The monetary and fiscal policies implemented by the Federal Government have been described as ineffective to solve the Nation’s current economic challenges.
The verdict was handed down by the Nigerian Senate to the economic management team of the Federal Government which included the Governor of the Central Bank of Nigeria (CBN) Olayemi Cardoso, Minister of Agriculture Sen Abubakar Kyari, Minister of Finance Wale Edun , Minister of Budget and National Planning Abubakar Bagudu and Minister of State for Agriculture ,Sen , Alyiu Abullahi Sabi.
Members of the Senate Committee on Finance, Banking, Insurance, and Financial Institutions made this known Friday while addressing Olayemi Cardoso and other Minister’s when they all appeared before the Senate to answer questions regarding the current economic situation and more importantly, the free fall of the Naira and hike in prices of food.
Senate committee Chairman on Finance, Senator Sani Musa decried the persistent hunger and unemployment despite the policies deployed by the CBN and the Federal Government.
Musa queried the effectiveness of the Policies;
“Will you convincingly tell Nigerians that this policy is working? It’s a free market supply and demand prices but the most important sector is Agriculture.
“More people are hungry, that means your policies are not working. Go and look at the number of Toyota Vehicles, go and look at the number of Toyota vehicles , do we manufacture Toyota vehicles? How much foreign exchange do we pay for Toyota Vehicles?
“Do we have a policy that will make backward integration work ? By Making Toyota come back here and make an assembly plant that will serve Nigeria and sub west African Nations ?
On Agriculture Sani Musa urged the Agriculture minister Abba Kyari to step up his efforts. He said;
“Look at our Agriculture sector and compare what Brazil is doing with their development bank. Can they do it in Nigeria?
“These policies are not working, for sometime the Central Bank closed the OMO (Open Market Operations) to allow the market to dictate but has that worked ?
“There’s no country that will allow such freelance in foreign exchange policy. When was the last time you heard in the UK, Saudi Arabia even in some of the developing countries where you allow your foreign exchange to sky rocket , it’s not done.
“We are in a country where we have the best economists. Which local of foreign investor in Nigeria today will be very secure to invest in this country today?
On foreign loans, the Lawmaker lamented that despite the previous Loans approved by the Senate for the Executive , there has been no improvement.
In a series of posers fired at the Ministers and CBN Governor, Musa queried the $3.3billion collected as loan to rescue Naira , since expected positive effects are not being felt , months after .
He said;
“We have times without numbers, approved foreign loans in this National Assembly and the foreign loans that we have approved today if you convert them they will give you trillions of Naira but are they actually reflecting on the people?
“An example is the National Agency for Science and Engineering Infrastructure (NASENI) of the last administration where millions of dollars were approved for the Agency because they told us they will localize the manufacture of solar that will generate employment and income but today there’s nothing to show for it after almost three years..
“We have collected back money that was said to have been embezzled out of this country and they have repatriated these funds but till today we are still funding Niger Bridge, Abuja-Kano expressway and with the inflation now the rate would have tripled. “Just recently you took 3.3 Billion dollars to cushion the volatility of the foreign exchange but I’m yet to see how that will work.
In the same vein Senator Abdul Ahmed Ningi (Bauchi Central), accused some Top Government officials including those in the CBN of being involved in the hoarding and stealing of dollars which he described as a major contributor to the high inflation rate in the country.
Ningi called on the prosecution of those indicted, the Lawmaker added that apart from the former CBN Governor no other person has been made to face the law. He mentioned that the adulteration of the dollars begins from the CBN.
He said ; “This is not a time for rhetorical statements and they are made to look stupid but they are not. One of the talking points that has not been mentioned by the Senators and Economic management team is the issue of the criminalisation of the dollar.
“In the last 10 years nobody takes bribes in dollars or gives bribes in dollars and nobody has addressed this because most of us have been affected because we are involved. 2ndly, what guarantee will the CBN give to go back to its core mandate of being the banker’s banker.
“The bastardisation of the dollar usually starts from the CBN and because sufficient people that are in Government today and the Government of the last two decades are involved and I have heard the Deputy CBN Governor mention Billions of dollars being swept away through the CBN and it is lamentations upon lamentations.
“Apart from Emiefele nobody else has been called to account and if we continue like this , Nigerians are looking at us and we’re going nowhere. The fact of the matter is that we must be more serious and accountable than this because you have the best credentials, we know you and where you are coming from.
Ningi called for the arrest and prosecution of persons involved in the stealing of dollars;
“I cannot deceive myself, the issue of monetary and fiscal policies are very minute to what is happening in this country. The fact of the matter is that people are stealing these dollars because they know nothing will happen to them and it is our responsibility as citizens to come up with solutions. This issue of dollar bribe and dollar taking is starting from the Top to Bottom.
The investigation and prosecution of individuals or groups responsible for the $2.4b fake Forex claims was made by Senator Orji Uzor Kalu (Abia-North).
Kalu also harped on the need to ban the dollar transactions in the country except those mandated by the Authorities. The Chairman Senate Committee on Privatisation lamented the challenges faced by the Manufacturing and Agricultural sectors.
Kalu sought answers from Cardoso;
“What measures are you putting in place to strengthen the naira because the manufacturing and Agricultural sector has gone dead.
“How do you expect to generate foreign exchange when Farmers are no longer going to farms? Herdsmen have taken over. Are you going to print dollars?
“The Governor of the Central Bank and his team have concentrated so much on the monetary side of the economy, nobody is talking deeply about the fiscal side because it impacts directly on the poor people.
“We must abolish the use of dollars in any shop , hotels or any place in Nigeria. Nobody should be seen with dollars except the authorized dollars. Even shops in Abuja advertise their goods to be bought in dollars . What efforts is the CBN doing to bring to book those behind the 2.4 billion dollars of the FX backlog claims that are fraudulent.
Responding to the issues raised by the Lawmakers, the Central Bank Governor insisted that its policies were beginning to yield results to ease the economic situation in the country.
With regards to the depreciation of the Naira , Cardoso pointed out that a series of measures put in place by the apex bank recently , are yielding results with inflow of about $1billion into the economy.
Admonishing Nigerians to subdue their appetite for dollars ,consumption and usage of foreign goods, Cardoso posited that without moderation of demands on USD, the CBN has no magic wand to hurriedly get Naira stabilized.
He however informed members of the committee that a series of measures put in place by the apex bank recently , are yielding results with inflow of about $1billion into the economy.
Cardoso provided explanations;
“The Nigerian foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply, increased capital outflows, and excess liquidity.
“To address exchange rate volatility, a comprehensive strategy has been initiated to enhance liquidity in the FX markets. This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs and IMTOs, enforcing the Net Open Position limit, Open Market Operations and adjusting the remunerable Standing Deposit Facility cap among others.
“Distinguished Senators, these measures, aimed at ensuring a more market-oriented mechanism for exchange rate determination, will boost foreign exchange inflows, stabilize the exchange rate, and minimize its pass-through to domestic inflation.
“Indeed, they have already started yielding early results with significant interest from Foreign Portfolio Investors (FPIs) that have already begun to supply the much-needed foreign exchange to the economy.
“For example, upwards of $1 billion in the last few days came in to subscribe to the Nigeria Treasury Bill auction of 1 trillion Naira which saw an oversubscription earlier this week.
“Our measures aimed at improving USD supply into the Nigerian economy, has significant potential in taming the volatility of the exchange rates. However, for these measures to be sustainable, we must as a country, moderate our demand for FX.
“It is also clear that the task of stabilizing the exchange rate, while an official mandate of the CBN, would necessitate efforts beyond the Bank itself. It will also include actions by corporates and individuals to reduce our frequent demand for the dollar for business and personal needs”.
On Inflation rate , the apex bank governor assured Nigerians that it will reduce to 21.4% in 2024.
” Distinguished Senators, Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4 percent in the medium term, aided by improved agricultural productivity and easing global supply chain pressures”, he said .
Buttressing the explanations given by Cardoso, Deputy Deputy Governor of Economic Policy at the Central Bank, Muhammad Sani Abdullahi absolved the CBN of being responsible for trade policies. He told the committee that 43 items were identified and excluded from Foreign exchange but were banned from the Nation’s borders.
He revealed that the Nation collectively lost 1.4 Billion dollars between 2015 and 2019 because of the FX value of these particular items.
Shedding more light Abdullahi revealed how the CBN through its investigations discovered how dollars were given to individuals without due process.
He said; “Trade Policy is not the responsibility of the Central Bank , Trade policy is a fiscal issue and what happened is that 43 items were identified and denied foreign exchange but they were never banned from the borders. And the items never actually stopped being imported but the country collectively lost 1.4 Billion dollars between 2015 and 2019 because of the FX value of these particular items.
“The second part is that they actually fuel inflation because they have increased their products and when we got in we wanted to as much as possible ensure that the market is functional and many of the distortions that were present in the market was what we wanted to remove and so this issue we discussed with fiscal authorities and the understand was that the process is actually identify which ones need action and which ones do not.
“On the foreign exchange backlog, in September there were discussions around 7 billion dollars of FX backlog transactions the CBN was obligated to pay.
“In some interactions it was taking up to 10 to 11 Billion, so the first thing we did was to ascertain how much is this exactly and after we ascertained, we commenced the process where we decided to settle this in a process that is fair.
“Every Month or so the CBN will do auctions of foreign exchange, this function allows customers to pay through their banks and the banks will submit the goods but the transactions have to be Trade backed, meaning that you either need to have a form A or a form M. So a lot of these transactions were in debt starting from 2021 to 2023 were the ones that were outstanding.
“We started a process that then we engaged the banks to actually discuss this issue and the banks themselves told us that there was a point where you will get called by the CBN to say you have been awarded 10 million, 20 Million Dollars without any documentation so this time around we raised an alarm and we immediately engaged deloitte consulting to forensically verify these things and what came out was a number of infransactions.
“Infractions number one was where customers who have not even bid will get allocated with 5 to 10 million dollars and go undocumented.
“The other infransaction was where customers who had bid for two hundred thousand dollars will get 10 million dollars awarded. The order Infraction was customers who were importing banned items but these items were brought in.
“So all these infransactions have been well calculated and what we have now done is that we have written to the banks to explain this process because we have to give them right of reply and many of them have responded and this is the process that we are now.
“In terms of investments at this time last year the foreign exchange market was trading at 16 million dollars per day at a high point of 40 million dollars and as recently as three Months ago the highest trading was about 110 Million dollars. For the past two weeks now the least it has been trading in the Nigerian Foreign exchange market is about 400 million dollars which was even 500 million dollars yesterday.
“So supply is coming back to the market in terms of preference. In terms of the other parts of supply we are working on the remittances with IMTOS (International Money Transfer Operators).
“Last year IMTOS brought 3.2 Billion dollars to the country. In truth the amount is closer to 18 to 20 Million Dollars but the reason it doesn’t show in the original statistics is because of the Policies that CBN put in that count how they cost between 2.5% plus or minus.
“The issue with inflation is that what we are now witnessing in November inflation actually reduced. What happened was that in December , it went up and because of the festivities , we are hoping that in the next two Quarters we will be able to get inflation down.
On food production Minister of Agriculture Sen Abubakar Kyari highlighted the challenges militating farming an food sufficiency in the country which he said was as result of the lapses of the last administration.
Kyari also mentioned COVID-19 , If you remember the flooding of 2021 and 2022, insecurity, pests and the Naira redesign amongst others.
On its efforts Kyari said that plans has been concluded for the cultivation of grains saying that despite the challenges Nigeria’s food prices still remained the lowest when compared to other neighbouring African countries.
“We had COVID-19 , If you remember the flooding of 2021 and 2022 and the Naira redesign and at the point of Harvest the Government came with a policy of change of Naira and that really impacted on the availability of cash. In 2023 Farmers has no access to cash and the exiting Government did not plan to the wet season cultivation in 2023 that also impacted in the quantum of Harvest in 2023.
“Nigeria is a co-signatory to the comprehensive African Agricultural programme of the African Union that Agriculture provisions of the budget should be 10% of the total budget and I think when we look at the 2022 – 2024 budget we are a far cry from that target.
“Within the next eight to ten days we should be able to roll out and it’s still a good window , we are not late and we should be able to make that significant impact as planned.
“On food reserves we have grains available and to avoid diversion like the usual practice we are working institutions like NEMA that are being handed over the grains because they have the capacity and poverty index of the country and they know exactly where it is needed and they have a policy of how they transport and distribute and we have started working on that . We have instructed NEMA to give us their work plan.
“But now we have had the wheat programme, the second phase of rice cultivation we have now is being challenged by the cost of fuel and beetles. Farmers are excited to go back to farm. The challenge as we all know is insecurity and fuel but we are working with the ministry of finance for the second phase and we are prepared to cultivate 200 and 250 hectares for rice alone.
“For the short term we have 50 thousand hectares of maize to cultivate and we can do more as long as there is irrigation. What we are faced with today is the undocumented exports of food to our neighbouring countries. Today one Cefar is equally to Two naira 70 kobo that is a thousand cefar is Two thousand two hundred naira
Minister of Budget and National Planning Abubakar Bagudu gave assurances that the inflation rate will be reduced by the second and third quarter of the year.
He said ; “Even when the budget was brought, we appreciated that there’s work in progress. Exchange rate is computed on an Average basis not on the spot basis but we hope that inflation Will moderate. When the exchange rate moves it consequential effects on other prices particularly fuel prices, electricity subsidy but measures have been put in place.
But the Chairman of the Committee on Banking , Insurance and other Financial Institutions, Senator Adetokunbo Abiru in his remarks , told the CBN governor to ensure proper handshake between Monetary and Fiscal Policies .
He specifically urged the CBN governor to make available to the committee, audited account of the apex bank and its Budget .
“What this administration is doing is to realign all the distorted Marco economic indices and direct the economy properly. We salute the courage of the current administration. We know that these policies will come with some pains and that is what we are feeling.
“For the economic team , I must acknowledge that in terms of the collaboration between the monetary and the fiscal side these have been exemplified by what we see between the CBN and the NNPC and all of that and we believe we should continue to work along that line.
