On Economic Recession And Chukwuma Soludo’s Tenure 

Detractors and friends of the CBN governor, Chukwuma Soludo, have been having bouts over his tenure. Mute, as expected has remained Soludo’s response. It appears he has learnt to control his acclaimed weakness - inability to resist mounting, or being dragged to the rostrum even at the shortest notice, a habit that can have an Albert Einstein goof on a discussion on energy, mass and light’s speed. By and large, the deleterious effects on the nation’s economy of the overdrawn speculations on the incumbent CBN governor’s tenure may yet surface. 

By the 3^rd quarter of 2007, the CBN’s programme of reverse decimalisation of the Naira had received many hard knocks.

Like many debates on topical issues in Nigeria, at some point, that on reverse decimalisation of the Naira veered closer to name calling. In The Proposed New Naira Exchange Rate And The Nigerian EconomySam Aluko from Ontario, Canada, had to remind the CBN governor, that “the CBN is to operate and execute the monetary policy of the government, the government is not to operate the monetary policy of the CBN,” and that the CBN “should not act alone as if the Naira is its property.”

Eventually the government distanced itself from the idea of kicking off two zeros from the Naira units to obtain low, single unit exchange rates.

But many among those critics were either scarce with facts, laden with sentiments or could not or refused to look beyond 2007. This class of critics was mainly preoccupied with the immediate aftermath, and not the enduring benefits of reverse decimalisation.

(i) In countries where currency reverse decimalisation were effected, with the public enlightenment and careful execution it required, there were the anticipated initial slight surge of inflation which later petered out and in many instances provoked deflation. The introduction of the Euro in many European countries attests to the above. Turkey and Ghana are successful examples of reverse decimalisation outside the Euro zone. Forget the embargo- and crisis-ridden Zimbabwean example.

(ii) A few of those critics bothered to prospect on today’s oil price plunge. The price of crude oil in 2007 was high and rising and ensured the piling up of the nation’s foreign reserve, and by extension, the instantaneous stability of the Naira.

(iii) From the third quarter of 2007 till date if there had been any tangible efforts to improve on the nation’s infrastructure to enhance industrial productivity and services, they are yet to impact positively on these sectors, and by extension, on the stability of the Naira.

When it became obvious the government would not buy into CBN’s reverse decimalisation prescriptions, at least, in the immediate future, Nigerian traders not used to cheque stumps (though many could not have understood the intricacies of reverse decimalisation) but were warming up to prune the number of their cash-carrying Ghana-must-go bags and the associated risks weren’t elated. It was business as usual for the ubiquitous bullion vans and theirkoboko and gun-totting escorts. Soludo retreated, but like every mortal, could have been subjected to some degree of crisis of self doubt.

But unlike most mortals, Soludo did not display any disenchantment with the system. He rather went about his duties with much more diligence and dignity. That was a true test of good servant/leadership. 

Later-day critics of Soludo cite the recent depreciating value of the Naira as an example of his non-performance. But at the dawn of the global economic crisis analysts had expected a worse case scenario for Third World economies. Some of his critics often fail to take cognisance of some untoward machinations of some economic policy makers in the rich world aimed at sustaining economic well-being within their domains; for such policy makers it does not matter if such machinations render poor countries poorer. Many in the rich world based on the vagaries of the ‘economic weather’ preach globalisation in one instant and at the next shift to protectionism. And if the truth must be told, neither of the above two concepts has yet found favour with the poor nations’ economies. For these economies, protectionism is a killer dose; globalisation, on the other hand, forces the cash-strapped Third World entrepreneur to shop for the same factors of production (except unskilled labour) in the same market where the cash-laden, rich world entrepreneur obviously dictates the pace. Third World economies still yearn for some sort of Marshal Plan for a catalyst.

Again, bankers in the rich world knew (more than 18 months) before October 2008 of the impending economic meltdown but tried to hide the bust. Most bankers and economic policy makers in the Third World were taken by storm. Or was Brazil’s Lula Da Silva merely looking for scapegoats when he stated that the recession “was caused by irrational behaviour of white people with blue eyes”?

So Soludo could not have been meant to take the hard knocks as the economic ill-wind was bound to visit Nigeria. He should rather be given kudos for Nigeria’s financial system’s prompt reaction to the economic crisis. The Naira did undergo some measured and manageable devaluation in the circumstance, thanks to the managerial skills of those in charge at Nigeria’s apex bank. Nigerian banks quickly adjusted to the already bad situation and did not immediately go bust, no immediate bank bailouts, vintage CBN’s banking reforms 

Remove any of these two factors - political stability and transparent financial regimen (read buoyant banking sector) from any nation’s economic machinery, abject poverty sets in. Soludo inherited a banking sector which in the past, confidence men were said to have been strolling onto the central and commercial banks’ floors to organise advanced-fee-fraud. It was an open secret that one military leader before then would order the CBN governor to transfer, with immediate effect, huge sums of foreign currency in Ghana-must-go bags to his office. Soludo inherited family banks where depositors’ money could vanish overnight. Before him, Nigerians in the diaspora who lost deposits in Nigerian banks of the 90’s would not have any thing to do with banks back home, foreign investors were scared of Nigerian banks, in fact, they shunned them like a plague. It was not until Soludo came to the apex bank and cleared the Augean stable through his splendid banking reforms that Nigeria was repositioned on the path of economic growth. At least, ‘Naija Pundit’ in : Is CBN Governor Embezzling Money or Merely Engaged in Extensive Corruption? acknowledged this with the statement: “with a vigorous anti-corruption campaign and the cleaning of the banks, the path was clear for the most remarkable banking reforms in the history of the nation.” ‘Naija Pundit’ set out churning out apparently spurious allegations of corrupt practices on the part of Soludo ostensibly with a mission to pre-empt a possible Soludo re-appointment, and perhaps, enhance the chances of his candidate for the man’s job; but in the above statement, he unintentionally ended up highlighting the signature tune that serves as Soludo’s bulwark in the court of public opinion. However, in Soludo And the Burden of Public Office Ignatius M. Ejikeme who apparently knew Soludo very well debunked much of the allegations of ‘Naija Pundit.’  

Trading on convertible currencies on the streets of any nation is the trademark of a disjointed economic/financial system. For donkey years the practice characterised Nigeria’s business space and weighed down on any serious integration of the nation’s banking/finance system with the global banking/finance mechanism. It distorted the nation’s economic indices and frustrated her economic planners and policy makers. Simply put, the practice does no Nigerian any good. Back-street fixation of the exchange rate of the Naira and sale of foreign convertible currencies were nearly stamped out not by force but by sound monetary and banking policies instituted by Soludo and his team at the CBN. And that reminds one of the recent directive by the CBN to commercial banks to remove their ATM outlets at some strategic positions in the country. Before confidence was reintroduced into Nigeria’s banking system, and when other countries had long been using the ATM outlets, Nigerians had their unconventional ATM cash dispensing mechanism. An average Nigerian would stock up the US dollar which he could exchange for the Naira even at the dead of the night by merely knocking on the doors of a trusted back-street foreign currency seller. Depending on the level of desperation of the buyer, the exchange rate agreed upon could influence the next day’s exchange rate. That was the real voodoo economic system. The bank reforms of the CBN nearly extinguished the system but for its recent upsurge deriving from the global financial meltdown.  

The spectre of dumping performing public servants has continuously rubbed off on Nigeria’s economic development. Some of these servants deploy the initial period of their assignments to undergo on-the-job training and no sooner had they become masters on their jobs than they were shoved off for some imprudent considerations. Trevor Manuel as finance minister has run South Africa’s economy for 13 years and has guided the nation from economic crisis to near boom. And he is not leaving soon because successive South African presidents have learnt to appreciate the economics wizkid. United States’ Alan Greenspan served various GOP and Democratic party presidents as Treasury Secretary for 18 years until he was seen to be about to resort to the use of walking stick in 2006. In many of the countries we envy for their economic well-being, performing public servants are wooed and encouraged to hold on to their jobs as long as it is constitutionally permissible. “Naija Pundit” in the article cited above made reference to Ngozi Okonjo- Iweala, Nigeria’s ex-finance minister as “the gifted MIT-trained development economist.” Wouldn’t it have been to Nigeria’s advantage if Okonjo-Iweala is still serving the country? 

There is no doubt today there are so many Nigerians who can take over the job of Soludo and perhaps, perform as well, but timing is an important factor here. In the midst of a global economic crisis Nigeria cannot afford the party of musical chairs. A new boss this time at the CBN irrespective of his/her level of preparedness for the job must surely be overwhelmed by the current economic crunch. It is to Nigeria’s advantage that those at the helm at the CBN and the finance ministry who received the first impact of the global economic crisis and must have studied the A-Z of it be left to guide Nigeria out of the crisis. And above all, if we have a leader at the apex bank, (or indeed, any other public office) who is seen by Nigerians as having performed well during his first tenure, why must we not strive to continue to profit from the leader’s on-the-job potentials until we reach the limit of his or her constitutionally allowed term? 

Finally, we need to see as a rare gem a Nigerian who lost his mother at the age of 8 and ended up bagging a first class honours degree and received the faculty’s highest prices all the way to doctoral level in the 1980’s. Soludo’s good works impact positively on every Nigerian. It is drab and counter-productive to circumscribe matters about Soludo of this moment on the closet of ethnic considerations as some do. There is a saying that in President Yar’ Adua Nigeria is bestowed with the first leader that got a thorough university education. Therefore, so long as Soludo’s fingers are not soiled by the spoils of office it is expected that the President recognises the abundant assets in the incumbent CBN governor. 

Benedict Okereke

Robot  # 1 | 16.04.2009 08:28

On Economic Recession And Chukwuma Soludo’s Tenure Detractors and friends of the CBN governor, Chukwuma Soludo, have been having bouts over his tenure. Mute, as expected has remained Soludo’s response. It appears he has learnt to control his acclaimed weakness - inability to resist mounting, or being dragged to the rostrum even at the shortest notice, a habit that can have an Albert Einstein goof on a discussion on energy, mass and light’s speed. By and large, the deleterious effects on the nation’s economy ofthe overdrawn speculations on the incumbent CBN governor’s tenure may yet surface. By the 3rdquarter of 2007, the CBN’s programme of reverse decimalisation of the Naira had received many hard knocks. Like many debates on topical issues in Nigeria, at some point, that on reverse decimalisation of the Naira veered closer to name calling. In ...Read the full article.

Nzeman  # 2 | 16.04.2009 11:13

I don't understand the point you are making here. Should we keep Soludo just because he kept making first class degrees, when he cannot properly manage the monetary policies of Nigeria to achieve growth, reduced inflation and exchange rate stability? People should remove sentiments and ethnic chauvinism out of this. No doubt Soludo may be a paper intelligent economics, but he has not done that great as CBN governor than anyone before him. There is rampant corruption in the banking industry which the CBN have no clue how to reduce. Last year UBA was fined $15 million (US Dollars) for money laundering- been AFC (Soludo's initiative) money that went round in circles of corruption and round-tripping. Nigeria were the money was shifted from did nothing to the thieves masquarading as bankers with Soludo's hand massively soiled with the loot! UBA promptly paid $15million dollars for the "offence" without blinking. What did Soludo and Nigeria do? nothing. How is Soludo able to pay nearly £50,000.00 (pound sterling) annually for his 2 children in top British private schools? How much is he earning. Go look at the house he acquired in Abuja costing over N200million. What is his wage for four years, if we assume he does not spend his wages at all! He is romoured to also have a property in London worth over a million Pounds Sterling. Please leave this matter. Why are you blaming Nigerian Naira collapse on economic meltdown? Why is US Dollar not depreciating against Naira? It should have been since that is where the meltdown is stronger. If Soludo was the wid kid you want us to believe he is, he ought to have helped in Diversifing Nigerian economy by now so we don't rely exclusively on Oil and the vagaries of the market of Oil. There is nothing special about Soludo. I think he has no clue how to manage the economy!

Albany  # 3 | 16.04.2009 12:08

=Nzeman;346985>I don't understand the point you are making here. Should we keep Soludo just because he kept making first class degrees, when he cannot properly manage the monetary policies of Nigeria to achieve growth, reduced inflation and exchange rate stability? People should remove sentiments and ethnic chauvinism out of this. No doubt Soludo may be a paper intelligent economics, but he has not done that great as CBN governor than anyone before him. There is rampant corruption in the banking industry which the CBN have no clue how to reduce. Last year UBA was fined $15 million (US Dollars) for money laundering- been AFC (Soludo's initiative) money that went round in circles of corruption and round-tripping. Nigeria were the money was shifted from did nothing to the thieves masquarading as bankers with Soludo's hand massively soiled with the loot! UBA promptly paid $15million dollars for the "offence" without blinking. What did Soludo and Nigeria do? nothing. How is Soludo able to pay nearly £50,000.00 (pound sterling) annually for his 2 children in top British private schools? How much is he earning. Go look at the house he acquired in Abuja costing over N200million. What is his wage for four years, if we assume he does not spend his wages at all! He is romoured to also have a property in London worth over a million Pounds Sterling. Please leave this matter. Why are you blaming Nigerian Naira collapse on economic meltdown? Why is US Dollar not depreciating against Naira? It should have been since that is where the meltdown is stronger. If Soludo was the wid kid you want us to believe he is, he ought to have helped in Diversifing Nigerian economy by now so we don't rely exclusively on Oil and the vagaries of the market of Oil. There is nothing special about Soludo. I think he has no clue how to manage the economy! Nzeman, Are you trying to tell us that Soludo never worked all his life until four years ago ? Come on, you can do better than that ! You probably do not know that he has a beautiful mansion at Independence Layout, Enugu, which was built more than four years ago. I really do not give a hoot if Soludo stays or not. I only pray that 3 years down the line, we will not all gather here and wish he was allowed to stay.

Iroabuchi Onwuka  # 4 | 16.04.2009 12:27

Nzeman..., 45 thousand pounds is no money in England. It is probably a top level but medium scale private school. You should do Nigerian a favor and attarck his policies. The Writer paid to much attention to the merits of the man and only emphasing his angst in terms of training. Nzeman your mentioned his house in London...well give us address and place, else we can suppose that you are misleading and lying to us. We should also remember that Soludo was already a multi-millionaire before he became your Bank Chairman. Much like Prof. Idika who had already established a business empire before he became finance Chair and secretary and he understood the effect of Nigerian foreign monetary policies. Sanusi is another example but he was not an effective administrator but he understood the market. They are now counselors to the Central Bank. There are others who do a good Job, if not better, but why talk about two other birds in the Bush. Soludo's policies are to be criticised not the man. I fear his leniency towards international credit rating which sometimes exposes him to very uncritical local pitfalls. Has anyone said something about Lukman. He is so good that no one speak of him, but if there are scarlets in the eyes of Nigerian economy and market, he is one of the major ones.

abdulmumin  # 5 | 17.04.2009 04:32

I cannot remember any furore being generated in times past about the appointment or removal of a CBN Governor and I have been around, believe me. So what makes Soludo's case different from Joseph Sanusi's or Paul Ogwuma?

Carrygo  # 6 | 17.04.2009 07:13

To me, Soludo is something of a metaphor; in his eyes lie a future anchored on the indices of modern existence. He made me believe it is possible. I used to know CBN as a den of sharpers, an organism managing the contradiction of bankrolling 419, Nigeria’s international blight and a pretence to banking. I have spoken to Nigerians from different ethnicities who attest to the Nigerian banking emergence. They tell that the banking sector has spurned other pursuits which they or others they know benefit from. The quota and ethnic-inclined people won’t hear this. Everything must conform to their prehistoric version of existence. They can always draw from a fund of tribalism and institutional incompetence to pursue this well-worn path. Well some of us place store on efficiency above primordial concerns. Why should a serving public servant be unseated? To pave way for ‘federal character?’ In what ways has he been ineffective? When Soludo called for an end to oil dependence, it was predictably met with silence from people who rely on its enforcement. Soludo has tried within the parameters set for him in Nigeria. He stands singularly above a CBN history of incompetence.

ozoodoo  # 7 | 18.04.2009 14:35

The finance corporation referenced in the following report is most likely the African Finance Corporation (AFC), a conduit pipe used to mercilessly loot our public treasury. http://www.thenationonlineng.com/dynamicpage.asp?id=82161 British police seize N247m from ex-Nigerian official THE Metropolitan Police in the United Kingdom have frozen about £1,153.627.27(N247, 303,077.87million) in the account of a top official of a finance corporation in which some financial institutions in Nigeria have an interest. It was also learnt that the Attorney-General of the Federation, Mr. Mike Aondoakaa (SAN), has been put on the alert by one of the security agencies. But President Umaru Yar'Adua is not yet in the picture. Investigations by The Nation revealed that the account of the affected corporation was with a branch of the Citibank in London. A document exclusively obtained by our correspondent showed that the account was frozen on April 6, 2009. According to the document, the money was transferred to the London bank account in what is described as “in one lump sum.” It was gathered that the transfer made the Met Police to be suspicious leading to a series of investigations. A reliable source said: “The investigation by the Met Police might have taken one or two months before the seizure of the money. What made the Met Police suspicious was the fact that the said official left the services of the finance corporation but when he was quizzed, he said the money was his severance package. “The British police want to know if an ex-official is entitled to any severance package as claimed by the corporation's former official.” The Met Police brief to the Nigerian security agencies indicated that the official justified the severance package with an appointment document which he presented to them in London. The Met Police quoted the appointment document, dated September 11, 2007, as follows: “In the event that the appointment is terminated by the corporation prior to expiry or otherwise, than for objectively determined unsatisfactory performance or misconduct justifying summary dismissal, corporation will pay a lump sum amount in US dollars equal to the remuneration you would have earned up to the contract expiry. “This payment shall be in full and final settlement of all and any claims that may have arisen out of the termination.” Although the Met Police said the Nigerian official presented many documents, it nonetheless raised the following questions: Was the official entitled to severance package? If he ought to have severance benefits, how much was it? Does the amount seized represent the severance pay? If he is not entitled to exit package, how did he come about the money? EFCC officials declined comments when contacted by The Nation. But a top official of the Federal Ministry of Justice said the Met Police in London contacted the office but refused to give details.

Iroabuchi Onwuka  # 8 | 19.04.2009 16:13

=ozoodoo;347804>The finance corporation referenced in the following report is most likely the African Finance Corporation (AFC), a conduit pipe used to mercilessly loot our public treasury. http://www.thenationonlineng.com/dynamicpage.asp?id=82161 So Mr. Ozodoo who gets the money. I million pounds is not even up to a full size container of medical equipment. Here in the states over 500 million dollars everyday move to the China via Etfs alone. The business relationship between India and USA is well 40 Billion Dollars every year. Much of this money get transferred a lump sum by privates. The business transaction between Britain and the USA is more than 80 -120 Billion a year. Much of this money get transferred by individuals businesses, much of it comes from Britain. If you know anything about 'pure play' and intelligence community, you can bear with me that people were complaining that their colleagues were folding 100% stock value for 900% in matter of years. A lot of these companies come from England. They pretty hugged much of the money set as aside for defense spending. This was such a big deal for people in 2005. The English were still complaining that China was a terrible place to live even at the eve of thier entering the common market, while at the same time they were spreading thier monopoly of Szenchen and Beijing. My people dsiabuse your mind about this kind of news. Why is 1.5 million pounds that much a big deal when Nigerians in America and in Europe send over 7 billion dollars Yearly to thier people in Nigeria. Nigerian has close circuit pond of 60 Billion Dollars in Revenue gater, it has 35 Billion in Gold reserves and other assortments, why do we have to conduct a news that is incomplete as the one above. Don't know that Nigerians and thier officials are considered criminals. Look me inspite of my reputaion in business and credit, I still get scrutinized by my Juniors for nothing. Unless you are in Nigeria then you cannot feel the business pain. But is all good, you want them to do the right...but it is getting negative. As if your black skin is the outcome of some a certain black soul, spirit or something. The news mentioned that the sender was a high official of the Nigerian finance and mentioned the amount, but did not mention the persons name nor the bank that sent the money, nor the nature of the transaction, nor the date the money left Nigeria. I think there is soemthing wrong with this kind of information, it is bad journalism and Nigerians should master the art of picking stock at a hint. Second of all why should a high ranking Nigerian official send money to England, is he trying to stow money like that. The English police want to steal the money buy creating or casting aspersion on this transfer of money...they want to confiscate the money which is what the like Godwin Goodluck was talking about when he complained about ceasing Nigerians funds abroad. Think and see what is going on, don't bore people with the talk and on a thread about an open office. They should get definite or else leave us alone. There will be another bad news from Nigeria as time passes on. The whole thing is becoming a harrasment.