There was a mild drama at the Vanguard Economic Discourse in Lagos on Friday when a former Governor of the Central Bank of Nigeria, Prof. Charles Soludo, and the immediate past Governor of Edo State, Mr. Adams Oshiomhole, made allegations and counter-allegations.
The development, which generated grumblings among the audience, occurred during a discussion session moderated by the founding Group Managing Director/Chief Executive Officer, Guaranty Trust Bank, Mr. Fola Adeola.
Soludo, who delivered the keynote speech on the topic, ‘The hard facts to rescue the Nigerian economy’, had earlier highlighted some of the failures of the President Muhammadu Buhari-led government, particularly in terms of fiscal and monetary policies.
But in his remarks during the panel session, where the Minister of Solid Minerals Development, Dr. Kayode Fayemi, defended the government, Oshiomhole accused Soludo of wrongly allocating millions of dollars to two new generation banks shortly before the naira was devalued.
He said, “I got some intelligence from my comrades who worked in the system and we found out that the CBN under Soludo had just allocated couple of millions of dollars to two, as they were then known, new generation banks.
“And I asked Prof (Soludo), if you were going to devalue by Friday, why did you auction dollar at a lower rate on Thursday? I accused Soludo, I said you have enriched these two young men to the tune of N8bn, courtesy of your internal abuse.
“When the regulator behaved in this manner, then the Nigerian condition is much more serious than we can appreciate it. We need to deal with issues of attitude.”
However, this did not go down well with Soludo, as he said some people tend to change the subject when they did not have an answer to his earlier comment, a response that caused boisterous laughter and clapping by the audience.
At this point, the moderator told him he was running out of his time, but this was greeted with shouts of “No” from the audience.
“This debate has only begun. Adams made the point about exchange rate and exchange allocation to two banks. I want to say for the record that Adams Oshiomhole has lied. I didn’t say he misquoted anything; he has lied.” Soludo stated.
He said at the time, banks were bidding for forex two to three times weekly, and only the successful banks at each of the bids were allocated forex, adding that he was not even part of the bid as there was a committee for the purpose.
“Every bid produced a different exchange rate and there were different winners at every bid. We didn’t do devaluation as the case may be; we had the currency depreciating as the market determined day to day. With all due respect, I think if you (Oshiomole) don’t know what to say, sir, just don’t get into this kind of personal allegation,” he added.
Soludo had earlier said nothing much would be achieved with the 2017-2020 Economic Recovery and Growth Plan, which was released by the Federal Government last week.
“Whose plan is it? Ownership will determine whether the plan is just a public relations document or whether it will be implemented. To what extent is the plan consistent with the APC manifesto, which promised a conscious plan for post-oil economy and to restructure the country and devolve power to units with the best practices of federalism? Is this plan that plan?” the ex-CBN boss asked.
He described the envisaged 15 million jobs to be created under the plan as a “very nice wish.”
“The plan envisages to continue the practice of the past government of borrowing to finance recurrent expenditure. Up until 2018, recurrent expenditure will continue to exceed total revenue. The deficit will continue to exceed capital budget, meaning that capital expenditure will continue to be borrowed, as done by the last government. So, what has changed?” he queried.
Soludo said there were no projections for the trajectory of exchange rate or foreign reserves in the plan, stressing the need for a competitive real effective exchange rate.
He said, “The plan as packaged is a good effort, but in terms of our expectations as a plan for transition to a post-oil economy as promised by the APC, it is a missed opportunity.
“I am willing to bet that not much will happen in terms of the structure of the economy or the structure of fiscal and export revenue at the end of the plan.”
He noted that the current government inherited a bad economy, adding that by May 2015, the Federal Government was already borrowing to pay salaries and about 30 states had challenges meeting their salary obligations.
“The previous government had an unprecedented rate of debt accumulation even at a time of unprecedented oil boom, and was even depleting our foreign reserves instead of more than doubling what it met,” he noted.
Soludo added that most Nigerians acknowledged the Federal Government’s effort in fighting Boko Haram insurgency and corruption.
On the economic front, he said the government had implemented the Treasury Single Account, but that it could have been better implemented.
Soludo said, “Most macroeconomic variables have worsened in the last two years. Inflation from about nine per cent to 19 per cent; dollar exchange rate from about N197 (official) and N215 (parallel market) to now N305 (official) and N465 (parallel); unemployment from 7.5 per cent to 14 per cent; GDP from about two per cent to -1.5 per cent; poverty is escalating and youth agitation increasing; business confidence remains very low; foreign reserves remain depleted, and the current account balance is negative, and sovereign credit ratings have worsened.
“Nigerian workers have suffered a double whammy. The average nominal wages are declining, while real wages dramatically shrunk with high inflationary pressure.”
He stated that the Federal Government had continued to spend over 100 per cent of its revenue on recurrent expenditure as done by the previous government, while borrowing 100 per cent of all its capital expenditure.
“There remains half-hearted commitment to deregulation of petroleum pricing as well as the privatisation of refineries. The budgetary framework remains largely the same with all the institutional inefficiencies. Monetary and exchange rate policies were in their own worlds,” Soludo said.
He added that the economy had suffered massive compression, adding that its size had shrunk to anything ranging from about $354bn (using official rate) to $232bn (parallel rate) from $575bn when the government took over.
“Nigeria has lost the first and second positions in Africa’s ranking,” he said, adding, “We will get out of recession any moment from now with oil price and output increasing. But it will be a miracle if the government is able to return the GDP in US dollar terms to the level it met, even in 2023.”
He congratulated the government for plugging some of the loopholes and stopping some of the bleeding, but added that the challenge was that much of its efforts had focused on the micro.
Soludo added, “While trying to tie down the chickens, we were either stopping the cows from coming in or chasing them away. For example, while we are fixating with stopping the import of toothpicks and stopping the petty traders from taking dollars away, we have created havoc that has shut down many factories and with low capacity utilisation as well as ignited massive capital flight with the attendant impoverishment of millions, escalating unemployment and inflation.
“Put simply, we have missed the macro picture. While we are winning selected micro battles, we are losing the war on the macro economy.”
The Editor-in-Chief, Vanguard Newspapers, Mr. Gbenga Adefaye, said the essence of the discourse was to provide a platform to enrich the debate about the Nigerian economy and assist the government to quickly achieve a turnaround of the depressed economy.
Other panellists were a former Deputy Governor of the CBN, Dr. Obadiah Malaffia; Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf; former Group Managing Director, Diamond Bank Plc, Dr. Alex Otti; Managing Director, Financial Derivatives Company, Mr. Bismarck Rewane; and a member of the National Executive Committee of the Nigeria Labour Congress, Mr. Issa Aremu.
Dignitaries at discourse the included the Publisher of Vanguard Newspapers, Chief Sam Amuka; former Speaker of the House of Representatives, Mr. Dimeji Bankole; former Delta State Governor, Dr. Emmanuel Uduaghan; and former Chairman of Punch Nigeria Limited, Chief Ajibola Ogunshola.