By Charles Iyore
The clockwork of modern states is so complex and interconnected that a spanner in the works anywhere could create many unintended consequences and grind it all to a halt. Unfortunately, we have had many spanners thrown-in since 1988.
We must all be grateful to Governors Obaseki and El-Rufai, for providing critical reference points for this analysis of the state of the nation. It takes courage to do what they have done, against the ruling elite culture, of silence.
What they have both said as sub-sovereigns, is that we are carrying public spending round ratios that are not sustainable. The responses from labour, government and the deafening silence of the fourth estate of the realm, must be cause for worry.
Like or loathe them you can neither question their patriotism, because they are in public service at great personal cost, nor their capacity for process analysis, because they have come to their jobs after demonstrated ability in their professional callings.
State of the nation
Many in the nation, jointly (as institutions) or severally (as individuals) wake up every day in a predatory mode, equipped with sharp gaming skills and seeking to take advantage of their chosen targets, others just drift around without purpose. That is the operational mode of most trade and exchange in the country, such that the serious fraud offices can no longer cope with cases of persons and institutions seeking redress.
That outcome might seem remote to the query of Obaseki and El-Rufai but they are actually closely linked to the underlying malaise of our economic mismanagement.
There is low productivity because of the lack of currency (uniformity) in the reward mechanism of our production (our currency cannot hold value). Our currency cannot hold value because we have deployed hydrocarbon foreign exchange earnings as liquidity anchor for domestic currency operations since 1989, in total disregard of prudent reserve provisions. This is why the Naira has not been able to find its trading level in the global community of currencies since 1989, and continues to provide a one-way bet for local and external currency speculators.
This arrangement has turned the CBN into our economic Tsar, lording it over the treasury and holders of banking franchises, whose survival is tied to allocations from the CBN of both local and foreign currency.
This destabilizing effect means that our markets are without stalls and have not developed beyond being open bazaars. Open bazaars cannot accommodate items from long-term production planning and their regulatory boundary values will as a consequence become blurred.
One of the major fall-outs of that arrangement is that individual and institutional savings tend to be held in foreign currency as hedging instruments against local currency instability. (Bloomberg Report)
The drying up of local savings means that it is difficulty to form capital in the capital markets and credit pricing (interest rates) in the money market will go through the roof without moderation from capital market sources. This will systematically shut-out value adding industrial production and silence the machines (The graveyard silence of our industrial estates and textile mills). The medium and small scale businesses in the value chain are also victims and the countryside is soon quickly decimated.
The capital markets have not formed significant capital since 2008, save for circulation in notes and the forced circulation of the available liquidity in various asset classes, mostly in secondary market trading. Innovations in ETFs and other derivatives will improve movement of trading indicators but fail to drive growth in the economy.
Against that background we need to understand why it all seems too much for the political class to manage and why Obaseki and El-Rufai, in their loneliness are seeking for more technocrats to join them in the political fray.
The economy via the treasury has gone to sleep on the sweet ether of the central bank’s indulgence over 32 years, and only knowledgeable remedial action will wake her up.
The first move towards reversing this trend is for all the sub-sovereigns (not in regional formations) but together, begin to hold the national institutions to account, along the lines of Obaseki and El-Rufai.
That must be followed by the elected members at all levels of government taking on the responsibility of representation and championing local actions for improving community resilience. They must correct ratios that allow 90% of revenue to be spent on the 2% in government employment, through productive engagement.
The change that has yet to deliver
I had a ring side seat in 2011, when patriots got together to field questions at the ascetic general in his bid to steer the ship of state, I was also in the locker-room, when the church became broader by merger in 2014. I can vouch for the key promoters of his choice, in their commitment to changing the nation’s fortunes and their belief that the general would bring his moral authority to bear of the affairs of state.
A general once on the saddle is only as good as his brigade commanders, what happened there after has been reported widely to the effect that new faces, far from the battle lines became brigade commanders and the war victorious (First lady in her quip).
That, however, is not the full picture, as the constituent units of the broad-church left their flanks open, with team building methods seeking strange loyalty oaths, only fit for the mafia. Many technocrats whose livelihood were not dependent on political patronages drifted away.
This is why the Obaseki/El-Rufai position offers an opportunity for a fresh start. The leadership class must call itself to responsible action and line up behind them. Their action cannot now be described as threat of regime change, just like the #Endsars protest was branded.
The Chief of Staff must offer to the sovereign, the many permutations and combinations for unlocking value from the available resources needed to deliver economic growth. It is on the basis of that clarity, that the Presidential Economic advisory team will offer workable options for creating sustainable ecosystems. This hopefully should deliver even development across the country and closedown ungoverned spaces.
I am sure by now it has become clearer, what critical role money in its management plays in the affairs of state.
We need to understand the concept of money to develop.
Charles Iyore, Partner, DNA Capital Dioncta@aol.com
Darenth Kent England