#NIGERIA STOP TREASURY BILLS SCAM!!!
BY HENRY BOYO
In last week’s article we discussed why inclusive economic growth is made unattainable in
Nigeria by the awkward process, which the Central Bank adopts for reducing money supply
in order to restrain inflation. It is clear that whenever the Central Bank sells Treasury bills to
control money supply and prevent spiralling prices of goods and services, it is unwittingly
forced, inspite of the attendant oppressive rates of interest, to borrow funds that will simply
be kept idle; ironically, in a manner that is reminiscent of a man who cuts his nose to spite his
face, the same CBN is also actually responsible for instigating the inordinately high interest
rates attached to government’s huge domestic borrowings!
On the 19th of December 2014, the CBN auctioned government Treasury bills and therewith
borrowed N195bn from the open market at interest rates which range from 9-16% for the 90
to 360 days debt instruments respectively. Incidentally barely a week or so after this auction,
as an admission of its failure to reduce Naira surplus with existing monetary control
measures, the CBN also gave notice that it would borrow another tranche of N 1200bn with
possibly the same high interest rates also applicable before the 30th March 2015.
True to its words, last week, the CBN advertised its ‘Bid Notice’ to auction T/bills and
borrow about N160bn on the 8th of January 2015. Indeed If CBN’s strategy for reducing
surplus Naira is projected along this pattern of borrowing in 2015, we may sadly need to pay
over N 600bn from our already lean treasury, to primarily the commercial banks, for the joy
of borrowing part of the surplus funds which were largely induced by CBN’s creation and
substitution of Naira values for distributable dollar denominated revenue; clearly no real
development and economic growth can be predicated on such a reckless business strategy.
Indeed, failure of this strategy is best amplified by the deepening poverty which has become
accentuated nationwide, despite the fortuitous accumulation of bountiful reserves from a
bullish crude oil market which persisted for over 5 years.
Thus, we have actually inexplicably become poorer when we were stupendously richer and
not even the “embarrassing” availability of eternally systemic surplus Naira could redeem our
economy! It would therefore be foolhardily to continue to adopt the same arrangements
which have distorted our economic fortunes for so long and suddenly expect that our social
infrastructure and welfare would rapidly improve, especially when it is also clear that our
Small and Medium Enterprises which are, generally regarded as the prime engines of growth
and job creation, are incapacitated by the socially antagonistic strategy that ensures that
SMES forever remain in a lop sided competition with the CBN and the Debt Management
Office for the available ‘surplus’ funds in the market.
The question then, is why does CBN and the government persist in this macabre
emasculation of our economy? It is difficult to suggest that our economic management team
is ignorant of the cause of the clear failure of its policies to instigate the kind of economic
growth that creates increasing jobs! Surely, the evidence of failure of this strategy is also
clearly mirrored in the rising rate of unemployment and our stubbornly famished industrial
landscape, in which consumer demand is retrogressively, stringently capped by an average
inflation rate of about 8% in recent years.
Sadly, the way things are, we may never witness below 3% best practice inflation and
monetary policy rates that are characteristic of economies where genuine economic growth
and vastly enhanced social welfare exist. Regrettably, however, our government has
consistently, inexplicably, sustained an obtuse liquidity management strategy that will
ultimately propel our economy into a tail spin with considerable adverse consequences for
everyone.
Furthermore, the National Assembly appears to have readily acquiesced to this annual rape of
our economy with CBN’s Treasury bills borrowings, which not only makes it difficult and
expensive for SMES to access funds, but also immorally and inequitably subsidises bank
profits with over N600bn interest payments on borrowed funds that will inexplicably be
quarantined as idle deposits by CBN! Regrettably, the farcical complexion of this strategy, is
that the trillions of Naira surplus funds borrowed and quarantined annually by CBN actually
exist simultaneously with the need for additional medium and long term loans at equally
oppressive interest rates to fund annual budget deficits! Inexplicably, the government and
the National Assembly appear determined to sustain this oppressive process which
continuously throws up a handful of very rich Nigerians while increasingly more than 80% of
our fellow countrymen still live on the proverbial poverty benchmark of U$D2/day.
Fortunately, we are in a democracy, and it is also the season of political campaigns leading to
the eventual elections in February. Consequently, the parties that seek our votes must be
asked to state their position on CBN’s “Treasury Bills scam” in very clear terms i.e., whether
or not they would stand on the side of the people by quickly stopping the blatant rape of our
patrimony with CBN’s failed attempts to reduce excess Naira supply by unwittingly
borrowing trillions of Naira that will simply be kept idle at a time the real sector remains
starved of funds! No candidate or political party can be trusted with the management of
public funds if they knowingly condone the enrichment of a small minority of Nigerians with
payment of over N600bn interest charges on government debts, which are not applied to
redressing the condition of over 160 million Nigerians who still wallow in poverty.
Unfortunately, we are all helpless victims of this brazen scam and, so long as any
government sustains such inequitable and oppressive strategy for managing money supply,
there is clearly no possibility that Nigerians will ever be redeemed from economic bondage;
fortunately, politicians and critics cannot suggest that the required public declaration of their
opposition to the Treasury Bills scam has any ethnic, religious, political or cabalistic
colourations.
The simple question, therefore, is whether your political party will stop or sustain this
apparent betrayal of the trust Nigerians on this matter of managing public funds wisely.
Consequently Nigerians should raise their voices in support of any campaign to stop CBN’s
economic malady which is clearly the root of our economic woes. Everyone can let their
voice be heard on this campaign by simply tweeting your name and telephone number with
the slogan “I support the NSTBS campaign” to the twitter handle @Lesleba #NIGERIA
STOP TREASURY BILLS SCAM (N:STBS)!!
Similarly, the same message can be sent as text messages on mobile phones to 08052201997.
Please be assured that if the size of participants is sufficiently impressive, a compiled
summary of respondents will be made available to frontline political parties as a guide to the
kind of change Nigerians urgently want.
Our future and the future of Nigerians yet unborn is at stake, this is no time to sit on the fence
especially in the face of clear evidence that for decades the CBN and our Economic
Management Team have succeeded in Selling the Nigerian people a dummy on the
effectiveness of their convoluted monetary strategies.
Save the Naira, Save Nigeria!!