Document - Keynote Speech at the Leadership Newspaper Group 2024 Conference and Awards. Prof. Moghalu is Chairman, Advisory Board & Board of Directors, Africa Private Sector Summit (APSS) and Former Deputy Governor Central Bank of Nigeria.
is Chairman, Advisory Board & Board of Directors, Africa Private Sector Summit and Former Deputy Governor Central Bank of Nigeria.Every choice we make has consequences; but we have no choice over the combined consequences of the choices we have made - Anonymous.. Will there be a resurrection? I believe so, but only if we fix the FUNDAMENTALS.
Although the immediate aspects of the Mexican peso crisis lasted for two years from 1994 to 1995, the effects lasted for about 6 years. The Asian crisis of 1997-1998 was relatively brief and over in two years. That crisis originated in Thailand after the Thai government floated the country's currency, the baht, owing to a shortage of foreign currency to support its peg to the US Dollar.
Second, exchange rate unification and a further effort to"float" the naira in an environment awash with naira liquidity was a mistake. This contributed to the naira's race to the bottom. The policy should have been accompanied, or preceded by, immediate monetary tightening. But we know that a substantive Governor of the CBN was appointed only several months later, and the Monetary Policy Committee was only just appointed and confirmed in office – last month, I believe.
In Nigeria, the absence of nationhood, the primacy of the primordial identities of ethnicity and religion, prevent a shared understanding of the purpose of the state and the unity of purpose without which transformational economic policy and management cannot be achieved. It is"every group for itself and God for us all".
Real strategy is what will make the difference, and is what Nigeria needs, rather than yet another committee of"stakeholders". Strategy is first and foremost about thinking, far more than it is about planning. The way we as Nigerians think, or don't think, determines whether we can make progress with our economy. Thinking is more important than we think . We must THINK more deeply about our economy than mere ad hoc reactions that don't move the needle.
This absence of philosophy and knowledge has resulted in our inability to balance the state and the market. This is why we hear policies about airport bans, border closures, price controls, fixing of forex rates and all sorts of artificial controls on market dynamics, well beyond responsible and appropriate regulation. A huge amount of arbitrage is the result, because in a capitalist economy, the state cannot play the role of the market. This is economic populism.
Nigeria has been progressively de-industrialized over the past 40 years. Instead, our economy has been increasingly"financialized" without a productive base. The banks and the bankers are kings, serving a rentier political class for healthy profit, while productive sectors suffer. This project, which we shall for the purpose of our discussion call Project"3-in-3", should be aimed at the rebirth of three strategic sectors in three years. The project, to be scoped and commissioned within the next three months, is to be predicated on massive investment in the development of railway lines , housing , and agriculture , to be delivered in the first phase over three years beginning in 2024.Project 3-in-3 should target to create 5 million new direct and indirect jobs.
I also recommend the issuance of a presidential executive order for mandatory engagement of indigenous academic and research institutions located close to the operational bases of the program as consultants. This will create a needed interface between"town and gown" as a model for the rest of the economy as obtained in the industrialized countries.
Some have criticized the central bank's rate hike by a dramatic 400 basis points , noting that Nigeria's present hyper-inflation is much cost-push in nature than demand pull. This criticism, while understandable, does take the full picture into consideration. First, forex instability is a major cause of cost-push inflation.
This option should be subjected to a thorough analysis by experts, as opposed to any knee-jerk action or uninformed public opinion. While there is typically a strong emotional and substantive argument against this approach in our country, it has clear pros and cons. Regarding the pros, a substantive IMF facility would markedly increase forex liquidity and our forex reserves in a more transparent manner.
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