The Vanguard Economic Discourse in Lagos yesterday got to a climax where former Governor of the Central Bank of Nigeria, Prof. Charles Soludo, and the immediate past Governor of Edo State, Mr. Adams Oshiomhole, made allegations and counter-allegations.
The development, which generated grumblings among the audience according to Punch Newspaper occurred during a discussion session moderated by the founding Group Managing Director/Chief Executive Officer, Guaranty Trust Bank, Mr. Fola Adeola.
Soludo, who delivered the keynote speech on the topic, ‘The hard facts to rescue the Nigerian economy’, had earlier highlighted some of the failures of the President Muhammadu Buhari-led government, particularly in terms of fiscal and monetary policies.
But in his remarks during the panel session, where the Minister of Solid Minerals Development, Dr. Kayode Fayemi, defended the government, Oshiomhole accused Soludo of wrongly allocating millions of dollars to two new generation banks shortly before the naira was devalued.
He said, “I got some intelligence from my comrades who worked in the system and we found out that the CBN under Soludo had just allocated couple of millions of dollars to two, as they were then known, new generation banks.
“And I asked Prof (Soludo), if you were going to devalue by Friday, why did you auction dollar at a lower rate on Thursday? I accused Soludo, I said you have enriched these two young men to the tune of N8bn, courtesy of your internal abuse.
“When the regulator behaved in this manner, then the Nigerian condition is much more serious than we can appreciate it. We need to deal with issues of attitude.”
However, this did not go down well with Soludo, as he said some people tend to change the subject when they did not have an answer to his earlier comment, a response that caused boisterous laughter and clapping by the audience.
He dismissed the allegation as a lie,insisting that there was no such allocations to the banks as the lenders followed competitive bidding process.
He said that the CBN under his tenure built massive foreign reserves, and had allowed the exchange rate to adjust to market forces demands.
He said that Oshiomhole did not know the difference between devaluation and depreciation of the naira. He said all the banks got equal chances during the bidding process.
Earlier in his keynote address, Soludo had said the country has many challenges, calling for all hands to be on the deck to resolve them.
“Nigeria economy is in a dire need of a rescue. The national budget is not working. We are still where we were since independence. Nigerians have been trusted to rescue the country. The continuous slide in oil prices and Niger Delta crisis are only a simple explanation of the ongoing economic problems. Nigeria seems to be moving in cycles since independence. Finally, the Federal Government has an economic recovery plan which is supposed to be government’s blueprint for rescuing the economy,” he said.
“I want to commend the effort, to be fair, the government inherited very bad economy. The previous government had unprecedented rate of debt accumulation even at a time of unexpected oil boom. The previous government was even depleting our foreign reserves instead of doubling what it met. It could have more than doubled the reserves, if it grew it by just 50 per cent,” he added.
Continuing, he said that when President Muhammadu Buhari came to power, inflation was at nine per cent and has risen to about 19 per cent; exchange rate dropped from N197/ N205 to dollar to N305/465 to dollar in the parallel market; unemployment rose from 7.5 per cent to 14 per cent while capital market capitalisation, business confidence and ease of doing business have also worsened.
Soludo said that foreign reserves have been depleted, current account balance negative, wages are declining, half-hearted commitment to deregulation of the petroleum industry.
“The domestic currency style, the economy is in recession, but in dollar terms, the economy has suffered a massive compression. The Gross Domestic Product has shrunk from $575 billion when the government came to power to $357 billion/$232 billion for parallel market rates. The value of the GDP has dropped by more than half. It will be a miracle for the government to return the GDP value to the level it met it,” he said.
Soludo, however, commended the government for plugging the loopholes in the economy. He said that government is inconsistent with plan for economic growth. The governments keep blaming themselves, and are busy chasing rats and losing the cows.
“Nigeria has refused to learn from the history from the booms and bursts cycles. Every government since 1970 has pursued diversification, but failed to pull it through,” he said.
Also speaking, Solid Minerals Development Minister Kayode Fayemi, said the ugly trend in the economy started long ago, and that the present government cannot perform magic in fixing the economy.
“We are not going to perform magic in addressing the challenges facing the economy. But the people may not want to hear this. Our tax base is one of the lowest in Africa,” he said.
Oshiomhole alleged that Soludo priced money out of the reach of investors and had no reason to castigate government over present economic crisis.
“We need to raise the purchasing power of the average Nigerian. The problem with the public sector is not wages but fraud,” Oshiomhole said.
Former Managing Director, Diamond Bank Plc, Alex Otti, said it was wrong to bar 41 items from accessing forex from the official market because the importers will still find ways to fund the products.
Managing Director, Financial Derivatives Company Limited, Bismark Rewane, called for reform of the forex market to save the economy from collapse. He also called for the government to fix the lectoral process for the economy to recover.