Paracetamol brand of acetaminophen is generally a first choice drug in the treatment of mild body discomforts (cold, headache, nausea, etc). Taken as recommended by their manufacturers, the ailment often disappears within a few hours, and at most one or two days. What if the ailment does not subside even after two days?
Their manufacturers have a general caveat in their advertisements: “If symptom persists after three days, consult your doctor”. But why this warning? The answer is simple. Self diagnosis or the diagnosis by an untrained or an incompetent healthcare provider could be wrong, thus culminating into serious health hazard or even death.
And many have had such expirences. To mitigate this trend, recourse has to be made to the “Doctor” who is trained and competent to carry out comprehensive diagnosis as well as offer the right prescriptions to cure the ailment.
We can now use the foregoing as a pedestal to address the Nigerian economy vis-à-vis the palliative measures of our Mr. Soludo to justify his competence and or incompetence. If we consider the Nigerian economy as the patient, the distress in our banks as the symptom, banks’ recapitalization as our paracetamol, and the days in the caveat as the number of times it has been used, then we can safely conclude that our Mr. Soludo is incompetent to cure our economic woes.
The following listed issues are examined to corroborate my viewpoint: Banks Recapitalization and Consolidation, New Naira Agenda, Economic Decline or Recession, Economic Reform, etc
Before the forceful recapitalization and consolidation of the Nigerian banking industry, a study by the Central Bank of Nigeria showed that of the eighty-nine (89) banks on ground, sixty-two (62) were sound and satisfactory, fourteen (14) marginal, eleven (11) weak while two (2) could not be categorized because their report was not available early enough (See: 2006 Investment Climate Statement - Nigeria, US Department of State, http://www.state.gov/e/eeb/ifd/2006/62042.htm).
As at then, about a hundred textile companies, over two hundred vegetable oil companies, two tyre manufacturing companies, etc were on ground.
Rather than strengthen the sound and satisfactory sixty-two (62) existing banks and fourteen (14) marginal ones to encourage realistic growth in the Nigerian banking industry, he chose an already overused and failure prone therapy: recapitalization and forceful consolidation. He refused to study history or perhaps unaware of history.
Before him, banks recapitalization had been used three (3) times: 1990, 1998 and 1998. In February 1990 Commercial Banks and Merchant Banks had their capital bases revised upwards to N50 million and N40 million from N20 million and N12 million respectively. It took effect from March 31, 1997 with the liquidation of thirteen each of commercial and merchant banks.
Within 1997 still, banks were directed to recapitalize to N500 million effective from January 1, 1998 (For further details see: Monetary Policy, Central Bank of Nigeria, 2006, http://www.cenbank.org/MonetaryPolicy/Policy.asp). By January 2000 these banks were directed to recapitalize to N2.0 million with effect from January 2002.
Alongside these measures, banks cash reserve requirements were raised in 1989, 1990, 1992, 1996 and 1999 (See: Monetary Policy, Central Bank of Nigeria, 2006, http://www.cenbank.org/MonetaryPolicy/Policy.asp, ibid). Yet the distresses did not leave the banks. The import is that both recapitalization and cash reserves increases are not the solutions required to stimulate the Nigerian banking industry.
Yet, our Mr. Soludo announced his banks recapitalization / consolidation plan to falsely stimulate the economy on July 6, 2004. With his recapitalization /consolidation base raised to N25 billion, the number of approved banks reduced to just twenty-five (25) and later twenty-four (24). This figure has now been reduced further to twenty-three (23) with BankPhb and Spring Bank merger / acquisition.
In spite of the recapitalization and consolidation, all the textile industries in the country subsequently started to liquidate one after the other. It was the same with vegetable oil companies, beverages companies, tyre manufacturing companies, chemicals manufacturing companies, etc.
The stimulus package turned out to be an epidemic that has ravaged every industry, institution and corporation along its path such that many airlines were liquidated, the Nigerian refineries depended on imported fuels, rail services are limited to Sango-Iddo in the West and Kaduna – Kano in the North, etc. Roads are impassable especially in the South West, South East and South South.
As if the foregoing was not enough, Mr. Soludo was a strong force behind the printing and circulation new Naira denominations and notes between 1999 and early 2007 in Nigeria. He was first one of the members of Nigeria’s Economic Team saddled with fashioning out economic blue print for Nigeria under Mr. Obasanjo.
This resulted in the printing of new N100, N200, N500 and even N1000 in 1999, 2000, 2001 and 2005 respectively (See: Stane Straus – Obasanjo, Nnamani allay fear on N1,000 note, In: Polymer Bank Notes of the World, October 13, 2005, hhtp://www.polymernotes.org/articles/NGA_article_fear.htm).
But by August 14, 2007 he took a u-turn. He informed the country through his “Strategic Agenda for The Naira” that all the existing notes were to be withdrawn and replaced with re-denominated units. All the existing units were to be reduced through a common division by 100 to arrive at his new notes (For further details see: The Punch newspaper, Wednesday August 15, 2007, pages 4 & 26).
Thank goodness that many men (not gender sensitive) of wisdom quickly challenged him, and the political clout built around the useless “Agenda” quickly fizzled out (For further details, see: Yinka Fabowale – Aluko rubbishes Soludo’s naira policy, Daily Sun, Tuesday, September 4, 2007, pg 4; Ismail Ganikale – Naira revaluation:
An abracadabra economic policy, The Guardian, Thursday, August 23, 2007, pg 67; Peter Alexander Egom – Soludo’s American Wonder (1&2), The Guardian, Wednesday & Thursday, August 22 & 23, 2007, pg 67; Omotayo, J. A. – Questions on Strategic Agenda for the Naira (1,2&3), August 28, 2007, www.ngex.com).
Third, when the Naira appreciated against the US Dollar from N151 : $1 to N136 : $1.0, our Mr. Soludo was proud of his achievement. He claimed that Naira appreciated because of the measures taken “to stifle the black or parallel market out of existence” (See: Blessing Anaro – Naira gians 11.30% at bureau de change, Businessday, Friday, June 23, 2004, pg 2). When the Naira appreciation reached N125 : $1.0, our Mr. Soludo announced his “Strategic Agenda for the Naira”.
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