The opposition political party, the All Progressives Congress, APC, and one of its presidential aspirants, Atiku Abubakar, on Thursday criticized the series of monetary policies unfolded by the Central Bank of Nigeria, CBN, to reduce the pressure on the Naira as oil price dwindles.
The Monetary Policy Committee, MPC, of the bank had announced the measures at the end of its meeting in Abuja on Tuesday after it considered vulnerabilities in the domestic front as well as the
exposure to changes in the global economy.
The committee, which claimed the domestic economy was strong and resilient in the face of strong global head winds, projected a seven per cent overall growth of the economy in 2014, a figure, the CBN governor, Godwin Emefiele, said was better than the 5.5 per cent recorded in 2013.
The CBN governor, who presented the decision to the media on behalf of the committee, noted the robust expansion in domestic output in the third quarter of 2014 against tepid growth in the global economy, saying this was anchored by the improved performance in services, agriculture, trade and industry.
But the former vice president described the measures adopted by the CBN as contradictory and inconsistent with the prevailing realities on ground, as they had no true premise to justify the drastic panic measures being taken.
Besides, Mr. Atiku said claims by the Committee that it created a total of 600,000 jobs in the second and third quarters of 2014 in the informal sector did not reflect reality, as most of the jobs were mere hand-outs based on fanciful schemes with attractive acronyms.
“They add very little to the National Productivity Index and have been designed for cosmetic political intentions,” he said.
He described as despicable claims by the CBN that the N200million Commercial Agriculture Credit Scheme created only 166,790 jobs since 2009, pointing out that this translated to creating 33,000 jobs per year at the cost of N1.2million per year each creation.
“The managers of our economy should be sincere with themselves and Nigerians. Hiding under the umbrella of international economic development trend to justify our current predicament is misleading and deceitful. The economy is not as strong as they make us believe and the “global head winds” cannot fully explain our dilemma. Key vulnerabilities in the economy have been noticed a long time ago,” Mr. Atiku said.
He said the indices were clear long before that that economy was heading for the rocks, as there were uncontrolled spending and lack of discipline in budgetary implementation by government, resulting in huge foreign and domestic debt portfolios of $9.3 billion and N8.9 trillion respectively.
Besides, he said the rapid depletion of the country’s external reserves, which stood at about $68 billion under Yar’Adua in 2008 to as low as $36.75 billion at the end of October 2014 as well as the misapplication of the excess crude account, reducing it from $22 billion in 2008 to $470million today were all signs that the management of the economy was not in the right direction.
Mr. Atiku blamed the present crisis on excessive government borrowing and higher bond repayment prices with higher interest rates, pointing out that it was alarming that the MPC claimed the depletion of the foreign exchange did not have any bearing on the genuine foreign exchange need of the country.
The CBN, he said, needs to fine-tune its policies such that while targeting currency speculators on the one hand, it could also boost investors’ confidence to forestall capital flight.
On the decision to increase cash reserve ratio, CRR, from 15 per cent to 20 per cent and the Money Policy Rate, MPR, from 12 per cent to 13 per cent, the APC presidential aspirant said this would increase the cost of borrowing, which would affect small and medium businesses and
reduce their capacity to expand and create jobs.
He said while the banks and speculators were primary targets of the CBN action, the challenge of protecting small scale businesses must be equally addressed.
“We must drastically sanction corruption and nepotism and create competitive services that will stimulate the growth of a private sector driven economy,” Mr. Atiku said. “Even though the economy is in a desperate situation that warrant desperate measures, Nigerians should not be made to face desperate times without hope for a better tomorrow.”
The APC on its part faulted the decision to devalue naira, described the development as unhealthy for the country’s economy, as its implications on the people and the economy were serious.
The National Publicity Secretary of the party, Lai Mohammed, said in Abuja that the devaluation of the national currency was the worst thing that can happen to any nation.
“All it means for a country like ours, which is import dependent, is that more Naira will be needed to buy raw materials and machines. It also means that very soon cost of living will go up,” Mr. Mohammed said.
He said the APC had always warned government about the implication of its economic policies, particularly the ones against organised crude oil theft and the high cost of producing oil, which the party believes was one of the highest.
The APC spokesperson said the party had advised government on the need to diversify the country’s economy and spend more of the resources in finding new oil reserves, as was the policy by Angola and Brazil, which reinvested about 40 per cent of their resources in the development of new oil deposits. Nigeria only invested about two percent.