On the 12th day of March, I bought a litre of PMS (Petrol) for #215. The PPRA, the Agency responsible for fixing prices of petroleum products allegedly fixed the price for the month of March, 2021 at between #212 – #220, though that has been rescinded to the usual #162 and #165 per litre.
The Federal government have promised to fully deregulate petroleum products before the end of the year. So it is a matter of time. Petroleum product is one product that every Nigerian needs on daily basis either directly or indirectly. Like food, its cost will continue to influence the wellbeing of Nigerians. As long as Nigeria continue to import fuel and Nigerians continue to buy fuel at a high price or dollar rate, inflation rate will continue to rise and Nigeria international trade payment will never balance. The implication is that Africa’s biggest economy will gradually becomes Africa’s sickest.
The country has had two recessions in the last five years, inflation is at a near four-year high, insecurity in the north of the country is rife and getting worse and attempts to diversify the economy away from oil have largely failed. Where do we go from here?
1. Diaspora remittances: Where are the dollars?
In 2020 Nigerians living abroad remitted about $20b back to Nigeria, a significant drop from $26b of 2019. No doubt the lockdown occasioned by corona virus pandemic affected the 2020 remittances. Report from Nigeria apex bank the CBN shows that there is 10% increase of diaspora remittances in the first quarter of 2021.
The question well meaning Nigerians are asking is where are the dollars? Until this question is answered correctly and further action taken to undo the wrong, Nigeria economy will never be on the path of recovery. There is need to discuss this issue, as it appears that there is massive foreign exchange laundering going on in our commercial banks. There are several abuses in the commercial banks that should naturally worry Nigerians.
Sometime ago, in the nineties, the Nigeria government reviewed the country’s sources of foreign revenues, it was discovered that nothing was coming in from Nigerians in the diaspora, whereas countries like India and Jamaica were living on foreign exchange from their citizens abroad. Then, due to tax laws Western Union and MoneyGram could not receive money from Nigerians abroad. It was discovered that Nigeria tax laws as part of received English laws had provisions on the imposition of taxes on income accruing in, derived from or brought into Nigeria. Jamaica and India were part of British colony. The question then was why income brought into India and Jamaica were not taxed? The colonial masters may have imposed those taxes to ensure that foreigners living in United Kingdom do not remit their money back home. But soon after independence countries like Jamaica and India changed their tax laws to encourage their citizens to bring their wealth home. But not so for Nigeria.
Happy enough, when Anthony Ani was the Minister of Finance under General Abacha government, Nigerians repatriating dividends, royalties, fees, commissions, receipts by authors, sportsmen/women, musicians, play writers, artist etc, such income repatriated into Nigeria in foreign currency was 100 percent exempted from tax, provided the foreign currency was repatriated through a domiciliary account with a Nigerian bank. With the promulgation of this law, First Bank Nigeria Ltd brought in Western Union in August 1996 while the UBA brought in MoneyGram a few weeks later.
It is on record that in 1996, Nigerians abroad repatriated about $4.5bn (about 50 per cent of our gross revenue from oil) and it was ensured that these monies were brought into Nigeria, intact, in foreign exchange. The receipts increased exponentially in the following years till 1999. The receipts helped to stabilise our exchange rate mechanism at about N82 to a dollar. That helped to ensure that the Naira was internally convertible currency. But that was then, today if you want to remit dollars to Nigeria, you will be given a quote in Naira which amounts to the equivalent in official market. Despite paying the necessary charges for the transaction, the dollar is retained abroad and the bank in Nigeria pays Naira to the receiver.
It was obvious that there is an arrangement between our Nigerian banks and Western Union/MoneyGram, whereby the former pays from their excess Naira liquidity while the later retains the dollars abroad. In other words, the dollar remittance is retained abroad and is laundered by the Nigerian banks at back market. This is definitely against the law which provides that all remittances must be brought into Nigeria in foreign currency via domiciliary account. This is economic sabotage of great proportion. If the so called diaspora remittance are domiciled in Nigeria bank, Nigerians will source foreign exchange from Nigeria banks and that will go to a great extent to stabilize the Naira and control inflation.
It has been revealed that on August 14, 2014, Nigeria government introduced the Outward Money Transfer Service and authorised the same MoneyGram and Western Union to re-export, in tranches of $5,000 per transaction, to Nigerians abroad, on payment of the Naira equivalent at the CBN rate of exchange. Thus, Nigeria is the only country in the world re-exporting its remittances. Imagine, remittances which are meant to stabilise our exchange rates are re-exported. There is something wrong somewhere. So if by chance some dollars found their way into Nigeria Bank, it can be sent back to Nigerians abroad at an official CBN rate.
2. Commercial Bankers should have no business heading Central Bank.
The major problem Nigeria have in this respect is that we often put square peg in a round whole. That someone is successful in commercial bank does not translate to success in Central Bank. Since Sanusi Lamido Sanusi who from First Bank became the Governor of Central Bank and Emefiele from Zenith Bank to CBN, Naira has been on free fall.
It seems these commercial bankers brought the mentality of commercial banking into the CBN. They create avenue for CBN to make more money at the expense of the economy. We now need real central bankers to govern our Central Bank. The rot in CBN is so deep that we do not see Central Bankers stand up to challenge the way our Central Bank is governed, to say enough is enough.
Central Bank is being ran in a manner that is profit oriented. For example, they are comfortable collecting charges and deposits from licensed Bureaux De Change (BDC). They in the process create circumstance BDC operators regain their heavy investment by allowing the huge gap between the official dollar rate and black market rate. A situation whereby we have up to #70 difference per dollar is unacceptable. It kills the economy.
It was a former Finance Minister Otubon Anthony Ani that once argued, thus
_”Diaspora remittances are not retained in Nigeria and there is a collaboration between the CBN, Nigerian banks and Western Union/MoneyGram; in such an event, government must investigate the infraction, punish the money launders, and recover all past Diaspora remittances retained abroad! The Outbound Money Transfer Services must be stopped and all our remittances retained for Naira stability and the nation’s development.”_
Our Ministry of Finance and by extension the Presidency are not doing well because they are not monitoring the CBN as they ought to. When Ngozi Okonjo Iweala was the Finance Minister, she did well, not necessarily on diaspora remittances or stability of Naira but on general sense like inculcating savings culture and management of external debt. No one know how she was able to hold our creditors to jugular to forgive Nigeria external debt. It is like, you’ve done this for a long time thereby stifling our economy, it is either you do something about it or we fight dirty for the world to judge us.
Nigeria need more of Okonjo Iweala and Anthony Ani, no nonsense, ruthless and mean economic savvy egg heads. As the hunters say, when the animal run fastest, you deploy the fastest bullet. Anụ gbaa ajọ ọsọ…
Val Iwuchukwu has his academic training in civil law but he is seen in many circle as a natural philosopher.