FemiBoyede Consulting

Executive Discourse with Olufemi Boyede, CITP/FIBP

Q. Sir, over the past few months some of the monetary policies of the Central Bank of Nigeria have been largely misunderstood by some sections of the public. What do you think is responsible for this?
A. I would not really be able to differentiate between whether the policies have been “misunderstood”, or that they were misconceived, misapplied or miscommunicated. Saying that they were “misunderstood” would tend to imply that I kind of agree with them as against the position/reaction of the generality. This would not be true. With monetary policies role out seemingly without adequate consultation, and apparently devoid of a realistic appraisal of the policies on the business environment, the socio- economic composition and the social welfare of the people for whom they are meant or to whom they are directed, one should not, in all honesty, expect any reaction different from what has been prevalent. Of course, apart from the foregoing, there is also inadequate explanation, sensitization and information. These lapses can not have any other effect than to be “misunderstood”.

Q. Despite some misgivings about these policies, the apex bank has continued to act in a manner that suggests that its overall intention is to achieve sustainable economic growth and macroeconomic stability. How do you react to this?
A. There is a wide difference between intention and reality. Every golfer sets out with the intention of playing at worst, a BIRDIE. many end up playing several shots over par. There is no doubt that the central focus of the Central bank is, should be and would be in the overall interest of the nation and her macro-economic stability and development. Have the results or reactions supported this? My answer is a BIG NO. In fact, a lot of the policies are exerting devastating negative impacts right now on the sectors/issues for which they were evolved.

Q. The last few months have been rather harrowing for the Federal Government in terms of declining revenue and its efforts to revitalize the economy. Would you say the current fiscal uncertainties being experienced by Nigeria have anything to do with structural defects in the economy? If, yes, how?
A. In my answer to your last question, I had indicated that several of the policies are exerting negative impact, indeed, producing the exact opposite of the objectives for which they were introduced. For instance, export-related policies recently rolled out have resulted in a scary decline in the nation’s official exports. At the very first “small devaluation” of the Naira from the N150s to N190s per dollar, the Central Bank had explained that the measure would radically increase export earnings as exporters would now earn more Naira for every Dollar earned and officially repatriated. It’s just like blowing hot and cold at the same time. The CBN concurrently imposed a restriction on access to their export proceeds on exporters, insisting that exporters must dispose their foreign exchange through the banks at official rates. Worse still, they could no longer utilize the export proceeds they earned, to finance further export (be it purchase, production or logistics) as the same CBN insisted that exporters MUST SOURCE FOR FOREX AT THE BDCs to pay for their freights and insurance, etc. Let me stress, and very emphatically too, that the decline in Nigeria’s export performance (via official records) does not mean that Nigeria’s sales to the world has decreased in any way, whether volume or value. What it simply means is that hitherto transparently honest exporters have now decided to shift their “honesty” to the reality of their economic realities and are now doing “free funds” or unrecorded exports. After all, it has been proven over and again that unofficial exports have a shorter turn-around cycle and “produce” a higher Naira yield. It definitely brings more profit to an exporter if he sells his Dollar at N320 rather than N200!

Q. One of the basic performance assessment parameters for determining whether a country is doing well economically or not is merchandise trade capacity and this is determined mainly by the quality of manufactured products. As an export-import trade specialist, would you say structural defects in Nigeria’s export-import trade is partly responsible for the current fiscal crisis the country is going through now?
A. I would downplay on import trade, in my response to this question as my passion and my desire is export trade. Having said that, there is no doubt that Nigeria’s trade infrastructure is very inadequate, inefficient and poses a major challenge to export production and delivery. You are aware that even before the recent embargo some Nigerian agricultural products in the EU, Nigeria’s cocoa had been attracting heavy penalties while other countries attracted premiums. That, in itself, is a major paradox as Nigeria’s Cocoa is rated as possessing the highest aroma in the whole world. However, the downturn in the nation’s export performance is not only because of weak quality infrastructure. There are several other factors. Unfortunately, the only incentive that used to help exporters to cover up for some of these laxities in the past, has been suspended for almost two years now.

Q. How do you think this ugly trend could be reversed, especially within the context of government’s economic diversification agenda?
A. It is still left to be determined, the level of Government’s seriousness to its declared desire to create a diversified economy. Like I have crusaded over the past three decades or so, the only alternative to oil as mainstay of our country’s economy, can only be “non-oil” Words and Opposites will tell you that the opposite of oil exports is non-oil exports, pure and simple. Before oil, Nigeria’s economy was built on non-oil exports. Domestic stability was assured by our aggressive agricultural production that yielded enough and heavy surpluses for export. Therefore we were also able to build a foreign reserve base that emanated from the Groundnut Pyramids, the Oil Palm and Rubber Estates and the Cocoa Plantations. My smile prescription is that we go back to these and make sure we speedily re-become a net exporter. But this time, ensuring minimal value added, to preempt the escalation of the present situation where we are exporting jobs along with our agricultural raw materials!

The most practical strategy therefore is to operate from henceforth as if there is no oil, what President Buhari and recently, the ED/CEO of the Nigerian Export Promotion Council, refer to as ZERO OIL. However, my prescription is predicted on physical activities to ensure we achieve this singular ojective. We must land a campaign to make at least one million Nigerians export-ready within the next twenty-four months. Is this possible? My answer is a big YES.

If we can establish and propel a Nigerian-Export-Initiative (along the lines of the Obama Export Initiative of 2009), where there is a cabinet-level Task Force on Non- Oil Exports, we can realistically harness the potential and opportunities in several MDAs towards ensuring that Nigeria not only radically expands her share of the global market, but also begins to command a bigger chunk of the huge global wealth accruable from international trade. For a start, I would want to see a strategy whereby Nigeria begins an “economic conquest” of the ECOWAS market via several Road Shows (Solo Exhibitions) and Targeted Trade Missions. It is time that Nigerian became an Industrial Outpost where a handful of items specifically consumed in our target markets are produced in Nigeria for total export to those markets! We must begin to use policy, with appropriate incentives, to back up our clamour for a diversified economy.

Q. Now let us go back to the monetary issues again. Recently, the CBN excluded some 40 items from the official foreign exchange market windows and this measure has generated so much controversy. Sir, does this mean that there are no positive sides in this forex policy decision?
A. Of course, that particular policy is bound to, and has begun to exert a positive impact on our manufacturing sector and our a corrective measure on our acquired exotic taste for the imported, that has seen us consuming what we do not produce. My only concern is the “military approach” that makes the exclusion “with immediate effect” without allowing enough grace period of backward integration and sustainable local production. Temporary scarcities have been enabled and these have resulted in spontaneous and sporadic inflation. I can not, and will never, realistically support expending our reducing foreign exchange on importation of toothpick and rice. I grew up in Agaie, a few kilometres from Badeggi in Niger State and have always wondered, for close to forty years now, why Bdeggi’s Rice Belt cannot feed the whole of West Africa! I wonder why we keep importing Basmati Rice froIndia when Igbemo Rice from Ekiti or Abakaliki Rice have even stronger medicinal properties! On the exclusion list, I give thumbs up to the CBN.

Q. The Bank has justified the basis of the measure by saying that the policy could serve as a bedrock of the nation’s industrial revolution if embraced by Nigerians. How do you react to this?
A. While this could hold out true eventually, I am not sure that the Central Bank has has begun to erect the pillars that would make it happen. The last administration, for instance, produced and launched a Nigerian Industrial Revolution Plan, NIRP at a cost that could be mouth-filling. The current administration cannot, should not and must not, throw this away in a quest to create their own initiative. The NIRP definitely has enough requisite useful pillars on which CBN and the Administration of Muhammadu Buhari can build and industrialized economy. It’s such a pity that Nigeria’s successive administrations have not learnt the useful lesson in ensuring that such economic initiatives are legislated, to compel continuity and guarantee their execution. Back to the CBN, there is a big difference between “saying” and doing. They just must begin to walk the talk!

Q. Since there is no policy without some shortcomings, where do you think the apex bank could work more on the forex policy to enable industrialists key into it to begin local production of those items ?
A. While there are no policies without shortcomings, the occurrence of them (shortcomings) can be drastically reduced with adequate prior broad-based consultation. It is a fact, for example, that some of the policies that the CBN has been rolling out, actually exist and are backed by law. A good example is the 100% Retention of Export Proceeds in Exporters Domiciliary Accounts and total liberty of application (for legal transactions). In an economy governed by the rule of law, such policies can only be reversed via an amendment to the Act that created them. CBN does not have the right to upturn an Act of the National Assembly. The same holds true for the Export Expansion Grant. It was introduced vide Act of Nigeria’s Assembly, Cap 118. Unfortunately, one single agency of Government has blocked its implementation for two years now, with no solution selling in sight. Again back to the Central bank, I believe that they need to do more work on potential socio- economic impact assessment before introducing policies that boomerang and force the bank to retrieve and rework!

The CBN must work, hand-in-hand with the Manufacturers Association of Nigeria, (through the Association’s sectoral groupings) to brainstorm on the realistic interventions capable of producing the collective national result of an industrialized economy . In the area of export, I believe, with due respect to the CBN as an age- long institution, that it needs to strengthen its in-house capacity in the area of non- oil exports. The Bank has the capacity to change Nigeria’s non-oil export sector, but must understand it from the practitioners’ point of view rather than unleash economic theories that are only suitable for the climes.

Q. Over the past 20 years, Koinonia Ventures has consistently been engaged in promoting export-import trade through awareness creation and engagement of stakeholders on how to boost Nigeria’s non-oil exports. Why is the company so passionate about this agenda?
A. I am not too sure that I have an answer to that. Can people truly explain the source of their passion? For me, it’s something I have known over the years. We did not need a soothsayer to tell us that the Oil Boom we were revelling in would surely come to an end one day. In the same way, having travelled the whole of Africa (at least 80% of the continent) and seen the comparative advantage that Nigeria has if truly she wants to control the continent’s economy, I have always wept deeply, inside me, at the country’s reluctance to convert the potentials into real advantages. The Yoruba’s would say “ko si awo kan l’ehin ewa ju pe k’a se lo” (there is no mystery behind beans than that it be cooked). For me, it is so painful how blind we have become to these possibilities because, as far as I am concerned, the solutions to our economic problems, at least the non-oil export part of it, are so available and simple. I stand to affirm without equivocation that Nigeria can replace crude oil’s contributions to her economy, with non-oil exports within a twelve-month period if the appropriate strategies are designed, defined and implemented with nationalistic passion.

Q. Much has been heard about plans by successive governments to diversify the nation’s economic base with little results to show for the plans. How do you think this agenda could be pursued in order to achieve desired results?
A. As it is often said, if you do not know where you are going, you can never get there. There is no denying the fact that successive Nigerian Governments, over the decades, have only been paying lip service to the critical issue of diversifying the country’s economic base. It is also common knowledge that the lip service to (negligence-nearing-total abandonment of) the non-oil export sector was as a result of the oil boom. Now that the boom has come to a close, it has become a stark reality that unless the nation begins to diversify into non-oil sectors and emphasize non-oil exports, the economy is set for total collapse.

The best (probably the only) way to pursue an economic diversification agenda is to elevate non-oil exports to priority focus. President Muhammad Buhari’s administration will soon be marking its first anniversary. It is significant to advise the administration that development of Nigeria’s non-oil exports must be one of its priority commitments. This is the reason why we have been clamouring for the establishment of a National Rescue Squad on Non-oil Exports (NARESQ-NOE). This should be in the form of a cabinet-level broad-based Task Force to enhance the sector’s contribution to Nigeria’s economy.

Q. In the drive towards export promotion, it appears governments have not done so much in engaging private export trade experts over the years. In what ways could the private-sector driven synergy be tapped into by the present government to boost the nation’s exports?
A. A past Nigerian Head of State once charged the Private Sector to see itself as the Engine for Economic Growth and Development. In agreeing with the desirability of that concept, I had, in response, challenged the Government to be prepared to be the kickstarter, ignition key and the lubricating oil to drive that engine. The economy of Singapore is in the hands of the fifteen leading players in that economy.

Nigeria can borrow a leaf from that country and end up encouraging health competition amongst the private sector companies, to contribute to the effective and timely attainment of Government’s programmes. In the same way, Government can, and must leverage on the several exporting multinationals in Nigeria in order to foray into new markets and mentor new exporters.

Q. Could you throw more light on how the CBN forex policy on excluded items could be explored for national economic benefits?
A. If you look at the 41 items on the the CBN’s list of “Forex-Prohibition”, you would easily understand that these are all products that Nigeria can produce locally. Preventing access to forex to import those products is bound to immediately create a huge ready market. To satisfy this market, Nigerians will need to invest into the production of this products. In this way, the country would be increasing local production and rural industrialization. New employment will be crated no doubt, and the nation can begin again to gather foreign exchange.

Q. Finally, you spoke again a few days ago that Nigeria’s future will depend on the extent it goes to improve non-oil export earnings. Which key sectors of the economy do you think government should focus on to achieve improved non-oil export-import trade competitive edge?
A. The NEPC conducted a Supply Base Study of Nigeria’s Exportable Products some fifteen years ago and came up with a list of over 5,000 non-oil products that can be exported from Nigeria. Recently, under the leadership of Segun Awolowo, the Council refocused these to about thirteen strategic products. Add a few Services Exports to these and you would have a robust basket of products ad services being exported from Nigeria. But, like it has emerged recently, Agriculture and Agro-allied, Mining and Minerals, Fashion and Entertainment, Handicrafts, offer the immediate profitable opportunities. Of course, Manufacturing can help in “manufacturing” ready Dollars from the West Coast, if and only if, the Manufacturing sector receives the required adequate support from the Federal Government.

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