The more I watch Cardoso and Edun struggle to come to grips with the abnormal situation, the more I am convinced they are not the right men for this season.
First, I personally give them their due for at least hustling to find solutions. They are not just staying in their offices, crying or looking at the ceiling to divine answers from the silent ceiling. They are moving and throwing everything they can at the abnormality known as the Nigerian economy.
They have issued over a dozen new policies in less than a year, dropping one Ikoyi-minded policy one after the other at a dizzying pace, and sometimes the new moves contradict the previous ones. They never looked at their surroundings to know they are actually operating in a Fadeyi environment
Still, they keep moving and we have to respect them for that even you who grew up in Fadeyi can see that they are trying to operate with an Ikoyi mindset in the jungles of Fadeyi or the old Ajegunle
I like the economic Siamese Twins of Edun and Cardoso, but with their latest move of raising interest rates—the highest one-time raise Nigeria has ever seen (they raised rates by over 400 basis points!). It is clear they are out of their depth and have not yet understood that they are dealing with a kind of animal nobody taught them about in the Ivy League schools they attended. This is not the economics they were taught in their Kings College days. Nigerian economy is a class in Fadeyi economy now.
Nobody, when I was growing up, had too much money to chase any few goods. So when prices of Mama Ngozi’s Bournivita start going up anyhow, people handle the situation very differently. Instead of talking about theory, the elders of the street will have a meeting with people like “Brother Dada” as we call him ,who is like the wholesale supplier to Mama Ngozi and Mama Ramota to know what the hell is going on and why he is increasing prices anyhow.
If he cannot explain how his cost increased from yesterday to today to make him increase the wholesale price to Mama Ngozi the retailer, anyhow, they will burn down his shop or threaten to deal with his junior brother unless he reverses the price… and more often than not, he will
Someone should tell our economic czars they are not in Ikoyi anymore . They have entered the thickest parts of the Fadeyi jungle and need to wake up and recognize that their comfortable and predictable rules will not work here . Fact is APART FROM OTHER FUNDAMENTAL CAUSES, that I am not delving into in this piece, it’s also obvious some big players are holding all of us to ransom and instead of increasing interest rates, he needs to be getting his big boys with big muscles to go bring them to come and explain to Baba WhatsApp or ‘burn down their houses’ if they are not calming down.
Sure, these nice ajebota cultured guys are making moves, but they are all geared towards a NORMAL economist’s approach to normal economic activities. They see rising prices, so their ajebota brains identify inflation, and according to economic books, they think you cool down inflation by raising interest rates so it can stimulate savings, and reduce spending in the hopes that lesser demand or spending will bring down prices.
In Fadeyi, you don’t see inflation when prices just start rising anyhow, you see a seller about to make you and your children go hungry and you go on the attack against him or start shouting for the whole neighborhood to come and see the nonsense that Mama Ngozi is doing before you burn down her shop . Everyone then get involved and threatens to burn down her shop once it’s clear it’s profiteering going on, until she reduces prices. Problems solved
The posture of the fadeyi economist is different from the ikoyi one. They live in different realities.
Edun and Cardoso must flex their minds to the reality of our system where a few are holding us and the government hostage or leave the govt for baba to activate native-minded uncultured economists from the Fadeyi school of economics. Baba has them plenty too.
So far, all their moves are classic responses for an economy behaving in a normal way. They did not even see that we do not have normal inflation in Nigeria (i.e, too much money chasing too few goods).
In Nigeria, right now, what we have is too little money chasing too few goods and sometimes too little money chasing too much goods. I cannot say it is inflation, and I cannot say it is deflation. It has no name or definition in Harvard economic schools or in Ikoyi club discussions .
The Nigerian economy is sui generis, and it is time our economic leaders threw away their books and looked this thing in the eye and made some out-of-the-box moves to get it under control, or Zimbabwe here we come (sure, tell me that can never happen in Nigeria, you hear?).
How can anyone say we have normal inflation (that is a case of too much money chasing few goods) when salaries have been stagnant for years? Where the money people have to spend today, is LESS than what they had to spend last year. Even youth corpers used to be paid N33k, but most are now being paid N31k, if at all, according to my very recent research. So where is the ‘too much money’ chasing ‘few goods’ coming from for Cardoso to think it’s reducing the purchasing power of the people is what will solve it?
In fact, in some cases, we are having a weird situation of less money chasing MORE goods, but the prices of those goods are not going down according to normal economic imperatives. Instead, the prices keep going up!
My senior brother, Ola, an architect, keeps telling me there is plenty of rice in some place called Ogere or something, and he also mentions a few other places… and insists rice is not scarce. Yet, the price of rice kept going through the roof.
Someone just also said the same thing here, and some of us are jumping on them, but have you gone out to buy rice and didn’t see a bag to buy? So rice is not scarce. Yet the price keeps going up. Totally making nonsense of all the economic books we know.
We witnessed it live a few weeks ago where the CBN ordered ALL banks to sell their dollar reserves in the normal economist expectation that when they dump billions of dollars into the market, it will crash the exchange rate. Yet what happened? Exchange rates actually went up as more dollars entered it! And on The same day too! That is when I started having a headache.
This is not the economy people like Lord Keynes or Lord Malthus have ever seen before writing their economy books that Cardoso is still flipping to find solutions. This is a Fadeyi economy being manipulated by ‘Brother Dada’ and his paddies . It’s time the elders visit them or burn down their shops!
As crazy as it sounds, right before our eyes, our economy is totally defying economic logic. There IS rice everywhere, but the price of rice is rising instead of dropping, even when purchasing power has declined or not increased for most people.
So, a man stands at a store to buy a bag of rice with his N65k that he had that same morning for N64k. Without leaving the place, and without having more money in hand, the market owner answers the phone, then turns to him, and says, ‘the price is now N75k’.
How do you solve that kind of ‘inflation’ problem by increasing interest rates?
Seriously?
How can raising the interest rate even affect the spending power of people who never got bank loans or saved their money in the bank, to begin with? We all know our banks do not lend anyone money unless you know the MD or are a big conglomerate like Dangote, who saves nothing but borrows everything. How will an interest rate increase affect his spending?
It is a totally crazy scenario, and all these Harvard approaches or normal textbook responses are only going to make things worse. Mark my words unless these guys go native and start doing something really mad.
I do not have the answers myself, but I am sure the traditional approach will not work. There is nothing normal or traditional about what we are seeing.
My name is Ope Banwo . I am not an economist but I did grow up in Fadeyi
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