The Presidency — By Prince Emeka Obasi
Business Hallmark Newspaper, September 28–October 4, 2009

Where is the Hon. Minister of Finance? I don’t mean the Minister of State, Remi Babalola. I actually mean the substantive Minister, Mansur Mukhtar.

It is yet another perplexity of the Nigerian conundrum that at a time of grave economic crisis and financial paralysis, the officer entrusted with the onerous task of managing the national economy is missing in action. This is deeply worrisome and I hope you are as worried as I am.

From the time Prof. Chukwuma Soludo emerged as Governor of the CBN, an anomalous situation has existed in the management of the national economy. Curiously, not many people appear to have noticed that the Governor of the Central Bank of Nigeria has surreptitiously appropriated both fiscal and monetary policy enunciation and implementation. Even during the tenure of the internationally acclaimed financial expert, Dr. Ngozi Okonjo-Iweala, Prof. Soludo eclipsed her rather effortlessly and appropriated the leading role in national economic management. That development was fraught with dire consequences and was unwittingly the root cause of the current financial crisis.

The constitution of the Federal Republic of Nigeria did not envisage a situation whereby the office of the Governor of the CBN should be superior to the office of the Minister of Finance. As a matter of fact, the CBN used to be supervised by the Ministry of Finance until the CBN Act was amended. The amendment granted the CBN considerable autonomy, but it did not make it the monetary and fiscal policy czar of the country. There is no country in the world that I know of where the Governor of the CBN is simultaneously the economic manager. But here, that was the precedent Prof. Soludo set and which Mallam Lamido Sanusi appears to have embraced with gusto.

For the records, I understand that Dr. Okonjo-Iweala resisted Soludo’s efforts to annex her statutory responsibilities. Unfortunately for her and for the nation, she became a pawn in the Obasanjo–Soludo conspiracy and was remorselessly dispensed with.

Soludo’s basic response to his brief derived from his fundamental belief that the core problem of the Nigerian economy was monetary. His basic premise, which he stated over and over again, was that if the banking problem was solved, the Nigerian economy would spring to life. So his response was to throw more and more money at the banks, first under the celebrated consolidation programme and secondly under the now discarded Expanded Discount Window. The consequences of both policies are still unfolding.

Perhaps, there may have been some merit in his position in a developed economy, where infrastructure and the various other elements of economic development are fully put in place. But this is Nigeria, an under-developed economy, critically lacking even the basic fundamentals for sustained economic growth. For anyone to make monetary policy the core economic function in such an economic circumstance was a strategic blunder and manifests a shocking ignorance of basic fundamentals of development economics.

The problem with the Nigerian economy is fiscal in nature, and certainly not monetary. It is an economy that is not productive. It hardly adds value. It hardly creates wealth. What is more, it lacks basic infrastructure and thus the capacity to add value.

So the first order of business for any economic manager is to create the framework that would make the economy productive. That framework must of necessity dwell on two canons: infrastructural development and human resources development. The state of infrastructure in the country today is hopeless. Last year, a United Nations report rated infrastructure in the country as grossly inadequate for any meaningful socio-economic development. Then of course, the human resources situation is abysmal. For over two months now, the Academic Staff Union of Universities has been on strike yet again. And yet again, students are sitting at home, idling their time away. Even when schools are in session, graduates are little more than half-baked, incapable of adding value.

Rather than add value, such a population drains resources and encumbers development. The primary duty of any leader in the modern world, apart from providing security, is to manage the economy in such an effective manner as to provide meaningful livelihood for the citizenry. Every leader of government in the world therefore is basically the chief economic manager of his country. Of course, they delegate such duties to their key ministers. In the USA, the Treasury Secretary handles that responsibility, while the Chancellor of the Exchequer oversees the function in the UK. Even though both are developed countries, none of them entrusts the task to either the Chairman of the Federal Reserve or the Governor of the Bank of England.

The core duty of a Central Bank, apart from industry regulation, is ensuring price stability through the mechanism of interest rates. As far as the economy is concerned, that is certainly a micro function. But in Nigeria, it has been elevated to the core economic function by a succession of Central Bank Governors who have usurped economic policy enunciation and even implementation. I had plumped for Mallam Sanusi’s appointment in the erroneous belief that as a professional, he would appreciate the need to restrict his brief to his core functions. Obviously, I was mistaken. I had clearly not factored in his expansive world view and Mr. Mukhtar’s perplexing sheepishness.