Soludo had come under criticism for his slow response to the unfolding crisis (words like "slapdash" were used by The Guardian). I suspect much of the disappointment derives from the fact that Soludo kept insisting Nigeria would not be affected by the global economic crisis, while commentators and industry participants were expecting the CBN to act to forestall a crisis they saw coming.
It is important that we Nigerians separate two issues and handle each separately.
The first are the impacts of the global crisis, which affects Nigeria in a few ways, notably falling demand (and hence prices) for crude oil, capital flight by international investors, lower foreign direct investment, and fewer loans from foreign banks to our banks and import-exporters.
There is not a lot we can do about the global component to the problem, except reorient ourselves away from reliance on North American, Western European and East Asian markets, and instead priotize economiic growth in Africa, transforming the 922 million people of the continent into a large, more secure market. And when I say prioritize African economic growth, I do not mean repeating those meaningless "Pan-Africanist" slogans that have never created a job, ended a war or planted a single seed of maize. Less talk, more work.
The second are the uniquely Nigerian aspects of our domestic crisis, issues I partly discussed here, issues that require serious reform. Unfortunately, I do not think our political-economic-social system as currently constituted is capable of the necessary reform, but I live in hope.
The other thing I want to say is I think we should be trying to deal with the crisis in a "natural" way rather than a "command, statist" way. Rather than out-of-the-blue-with-no-warning imposition of official, governmental deposit and lending rates, the Central Bank should have addressed the other side of the ledger, so to speak. At some point in my long rant, I mentioned the fact that "toxic assets" on the books of Nigerian banks are estimated at about $10 billion. As I said then, this is a manageable number, and there are any number of ways to assure the market (national and international) that we have it covered .... including techniques that do not require us to pay out a lump sum of $10 billion.
If a bank has "crossed the Rubicon" so to speak, it should probably be acquired by a bigger bank. But if it has solid fundamentals, again there are ways the CBN could allay the liquidity and deposit fears of such a bank, without "commanding" it to apply a randomly chosen deposit rate.
If I seem to be a little "vague" on specifying what these techniques are, then (a) it does not matter because the experts and the CBN should know them; and (b) it is because the issues are very big, and require an INTEGRATED approach that is too big to discuss on a blog.
It is not just a stock market issue, or a banking issue. Our federal and state governments will be running budget deficits this year; deficits that will ultimately be financed by $11 billion in loans according to Bloomberg, much of that borrowed from domestic banks. Knowing our fiscal management (and knowing the volatile price of crude oil) the borrowing to fund the deficit may turn out to be more than $11 billion.
Is it just me, or has there been LITTLE OR NO PUBLIC DISCUSSION of this borrowing, of its short-term and long-term? And please don't say the word "stimulus", because much of this will probably finance regular, normal spending (i.e. spending that does not create wealth or increase productivity) that would otherwise have been funded by crude oil receipts.
The Year 2009 is only 3 months old, and it is already proving to be a rocky year. Nigeria needs to make some serious, coordinated and integrated adjustments .... and quick.
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