Muhammad Sanusi II, the emir of Kano and the immediate past governor of the Central Bank (CBN), says President Muhammadu Buhari’s endorsement of the CBN foreign exchange policy encourages corruption.

Lauding Buhari’s removal of “wasteful and corrupt fuel subsidies”, Sanusi said the current forex policy endorsed by the president encourages similar rent seeking and corruption which trailed the subsidy regime.

“He (Buhari) has put an end to the [crude] swap regime which is also one side of rent-seeking and corruption . . . he has made the NNPC start producing accounts, so there is greater transparency,” Sanusi told Financial Times.

“These measures are good for the economy and display strong political will to change the system. But getting monetary and fiscal policies right will be crucial for broader progress in structural reform.”

FT quoted the emir as saying the president’s anti-corruption stance was “totally inconsistent” with the foreign exchange regime he supported, adding that it “encourages corruption and rent-seeking similar to the fuel subsidy regime”.

The emir, who was CBN governor from 2009 to 2014, expressed his displeasure with the monetary policy regime which he said has “very obvious drawbacks that far outweigh its dubious benefits”.

“Unfortunately, because the exchange rate is right out there in front now, monetary policy is being seen as the barometer for broader economic thinking,” he said.

“It is sad that on this one policy you get it so wrong that you risk taking away attention from everything else you are doing.”

Sanusi who resisted devaluation during his own tenure as CBN governor said he did so because he “had reserves of over $40bn and an oil price at over $110,” admitting that there are no easy ways out of the current situation and “devaluation is a bitter pill”.

The country’s economic woes were now being exacerbated, with the currency peg and restrictions in the foreign exchange market creating “a lot of speculative and precautionary demand,” Sanusi argued.

Exporters and investors “are holding on to foreign currency, as no one would sell at the rate the government is setting”, while “the government does not have the reserves to keep the exchange rate at its official level in the market”.

“These policies have been tried in different parts of the world and in this country before and they have just never worked. No matter what the stated intention behind them, they are wrong,” he said.

The gap between the black market rate and the “artificial” official exchange rate would keep widening until the bank adopted a more realistic policy or the price of oil climbed and dramatically increased reserves, he further said.

He said a more flexible exchange rate policy at this point would be the “least bad option”.

“We are hopeful that given all the other positive things done so far, policy will head broadly in the right direction and flexibility will come in down the line.”

Buhari and the CBN have continually insisted that devaluation of the naira is not the way out, with the president insisting that he would not want to “murder” (devalue) the naira.

The parallel market sells at N306, which is 50% higher than the official rate of N198.

DonXavi:
Give Sanisi a wailer's form to fill, I have payed for the form on his behalf.

The number of wailers are swelling by the day.. who's next?

crestedaguiyi:


sorry boss, form is sold out.

Firefire asked me not to order for reprint

crestedaguiyi:


sorry boss, form is sold out.

Firefire asked me not to order for reprint

Lordave:
PMD is a disgrace.

The current situation (helpless slide/depreciation of the Naira), cannot cease to be a big case for worry for those who truly can grasp the enormity of this catastrophe -- impoverishment! Unfortunately, most of do not realize the magnitude of this malady. If the gov't were to increase PMS pump price to N120/litre tomorrow, or reduce minimum wage from N18,000 to N9,000, we would have taken to the streets -- but that's what just basically or 'technically' (Mr. Lai I see you) happened.

In order to keep this as short as possible (avoid writing a book), especially with our "too long can't read" cousins in mind, I'll express my thoughts in form of questions to the CBN governor or those that can help him answer the following (of course we know fall in oil prices and 'yada, yada, yada'):

1. If demand and supply basically control the exchange rate, why is it that, despite the reduction in foreign expenditure from our Nigerian bank accounts from $3,000 daily to averagely $300/day has had no effect in curbing the 'unabated-downward-spiral' of the Naira?

2. Why is the CBN in bed with commercial banks bleeding the people dry? Why would they get dollars at N199 and charge us at N280-N300 (roughly a profit of N100,000 on every $1,000)?!

3. Why is the FG (PMB) and CBN (Gov.Emefiele) abetting arguably the greatest instigator of excess liquidity (the constant substitution of Naira allocations for dollar denominated revenue).
https://www.nairaland.com/844884/solution-fuel-subsidy-wahala-look

Read more at: http://www.vanguardngr.com/2014/08/much-talk-dollar-certificates/

4. Can the CBN Governor kindly explain to us: how going from paying N2.6 trillion for petroleum products subsidy, to paying nothing, to actually making excess of N4 on every litre of PMS sold/bought has had no positive impact in propping the Naira?

5. If we truly enjoy a bit of better power supply than say 1-2 years back, do we still consume the phantom, "imported 40 million litres of PMS/day"? If not, how has this helped, or not helped the demand and supply brouhaha of the Naira vs Dollar hide and seek?

6. If we truly are tackling corruption head-on, and the customs service is doing a better job (checkmating refined products smuggling across our borders and e.t.c.) than 1-2 years back, do we still consume the phantom, "imported 40 million litres of PMS/day"? If not, how has this helped, or not helped the demand and supply brouhaha of the Naira vs Dollar hide and seek?

7. If truly our refineries are working to the recently publicized capacity, do we still consume the phantom, "imported 40 million litres of PMS/day"? If not, how has this helped, or not helped the demand and supply brouhaha of the Naira vs Dollar hide and seek?

8. If the BDCs are being 'dealt with', what alternative positive measures have you Mr. Governor put in place . . .?

9. If you Mr. Governor are no longer getting orders from the present C-in-C to disburse them dollars to them Dasukis, and with the implementation of proper accounting of remittances from NNPC and others, why is it not helping the Naira?

10. Lastly, why would you preach 'agric', but say 'agric' does not need power supply to practice? Duh