Brace up for more tough times, expert tells Nigerians
By Mahmood Olayinka Alaya
A financial expert, Mr. Babatunde Salami, has advanced reasons it would be difficult for the country to escape the pressure of economic hardship currently plaguing it.
He asked Nigerians to brace up for more hardship in the next three years as the nation’s revenue is now susceptible to external debt.
Salami said this at the weekend while fielding questions from journalists in Ilorin, the Kwara State capital.
“I don’t see us getting out of this trouble regardless of whoever is in power. It is not a two to three years period because those transactions were defaulting and they need to be paid. We are doing with our income in relative to what we have on the template now as we used 90% of our income last year to service debt. The question is can we double or triple our revenue”, he asked.
Contrary to the notion that resuscitation of the refineries will rescue the situation, the financial expert said all the money invested in turning around the refineries proved to be wastes over the years.
Salami said, “The refineries have not produced anything for years, money spent on them have been good money thrown into bad rubbish.
“The three refineries in Warri, Port Harcourt and Kaduna haven’t produced a litre in years and we are paying salaries of an average of N13billion monthly to the people who are just resuming to office with no productivity whatsoever. Those are part of the structural problems in the country”.
The financial expert took a swipe at the Central Bank of Nigeria (CBN) for allegedly shrouding its account in secrecy, thus making it difficult to be audited.
He said, “The implication of failure to audit account is that you don’t know where you are, and you won’t be able to assess your standing, and for going off for that length of time, the implications are becoming very obvious on our economy.
In a reference to the report of the world renowned financial management firm, JPMorgan Chase & Co., Salami alleged some discrepancies in the Audit report by the CBN and also blamed the current financial crisis on some questionable transactions made by the Apex Bank in recent years.
He said, “In balance sheet, we normally see figures like $33billion and figure is not the actual money because there are some borrowings that have been excluded, in terms of wanting to know how much we have as a nation.
“The audited account exposes many things that ordinarily people may not take cognizance of, one of which is the intention to do forward and when you do ‘forward’ in any derivative market, you are bound to pay as at when it is demanded.
“Forward is like projecting what the price of commodity will be in like six months time. CBN wrote about $6.1billion of forward, some of those forwards have matured while some haven’t but they have been settled. So, they become a liability, and it might lead to a ripple effect of people going to court to make sure they get settled but is quite worrisome why the CBN has failed to deliver.
“Recently, there was a issue of cashless policy and the complaint of the CBN Governor was that there was too much money in circulation and there is need to reduce it where at the percentage of money in circulation then was 6% while America had 10% and Britain had about 9%.
“A report came out through JPMorgan, which is different from what was reported in the audited account of CBN. JP Morgan claimed CBN is owing them $7.5 billion, which hasn’t matured but will be netted off the $33billion. The figure is coming down
“There is another worrisome aspect of it that JP Morgan exposed. It is like saying you have N10,000 in your account but the bank manager is saying that you have only N3,000 on your balance sheet. So, you need to explain why your figure is different.
“JP Morgan said at a particular point in time any individual who is in need of dollar maybe for travelling or payment of school fee you have to make application for weeks or months and it was difficult but the question is what happened to the cash in circulation in Dollar.
“Apparently, JP Morgan exposed that $21billion was used as swap during the Nigerian/Chinese Bilateral swap where Dollars and Naira were swapped leading to scarcity of Dollars and the law of demand and supply came into play, meaning price Dollar rose against Naira”.
He noted that the failure of the CBN Governor to maintain price stability is due to what he described as unwise decisions.
“The responsibility of CBN Governor is to regulate price stability whereas he is making transactions that are making the prices to go up and I don’t think that is a wise decision.
“By the time you net off $21billion, $3billion and $7 billion in an open environment, Nigeria just has only $3.7 billion left whereas we have reported that we have $33.7billion.
“How do we now settle majority of these outstanding that is $21billion, $3billion and $7billion, how do you manage this? As at the time of taking over of the last government, there were some balances in the account and it grew to about $44billion. So, what happened to those balances, this is begging for answer”, he said.
Salami observed that the inability to stabilize price will further affect the country trade balance as well as compound the already affected living standard of the citizens.
He added, “Implications are, firstly, our trade balance will be affected. Secondly, our living standard will also take a hit as the country is currently struggling with productivity due to insecurity”.
On the anchor borrowers programme, Salami lamented that majority of the funds were given out for political patronage and lauded President Tinubu for taking the step to recover money from the defaulters who are yet to redeem the loan.