Presidential candidate of the Social Democratic Party (SDP) in the February 2023 general election, Adewole Adebayo, speaks with select journalists on the Federal Government’s palliatives to states, the consequences of the action, the introduction of Compressed Natural Gas (CNG) to Nigerians as an alternative to petrol and other salient issues. SUBAIR MOHAMMED brings excerpts.
Do you think the Federal Government’s N5 billion palliatives to each state of the federation is encouraging enough, particularly, as it is a loan to be repaid by the governors?
Some critics of the administration of President Bola Tinubu have expressed the opinion that some of his policies are not well thought out and are not countermeasures to the current economic situation in the country. What is your take on this?
I don’t think the focus of this administration at the moment is on the economy. It is more on how to settle down and form the government. Firstly, they have affirmed the policy of former President Buhari’s administration and the APC that they would remove subsidy from petrol, which they have done, and the attendant push inflation is already coming in. Secondly, they have harmonised the foreign exchange market, but in terms of focusing on the economy, they have not. These policies bear on the economy with respect to public finance, inflation and foreign exchange stability, but they haven’t really shown seriousness to focus on the economy.
For example, during the ministerial clearance at the Senate, none of the ministers, including the minister-designate for finance and economy planning, committed to any macro-economy target. There is no policy pronouncement where they say that by this time next year, we push employment up and unemployment down.
What do you make of the Federal Government’s intervention so far in the effects of the subsidy removal?
Everything is off, not just the timing. Is it about governance, poverty alleviation, industrial dispute, or how to run the economy vis-a-vis the fallout of fuel subsidy removal? This is an endless discussion. I hope this is not how they are going to be for the next four years.
Let them present a white paper and set a target so that we can monitor that. There are three ways the impacts of the subsidy removal can be handled. They can provide alternatives to petrol, which is the Compressed Natural Gas (CNG) they are talking about. If they can focus on that, you could get one million conversions in one year. If that is what they want to do, let them focus on it.
Again, the government needs to lead by example by converting its vehicles to CNG. If government vehicles are still running on petrol and they want the people to be on Compressed Natural Gas, then there is a problem.
The country’s reserve is on a single digit, though the Central Bank of Nigeria (CBN) has resorted to threatening the speculators. What should the CBN do since it does not have the reserves to influence the market?
The first thing to do when you are floating your currency is to do an appreciation of your environment. For example, you say you welcome everybody who wants to trade in the naira and exit the naira in a free way to any currency of their choice since you say you are not regulating the pricing of your currency.
Therefore, the CBN needs to realise that it cannot control the dollar and it doesn’t have the power to issue the dollar. When you say you are doing foreign exchange control, what you are saying is that you are controlling the naira, not the dollar. If you capture the naira in your reserves and you don’t want to be releasing it and be pricing it, that is your choice.
Soon, they will realise you are stingy with your reserves and go to the autonomous market, which is actually the real market. But if you want to benchmark your own with that and have a uniform one, then the rule of the market would have to be that of the autonomous market that is independent of you.
The only thing you can do now is to come in with your reserves and you can only influence the market if you have big reserves. If you look at other countries floating their currencies, you will see that they have trillion dollars in foreign reserves, they have 500 billion dollars in foreign reserves. If you have 9.8 billion dollars in foreign reserves, you need to be careful in floating your currency.
It appears the country is returning to the [Goodluck] Jonathan era where Ngozi Okonjo-Iweala was the minister of finance and coordinating minister of the economy?
For me, all these decorative ministries don’t move a needle. Ideally, the coordinating minister of the economy is the president assisted by the vice president, who is the chairman of the National Economic Council. All these naming ceremonies don’t matter in economics. What matters is that there are policy choices, and there are alternatives we have to make that have consequences. I am not bothered about how you titled yourself. When Okonjo-Iweala was finance minister, she performed far better than when she was called the coordinating minister.
If you a minister, being sworn in is like a player being brought on to the pitch when the game is already on. You only need a few seconds to gather the wits around you and know exactly what role you are coming to play. The numbers are already out there, so they can’t say we don’t know what is going on.
The legacy policy they inherited and are adopting and the pronouncement the president has made on since he came in have already made some dynamics on the streets on what they want to do. So, they need to make up their minds. Do you want to float the naira? In that case, you don’t need a cap. Stop worrying about the cap. Do you want to leave that to the CBN to manage, and you agree with the CBN on broad outlines? Do you want to forget about the regime of subsidy, and if that is the case, then you need to forget about having a cap for the pricing.
Many are said to be borrowing from the banks for the purposes of speculating against the dollar…
One of the mistakes they are making is borrowing in tranches. Stop borrowing in tranches. Make a global plan to stabilise your economy. There is a subset of the future market where you can structure your reserves’ protection.
Recently, the presidential spokesperson assured that there won’t be an increment in the pump price of petrol and that the government would look into some deficiencies in the system for greater efficiency. Is this not what ought to have been looked into before deregulation?
These were the options we offered during the campaign as to their own ideas. Recall that during the campaign, the president, then the candidate of the APC, former vice President, Atiku Abubakar of the PDP and Mr Peter Obi of the Labour Party, uniformly, agreed they were going to remove subsidy from day one. We told them that is not going to solve your problems. What would solve your problem is remove the corruption and your cost will go down. That’s water under the bridge now as they have since started the policy.
What worries me is the inconsistency because you are not in the business of selling petrol. You cannot be the guarantor of the price if you don’t want to put your money in it. If it is deregulated then, you are supposed to take your hands off it and deal with the outcome of it.
What I think they should do is to ensure that the impact of the deregulation does not fall on the people. This dong dung tussle between the government and the labour over industrial tension on price commodity, which the government neither produces nor the labour produce. Neither of you import the product.
The government has realised they have taken a wrong economic position but they are not going to change it because it looks to me as an ideological position which they have taken in conjunction with some international concerns and private businesses. They try to create a market that is conducive to exploitation.
Since it is done with the mandate of the electorate, I can’t fight them. It is good for the people to see the effects of the policy they endorsed so that next time, when we are campaigning, they will pay serious attention to where the mouths of these politicians are moving.
What do you expect the government to do with the issue of floating the currency as we are seeing reversal as it were of the deregulation policy, shouldn’t there be more efforts to manage the foreign exchange?
Every country manages her reserves according to their macroeconomic targets. The foreign exchange management itself is not the deal but a tool. These monetary tools are not achievements in their own right. They are the direction of where you want your productivity to go. For example, China is doing the opposite of what we are doing. China wants its currency to devalue. It has official reserve of about 3 trillion dollars. But when you look at it very well, its reserves are over 7 trillion dollars. Singapore won’t tell you what their reserves are.
The NNPCL got a loan of $3billion dollars from Afrexim Bank, is that act out of desperation or would it help to pull us out of the woods in terms of foreign exchange?
No, it’s a routine exercise. It is not worth reporting because the CBN knows its future earnings as the NNPCL is an asset of the government. It might be it’s the CBN that is taking the money but using the leverage of the NNPCL. It’s a routine of CBN across the world that when they are in trouble often do. Turkey just took $50b quietly to shore up the Lira.
So, the borrowed 3b dollars won’t have any effect on the foreign exchange because it is so small in the scheme of things. It is just a matter of government to put the right economic team in place who knows the international market and who can communicate long term policies to the Nigerian people so that the government doesn’t blackmail itself to reacting to short term issues. The problems the government find itself cannot be corrected until the 2nd to 3rd quarter of 2024.
(Nigerian Tribune)
