We have hope in Soludo and his canopy of policy makers

Iroabuchi Onwuka

We begin the accessment on the man in office, but it is a little too late in the day to place such heavy emphasis on Professor Soludo, the current Central bank of Nigeria Chairman facing re -election. He eliminated uncertainty from Nigerian economy by cutting down the number Banks, a play that was so timely that it simulated a response from China. The Chinese were beginning to complain about the many banks in thier country and about the idea of too many currency floating around Shanghai when by some misguide, Soludo ventured in June 2007 to take an active stand on the idea of currency redomination.


The implied vector of such exericise is balancing act on 'supply' auction, a way of improving liquidity operation without collapsing the value of Equity price. It was a way of fully advertising the country to foreign countries seeking a long term expansion in Nigeria, who were seriously complacent about the country given the global weight of the unit of exchange. The target was for small businesses, all for administrative firms both local and foreign, who were expected to improve their employment numbers and increase pay for fixed income earners.


The kind of attarck Soludo got from News makers like the Nigerian Guardian and Business day, invoked tensions of antebellum with the world fully observed to the fact that tension is still high in the country and was perhaps challenged to look elsewhere. Above all, within the country there was lax security, especially in the Riverine. Riverine daggers on foreign workers were still sharp. Then came the killer punch from New President Yar'uwa suggesting openly that Soludo's plan was unenforceable. It is low point in Nigeria as a financially viable entity. Little did Nigerians know that the man Soludo and the President Yar'uwa successfully blocked a transfer of 2 Billion for a no bid oil pipe line contract, linking River State to Abeokuta.


That was stepping on the wrong toes, the very one of which is Obasanjo's. It is not possible to doubt that Soludo was not forgotten or forgiven, as such his implaccable enemies roved around for the opportunity to act out thier frustrations. That opportunity came with the redomination of the Niara. What amounted to the sum of all foreign fears about Africa became real in Nigeria, that in spite of the effort of the Central bank of Nigeria to live up to expection, the office was still too lenient to Nigerian Governement. It was not the edifice that mark its own meaning, it is not independent of the presidency.


Yet the clamour against Soludo may have been right, that Nigerian Niara need no further emendation of its unit proper. What was the Nigerian Government expected to do, when a new CBN man in office has demonstrated the readiness of the Nigerians to lead the continent once more, against the multitude of past failures now showed lapses in his judgement.


If this episode is considered the lowest point in Soludo stint as Chairman, it will be wise to measure him entirely by how he kept his head above the parapet. He insisted of a new line
of currency notes, got the nod of the Government and did exactly that, he went the distance of announcing his meetings, to re-arm the Diet of his surf in the interest rate. In essence, he made his position useful towards enabling Bankers and other financial institution adjust to matters arising from the market. But from a professional standpoint, this was actually where he failed.
If he wanted to execute the wish of the Banks, it would have been served with annual adjustment in market.


The robust power of the CBN was not checkered, the Banking institution got stronger and stronger, threatning to overpower other avenues of wealth. There was no 'gauge' to enable his judgement concerning investing with interest rate cycle and as such he torched off the job of the Fed Chairman when he cited in 2008 of a propensity towards inflation. PPI, CPI, and what the Americans call 'personal consumption expenditure deflator' (PCE) are used for studying inflation rate, but since these sensitive barometers are not available in Nigeria, it is entirely accurate to say that the power of the Banks may have aggrevated the problem of inflation.


For all important economic dictates, the idea of copuling Naira to Crude oil is weak from the beginning. Not that the idea is uninspiring but given the weak nature of the world total finances market, the Dollars was under pressure since the Euro incentive. Euro was created to elevate the Dollars through competition, but it was doing the opposite. Yet the currency carried on suggesting that these White people can play themselves sometimes. I mean they can really play dummy fool, should I say blockheads given the opportunity Euro was making for Dollars. The Euro should have been done away a long time ago.


Indeed, the US Dollars felt the challenge of its existence in strong hands of Euro, a currency that has levelled out the value of everything, the currency called Dollars was just been exported to dog off the inflation within the US. It was meant to be cheap at that export and CBN and Fed chairmen around the world were to react. The Nigerian Banking system didn't react. The Niara was left forlougnly, and with the tight power of the Banks, the country was set for inflation.


If Crude oil, Nigerian chief export will rise, then Naira was expected to rise with it, and under the common fact that country needed no outstanding debt to divide its Crude oil profit, the only way forward was Foreign reserve. This was no immaculate conception since Foreign reseves have in the time past played an anchor for local currencies. Merit should be given Soludo for insisting on foreign reserve since before we had none, his trainng also proved useful since Iraqi war provided the chief excuse for Dollar depreciation and Crude oil rise.


Soludo also broke his own glass by failing to jettison the Dollars when it cheap, perhaps due to matters arising from 'bureau of exchange' and parallel 'Dutch auction' market. The copulation of Dollars to Niara and the capitulation of Dollars in Nigeria was a major statistical error which reversed the Niara gains to the Dollars, even before it began to climb.


The Nigerian ship needed such an anchor on a global level, an anchor to be set against the ocean of uncertainty. More than anything, it will help hedge against the fierce basin of market drift common in advanced countries of the world and in pari passu, the host country tilt to the stable side.


Soludo's measures were all good except for the Binomial mistake of trying to hard to please a world of market dragons with a 'full of a black cow'. His position that US Dollars can capitulate in Nigeria from US propiece, and that Euro can capitulate in Nigeria from Europe prepiece was a great mistake. This may have served to advocate for foreign investment but it was a bad move that can only be understood as a hole in a pot of Gold. He's is an administration that is working to crack Nigeria into the top 20 currencies of the world but letting such transaction to take place is like shooting himself on the leg.


He also forgot the very role of CBN - modelled after the Bank of England - in stabilizing the Bond market. In terms of the galloping inflation that took place in November 2008, annoucing a few selected Bell Wether with very low yield and earnings margin, would have promoted 'price' restoration in all classes of respect and 'decorum'. Agitating for tax free Municipal Bond in high earn areas like Abuja and Metropolis like Lagos would have discouraged the ruling Banks tendency towards a short term interest rates that exceeds the earnings of working Nigerians on thier long term Business package.


Sanusi, the former Governor shut down the idea of foreign currency capitulation and for once in his stint as Governor Naira showed signs of stability. The idea that Western Union, Traveller Check, Visa, Eastern Union and other commercial papers, could now buy into the Naira would have not been desired, for the deal they want is the one that allows Nigerians send money to Nigeria and capitulate in the currency of thier country. In that way, their exchange statistics will appreciate against the money transfer countries of the world, while the host remain weak.


Such buying into Naira at the about 7 Billion dollars a year, would set Nigeria free from the fear that accompanies a strong American Dollars. This is unlikely to have been desired, for could oil rich Nigeria gain against the Dollars and Euro while the Forex traders faired on average. Sanusi was engineered out of office and in Soludo, a new canopy was erected until he took a stand against many banks, until he took corrective measures to helm our foreign reserves, until he experimented with 'redomonition' of the currency...then a plot to ship him out began.


Had it not been for the sudden down turn in the world, who knows what would have happened to the office. The US Dollars late in 2008 began to show signs of strenght, with Crude oil down to the highest since 2005, then came a free fall of the Naira since it was tied the Dollars. Buying 900 million dollars into the Naira immediately was 'sure Banking' but it was gonna do little to helm the losses. The boss however did the unimaginable, Soludo shut down the Dutch Auction by 2nd week of January, surprised everybody. For once, against a burgeoning Dollars that is so strong that Yen is pretty much squeezed, against a free falling Russian Rubies, the Nigerian Naira held out at 146.


The next page is a tricky chapter, it will tell how much Yar'duwa wants to change things in Nigeria. His face should be discouraged from looking at Suadi Arabia, thier whole family of rich people whose wealth are not taken seriously. The Nigerian president should be looking inwards, unless he is not serious in make changes in Nigeria. He should be conferring views on how a restriction of foreign currency capitulation in Nigeria will help, and what can be the advantage of buying 7 billion dollars into the Forex via money transfer agent Nigeria. Let them send in Dollars, let them send in Euro, let Nigerians and their foreign business partners send from whatever country they wish but let all pick up in Naira. Let the president give Soludo and his compeers a chance to make a case for the Naira. The world still yarn for the leader of the continent. Mr. President, those afraid to torch your Naira have no faith in your country.


Today Dateline NBC organised a documentary on Nigerian 419 were all kinds of inventive against the country, it was such a bad showing that make Nigerians look bad of American Televison, it was Soludo who began to remove financiers with questionable character. This NBC attarck is serious psychological on Nigerians and I hope that Nigerians realise that Ghana is set as a counter weight for Nigeria in West Africa.

The Nigerian local market is completely Zero right now and there is very weak internal dynamics. Soludo will need to play close to the president to reaffirm his confidence in him, for next step will not please anyone. Soludo should send a warning that as the 2009 World Cup closes in, you either trade Naira or go home. I can't wait to see the faces of these laughing comedians when CBN finally decides to shut down foreign currency capitulation in Nigeria. You see, is all about exchange, is all about numbers, is about who is winning on a global stage and who is loosing. If that is maintained for at least a 10 years note, expect a double digit growth in Nigeria with such a time.