It was barely 10 a.m when social media was abuzz and the name in everyone’s tweet was “Charles Soludo”, the former Central Bank Chief. I struggled to find a reason why he was trending on my timeline especially since he seemed to have settled into relative political insignificance following his failed attempt to become Governor of Anambra state.
If we ignore the messenger, the facts of his message are jarring and startling and if anything, would further plunge President Goodluck Ebele Jonathan’s campaign team into worried frenzy. Even without Soludo’s article, the tide seems to be turning against the incumbent in what is shaping up to be the biggest political test of his career.
In a refreshingly objective article with constant references to the Obasanjo administration, Soludo opened by berating both parties on their failure to hold campaigns based on real issues as opposed to simply making grand promises.
I’ve always opined that the opposition party All Progressives Congress is perhaps more powerful now than any other opposition party in Nigeria’s history and the onus is on to to direct the issues in the forthcoming elections. They must rise beyond the pedestrian “rent-a-crowd” political campaigns that have characterized Nigerian elections in recent years to being a source of enlightenment for the electorate on the issues we should be talking about.
I read General Buhari’s agenda with some dismay simply because it lacked a guide on how his many promises would be translated to reality especially in view of Nigeria’s present financial constraints.
Perhaps Soludo’s most arresting claims are on Nigeria’s foreign reserves;
For comparisons, President Obasanjo met about $5 billion in foreign reserves, and the average monthly oil price for the 72 months he was in office was $38, and yet he left $43 billion in foreign reserves after paying $12 billion to write-off Nigeria’s external debt. In the last five years, the average monthly oil price has been over $100, and the quantity also higher but our foreign reserves have been declining and exchange rate depreciating.
“I note that when I assumed office as Governor of CBN, the stock of foreign reserves was $10 billion. The average monthly oil price during my 60 months in office was $59, but foreign reserve reached the all-time peak of $62 billion (and despite paying $12 billion for external debt, and losing over $15 billion during the unprecedented global financial and economic crisis) I left behind $45 billion. Recall also that our exchange rate continuously appreciated during this period and was at N117 to the dollar before the global crisis and we deliberately allowed it to depreciate in order to preserve our reserves. My calculation is that if the economy was better managed, our foreign reserves should have been between $102 –$118 billion and exchange rate around N112 before the fall in oil prices. As of now, the reserves should be around $90 billion and exchange rate no higher than N125 per dollar.”
One of the questions the incumbent President must struggle with definitely has to be on the state of the economy; his regime enjoyed perhaps some of the highest crude oil prices in recent history and the windfall from an oil boom is nowhere to be found. This is without putting in the massive amounts the Federal Government saved from the partial removal of fuel subsidy.
How did we go from an oil boom to austerity in such a short period of time? I can hear the finance minister’s words in the background, still vehemently insisting that all is well.
Charles Soludo also touches on Nigeria’s rising debt profile; in hindsight the debt relief granted by the Paris club now seems rather insignificant seeing as we’re back in the debt trap again. He proceeds to emphasise something even a day old Nigerian knows;
“In sum, the mismanagement of our economy has brought us once more to the brink. Government officials rely on the artificial construct of debt to GDP ratio to tell us we can borrow as much as we want. That is nonsense, especially for an economy with a mono but highly volatile source of revenue and forex earnings. The chicken will soon come home to roost. Today, the combined domestic and external debt of the Federal Government is in excess of $40 billion. Add to this the fact that abandoned capital projects littered all over the country amount to over $50 billion. No word yet on other huge contingent liabilities. If oil prices continue to fall, I bet that Nigeria will soon have a heavy debt burden even with low debt to GDP ratio.
It is befitting to end my thoughts on another alarming claim and it is perhaps a big indictment on APC that these numbers and figures are not public knowledge;
“Fourth, poverty incidence and unemployment are also simultaneously at all-time high levels. According to the NBS, poverty incidence grew to 69% in 2010 and projected to be 71% in 2011, with unemployment at 24%. This is the worst record in Nigeria’s history, and the paradox is that this happened during the unprecedented oil boom.”