Cardoso, Forex Crisis and the Limit of Armchair Criticism, by Abdulrahman Abdulraheem

CBN Governor, Olayemi Cardoso

Cardoso, Forex Crisis and the Limit of Armchair Criticism, by Abdulrahman Abdulraheem

“The cacophony of postulations on the fluctuation of foreign exchange rates is unduly affecting the market negatively. Every one of us can not be an expert. If we have given someone an assignment, let us allow them to do it.”

That was vintage President Bola Ahmed Tinubu saying it as it is, knocking the hard truth on some ‘coconut heads’ who think governance is all about their own emotions, sentiments and bias.

Understanding the psyche, strengths at weaknesses of the people you lead is one of the qualities of a good leader. The President must have said this in his recent meeting with all 36 state governors in the State House, Abuja, because a lot of the pressure he is facing to remove the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, must have been coming from the governors and some other influential Nigerians.

There is no doubting the fact that Cardoso has been facing immense pressure due to the free fall of the Naira. But the President gave him the biggest vote of confidence ever, telling governors and everyone who cared to listen that there is no one who is more qualified than Cardoso to trust with the management of the country’s monetary policy at the moment and emphasising the importance of allowing designated institutions to fulfil their mandate without the distractions that come with selfish and vile politicking.

One interesting thing about Nigerians is that at every given opportunity, everyone thinks he is an expert who knows better than the person occupying the position of responsibility. When a challenge which is the collective fault of all of us occur, do-nothing and arm-chair critics believe the government appointee should be sacked.

A certain US-based Nigerian scholar who has made a career out of condemning everything about his country and criticising everybody but himself even recently wrote that Cardoso is not intellectually ready for the job, describing him as highly incompetent. Aside the fact that this self-indulgent, overrated academic has a history of peddling rumours, falsehoods and interpreting his bad dreams as breaking news or scoops, thereby misleading the army of ignoramuses on his social media pages, it is obvious that he knows nothing about how the economy works. The few discerning people who read him regularly know that he is an expert in using bombastic words to exaggerate, confuse abuse, destroy and condemn institutions and individuals in the country.

Due to his penchant for condemning everything and never seeing anything good anything about his country of birth, some Nigerians once challenged him to seek elective office or accept an appointment in any capacity so that he can understand that leadership is not a tea party and Nigerians can see if he is a pretender or he can live to the extremely high standards he sets for others. But the coward got angry and fought back with his trademark ferocity, arguing that not all persons are meant to lead, that he will never seek to lead or accept any leadership position in his life. Imagine, a self-styled saint and Mr Know-it-all saying his own destiny is to abuse and insult others, and attack great and brave minds who are doing their best to uplift the country while never-do-wells idle away in America to issue infantile condemnations.

Cardoso Came Prepared

The American professor ignorantly went to the ridiculous extent of claiming that Cardoso got the plum job on the basis of merely serving as Commissioner under Governor Tinubu in Lagos. On the contrary, those who know Cardoso will agree that he got the job on a platter of solid professional background and reputation as a first rate banker. His pedigree is rich as his character is untainted. Cardoso had a remarkable private sector career where he shone brilliantly in banking, stockbroking and consulting.

Cardoso also came from a very solid family pedigree. His late father, Mr. Felix Bankole Cardoso, was the first Accountant-General of the Federation who served from 1963 to 1971. Part of the remarkable private sector career of Cardoso was his appointment as the Chairman of the Board of Citi Bank in Nigeria.

As the Commissioner for Budget and Economic Planning in Lagos State, Cardoso was charged with several other responsibilities, including heading important cabinet committees that birthed landmark agencies in the state. Cardoso was known for enforcing strict budgetary discipline that contributed significantly to the overall success of the Tinubu administration in Lagos. He refused to authorise the release of funds for projects or programmes that had no budgetary head. For all of that and many more, Cardoso was nicknamed the Headmaster.

A Bachelor of Science degree holder in Managerial and Administrative Studies and Masters Degree holder in Public Administration from the Harvard Kennedy School of Government, Cardoso is obviously a perfect fit for the CBN top job and he came fully prepared. He is calm but firm, strict but fair, prudent but practical, straightforward and honest.

Cardoso is not to Blame

Since resuming office in September last year, Cardoso has been doing the right things and doing things right but any knowledgeable and fair-minded Nigerian would know and admit that the issue with the strength of our currency is not Cardoso or Tinubu’s fault.

Tinubu inherited an economy where nearly 100 percent of revenue was used to service debt, same loans that were used to pay an average of 6 trillion naira annually for a fraudulent fuel subsidy regime and also 1.5 billion dollars to defend the Naira on a monthly basis and give it a false value in an economy that produces nothing and consumes everything from abroad.

With the near emptiness President Tinubu met, he had to yank off the scam called fuel subsidy and float the Naira, allowing the currency’s value to be dictated by the forces of demand and supply, as it should be.

Cardoso has therefore put together appropriate monetary policies to complement the President’s decision, moving to rein in the rising foreign exchange rates and particularly achieve an appropriate value for the Naira, which he believes has been undervalued.

Cardoso, with the support of other relevant agencies, has been reining in all underhand dealings like round tripping that affect the value of the Naira. He has also sent a circular to ensure that all diaspora remittances are received in Naira by the Nigeria-based beneficiaries, among other measures to regulate the activities of the International Money Transfer Operators (IMTOs).

In the wake of the floating of the Naira and return of market forces, some of the variables shaping the value of the national currency are obviously beyond Cardoso’s control. These factors include limited production in the country which insecurity worsened, Nigerians’ high taste for imported products and disdain for local goods and services, dwindling exports, poor dollar remittances, humongous school fees of Nigerian students abroad and medical tourism. The factors promote excessive demand for Dollars.

Until Nigerians learn how to do their bit and stop the obsession with anything foreign including the excessive demand for Dollar which put immense pressure on the Naira, Cardoso can only keep trying. For instance, in his presentation at the sectoral debate organised by the House of Representatives recently, the CBN governor lamented that the growing number of Nigerian students studying abroad, increasing medical tourism and food imports have led to the depreciation of the Naira against the Dollar.

According to him, over the past decade, foreign exchange demand for education and healthcare totalled nearly $40 billion, surpassing the total current foreign exchange reserves of the CBN, while personal travel allowances accounted for a total of $58.7 billion during the same period.

Any analyst with no political bias will find it curious and ironic that same Nigerians who spend an annual average of $200 million on imported hair, £25 million on Scotch Whiskey, $75 million on French Champagne as well as $20 million daily on MTN and Airtel, are calling for Cardoso’s head over the free fall of the Naira. How can the Naira be strong in an economic atmosphere that emphasises capital flight in millions of dollars and pounds?

Light at the End of the Tunnel

Brimming with confidence even in the face of pressure, Cardoso spoke recently in Abuja at the opening of the 2024 First Plenary Assembly of the Catholic Bishops Conference of Nigeria (CBCN).

Cardoso, who was the Chairman of the occasion, expressed optimism that despite all the difficulties, there is light at the end of the tunnel.

“As a result of some of the recent reports from the CBN, over the course of the last week, about $1.8bn came into the markets.

“As long as the country can sustain a positive trajectory, Nigeria will get out of its economic woes and the foreign exchange market will begin to moderate itself,” he said.

Cardoso said an attempt to merge the official rate with the black market rate had been made, adding that the difference between the two is now significantly lower.

“There is a positive outlook on that. The positive outlook comes from the fact that a series of reforms have been made by the federal government and the Central Bank, which are now paying off in such a way that international investors are coming back in again,” he said.

He said one of the problems of economic advancement in Nigeria is finding ways to move as a country beyond being a consumer nation and shelf appetite for foreign goods.

“You have got to move as a country beyond being a consumer nation. And it is something that we as Nigerians have been talking about for so long, but really, we have not been able to actualise it.

“The other thing, of course, is to moderate appetite for foreign goods. And that’s closely related to what I had said earlier with respect to becoming a producer nation, because at the end of the day, many of the things you see and many of the things that bother a lot of people with respect to foreign exchange are all essentially down to demand and supply,” Cardoso said.

Last Line

The bitter truth remains that most of the country’s elite who are calling for Cardoso’s head are more responsible for the free fall of the Naira with their obsession with foreign goods and services. The CBN governor knows he has his job cut out for him and he is doing it, churning out circulars on a daily basis to keep operators in the monetary system in check, to make the Naira achieve its true value.

The President has rightly expressed support for his economic team to pull the economy out of the woods. Majority of Nigerian voters cast their ballot for President Tinubu after he had promised to float the Naira and remove fuel subsidy and we are all here facing the temporary consequences for the long term gains.

No pain, no gain.

Abdulrahman Abdulraheem is the author of “eNaira Revolution: A Peep into Nigeria’s Cashless Future.”

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