That IMF Confidence Mark On Nigerian Economy By Nasiru Suwaid

These days, something unique is happening in the Nigerian economy narrative, which is about the extraordinary contradiction, in fact and in terms of an economic system that has considerably slowed down or for a fact, it is threatening to become a sustained recession, but, it still manages to conjure some form of growth. An economy that is not strictly facing Balance of Payment issues, yet, it could not generate enough foreign exchange currencies for international trade.

A country having a diversified economy purely on Gross Domestic Products (GDP) terms, but, it does not have a diversified source of income, in fact, basically, it is still a primary commodity and mono product nation, which highlight the fact, for Nigeria, nothing seems to have changed, in economic terms, despite the many years and indeed, recent years of projections of a changed national economy, anchoring the narrative of a new era of an Africa rising.

It is within this context and perhaps, against prudent rational economic logic for the country, the reverse is becoming the case, when, rather than Nigeria seeking for loans, like many other African countries and indeed, economically, lesser developed economies, to ride out the storm of a subsisting global economic slowdown. It is the inauspicious not becoming the obvious, as the country is courted and coveted to receive international loans, unlike others nations, who had to go out to seek out economically sustaining credit facilities, within the space of a week, twice, an invitation to access international investment capital was extended to Nigeria.

It started with the state visit of President Muhammadu Buhari (PMB) to the Peoples Republic of China (PRC), where an offer to re-negotiate, an already existing loan facilities initiated by the last administration was extended to Nigeria, thus, shrewdly shifting the burden of ‘initiation’ from Nigeria to China. Now, anyone having an inkling or even a peripheral knowledge of what is to obtain a loan, knows that ‘initiation’ in financial borrowing matters a lot, in terms having the upper hand in the negotiation of the credit facility and repayment terms, I should stop here, as I shall not want to discuss deals that are yet to be concluded.

However, it is worth noting, that it is within such basis and understanding, it is the Chinese offeror, which pledged and put down the sum of $6 billion dollars, on counterpart funding basis for the Nigerian offeree to access, even before citing of the projects and the beginning of the accessibility negotiation talks. And within the same week, at the International Monetary Fund IMF/World Bank springs meeting, the offer to apply for a loan facility was extended to the country, mind you, it was a subject of discussion and agreement, just a few months back, that it is not needed, when the Managing Director of the International Monetary Fund, Madame Christine Lagarde visited Nigeria.

Generally and usually, countries that seek for credit facilities from the international multilateral lender, have problems running their economies; in terms of formulating a balanced budget, raising revenue, balance of payment issues and the general need to restructure the economy, but most especially, those nations in a financial crisis, do not have the capacity and have not exhibited the needed capability to reform the economy.

It is why an International Monetary Fund (IMF) facility, always comes with a conditionality of following a strict prescription programme, but, for a nation such as Nigeria, which had realized the structural defects in its economy and have initiated the mechanism for correcting the structural imbalance and distortion within the system, without any prompting, as attested to by the contents of the 2016 International Monetary Fund (IMF) article IV consultation report.

The consultative document acknowledged and certified that the fundamentals of the Nigerian economy are sound and strong, despite the immediate revenue challenges facing the country and most importantly, because of a resolute and resilient leadership, that it is able to take the hard decisions needed to bring back the economy into the positive territory of growth and development, as such, it would not be required to formulate a credit facility programme.

And this two other things:

WHY SWAP WHEN YOU CAN DEVALUE

From most of last week, coming into this week, there is no hotter topic in the Nigerian media space and indeed, the social media environment, as the China currency swap deal with Nigeria. For the proponents of the devaluation of the naira, it is as if the deal was specifically made to undermine them, when they have all along being waiting for the day, to see the eventual depreciation of the local Nigerian currency, where they could at the very least, be on the high moral ground to say; I told you so.

For the opponents of devaluation as a policy, the currency swap deal policy is akin to their smoking gun evidence, to say to the world, naira does not have to depreciate nor lose value, in fact, it is within such context of a narrative, last week, many predicted the eventual crashing of the dollar globally, as if Nigeria is the first and only country, which entered into such a deal. While many within the camp of the proponents of devaluation, could not wait to paint the scenario of how the United States of America would destroy Nigeria, for daring to choose the communist over Uncle Sam.

But the most preposterous of the lot, they are those who relayed how they have been undermining the naira against the dollar, hoarding it to make the naira weaker and trumpeting how they could as well create a Yuan black market, for purely rent seeking purpose. The tragedy in the narrative is that no currency exchange system is foolproof and the Nigerian currency the naira is neither the property of the government, nor that of the president, rather, it is a national legal tender, which is as valuable as the productivity of its citizens.

CAN YOU LEGISLATE JUDGEMENT CALL

Did she say it or she did not say it, that is what heralded the needless controversy, about a speech by the former Coordinating Minister for the Economy and Minister of Finance of Nigeria, in the immediate past administration of Goodluck Jonathan, Dr. Ngozi Okonjo-Iweala. That Nigeria did not have the will power to save, which would directly indict her principal, Jonathan and inadvertently, the allegation would point the fingers of complicity towards her very self, she being an integral part of the government, thus, policy victories and failures, should be shared amongst the members of the past democratic regime.

To be fair to the former minister, she only indicted Nigeria of that time but shouldn’t the blame go to its leaders in that particular moment in history, however, as an economic policy analyst, I was much more interested in the general content of the speech, which she delivered at the George Washington University, as a resource person delegate for the International Monetary Fund, IMF/World Bank springs meeting, her paper was titled: Inequality, Growth and Resilience with Chile as example.

It was within that context and perhaps, her personal disappointment with the Goodluck Jonathan administration’s lack of capacity to save, she advocated for the International Monetary Fund (IMF), the need for the multilateral financial institution to propose, as part of its engagement framework, a policy of institutionalizing saving as a constitutional feature, where economically, lesser developed countries are encouraged to insert constitutional provisions, setting a certain percentage of their earnings as savings, because, those nations could not save or are not responsible enough to save without a constitutional legislation.

I am sorry but that a dangerous stereotyping of Africans and the third world countries, it is why some of us have a low opinion of Africans serving in the global institution, because, they are too superficially informed about the continent and surely, disconnected or out of touch with what it takes to govern in those types of economies, besides, if legislation is the only solution, why not advocate for the inserting of constitutional sections decreeing good governance, it is what the continent needed most. Leadership is about personal vision, patriotic resolve and integrity, not in laws that could be easily subverted, period.

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