Aikhomu and the travails of the naira

This article first appeared in The Guardian on August 22, 1991. The article is as relevant today as it was 21 years ago. Today as it was then, it doesn’t appear there is anyone in charge of the economy. Today those who contributed to the collapse of the banking sector, those who supervised their activities and those who have been accused of defrauding the government are also economic advisers to government. Happy reading.

It feels good to be a Nigerian at this period of our nation’s history. For once, attention is being shifted from corruption, police brutality, drug, scandals, student riots and so on, to issues of development. Economic decisions that government believes to be in the interest of the governed are promptly taken. In politics, we have come up with our own models that will shame the whole generation of Western model builders. We have come up with our own definition of political party, elections, manifestos and so on.

In international economic diplomacy, we can ignore William Keeling and his Western masters and co-detractors who were envious because of about $150 million or 1.5 billion naira we spent on hosting the most successful OAU summit since the organization’s inception in 1963. If their problem is our outstanding debt, which is now $30 billion by their records, this we have been servicing without default.

At home, our economists have shamed their Western counterparts by embracing models they had been too timid to adopt. We have embraced what our economists call “the inevitable large scale programme of devaluation” in spite of the reservations of Western economists and scholars like Jaime de Millo (the World Bank official) and Ricardo Fari of Johns Hopkins University. Both men have warned that the wholesale devaluation of our naira would not help our situation. Our former Head of State – the frustrated chicken farmer, once noted for his cynicism about our economic programme, has even taken the battle to Columbia University where he dared our creditors to begin charity at home by adopting the law of demand and supply and to jettison “protectionism” against Japanese goods and subsidy of their agricultural produce. He is on his own; our government economic advisers would want us to know they are in charge. Unlike General Obasanjo, they have faith in our creditors.

What I have found disturbing however is not the economists ingenious recommendation that we must boycott goods and services including drugs, food, telephone, electricity, if the prices are too high, but their occasional head-on collision with government. This tendency tends to cast doubt in the mind of the governed especially when they are being told there is only one way to our economic salvation. The government no doubt needs credibility if it is to carry the people along.

We can now recall that as at November 13, 1986, the first-tier rate was N2.80 to $1 or N4 to #1. But shortly after this, the first rift between the government and its economic experts became noticeable. Then, on November 24, 1986 when the exchange rate jumped to N3.45 to $1, Augustus Aikhomu, then Chief of General Staff, panicked and attempted to issue a decree to ensure stability of the naira in total disregard for the law of “demand and supply”. He consequently went ahead to increase the amount of foreign exchange for auction from $50 million to $75 million.

The rift was settled but not without a strong warning from the Central Bank that government’s interference would not be tolerated. By November 1990, when they had successfully arrested the decline in the value of the naira, the exchange rate had floated up to N10.75 kobo to the dollar. Barely two weeks later, the Central Bank through its Director of Research, Dr. M.O. Ojo, ably defended this rate claiming that the naira was realistically valued because the supply of foreign exchange tallied with demand. In his words, the “rate is dictated by simple law of demand and supply.” He allayed our fears by informing us that low exchange rate is no indication that the economy is not on course.

By last July 24, the floating exchange rate had climbed up to Nl1.32 kobo to the dollar. Once again Aikhomu, the military Vice President, broke the truce by publicly criticizing the Central Bank and its economic masterminds. Characteristically, the Vice President then said that, “the value of the naira cannot be left absolutely to the whims and caprices of market forces”. He is thinking of government measures aimed at stabilizing the exchange rate of the naira at an acceptable level.

The latest confrontation has once again provided an opportunity for the critics of the economic policies of government to ask where exactly we now stand. The economic experts have moved us from first tier to second window, back to second tier and forward to the Dutch market. They have reduced our lives to second-tier lives. We accepted because “hope rises eternal in the human breast.” If government now doubts its able ally in this war of economic survival, how are we sure we have not all been hoodwinked?

In all this, I sympathize more with government. This is not because I care less for helpless Nigerians, who live second-tier lives, but our government that is saddled with the overall responsibility of taking us to the economic El Dorado seems to have been reduced to a pawn in the chess game of our economists. With this type of betrayal from a trusted ally, we can easily see that, were it not for the craftiness of government, our whole economic system would have collapsed.

Our government made up of men and women of great skills has, in spite of its unpredictable self-serving allies, successfully combined the husbandry of our economy with other vital decisions that have. far-reaching effects on our lives. For instance they alone decide for us when the nation needs to be prodigal or ostentatious. They alone know when we can make donations to the needy, sick, elite, successful footballers, musicians, churches and mosques. And it is they alone that can decide when it is time to stop spending money as if there will be no tomorrow.

As if these were not enough burden for government, it has to maintain a delicate balance between investing in our future political stability and health as well as housing for all in the magic year 2000. It has to juxtapose economic rationality with political expediency. It is obvious that our economic managers are not ordinary men. Even craftiness is a measure of resourcefulness. I would therefore rather swim or drown with a resourceful government with all its scheming than with our economic experts who operate more as agents of our creditors.

– August 22,1991

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