SAP, are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan, and that borrowing countries do not default on paying back.

In 1986, the economy of Nigeria was in dire straits. The nation’s trade arrears had accumulated, unemployment was at an all-time high, and its balance of payment was in alarming deficit. The country’s economic problem had started during the Shagari regime, which applied for a three-year extended facility loan from the IMF. The IMF had given 17 conditions for such a loan, and negotiations dragged on until the Babangida regime. Negotiations had dragged on because the previous regimes of both Shagari and Buhari had seen the conditions as potentially suffocating an already ailing economy. Though agreements were reached on some of the conditions, the IMF rejected the loan application because the two administrations had refused to remove the nation’s subsidy on fuel and fertiliser, liberalise trade and devalue the naira. But when General Babangida assumed power, he agreed to these conditions. In a display of cunning that became a feature of his eight-year rule, Babangida went ahead to introduce two price regimes for fuel users, eventually cancelling the price differential and settling for the higher price. He also devalued the naira to set Nigerian-made products at a competitive level in the international market.

In two years of implementing the policy changes as intended by the IMF, the Nigerian economy actually did grow as had been hoped, with the export sector performing especially well. But it was the impact on the living standard of the Nigerian people that really counted. The reduction in real wages in the public sector and among the urban classes was steep while there was adverse redistribution of income, leading to increased personal insecurity and manifestations of discontent. Following mounting pressure from Nigerians, the Babangida administration subsequently returned to an inflationary policy and corruption became a byword for the Nigerian system.

Fast forward to 2007, and the Obasanjo administration, through the Central Bank of Nigeria, tried redenominating the currency at one new naira equal to N100 old naira. Prof. Charles Soludo, the then CBN governor, had made public the apex institution’s proposal to restructure the naira by dropping two zeros or moving two decimal points to the left from the currency and issuing more coin denominations, with a view to ensuring macroeconomic stability and efficient payment system. The proposal never saw the light of day, but the Obasanjo administration will be remembered for devaluing the naira, unconscionably increasing the price of fuel, and a highly flawed privatisation policy that elevated a select group of very influential oligarchs – a la post-Soviet Russia – to the further impoverishment of majority of Nigerians.

Nothing has changed since 1986. Despite all the efforts that have been made since transitioning to democratic rule, the country still grapples with corruption. Majority of Nigerians still languish in abject poverty. Yet President Goodluck Jonathan chooses to poke fun at us by endorsing an ill-advised policy that would undoubtedly pile more hardship on us. To buttress its argument for its latest installment of anti-populist policies, the Jonathan administration is claiming that the roiling issue of restructuring the naira would upgrade the design of the entire existing range of currency denominations. It says it will enhance the quality and integrity of the bank notes, incorporate a more effective feature for the visually-challenged, and possess security features. Addressing State House correspondents last week, the Minister of National Planning, Dr. Shamsudeen Usman, said the introduction of the N5000 note was not in conflict with the cashless economy introduced some months ago by the CBN. The minister said he was deeply involved in the last review of the introduction of the N1000 note and the various coins, and that it was his responsibility to oversee the process when he was deputy director of operations of the CBN. By owning up to the responsibility of overseeing a previous policy of restructuring our currency, Usman is saying that he was responsible for the amplification of inflation that rendered our coins of almost no value for any meaningful transaction. In saner climes, Usman’s chest-beating posturing ought to beg the question: what is he doing as minister of such a strategic portfolio?

The Nigerian people are the pawns, the ones who must pay for their leaders’ mistakes. They are the ones who must pay the price for the huge debt running into tens of billions of dollars incurred in a little more than one year of the present administration. They are the ones who must pay the price for the depletion of the billions of dollars in external reserves that their president met on assumption of office; for the inordinate looting of the national treasury by the unscrupulous few. It didn’t matter to these technocrats that the introduction of the N5000 note and the general restructuring of the currency wouldn’t have any bearing on enhancing the integrity of a diseased naira. They also don’t care that diversifying the economy and providing an enabling environment that would boost production, and subsequently export, can just do that little trick of making the naira compete favourably with its international counterparts.

They are not bothered that the small matter of judiciously implementing well-articulated policies that would provide gainful employment to the millions of jobless Nigerian youths would boost the nation’s disposable income, the spin-off being the availability of more money to patronise locally produced goods and services. No, these technocrats are not thinking in that direction at all. If they are, it is not yielding the desired results. The unfortunate thing is that the plight of Nigerians is not about to let up anytime soon.

Nigerians should therefore brace themselves for more hardship.

Culled from the Punch ..