IMF role in the recent fuel subsidy removal in Nigeria

No matter how the Nigerian present economic team chooses to shade, equivocate or obfuscate it, International Monetary Fund (IMF) played a significant role, if not an upper hand in the removal of fuel subsidy in the poverty stricken Nigeria. It is no longer news neither is it a surprise that IMF has been interested in the removal of fuel subsidy since 2009. The evidence to this assertion has been littered everywhere especially in the public domain.

British Broadcasting Corporation (BBC) reminded us that “The IMF has long urged Nigeria’s government to remove the subsidy, which costs a reported $8bn (£5.2bn) a year.”  IMF has never stopped to meddle in the internal financial and economic affairs of the country in spite of the impression and double talk it has been making lately.  Nigeria’s economic team effort to obfuscate the matter is no longer functional.

The America's flagship newspaper, New York Times wrote recently: “In a 2009 report, the International Monetary Fund called the removal of the fuel subsidy “an important first step.” But in a place where experts estimate that $50 billion to $100 billion in oil revenue has been lost through fraud and that 80 percent of the economic benefit from oil production has flowed to 1 percent of the population, the monetary fund’s approval of a step that hits ordinary people so hard looks provocative."   The endorsement for the abrupt fuel subsidy removal without adequate palliative measures buttressed that IMF is clueless and at worst indifference on the level of poverty and depravity in Nigeria.

In the rush to appease the masterly IMF the Nigerian leaders failed to make a solid plan; which is to absolutely convince the poor masses before the subsidy removal with realistic and implementable palliative measures. The global news network CNN crisply described the removal of subsidy, “It is the abrupt removal of the fuel subsidy, in what has been described as a callous New Year's Day "gift" that proved unacceptable for many Nigerians. There has been intense speculation in the country that the decision came suddenly because of pressure from the International Monetary Fund. The announcement coincided with a visit to the country by IMF’s head Christine Lagarde weeks earlier."

The economic team of the present administration led by Dr. Okonjo-Iweala went before the country's congress after IMF’s Christine Lagarde visit to reassure them that Nigeria will not implement IMF's neo-liberal policies. But on the first day of January the removal of subsidy came suddenly. Nigerians protested not necessarily because they disliked the administration but for the rejection of the policy. The poor masses could not accept the jumped in price of a gallon of petrol from less than $1 to almost $4 in a country that seventy percent survived with less than $2 a day.  The decision for the removal is not logical knowing quite well that the masses are already deprived and barely surviving. It is beginning to look that IMF does not have compassion for the poor struggling masses of Nigeria. IMF history with Nigeria has been a historical annals filled with thorns of suffering and misery.

When IMF Managing Director Christine Lagarde came to Nigeria, instead of the Nigerian leaders and intellectuals to ask her to apologize to Nigerians on behalf of IMF for the austerity measures of 1980s and the subsequent deformation of the country's economy; rather they were busy praising her. She was also given credit for the so-called 18% write-off of the Paris club debt. The praise and credit should go to poor Nigerians on whose back the payment was made to rich syndicates of Paris Club in which the mountainous payment made was based on high interest rate and arrears accumulated by the outstanding debt. The provision of water, electricity, healthcare and roads were abandon in order to make the payment to Paris Club. The credit and heaping of praises should go to Nigerians not to IMF’s head whose highest priority is not on women and children who went to bed hungry.

No one is suggesting that a nation should abandon its financial obligations and deleveraging of its debt. But at same time a logical approach must be taken which is to put people’s welfare on account and not relegated it to the nadir level. Nigerian people should not be thrown aside to satiate international wealthy syndicates. After all, charity should start from home.

The implementation of IMF's Structural Adjustment Program with its austerity measures in Nigeria’s 80s and early 1990s comes with naira devaluation, importation restrictions and slash of social spending, that was too traumatic to be easily forgotten.  The negative adjustment in the economic outlook and wellbeing of Nigeria was expressed by Gideon Nylan, a writer on political economy of developing nations at Afripol, on which he painted the situation with this troubling description: "The Nigerian middle class has yet to recover from the IMF devaluation of 1986. Suddenly teachers, lawyers, doctors, and civil servants saw their life savings disappeared. In order to support their families and create a better living for themselves, they left the country for greener pastures in other countries."

In addition Nigerians have not wholly recovered from the aftermath of the implementation of the neo-liberal policies that separated families, worsen the health wellbeing of the country and totally demolish the educational sector that was starved of fund. The manufacturing sector that relied on the importation of raw materials closed down due to lack of import license and foreign exchange. The IMF's austerity measures spiked and induced higher unemployment and together with surging inflation rate made life unbearable for majority of Nigerians. Are Nigerians quick to forget?  Probably, the temporary amnesia has made them to be praising the visiting IMF's chief instead of asking IMF for reparation and apology.

A Nigerian government official was suggesting that the removal of subsidy was necessary to save Nigeria from not ending up like the bankrupt Greece.  But in reality and joke apart, Nigerians should be envious of Greece because in spite of the so-called debt problem of Greece, their lifestyle have not changed. Last time we checked there is still tap running water, 24 hours electricity and paved roads in Greece. Nigerians will not mind having all the social amenities, social safety nets, security enjoyed by Greeks even together with its debt.  Many Nigerians may be willing to trade places with Greece if asked.

Nigeria should work with IMF when she deems it necessary and there is no reason to be genuflecting and kowtowing. Nigeria has produced capable men and women that have the ability, intellect and potential to salvage the sinking country. IMF should not be adding sand to the garri of nation struggling to determine her destiny.

African National Congress made it to 100years... it was no easy journey

As racism and oppression against Black Africans gained momentum in the newly established Union of South African, Pixley ka Isaka Seme a visionary leader in 1911 appeal to all non- European ethnic groups in South Africa to unite together. Pixley ka Isaka Seme rallying words - "Forget all the past differences among Africans and unite in one national organisation" led to the formation of the African based liberation organization named South African Native National Congress (SANNC) at Waaihoek Wesleyanchuch on 8 January 1912. The first elected president of the newly formed organization was John Dube and with company of many intellectuals including Sol Plaatje, an author and a poet the fight against racism and oppression took a more focused dimension.

South African Native National Congress (SANNC) was later renamed African National Congress (ANC) in 1923. With promulgation of Apartheid system of government, African lands and Rights as citizens were taken away. The struggle for gaining of full rights of South African citizenship was not an easy struggle and there were many lows and highs encountered by ANC. But one of the greatest achievements of ANC was internationalization of the struggle that made the civilized world to come together and to reject apartheid government of South Africa. It was not an innocent and bloodless struggle for many lives were lost, properties destroyed and the innocence of a nation was lost forever.

Chiefs, churchmen and a lawyer met at the Waaihoek methodist church in Bloemfontein, and the founding South African Native National Congress (SANNC), the forerunner of the ANC, is born. John Langalibalele Dube, centre, is the first president.  Pic: creative commons- Wikepedia

Among the lowest points in the struggle was 1960 Sharpeville massacre of young people and this buttressed to the world how ruthless and cold the system was. Karen Allen of BBC news recalled the massacre with this chilling description: "Thousands of protesters had gathered in Sharpeville, just south of Johannesburg, to protest at the use of the infamous passbooks, or "dompas", that every black South African was expected to carry and produce on demand. It governed a person's movement, was a tool of harassment and was one of the most hated symbols of the apartheid state. Sixty-nine men, women and children were gunned down on that day, killed when police officers opened fire on the crowd. The police station - where they had gathered - is now a memorial to the dead."

The highpoint of ANC struggle was the unbanning of ANC and the release of political prisoners including Nelson Mandela, Walter Sisulu and many others from the famous Robben Island prison. The climax of the ANC struggle was the releasing of Mandela and his subsequent election as the first Black president of non-racial South Africa in May of 1994 after spending 27 years in prison. The ANC as a political party and liberation organization deserved the greatest praise and acknowledgement for the defeat of apartheid South African government and its management of victory. To the credit and maturity of ANC victory became the univeral freedom for both the oppressed and oppressor,  white and black, poor and rich.

ANC celebrates 100yrs

There were also unsung heroes, men and women of goodwill all over the world that never sleep nor stop fighting until the evil apartheid was declared death and irreversible. It was truly a collective effort of the good people of the world that refused to be quiet that eventually brought about the collapse and eradication of apartheid.

There has been successful transfer of power since President Mandela has been at herald affairs in South Africa. And each of the successive presidents has done a fairly decent job in trying to right the wrongs of the nation without upsetting the system. Although some will not evaluate it in more positive light given the quantity of poverty in the country, others may even accuse them of being timid and have lost their focus and direction. But all things being equal, it can be a delicate dance being that the majority poor Black masses are hurting but at same time the minority whites were engulfed with fear and anxiety.

The president that came immediately after Nelson Mandela was another intellectual and financial guru named Thabo Mbeki; he was good with the economy. Mbeki appointed both black and white technocrats to his government including the finance minister Manuel Trevor, that helped him to balance the budget and rein in spending. Mbeki appointed Tito Mboweni as the governor of the Central Bank of South Africa, who kept the rand currency healthy and strong, while at same time held down inflation. Mboweni tenured at the South African Reserve Bank was a success story for his monetary policy application reassured investors and business community.

AFP/Getty Images

The current President Zuma has shown a great leadership especially in the economy and management of emerging social crisis of restlessness among the youths. Due to his radical days during ANC struggle, many people were worried especially business community that he has socialistic inclinations. But to the surprise of many he is relatively conservative in spending and economic management. He held down inflation with the spearhead of good fiscal policies and the appointment of Gill Marcus, a conservative financial banker as governor of the Reserve Bank and this has solidified Zuma's new found fiscally conservative principle . Under the leadership of Zuma, South Africa has become the latest member of the BRICS - a powerful trading organization of emerging super nations. South Africa is also a member nation of G-20, the only African member of the esteemed group.

Thabo Mbeki Pic:EPA

With resolute and confidence, ANC has matured into a ruling party from their victory and has shown a great ability to lead a multi-racial South Africa. Nelson Mandela, the conscience of the struggle deserved a great respect and honor on the way he directed the affairs of the nation as the first Black president of South Africa. Mandela displayed of no remorse and bitterness to his fellow South African whites was a mark of maturity and statesmanship rarely seen in the annals of history. He taught the world that peace-making is a virtue and the once enemies can co-exist together and peacefully sought out their differences and work together to build a peaceful and prosperous nation. It has not been easy but the legacy he put forward has become a foundation for building a great, non-racial and prosperous South Africa.

With freedom and victory comes great responsibility. ANC cannot afford to sit on its laurels for as the ruling party it has a daunting task of rewriting the wrongs of yesterday. This is an enormous task because of how sensitive and delicate racial relationship in South Africa has become. The liberated Black majority has been overwhelmed with poverty and depravity rooted in the defunct apartheid structure, while whites were riddle with guilt and anxiety on the apparent loss of their ruling class status. ANC as the governing party together with the government leadership needs a strategic outlook and plan to successfully tackle and solve the problem.

Jesse Jackson of the US (C back) stands behind South Africa President Jacob Zuma

Democracy is an expensive form of government and it is not sustainable in a sea of poverty. South Africa under the leadership of ANC has demonstrated that it has the potential to become one of the richest nations under the sun. And the nation of South Africa can lead Africa to a better tomorrow. This is not the time to allow internal bickering to get hold of ANC. The greatest advantage ANC enjoyed is that it has men and women of goodwill that believes that Africa can rise again and become a productive continent that can determine its destiny without begging for a handout. ANC is strategically position to change not only South Africa but the entire continent for good. That must be the desire and vision of ANC, therefore ANC should provide the moral compass to a great nation and a great people.

ANC does not have the time to be timid, visionless and to wallow in corruption because if it chooses to go slow, the people of South Africa will not accept it. Only time will tell whether the blood and sweat deposited in the bank of liberation is redeemable. Happy 100 years anniversary!!!

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa. http://afripol.org

Standard & Poor's ratings agency moves higher the Nigeria's economic outlook from stable to positive

Standard and Poor's (S&P) the compassing powerful rating agency brought a smile to the faces of President Jonathan's economic team by lifting the country's credit rating from stable to positive. According to AFP news agency, "It also reaffirmed its B+/B long- and short-term issuer credit ratings for Nigeria, the continent's most populous nation."  This is a good news for President Jonathan and his economic team principally  Dr. Ngozi Okonjo-Iweala, Minister of Finance and Lamido Sanusi, Governor of the Central Bank of Nigeria (CBN), the country apex reserve bank.

This upgrade of the country’s economic outlook to positive will enable the country to continue with its on going reforms and to justify the removal of fuel subsidy. The country‘s administration can use it as a leverage to assure investors and capitalists that the country is moving in affirmative direction.  The Nigerian economic team will be strengthened on its battle against the rising inflation and the softening of naira.

Inspite of the security and social problems confronting Nigeria, including the Boko Haram endless bombing and the looming removal of the fuel subsidy the premier credit rating agency S&P still has faith in the country's economic outlook and the on going reforms by President Jonathan 's administration. The agency reiterated that, "The Nigerian government under President Goodluck Jonathan has been undertaking several important reform initiatives and is tightening its fiscal and monetary stance,"  and continued to emphasized that the "The authorities have restructured and strengthened the banking sector, and we expect economic growth to remain strong. We are revising our outlook to positive from stable ..."

L-R Madueke, Okonjo-Iweala, Sanusi

AFP agency further reported that, "Economists and government officials view the move as essential to allow for more spending on the country's woefully inadequate infrastructure and to ease pressure on its foreign reserves.Nigerians however view the subsidy, designed in part to hold petrol prices at 65 naira per litre ($0.40, 0.30 euros), as their only benefit from the nation's oil wealth.Nigeria's central bank head Lamido Sanusi has also led sweeping bank reforms seen as having pulled the sector out of crisis. Finance Minister Ngozi Okonjo-Iweala is a highly respected former World Bank managing director. However, the country has also seen worsening violence blamed on Islamists and warnings from the Christian population that they will defend themselves against further attacks. Standard & Poor's noted concerns over the situation.Nigeria relies tremendously on the oil industry for revenue, and the ratings agency pointed out that crude exports accounted for 72 percent of current account receipts in 2010."

This endorsement from S&P is goodwill gesture to the country’s administration that has many challenges coming its way. Most especially the Boko Haram's nightmare and its determination to shake and destroy the stability of the emerging economic power of this West African nation. The rampant, senseless and ceaseless bombings from this radical organization pose a great threat to the security and wellbeing of the nation. And without relative peace and stability; ample and comfortable environment the flight of capital and investment becomes more imminent. Therefore the upgrade is an approval by S&P on the monetary and fiscal policies employed by the administration to grow and stabilize Nigeria's economy.

DR. ALIKO DANGOTE: AFRIPOL PERSON OF THE WEEK

Aliko Dangote is the brainy Nigerian based entrepreneur, the founder, CEO and president of Dangote Group. He is an industrialist, a manufacturer of commodities principally food and cement. The head office of Dangote Group is in Lagos, Nigeria but company's prowess is felt across Africa and beyond. Dangote can be described as the King of cement industry due to his vast, enormous and extensive investment in cement manufacturing throughout Africa.

No other Nigerian has done more than Alhaji Aliko Dangote for entrenchment, consolidation and promotion of capitalism, market economy and free enterprise particularly in Nigeria and Africa in general. With his industry, business acumen and dedication comes a great dividend and returns that has made Dangote the richest man in Nigeria and Africa. The world renowned capitalistic magazine Forbes has quantified his personal wealth at a tune of $10.1 billion and that is not bad at all for a person who started a business from a loan he got from an uncle. For his vanguard in business and investment in Nigeria, President Goodluck Jonathan awarded him Grand Commander Order of Niger,GCON, which he richly deserved and merit.

Forbes wrote that the "Nigerian commodities titan Aliko Dangote is also Africa's cement king. In late 2010, he listed Dangote Cement on the Nigerian Stock Exchange. The company integrated Dangote's cement investments across Africa, including Benue Cement, formerly listed on the Nigerian Stock Exchange. It's now the largest company on the Nigerian exchange, with a market capitalization of $10 billion. In August, Dangote received approval from the Central Bank of Nigeria to invest $4 billion to build a new cement facility in the Ivory Coast. He's also building a $115 million cement plant in Cameroon, and owns plants in Zambia, Senegal, Tanzania and South Africa, among others. Dangote started trading commodities more than three decades ago after receiving a business loan from his uncle. He then built the Dangote Group - a leading West African conglomerate with interests in cement manufacturing, sugar refineries, flour milling and salt processing. Venerable philanthropist has given away millions to education, health and social causes."

President Jonathan decorating Dangote with award

The great thing about Aliko Dangote is his commitment to Nigeria and Africa. Most of his investments are in Africa and with that he has shown that Nigeria and other African countries can be lucrative for investments due to large returns from them. Dangote is the largest private employer of labour in the continent and jobs given has aided to slow down rampant unemployment facing Nigeria and Africa. This has given hope to the youths and has sown the seed of fruitfulness in the emerging economies of Nigeria, Senegal, Zambia and many others in Africa. Dangote can now become a tril blazer, a role model to aspiring business executive and many rich Africans that they can invest in Africa's market. Dangote is the greatest rebranding that Nigeria needs because he has shown to the whole world by his handwork and patriotism that Nigeria and indeed Africa are ready for 21st century, that a century of innovations and possibilities can be spearhead by Nigerians and Africans.

For his unflinching patriotism, business commitment and investment in today and tomorrow’s Africa's, the board and staff of Afripol Organization chose the business giant and magnate ALIKO DANGOTE, THE PERSON OF THE WEEK.

As CBN raises Benchmark interest rate to 12 percent, inflation rose to 10.3 percent in September from previously 9.3 percent in August

Once again at the beginning of fourth quarter, the country’s Federal Reserve Bank; the    Central Bank of Nigeria (CBN) raises the monetary policy rate (interest rate) to a new high of 12 percent from previously 9.25 percent. There is no surprise with the new hike knowing quite well that CBN has been aggressively engaged in the tightening measures of its monetary policy and assiduously mopping the monetary base liquidity. But the margin of the hike at 2.75 percent from the previous rate was astounding. The capital market was anticipating at least a 10 percent hike but the muscular CBN jumped interest rate to 12 percent.

The reason given by the Governor of Central Bank, Mr. Lamido Sanusi  for the hike was to strengthen the relatively malleable Nigeria’s currency naira. Although naira is weakening but it is not necessarily in a dire straight either it is totally collapsing to require such a drastic hiking of the interest rate to 12 percent. Subsequently Naira responded and appreciated against dollar due to the aggressive move; it did rally in the market and closing good the next day after the hike of the interest rate.

Vanguard Newspaper reported that “naira opened at 157.40 against the dollar at the interbank, firming from Tuesday’s close of N158.90 and up six percent from the record low of 167.8 reached before the CBN imposed several monetary tightening measures at an emergency meeting on Monday.” It was reported that Central Bank of Nigeria (CBN) at auction market sold $519.67 million at price rate of N150 for a dollar. On the previous day before the recent interest rate hike $400 million was traded at N156.91.

Other than the strengthening of naira, the unmentioned reason for the interest rate hike might be to get the economy ready for the removal of fuel subsidies. The idea is to utilize the monetary tightening policy as bulwark from the eventual higher inflationary trends as the subsidies are removed.There is no doubt that inflation will spike momentarily for a short time as fuel subsidies become history. Although Sanusi’s CBN was mum on fuel subsidies as propelling force for 12 percent monetary interest rate, but the writing is on wall. The development buttressed that the removal of fuel subsidy is a sure banker and there is no more orbiting around it, the government has finally made up its mind.

But the move to fix naira from its fall by CBN is not sustainable for the ‘shock therapy’ cannot solve the problem of naira permanently. The Sanusi’s CBN appears to be riding on momentum rather on fundamental; Nigeria has a structural imbalance that the tickling by CBN is quite minuscule to make a long term impact on the monetary affairs of the country and the strengthening of naira. Nigerian economy is based on oil and such an economy without diversification lacks the strong fundamental to sustain a viable and strong currency. When Nigeria sits up and makes the necessary changes in the way she runs her economy, the malleability of naira can be checked. The reactionary posture by policy makers is not the panacea to the falling naira.

CBN's Sanusi

The source of foreign exchange to Nigeria’s economy is limited. The major source of dollar to the economy is through the export of crude oil and remittance coming from Nigerians in Diasporas particularly from North America.  Another weakness in the economy is its inability to sustain or hold to those dollars flowing into the economy. This is because the economy and country lack the necessary infrastructures that can hold on to the dollars in the economy. Paucity of social infrastructures, poor security and underdevelopment contributes to capital flights. The country is becoming unattractive to foreign investments and dollars.

The problem with Nigerian economy and particularly with Naira is akin to football team that never soccer a goal in matches and always loses due to lack of training and planning.Although a team might have some good players but without training, planning and coordination it will never succeed. Nigeria has intelligent men and women but it has failed to map out a pragmatic and strategic framework to transform the nation’s economy.

In September inflation rose to 10.3 percent and this shows that the tightening monetary measures employed by CBN maybe waning. There is so much CBN can do with its monetary policy and if care is to be taken the success that CBN achieved may even reverse. This is why it is important that propping of naira and the battle against inflation must come with comprehensive strategy and economic reforms spearheaded with the executive fiscal policy.

Another thing sticking out with the 12 percent hike is the underpinning contradiction coming from CBN policy makers. The appreciation of naira will result in a sharp demand of dollar and CBN may not satisfy the demand. A contradiction that arises from the strength of naira is contrary to devaluation of naira that CBN is planning for near future. It is not logical to make naira stronger, simultaneously planning to devalue the currency in near future. The withdrawal from the country’s foreign reserve to defend naira has lowered the Nigeria’s reserve from $31.75 billion at the end of September to $30.86 billion as of October 7. The battle to save naira is expensive to the country therefore Nigeria must look beyond monetary tightening measures.

Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa. http://afripol.org/     This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Nigeria's inflation drops to 9.4% in the third quarter of 2011

A good and encouraging record trickled from National Bureau of Statistics that inflation rate receded to 9.4%  in July, the lowest so far in three years. This is a significant improvement from persistent inflation that was surging upward that compelled the Central bank of Nigeria (CBN) to aggressively tighten monetary policy. As of June the inflation rate stood at 10.2% and this made the Sanusi's CBN to raise the interest rate to 8.75%. There is no doubt that the monetary policy of restraining and mopping up liquidity at the monetary base aided to slow down the rising inflation.

The governor of Central Bank of Nigeria, Sanusi Lamido has promised earlier to hold down inflation rate at less than 10%, but for a while it appears futile. Therefore the apex bank of the land, CBN gets into muscular mood by increasing the interest rate at numerous times to rein in the run away inflationary trends. Many observers of Nigerian economy and market including investors were little skeptical about the usage of the aggressive tightening of the monetary policy to achieved the targeted goal.

Financial writer at Thisday, Obinna chima observed that, "The CBN had always expressed disdain for double-digits inflation rate in the country. This has seen the apex bank’s Monetary Policy Committee (MPC), adjusting various monetary policy instruments to achieve that ambition. The MPC which has operational independence in setting of interest rates in the country had increased the benchmark interest rate – the Monetary Policy Rate (MPR) four times since this year. The benchmark interest was raised from 6.5 per cent in January to 7.5 per cent in March, 8 per cent in May and to 8.75 per cent at the July meeting. Other monetary policy tools such as Cash Reserve Requirements (CRR) had also been reviewed upward."

In reality the issue of taming inflation in Nigeria must go beyond monetary policy but should involves the presidency's fiscal policy to help in the struggle to control inflation. Central Bank of Nigeria should be probably elated with the recent development as inflation now stood below 10% but the struggle is not yet over. The increasing of interest rate to dry up the market excessive liquidity in order to achieve the desired goal of restraining inflation may have a reverse effect at some point. As the interest rate increases it will dampened economic growth by making the availability of credits and loans to tighten. The scenario may once again usher in credit crunch and the financial flow of liquidity in the capital market. This is not the result that CBN is trying to achieve, that it is why a comprehensive outlook is needed to continuous wrestle down inflationary trends.

The economy is cruising at 7.9 - 8 % and that is phenomenal by any standard. The growth must be jealously protected from the rising inflation that can quickly dent the economic growth and reverse the trend. The injections of surplus money into the circulation by the bailing out of the failed banks have in the past contributed to inflation. The continuous and excessive borrowing by Nigerian government by selling of the bonds must be done in way that too much money will not overheat the economy. Nothing is wrong with a country selling bonds and T-bills to investors but the raised funds must be diligently funneled into the economy by the way of investments.

Another methodogy that can be used to checkmate inflation is for Nigeria to live within its means. By this a planned budget must be sensible and it must be successfully implemented. When a government dabbles into excessive spending that will increase its current expenditure and in the long run have untold consequences. The ramifications may come in the retarding of the economic activities and the surging of inflation rate due to excessive liquidity in the market. When Nigeria lives within its means, there will be no need to aggressively raise the interest rate to combat inflation.

When the interest rate was raised to 8.75% at end of CBN's Monetary Policy Committee (MPC) session, it issued a statement that, "The Committee observed that the inflation outlook appears uncertain owing to the expected implementation of the new national minimum wage policy and the imminent deregulation of petroleum prices. Significant injection of liquidity from FAAC in the third quarter coupled with the impact of AMCON recapitalizing intervened banks to the tune of N1.6 trillion will both add to inflationary pressures." That is supposely the case but it is not the whole story; the excessive government spending and borrowing played a role to the state of inflation.

Investment in this case means to put money and resources on things that will enable the creation of wealth possible. Investments should go into the provision of infrastructures and social amenities that are needed by the citizens and capitalist for further creation of wealth and upliftment of the wellbeing of the society. The Nigerian government should do its best possible to provide electricity, good roads and security. The security in this case becomes imperative for the protection of life and property, which is the most important function of a given government.

But there are also coming attractions to the economy according Samir Gadio, an emerging markets strategist at Standard Bank Group Ltd that makes outlook on inflation “uncertain.”  Those coming attractions include the doubling of "the monthly minimum wage to 18,000 naira ($116) and to deregulate fuel prices, central bank Governor Lamido Sanusi said last month. Core inflation, which excludes food, will probably accelerate in the second half of the year." These activities have the propensity to increase inflation.

Nigeria must look into the cutting down of importation of food commodities especially rice that can be grown in Nigeria. The less reliance on importation, less spending and less borrowing can bode well for a sound economic standing devoid of higher inflation.

The Rising Inflation Rate contradicts CBN policy and its measures

The report coming from National Bureau of Statistics (NBS) is not a good news for Central Bank of Nigeria (CBN) because the inflation rate was reported at 12.4 percent. The recent numbers from NBS have shown that inflationary trends are not cooling down but rather are surging. The composite Consumer Price Index (CPI) stood at 12.4 percent; CPI is used to measure inflation level in the country. This is disappointing phenomena because it does not bold well neither it is conducive for economic growth. While inflation rate of month of April was 11.3 percent, the increasing rate of April has shown that CBN may be losing the battle at arresting the inflationary enemy as they promised.

The tightening of the monetary policy maybe losing its grove, and it is beginning to look that it is beyond the power of CBN's application of monetary policy that comes with tinkling of the interest rate to reduce inflation. The usage of interest rate tinkling to control inflation may has limited effect and maybe waning. Nigerian economy has structural problem that must be corrected to be able to control inflation. The importation of essential commodities with its rising prices and the rising prices of food, petroleum and accommodations are causing the rising inflation.

Obinna Chima, financial Reporter at Thisday wrote, "Worried by rising inflationary pressure in the country, the Monetary Policy Committee (MPC), which is chaired by the CBN Governor, Mallam Sanusi Lamido Sanusi, had surprisingly raised the Monetary Policy Rate (MPR) from 7.5 per cent, to 8 per cent at its last meeting. The Committee which also lifted the Cash Reserve Requirement (CRR) had expressed its desire to battle inflation which has stubbornly remained at double digits, to single digit rate.

Most analysts attributed the hike in inflation to the rise in price of some household items, building materials and rents. They specifically pointed out that the high cost in kerosene and diesel contributed to the significant rise recorded in the CPI."

National Bureau of Statistics (NBS), "The urban ‘All Items’ monthly index rose by 0.2 percent while the corresponding rural index rose by 1.5 percent when compared with the preceding month. The year-on-year average consumer price level as at May 2011 for Urban and Rural dwellers rose by 11.5 and 13 percent respectively.

"The percentage change in the average composite CPI for the twelve-month period ending May 2011 over the average of the CPI for the previous twelve-month period was 12.6 per cent. This was slightly lower than the figure for the preceding month. The average monthly food prices declined by 0.3 percent in May 2011 compared with April 2011 figure. The level of the Composite Food Index (CFI) was higher than the corresponding level a year ago by 12.2 percent."

Nigerian government has been increasing spending while at same time having large trade deficits with some trading partners due to increased spending and importation. Another source of the rising inflation may come from the massive and continuous borrowings of the Federal Government of Nigeria. Nigeria has been borrowing heavily lately in order to finance the rebuilding and renovations of infrastructures.

The myriad issues that contributed to the rising inflation including the massive amount of money injected into the circulation to ease credit crunch. The recapitalization of the failed banks and the buying of the toxic assets of the failed banks introduced equally a large sum into the monetary base.

The scarcity of petroleum products especially kerosene with the long queuing lines in Lagos and rest of the country has brought about hoarding and subsequent higher price. The refining of oil outside Nigeria and importation of petrol at this era of the global rising prices of petroleum are major contributing factors to inflation. Things of these nature and others are triggering higher inflation rate and rising inflationary trends.

The Time has come for an African to head IMF

With the demise of the Managing Director of IMF, Dominique Strauss-Kahn who has just resigned his position due to alleged sexual rape, the momentum is gathering for the job opening to be filled. This time around the Bretton Woods institute that has always European and American boss may be willing to widen its scope of its applicants. Emerging nations are asking that the position of managing director to be filled by one of them. The time has come to give an African a chance to lead the organization at the dawn of 21 century.

 African nations including emerging and developing nations grip on IMF are getting stronger. According to Dr. Jason Wingard, Wharton school of the University of Pennsylvania, " Based on IMF statistics, voting blocks are changing -- largely due to economic shifts in global production. For instance, the European Union's voting block percentage for its 27 member countries will drop from 32.4% to 29.4% after post-2010 reforms. Developing countries will have a combined voting block that is almost 8% larger than European nations. If the next managing director is elected rather than appointed, over two-thirds of post-2010 reform votes will be cast by non-European Union countries' representatives."

This is a good sign which bodes well for global financial and economic integration. It shows that in the changing world that developing and emerging nations will have a say in making of monetary and economic decision that effect the entire global village. With the rising and ever increasing power of China and India it is logical that a house of IMF is rearrange and has them and others accommodated.

IMF a lender of last resort mostly caters to developing nations of southern hemisphere and has a stronghold in Africa due to increasing integration of the continent to global economy as its share of global economic activities gets stronger and bigger with increasing GDP.

Economically, Africa is the fastest growing landscape at above 5 percent. The economic outlook for Africa is encouraging and on its recent report IMF states that, " Sub-Saharan Africa’s recovery from the crisis-induced slowdown is well under way, with growth in most countries now back fairly close to the high levels of the mid-2000s. Growth this year is expected to average 5½ percent, and 6 percent in 2012. "

Ex-IMF Boss Dominique Strauss-Kahn with a group of African ambassadors and diplomatic representatives

To encourage the continent of Africa for its economic gains and progress is to have Africa produce the managing director of IMF at this point in time. An African leading the powerful institute is a sign that world is serious of bringing in Africans at the table where big deals and decisions are made.

It is not a news anymore neither it is a secret that Africans were not happy with application of the pre-lending requirements before funds were released to the nations of Africa. The criterion that comes with austerity measures embedded in structural adjustment program sapped and arrested African economic development in 1980s and 1990s. The position of IMF boss for Africa will be a compensation and recognition of African endeavor to overcome past mistakes by IMF in Africa.

One great thing of having an African as an IMF chief is that its neutrality in dealing with China and the West will be good for the global economy. The issues of trade deficits, currency assessment and debts will be deliberated with an African in neutrality.

The reclaiming of Nigerian and African dignity

The value and worth of a currency is determined by the wealth of a nation. In this era of global capitalism, a wealth of nation goes beyond the conventional valuation based on the natural and human resources. A nation’s image, perception, security and stability also played an important role in the determination of a nation’s wealth. Therefore currency and its value become the bellwether and principal indicator of the economic status and financial wellbeing of a given nation.

The principal factor in a currency regulation and determination is rooted on the forces of supply and demand, most especially nations that are exposed to global trade and currency transactions. Most currencies are not rigidly fixed but are allowed to float and checkmated by the forces of the market. The gold standard that was tied to a currency has been abandoned and determination of a currency was replaced by the forces of the market and the wealth of a nation. A currency is more than medium of exchange, for a currency is principally used as a settlement of debt both domestic and international.

A wealth of a nation consist of its currency backed by the size of the economy (GDP) which includes of course the natural and human capital, credit worthiness and the debt of a nation.

International Monetary Fund (IMF) an international elite organization is empowered by the member nations to be advisory regulatory of the financial wellbeing of the global market economy. In this case IMF becomes a watchdog to the financial and economic standing of nations, more or a less a financial policeman that can bark but sometimes it can also bite. The later became functional and operational when a nation seeks the aid of the Brentwood institute for a financial counsel and credit due to economic hardship. In this case a nation invites the financial entity and it will come and rearrange the financial house before it accept to help the host. Sometimes IMF can interject without invitation on the grounds of doing public good and protecting the world from financial and economic pandemonium that comes with great recession and sometimes depression.

Never for one second believes and accepts the propagated notion that IMF is just only a financial institution devoid of politics, the whole truth is that IMF is also a political institution. Political economy is bedrock of economic evaluation and determination of a nation’s wealth. Advanced nations have more clout before IMF more than developing nations of south of the hemisphere especially countries of Africa. IMF bureaucrats can prescribe some conditions and criteria to African member nations and the implementation may cause unforeseen hardship but those policies will not be accepted by the more powerful economies of northern hemisphere. The less developed nations bear the brunt of IMF overwhelming control and intimidation.

With this in mind, let’s reflect on Africa of 1980s that ran to IMF for financial bailout due to economic hardship and a laden-back breaking foreign debt caused by herculean mismanagement and corruption. Those were days of capital flights, military coups and political instabilities in Africa. The African dictators asked for credits from international financial institutions but they were directed to go through IMF. The ramifications of the emitted IMF’s austerity measures that come with currency devaluation on African nations brought economic collapse of the continent. There were massive unemployment and brain drains that decimated African economic outlook and prospect. Prices of essential commodities rose beyond the affordability of an average African.

African producers and manufacturers import most of their raw materials with devalued currency and subsequently higher price of dollar makes it impossible to continue production. Literally and figuratively Africa was in mundane hell endowed with higher and rising inflation. The prices of cash crops produced by African countries nosedived because they were instructed to devalue their respective currencies. The once respected and dominant naira was so devalued that many companies went bankrupt with red financial balance sheet. These were the prescriptions given to powerless and poor nations of southern hemisphere.

Most African nations were not producing materials and commodities for export but rely on one or two cash crops for making of small foreign exchange and these nations are receptors of donations from abroad donors to balance their budgets. Therefore what is the meaning and logic behind devaluing their already weak currencies that were streamlined by inflation and political instability? Instead of any gain, it brought about the crash of the currencies that brought stagnation and hyperinflation together with malnutrition and penury in Africa.

The connected and acceptable African economists and government bureaucrats who were anointed by IMF elites were the mouth piece of the goodness of currency devaluation and austerity measures. The government was asked to reject welfare state, therefore to cut down on spending and to remove subsidies from the essential commodities that the poor needed for survival. The IMF Ivy league elites and their puppets have no meat in what is happening to Africa, it is all about policies and economic theories and experiments on Africans. Our leaders were intimidated to challenge those unproven economic theories; moreover African dictators do not want to rock the boat and asked about their democratic credentials. Can IMF point to any success story that came out of Africa as a result of their economic and financial pills it prescribed to Africa?

Then comes Nigeria of 1980s, she has no business asking for help from IMF but she did and she paid dearly for it. Nigeria in 1980s could not acquire credit lines for international transactions due to her weakness in serving her debts and foreign obligations. Nigeria an oil-rich nation has no reason to fall behind in her financial obligations and payments of her foreign debts. But inertia, mismanagement and corruption had claimed a large chunk of her operational and financial integrity.

Today’s Nigeria is the one that can say no to IMF and tell the global financial elites that they do not need them. The country’s economy is growing above 7 percent for more than two years. The country is relatively at peace with an economic expansion of 7.8 percent that is the envy of the whole world. This is not to say that Nigeria is perfect and has reached economic zenith but presently Nigerians are serious about building a strong and prosperous economy. Nigeria is committed to democracy and capitalism, with the successful concluded election the prospect for greatness is geometrically growing.

Therefore for IMF to lately ask Nigeria to devalue her currency is just another gimmick to slow the country down and to control the destiny of the nation. Nigerians and Africans must refuse to be used as a Petri dish for IMF vexing theories. Therefore Nigerian financial actors at CBN and at ASO Rock have done the country well to tell IMF to leave naira alone.

IMF comes with depressing forecast of lower productivity and higher inflation

There is no doubt about this assertion; International Monetary Fund (IMF) is adamant and committed about being an important entity on Nigerian economic and financial scene. IMF the self-appointed chief financial adviser to Nigeria has made its annual econometric forecast on country’s economy. IMF the bearer of the depressing news is predicting that Nigerian economy will slow down from its above 8 percent growth to 6.9 percent, thus resulting to a GDP lowered by 17.9 percent. Still on the bad news IMF said the economic slowdown will be accompanied with higher inflation.

IMF do not produce any commodity or provide a recognized service that contribute to growing of the country‘s economy. Rather IMF officials have managed to have the ears of the managers of the economy simply on the ground that it is a global monetary and financial institute. But Nigeria must ask herself what has IMF done for her lately.

What has IMF done for Nigeria? That is an easy question to answer; lately IMF has advised Nigeria to devalue her currency naira without giving a logical reason for their advice. For naira that is already weakening by rising inflation to be devalued is for Nigeria to be inviting economic woes voluntarily. Nigeria with undiversified economy with crude oil as a major export to venture to the path of currency devaluation is trekking to road of higher inflation, higher prices of essential commodities and slows down of economic output.

IMF assertion and extrapolation on the Nigerian economy was not elaborated with a particular point of view, principle, proofs and genesis of the declaration. On what logic and economic basis are the elites of IMF making this forecast? This is not to cast a doubt or a shadow on their forecasting, but economics is not based on natural laws because it is a social science. In econometric forecasting nothing is written on stones due to the malleability of economic principle, therefore there is a quantifiable probability that IMF forecasting may not come true.

Nigerian economic and financial gatekeepers must take this with a grain of salt, as an opportunity to review their economic inventory and make necessary adjustments where needed. But one thing that they cannot afford to do is to swallow it as a given, without ready to make their research and analysis. Nigerians must not say ok! And sit down waiting for the rough times to come. The country must be pro-active and be in charge of their economic destiny not waiting for IMF to tell them what to do.

The point must be made perfectly clear that Nigeria should listen to IMF by separating the grain from the chaff. In some aspects of Nigerian economy IMF has some good points. In terms of cutting down on spending and slowing down on the excessive borrowing, there are truths to that. But in some cases when rising spending becomes inevitable as resources are being invested on the people with regards to providing education facilities and social infrastructures, then it will be a return that will eclipse the down side of increasing spending. There are investments on the society and the people that may have short term effects including budget deficits but at the long run it will aid to strengthen the nation by increasing productivity and wellbeing.

L-R: FINANCE MINISTER, DR OLUSEGUN AGANGA AND CBN GOVERNOR, MALAM LAMIDO SANUSI

Instead of IMF over emphasising about economic slowdown in Nigeria, it should also look at the positive development and growing maturity of the country. IMF can put more emphasis on the economic correlation between increasing investments and good elections. IMF can use their global megaphone and tell the rest of the world that credible election held in Nigeria shows stability and continuation, that Nigeria is truly ready to do business with world. That can help to attract foreign investments thus averting economic slowdown.

 IMF should and can significantly impact the country positively by counseling Nigeria on how energy conservation and its availability can help to checkmate inflation and trade deficits. When Nigeria has ample electric energy to operate their local industries that can ultimately aid to retard and stop excessive and unnecessary importations.

The point to be made is that IMF can go beyond the gateway of financial control. But also IMF can enhance its responsibility as a financial disciplinarian by becoming a cheerleader to a documented progress in a nation and that can in turn bring in goodwill and economic gains.