“Every country has the government it deserves.” — Joseph de Maistre, 1753-1821
And, as somebody has also reminded us: “As a people normally gets the government it deserves, so a society normally receives the punishment it asks for.” To me, it is now a precious waste of time whenever a frequent reader of this page calls to register his/her agreement with my article — only to launch into questioning Tinubu’s legitimacy as President. Millions of highly educated Nigerians have not developed the emotional maturity which makes it possible to accept with serenity what cannot be changed. Tinubu is President and nobody else. And, to him, I will continue to address myself. Cardoso is also Governor of the Central Bank of Nigeria. He will also be the focus of my attention. Nobody else.
That said; to me, the controversy over relocation of some units of the CBN to Lagos is vintage Nigerian stupidity. Neither those for nor against made a logical case from start to finish. It was a very emotional outburst all around — distracting us from the more vital issues regarding the CBN’s vital roles in the Nigerian economy. Nobody has advanced a credible reason why the change would help to stabilise exchange rates and check inflation or hinder both.
Permit me therefore to remind Nigerians once again about forecasts that we have made in Vanguard about the Nigerian economy in the past and for 2024. For the sake of those impatient with reading long articles, let me quickly summarise first and explain later.
First, it should be clear to all those capable of quantitative analysis that N2,000/$1 is already a reality before the end of the first quarter or early second quarter. Nothing the CBN does can avert that disaster.
Second, even with only a month gone, the 2024 Budget is already in the dustbin. The major indices, except one, will be missed. Oddly enough, the aggregate revenue target might be achieved or even surpassed. But, that will be at the expense of higher inflation led by deeper devaluation of the naira.
Third, Nigerians, expecting fuel price relief when Dangote starts supplying the domestic market are in for a shock. Dangote will not buy crude with dollars and sell for naira – unless dollar recovery is assured. Forget Port Harcourt refinery. The FG is just throwing good money after bad into the cesspool.
Irrespective of who controls Geregu Disco and others, power failure and grid collapse will continue throughout 2024.
Why N3,000/$ is a possibility this year
“There are no desperate situations; only desperate men.”— Joseph Goebbels, 1897-1945, Hitler’s Chief of Propaganda.
A nation in serious political and economic distress can be easily identified by the rapid releases of new regulations, guidelines, and Executive Orders which leave all the stakeholders totally perplexed. Since the beginning of January this year, the CBN has issued more new instructions to banks and other stakeholders in the economy than I can remember since 1987 – when I first started writing on this page. The most pathetic thing about all these releases lies in the fact that they evoke different and sometimes contradictory responses from all the stakeholders.
But, it is not only the CBN which is living in a fantasy world devoid of reality. Some, if not all, of Tinubu’s Special Advisers have also caught what I once described as the Aso Rock Disease. I described it as an illness afflicting people who built a reputation before entering the Rock; only to murder their reputation after their tenure there. Two recent examples will help us along in this journey regarding what to expect on exchange rate.
The first, shortly after his appointment, went on television to announce that Tinubu’s policies will soon bring down the exchange rate to N600/$1. Soon, as media veterans already know, is no promise and frequently deliberately deceptive.
The second, one of our dearest — Editor, Publisher and a staunch Abacha fighter — sent a press release two weeks ago; when the Pump and Dump operators on the Nigerian Stock Exchange were busy duping gullible Nigerian NGX investors. He took credit for the bubble on behalf of the FG. I wonder how he and the FG now feel – when the entire thing is now turning out to be a swindle of the unwary by the powerful Nigerians; who organised the scam.
Today, it is N1,400/$1. By contrast, on December 30, 2023, I specifically stated that all FG’S projections will turn out to be wrong as the year runs out. No forecast for the likely trend of exchange rate was made then. Let me make one now. Like all predictions based on the existing national and global situations, the outcome could be different. But, I can rightly claim credit as the only economist in the entire world who predicted that the exchange rate would hit N1,000/$1 in 2023. The World Bank, the International Monetary Fund, the CBN, Nigerian Economic Summit Group and Nigerian experts all failed us. They failed to warn Nigerians about the calamity we encountered in 2023. That was bad enough. They are failing us again.
Today is February 5, 2024, and the exchange rate is N1400/$1. Meanwhile, the Budget was based on N750/$1. The CBN has since then adjusted the official rate to N950/$1 – all in less than a month. Yesterday, the Bureaux De Change closed shop – just as the CBN rolled out another guideline asking banks to push out their dollar reserves. That, to me, must be a joke, indicating that Mr Cardoso and the top management of the CBN are totally out of touch with reality at the ground level of banking. Here is why.
Mr X, almost 80, a real Nigerian, believe me, operating a Domicilliary account with a bank for years, urgently needed naira. He called the bank requesting $1,000 to be released. “Not available”. That was the bank’s response. “How about $500?” “Okay, you can come for that.”
The poor fellow arrived at the bank only to be told that there was no dollar left. However, they will direct him to another branch which had $300 in small notes.
Despite being physically challenged, he walked to the other branch to collect with gratitude and feeling humiliated, a small fraction of what he deposited with the bank – with ease. He has vowed never to deposit another dollar in a bank in Nigeria. He is not alone. Just as millions of Nigerians no longer deposit excess naira in banks, thousands will no longer pay dollars into their Domicilliary accounts. If Cardoso wants to know the truth, he will have to leave that mausoleum erected as CBN Headquarters and talk to Nigerians outside official circles. Right now, he is leading Nigeria into economic calamity. The other experts won’t tell him the truth. But, he will receive it here; and here it is.
N2,000/$1 is inescapable this year; N3,000/$1 is a possibility. The reasons are not hard to discover. Permit me to mention just two for now.
Crude oil exports and fuel supply
Two things should worry all of us. Dangote Refinery was not established solely to supply Nigerian fuel demand. He will not buy crude from the US in dollars and sell the fuel in naira – unless at the price dictated by the prevailing exchange rate. Yet, he will receive crude allocations from Nigeria; and reduce dollar revenue….
