221 BUSINESS
lHEGUARDlAN, Wednesdtl)lJune29,20n
eBN and its poultryfarII1 project D EPORTS rt'Mhlng 'JS Indil\c:il t~ that the Ccntr;11 Bank of Nlg('ria has concluded plans [Q bul1d Ilsown poultry farm. which will. upC>n completion. ~ th(' largest poultry farm in Nil!,eria. This is In IiJ'le with lhe lilt~l direction of the CBN of becoming a diversiliNi ilnd profitable entity. To funher this dual purpose (If profIt.1blllt)' and dil'ersilic.1tion, the newCnN pouluywll1 su~ Illy the public with eggs and old la~rs. It will also supply chld:en and eggs to the 1.1nned CBN hotel a:ld conr,erence center Th(' CRN Is confident of th~ profit potentials of its l at~st venrures as both the pou[ny and the CBN Hotel will rt:ly on the long awaited CRN power plant for cheap power supply. Issues hampering the Implementation plan for the CBN poulny v:e:re the delays caused by other sta~holdel'5 .1t the CUN who believe: th.1t hospital de\'elopment Is mor~ iucr.nlve. The poultry farm won out after a vigorous debate between the staffers of CBN promoting It and the staffers who thought that fish farming and can If' rearing were more promising. There Is clearly a new creath-e: impeIUS at CBN lhe~days and the staffers promoting the nsh farm ing and cattle rearing ventures are conlident th.11 if Ul q' can demorutr.tle \-e:nl· cal Integration, their busl· ness plans would be implementednext. So, you think that the.1boYe is far-fetched. Think .1gain. Our CBN under $anmi liImido Sa.mul has g01l1 way off kilter. The main }ob of a C~ntral Bank should be price stability .1nd the related task
of managing interest rates and the exchange m e. The CBN merely pays lip seMce these fundamental primary tasks alld therefore has fail ed woefully in these .1reas. The National Statistical released by the N,nional Burt'au of Statinia on lune 16, 2011 IRd icar~s that Nigeria's inflation rail' climbed to 12.4 per cent in ,.,Ia} 2011. What thiS m~ans Is that the avera,Se farmer and civil selvant JUSt had their purchoulng ability slicNi 10 87.6 per cent 01 then eamings. As you will see lilter,this Is merely a st,lrt, as th(' polides of this CBN is defimtely going to take us to tenitones of more than 20 p~r cent innatlon rate. This Is someone who was handed a CBN that h.1d managed our innation rates to below 10 per c~m, during a period in which world oil prices were uptoSl45 per bar· rei. In addition. this eBN has by its own Irrational statements and actions dried up creditforbuslnesses from the banking sector. Additionally, with oil pnces aided upwards by the Arab uprisings, our CBN has managed to m.1imain a (ast dwind ling foreign exch.1nge reserves as a result of the poor management of the reserves by the OIN. Every month, tile CBN Governor promises that there will be relief on the foreign Te:sefVH and eve:ry month, the opposite is the case. As you can see, our CBN shoulC1 havoe their hands full in carrying out th(' primary functions of a Cenrral Bank, bur that Is far from what they have: been doing. We will not focu s on the various political slatementS that the CBN
Go\~rnor
hou c~ided is his past time_ Instead, we will focu s on the actions of our CBN that have contrihuted dlrectlyin its failure to actually ach'e\'e the price stability that is Irs primary function. In the past one ye:ar. staning in March 2010, our CBN has spent (M'r N900 billion on the so·olled Intervention Funds. These Include the N200 billion Commercial Agriculture Cred it Scheme; the NJOO bJllJon Jloy.·u and Aviation intep.'I.'ntion Fund: the N200 bi llion RestructurinJdRelinancin, to the lianufactunng Sector/SME: .1nd the N200 billion Small and Medium Scale Enterprises Guarantee Scheml". ll"t us use the exampl~ of lhl" Power fund . According to lamido. It was set up to Ilelp finance badly needed power projens In Nig~rU. Except that In light of the r.1et thaI most of the investments In the powersector are to come folfowlng the ongoing prlv.ltlsatlon proces.s.lhere was no need to releasl" the entire amount Into drculation. HO\Ve\<-e:r, what our CBN does is that once It announces the creation of th es~ funds, it mo\'cs thc amount to the Bank of Industry who deposits them wilh partner banks for onward acces.sibllJty to the lucky recir,ients. So If It takes another our years to disburse, the country Is burdened with money In circulation that it did not need to be IndmJiation. Thislsthecasc with all of the intervention fu nds. CUN therefore has done more to spur Innation than any other govemment policy in Nigeria and economists
:Ike Henry Boya have warned that CRN should look forward [0 innatlon rates of 20 pficent or higher if it continues with these policies. Eve:n if the CRN should be the entity setting up these intervention funds (which It has no business doing~ such funds should not be released outof theCBN untJI the recl!>" ients hil~ fu[liIled all require· ments and are about to use them for produ(ti~ actlvl· ties. ,.. cymc would say thai Ihe CBN should know this and that the only reason fo r releasmglhe Rinds so prematurely is to extend the period of playing Ihe same deposit kickback game that the CBN Governor has accused Nigerian Government omdais of playing wilh their public sector funds (where the pannering banks pay som~th lng 10 tile originators of the funds placed with them as deposlts~ More Importantly, when there Is no oversight or accountability othertnan the CUN (a non·eJected body) over the disbursement or spending of these funds, there is substantial room for Significant corruption and b.1d practices. The speed \vilh which the CBN has ~staJ>. IishNi these funds in the past one year during a period when the CBN Governor was warning about lh~ inflationary Impact of the elections speaks to the suspicion that these funds ~re not prlmarl· Iy meant for the announa!d purposes.. It Is unfommat~ that the CBN Is the only entity In Nlg~rla tilatcan spend publiC funds without a need for appropnallon or such funds being earmarked in the cor-
responding year's federal bud~el. Our constitutional reqUIrement of budget and appropriation does not cOYer tneCentral Bankof Nigeria. Lasl month, our CBN placed various adv~rtisemenlS in Nigerian n~ws papen and magazines inviting tend('fS for the deSign and manage· ment of its n~w project of building a hotel and confer· ence center in Ahuja. Many people were relieved that thfs CBN has finally decided to stan abiding bj the Nlgertan Public Procurement Act requirement of perfonnlnga tender for public procurements, which this CBN had not abid~d by In the past when it retained the services of advisers for Its various activities. Howeve:r, even people who bellew that Ahuja may need workklass hotels and ronference centers are wondering whYlheCBNistheentitybuiJd. Ing one. A review oT commentsinvariousNlgerianchat rooms a r~ negative:, with many advising our CBN to focus on inset: roles and leave pl'Opef!y dCYl'lopml'nt to the likeS of Ta}'o Amusan, among
.
ome~
Onerorrunentf'rln Nalraland even said that since our CBN has becom~ a profit seeldng enti~ he should be al~ to buy shares of CBN, as he believe:s in the viablUty of this hOlel and conference center. This is how ridiculous ordinal)' dtimu of NigtJ1.t now thinkoorCBN has become. It Is Instructive th.1tOlleof the seminar acts of this CBN Governor Is preachlngspedaJi.. salion to the banks that he supervi~ Byprosoiblngunlversal h.lnking. he has forced banks to focus on commercial banking and exit other are.u
and sectors of the Nigerian I'(:onom¥ Now that eRN is getting into real estate and other sectors. one Is wondering if merely 5.anusi was warned l'lat th~ Banks. \vith their d~, pock~n, posed bigger nsks)f com~ petition for taN In th ~se sectors Ih.:!.n Tayo I\musan etc.. and therefore made lUre [0 get rid of them as com~tl. tors prior to .1nno·Jnci ng own ven tures. CBN's Otherwise, why IS focus impon.1", for comm~rclal banks and not CBN. It Is sad, beaU51' many pe0ple \\-e:re hopeful that 5.anusi would maintain the stability that Soludo had fostered .11 CBN. but Sanusi has sadly been wrong as .! CBN Go\'l'mor and disastrous for the Nigerian economy. He has fa iled 10 apprl"Ciate th~ limited role of a Central Bank In a country. OUr CBN under him Is famng in lheir primary functions of maintaining price stability .1nd reserve management. Instead our CBN's own Inltla· tive:s have been detJ!mental to these primary functions. Thc CRN needs to dial back and kave govern.1nce to th~ Go...~rnment,but focuson the lighting Innal ion and its other primary functions. It needs to leave intervention funds to the appropriate minIstries and the National Assembly. Finally, one Is embarrassed to ha~ remind CBN thaI It should ha\-e: no business setting up its O\\Tl hOld, poYo-e:r plant or for that maner its own poulnyfann.
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