The two policies being adopted by this administration are two sides of the same coin to assist the Nigerian economy to stabilise and grow.
In order to know the impact that the two policies can have on the citizenry and the economy, one must decipher the key role that banks are expected to play as custodian of public money in the Nigerian economy and whether the banks are playing the roles expected of them for the economic development of Nigeria.
Money is not a factor of production; it is just a facilitator in the process of development. Money is meant to facilitate buyer, sellers, producers, distributors, workers etc. in their interaction among and between all the variables in the economy. The banks are custodians to enhance and smoothen the facilitating role of money. For this function, banks are expected to charge minimal fee (i.e interest) for their roles in storing money and releasing money to those who need money for production of goods and services and distribution involving all the variables in the economy.
But instead, Nigerian banks are manipulators not facilitators. The banks use the money kept with them to manipulate the economy negatively for their selfish ends such that they end up reaping not just normal profits rather they earn profit rent. They declare huge profits not from any production but from manipulations, which the banks do in the economy. While the users of money obtained from Nigeria banks are pauperised, the banks reap huge unearned profit. The producers and distributors using bank money not only have their business destroyed by prohibitive interest rate, they are reduced to walking corpses. This is how several genuine entrepreneurs are destroyed.
The banks in Europe and America use money to facilitate the variables in the economy and they earn a maximum of 3 per cent annual interest. But the Nigerian banks using their manipulations charge 20 per cent and above interest. The effect is that producers and distributors are liquidated with the accumulation of the astronomical interest piled against them.
Now, when billions of naira of government money is kept with the commercial banks, the money strengthens the banks in their manipulations of the economy leading to negative growth. The major money, which facilitates the small growth witnessed in the economy come from capital in stock market, private money generated within and from outside the economy directly into production and distribution not subjected to exorbitant bank interest rate. A lot of such monies are traceable to small scale industries and enterprises which accounts for 75 per cent of output and growth in the Nigerian economy. Therefore, keeping of government money out of commercial banks does not impact negatively on growth in the economy, it merely reduces the economic rent of the banks and therefore reduces billions of profit which go to increase the private billions of naira in the pockets of directors of banks.
As for using dollars in Nigeria, naira is the legal medium of exchange in Nigeria as per the Nigerian constitution. The use of foreign currencies for business transactions within Nigeria weakens our national currency – the naira. This is not good for the Nigerian economy. The production base of the Nigerian economy is not strong enough to sustain the use of dollars as a medium of exchange in the country. It does a great harm to the Nigerian economy and it has the impact of reducing the growth rate of Nigeria. It increases the unfavourable balance of payment against Nigeria thus reducing the prosperity of this country. The use of dollars within Nigeria should be banned as soon as the government policy on the use of dollars is laudable.
If we want this country to develop and take its rightful position as the 7th most populated country in the world; we must do what other big advanced countries of the world did to achieve their economic breakthrough. When Britain wanted to develop rapidly, she used trade and navigation acts and currency restrictions to launch an industrial revolution. When Japan wanted to accomplish economic revolution, she nearly closed her economy 100 per cent, using all sorts of restrictions. China used a lot of restrictions including tariff, language, communist form of government and many other policies to close her economy until recently when she had developed products she could sell in the world market.
Nigeria produces only crude oil for the world market; otherwise, Nigeria produces nothing for the world market. Any serious government that will launch Nigeria on the path of breakthrough to agricultural/industrial revolution must impose restrictions. But the restrictions must not be in vain. Such government must not only map out vision and target for Nigerians to see, it must be based on the use of systemic models to organise all major sectors of the economy. If a government can embark on such visionary journey and explains it plainly to Nigerians, I am sure that the citizenry will be ready to make the needed sacrifice for Nigeria to be great and leave the comity of inferior citizenship of the world.
• Dr. Olowoporoku, a former member of the Senate, was also Minister of Science and Technology in the Second Republic.