The Tinubu Administration is a fanatic believer in economic liberalism and market forces. Based on its belief, it cancelled fuel subsidy and floated the naira so that it can find its true value. The naira played its part and has been rising steadily desperately searching for its true market value, which it turns out, is still very far away. The result is a “misery crisis” as cost of living rise beyond the incomes of ordinary citizens whose naira is too small to enable them purchase food and hunger and anger spreads throughout the land. The President who always tells Nigerians that he understands their pains then offers a solution and orders distribution of free grains from the Strategic Food Reserves. It turned out the civil servants forgot to brief him that the reserves are empty.
Over the past few weeks, hunger and anger have led to street protests all over the country and strike threats. Our politically savvy President sensing the danger decides that since the stupid market forces are now threatening his turn to rule in peace, he must find a diversion. If you search, you will find. The Bureau de Change operators, the “Mallams”, are responsible for destroying the capacity of the “market forces” he unleashed to bring down the cost of living. He therefore got the EFCC to establish a Special Task Force across its commands, to clamp down on individuals “dollarizing” the Nigerian economy. The gun trotting operatives of the Economic and Financial Crimes Commission have since Monday been raiding Bureau de Change operators and arresting them all over the country. The task force which was inaugurated by the Executive Chairman of the Commission, Ola Olukoyede, was raised: “to protect the economy from abuses, leakages, and distortions exposing it to instability and disruption”, we were told.
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Those of us of a certain age were brought up in an era in which the dollar did not circulate as a means of exchange or store of value and we used our currency, the naira. Did our Afrobeat hero Fela Kuti not do to jail for having dollars cash that he wanted to travel out of the country with to perform in a concert? Then the neoliberals told us it was imperative to allow free purchase and sell of foreign currency. They even encouraged us to open domiciliary accounts in our banks to store foreign currency which government guaranteed will be safe as the ideology of free markets requires the assurance. The Central Bank of Nigeria licensed thousands of BDCs and asked them to trade in currencies. Why the hell are they being arrested today for doing what the law asked them to do? The other panic move is to place the blame on crypto-currency websites for stealing the value of the naira. The issue is that the few people with naira, conscious of its steady and daily loss of value, would seek to protect their asset anyway they can, won’t they?
The fact of the matter is that we are simply not earning enough foreign currency to meet our high demands for imported goods. In so doing, for decades, we have relied on petroleum rent as our major source of foreign currency. Then to our shock, in 2022, the Group Managing Director of NNPCL, Mele Kyari, explained to us in a State House media briefing that most of our petroleum was being stolen so the dollars are no longer coming in. Mr. Kyari blamed various sections of the Nigerian society for being complicit in the theft of millions of barrels of crude oil, mentioning even that make-shift pipelines and stolen fuel have been found in churches and mosques.
We were told that between January and July 2022, Africa’s biggest oil producer lost an average of 437,000 barrels of oil a day to criminal entities and individuals who illicitly tap pipelines onshore and offshore in the Niger Delta region. The solution to the problem is therefore clear – stop the oil theft and more dollars will come in. The bigger issue is that for a rentier State, safeguarding the source of rent is an existential problem and simple logic should have prevailed and made the state stop the theft. The underlying reality, as we all know however, is that our political leaders and upper echelons of our security forces are beneficiaries of the oil theft. They have taken the decision to eat the goose that lays the golden egg and move to Dubai thereafter as rich refugees.
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There is still an explanation needed for the astronomic collapse of the Naira over the past few weeks. What the hell is going on? The answer, says the research done by Business Day is that we should look at those with a lot of naira – government. Since the removal of fuel subsidy, the Federal and State governments have been receiving massive amounts of naira through the disbursement of money by the Federation Account Allocation Committee (FAAC). BusinessDay learnt that portions of the funds from FAAC were often changed to dollars by some governments at the parallel market, putting more pressure on the naira. Their analysis shows that from July 2023 to January 2024, the naira depreciated in the black market for the six months immediately after the FAAC shared money to the federal, state and local governments:
“With the removal of fuel subsidy, more volumes of naira are being shared by the federal, state and local governments and some of these monies are changed to dollars at the parallel market.” BusinessDay has asked us to open our eyes from now on. We should note the price of dollar one week before FAAC allocation, check back the price after the allocation and you will see clearly the difference. Let’s all do that and know that those who should go to jail are some of our governors and ministers. President Tinubu, please stop panicking, just look around you and you shall see.
