By Prince Justice Jadesola Faloye
In addition to what appears as jumping the gun in his inauguration speech by announcing petrol subsidy stoppage, which instantly destabilized our economic lives with high fuel prices, President Tinubu also announcing his intention to unify the Black market and official exchange rates is an empty but dangerously expensive boast that would devalue the Naira and conflagrate our economic problems. There can be no unification of foreign exchange rates that would make the Black Market redundant unless the demand fed by the Black market is sufficiently taken care of by official supply, returning to the Jonathan days when your ATM could buy any currency anywhere. If he devalues the official Naira rate to the Black market rate, the Black Market Rate will further fall as long as offical supply bottlenecks remain. The key is that it’s not about the brilliance of a policy, both being good, but shoddy implementation.
There are two components that led to the present yawning gap between the two rates – civilizational corruption and the economics of it. Tinubu can reverse the first component that I had warned about when Buhari came to power, which is the civilizational economic nepotism. When the North comes to power, especially the likes of Buhari that wants to distribute the spoils of democratic victory, they knowingly widen the gap between the two rates, then get the CBN to allocate his people foreign currencies which they can sell on the Black Market for quick profit. For Southerners with a large number of Western educated elites and political jobbers, the civilizational method is to award inflated contracts. The first has no audit trial which is why Buhari way is near foolproof while there is always a paper trail for Southern corruption, I digress..
What really matters is that Tinubu will discontinue the Buhari corruption model since Northerners control the Black Market forex business. However, threatening and attacking the Black Market operators will only drive them underground and widen the gap with a risk premium. For Buhari APC government to create the yawning gap, they pushed corruption propaganda to justify tampering with the import list. They pushed the propaganda that Jonathan’s corruption had emptied our cash reserves while it actually had over $30b. The lie was the justification to tamper with the forex import list. In addition to the 41 items named by the CBN in June 2015, they went about banning and reinstating foreign school fees, removing and re-adding Bureau De Change operators among other things, all to destablize the fragile foreign exchange mechanism.
Now to reverse it, Tinubu will need more than propaganda, because the ruinous 8yrs of APC has actually pushed the economy to the brink, as foreign debt has increased from $7b under GEJ to now $47b with a large amount of extremely high interest fixed tenure Eurobonds. For Tinubu to seriously attempt to unify the rates, he must repair the economy, especially our balance of payments, then slowly re-liberalize the buying of foreign exchange. I emphasize slowly and strategically because if he fumbles into it, like with the Oil Subsidy removal that has led to a nearly 300% increase in fuel price in the last month when subsidies are still paid, the forex exchange rates will drastically crash as everyone jumps into repatriating capital gains and profits, before it finally stabilizes at a far worse rate.
As noted in my previous article on the fuel subsidy debacle, this is not an honest one off mistake but a long standing problem with Tinubu’s style of governance which is mainly propaganda. Until I started traveling out of Lagos, Tinubu had made me and other Lagosians think he was a miracle worker. When I travelled to Sarakis Kwara and saw good roads all over, went to Anambra, Imo, Rivers and other states, I realized that there was nothing special in Lagos since all governors only built and rebuilt the few State Roads, while the roads branching off them to 90% of Nigerian residences remained untarred. Tinubu’s main selling point was increasing Lagos IGR which was only beneficial to his personal account balances through agbero commissions, while neglecting the fact that it wasn’t achieved by increasing productivity nor changing the colonial economic foundations, but through multiple taxation of the unorganized sector of traders, artisans and small and medium enterprises into a poverty trap.
It was this Tinubu’s governance by propaganda that was the contribution of ACN to APC as the Chief Priest of Propaganda, Lai Mohammed became the key and only working figure in Buhari 8yrs. So it is nearly impossible to change the unserious governance of tokenism and propaganda that has worked for him for 24yrs and brought him to presidency. However, he and state governors can play the games at state level, it is unworkable at the federal level especially after 8yrs of destroying the economy. The propaganda can pay his pocket but not the hungry 133 Millon people in abject poverty that might soon explode into social unrest.
Despite the goofing on subsidy removal, someone will be profiting by lining their pockets with the monies already allocated for June subsidies, as they have tactically accepted a N500 per liter pump price. Or where does the money of the difference between N186 per liter and the now accepted N500 per liter probably worth billions go? Also, the fallacy is that if you remove subsidy, you can prescribe a pump price, so this N500 per liter is only for the month of June and we will probably experience the full and higher price of probably up to N1000 per liter in July when the subsidy withdrawals actually kicks in.
Tinubu is actually in a fix which he played a major role to create, which is why I tell Obidients to thank their stars that Tinubu and not Peter Obi has to clear up the karmatic mess. If it was Peter Obi that first came in people will blame him and the Igbos, so let Tinubu carry his double wahala of a dead body economy he conspired to kill. At least until the Judiciary delivers the judgement months down the line, by which time it will be obvious to the people how APC has destroyed the economy. In 2012, President Jonathan actually tried to remove the oil subsidies as a precondition for Chinese to build Six refineries, but Tinubu colluded with others to engineer protests to sabotage the deal. It was the vile propaganda of subsidy theft instead of the real reasons for subsidy withdrawal, that led to the corruption propaganda which APC used to ride to power in 2015.
Ten years later, petrol demand has exponentially increased, our Naira has crashed and we are in serious debts that our creditors will demand the removal of subsidies to continue our credit rating. If Tinubu and the rest of his political class had kept our refineries in good shape or allowed the removal of subsidies in 2012 to build 6 refineries, Nigeria would have been able to supply below market price crude oil to the refineries for cheap petrol for local demand. As it is, we only have Dangote single refinery to wait upon which might be too late to save Tinubus government. As it is, there is no money in APC government coffers to provide palliatives for the huge petrol price increases which will bring about wage push inflation as workers demand increase in wages to cover the increase in transport, food and other goods. It also doesn’t have the foreign reserves and favorable balance of payments to unify the exchange rates now..
To compound our problems is the tendency of Tinubu and his APC to trivalize and tribalize issues to deflect responsibility. We see their ongoing Tribalistic propaganda to blame their electoral losses in Yorubaland on Igbos. They painted the Oil Subsidy thieves as Deltan militants. And, blamed the whole country consumption patterns in 2015 when there was the 300% fall in Naira, despite no proof of increase in importation of consumer goods within the same period, all to distract from Buhari machinations to widen the Black markets rates. They are already pushing the rhetoric that marketers are greedy and unpatriotic for selling their petrol stock at expected replacement costs, and that a forex exchange cabal wants to sabotage the unification of forex rates without increasing supply to fulfil the demand for Black market Forex. So, we might have Northern forex dealers colored bad.
The greatest issue apart from the oil subsidies and forex debacles, is that they show no sign of knowing how to deal with our huge unemployment and reliance on durable manufactures, which can only be tackled through industrialization with an emergency massive railway construction of three East West railway lines. So one can’t but wonder how there won’t be anarchy and revolution of the teeming millions unemployed and in abject poverty. First thing first is for Tinubu to put aside cheap propaganda and Motormouth economic governance. Enu o se, talk is cheap, and he must be serious. But just like Buhari of 1983/2015 you can’t teach an old dog new tricks.
