CBN Measures, Economy May Buckle As Dollar Drives Electioneering.
Beginning from today till March 2023, the Central Bank of Nigeria (CBN) may find it difficult to rein in the economy following the dollarisation of political campaigns.
Political activities have geared up and the timetable by the Independent National Electoral Commission (INEC) shows campaign activities will end on 9th March 2023.
Nigerians were startled by the abysmal use of the United States currency, the dollars by politicians to entice votes from delegates in the run-up to the 2023 general elections.
Political campaigns will begin in September and flag bearers from the state house of assemblies to the most exalted office in the country, the presidency will file out to woo voters.
Expectedly, money will be a factor in outwitting one another. And now that the Naira’s value is likened to that of a piece of paper, dollar will be the choice. Dollar at the official window last week, exchanged for N415 while it currently exchange for N610 at the parallel market.
This, some analysts said will affect how the country access foreign loans especially when those that engage in vote-buying with dollars are both former and active top functionaries of the government.
Dollar rain was a feature of the last convention of the Peoples Democratic Party (PDP) and this is expected to advance when the ruling party, the All Progressive Congress (APC) hold its primary on Monday to choose its presidential flag bearer.
The resultant effects, analysts said, would heighten corruption, strain the foreign exchange management, further lead to devaluation of the naira as well as put the Central Bank of Nigeria(CBN) in a blank stare vis-à-vis local and international finance observers.
The presidential primary of the ruling APC is expected to be tensed following internal rancour, and the fact that the emergence of the flag bearer will be by consensus arrangement that is not favoured by many.
If history of presidential primaries is anything to go by, APC delegates at the Monday convention will still pose for dollars despite the fact that the party favours consensus arrangement. At the 2015 convention where Jonathan Goodluck emerged as the PDP candidate, each of the delegates reportedly collected $7,000
The APC primary is already seen as the last phase and the party delegates will, like their counterparts in the PDP, barter votes for dollars, having reportedly procured the delegate slot with as much as N5 million.
This practice may worsen the estimation of Nigeria which currently ranks five places worse on the 2021 Corruption Perceptions Index in 154th out of 180 countries, according to Transparency International(TI).
The apex bank had in July 2021 cancelled the weekly dollar sale to Bureaux De Change (BDCs), accusing the operators of facilitating graft and corruption in the country.
Recently, a human rights advocate and Senior Advocate of Nigeria, Femi Falana, had asked the CBN to provide details of measures used to curb ‘dollarization’.
The CBN Governor, Godwin Emefiele also had frowned at this growing practice of trading goods and services in foreign currencies instead of the naira in Nigeria.
Bala Zakaa, a Public Affairs commentator, reviewing the current political terrain, told InsideBusiness that the dollar rain in the parties’ primaries cast doubt on the credibility of the CBN and its roles among financial institutions globally.
Especially at a period when the naira had experienced its worst depreciation and devaluation.
“What the politicians have demonstrated is that Nigeria is not exactly a very poor country in terms of liquidity and financial resources. They have deliberately adopted a system where providing infrastructure and boosting the economy is not their strategy of acceptability before citizens. Rather, what they have decided to do is, because they know there is poverty in the country, to wait when there is a political era to bring out their monies, buy votes and the loyalties of Nigerians.
“But the most dangerous aspect of it is that based on what is happening, it will be very difficult for creditors to give loans to Nigeria or any financial support. This is because if we have these kinds of monies hidden by our political class, then it is very clear that all the loans we were going out looking for are not worth it. “
Zakka described as shameful the intentions of money-bag politicians to dole out dollars to win the patronage of greedy delegates to occupy public offices to serve Nigerians.
“The cost of the form for the expression of interest is more than two times a president’s official salary when he occupies the office. That is the shameful, terrible and disgraceful part because going for public office is not about serving the public and Nigeria for genuine service. It is just like I am looking for employment but the cost of the employment form will be more than two times my annual salary when I get that employment. Does it make sense? That is questionable.”
He pointed out that, based on recent development and what has happened, it was clear the CBN governor is a member of a political party and may not be aversed to the use of dollar especially by his colleagues.
“That was a dent and would remain a dent on the image and credibility of the CBN governor who has political affiliation as far as managing our fiscal and monetary policies.
A Lecturer of Economics at the University of Lagos, Babatope Ogunniyi, said the dollarization in the party’s primaries has not only encouraged corruption but the further devaluation of the naira.
He said, “A good number of the delegates that went for the party’s primaries were deceived. Some of them have had to pay as high as N5 million to get the delegate’s slot. Somebody told me that he used up to N5 million to bribe his way through.”
According to him, what has happened does have a debilitating effect on the Nigerian economy both in the immediate and long run.
He said, “The effect may not be instantaneous but it could take some time before it will be felt. When you make another country’s currency more domicile than yours, you are devaluing yourself as well as your currency.”
Ogunniyi, who believes that parties’ largesse or bribes could be given using naira denominations, said, “the naira is no longer accepted for kick-backs in some government offices”.
*Why can’t Nigeria learn from the Chinese who use their currency, Yuan, as a strong bargain? He said. “How can an aspiring president who will earn an N1.5 million monthly salary be able to recoup the money spent on nomination form let alone the overall campaign expenses, if not corruption.”
The naira has continued its free fall against the dollar in the recent past, coupled with a supply squeeze.
The President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, said the holding position of foreign currencies by most political actors to finance election activities was one of the illegal market behaviours in the market that come with the season of election.
“The season of election trajectory in Nigeria have always put serious demand pressure on the foreign currency resulting into currency substation, depreciation, speculation and a wider premium.
“It is indeed an act of economic sabotage and injurious to the local currency and the fragile economy.”
The consequences of such behaviour usually create a wider premium between the official and unofficial exchange rates leading to the high inflation rate, unemployment, dollarization of the economy and general public loss of confidence and depleting buffers, Gwadabe explained.
He noted that the CBN, over time, has always been proactive in ameliorating the situation in the past years, by collaborating with licensed BDC operators to induce liquidity and discourage hoarding and speculation that comes with the season of elections.
“However, it is indeed worrisome that this current season of election is berated of the existing collaboration between the BDCs and the monetary regulatory authorities and consequently the attrition of our local currency,” he lamented.
Comments are closed.