Moghalu, Onyekpere, Rewane knock Buhari over forex directive

A former deputy governor of Central Bank of Nigeria (CBN), Prof. Kingsley Mogalu has slammed President Muhammadu Buhari over his directive to the apex bank to stop foreign exchange for food importation.

Also, a Nigerian Knowledge Institution, Centre for Social Justice (CSJ) also expressed regrets at the directive.

In addition, an economist, Mr Bismarck Rewane expressed the view that CBN ought to be treated as an independent institution.

In a series of tweets, Moghalu warned that political interference in economic policies of the CBN constitute a major cause of poverty and weak institutions, insisting the directive of President Buhari to the apex bank is totally against the independence of the CBN.

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Moghalu, who was the presidential candidate of Young Peoples’ Party in the last elections wondered if that bank had become a ministry under the presidency to be so directed by President Buhari.

According to him, Article 1(3) of the CBN Act 2007 states among others that; “In order to facilitate the achievement of its mandate under this Act… the Bank shall be an independent body in the discharge of its functions.

“The issue here isn’t whether or not CBN should allow access to forex for food imports. It is about whether such an economic policy of a central bank should be imposed by a political authority.

“A major reason for our poverty, instability and a weak economy is weak institutions. Our marketplace should be regulated and guided in a rational manner that creates a level playing field. Our economy will not be saved by Ad Hoc political decisions like this, handed down to the very institutions that should be shielded from the whim and caprice of politicians.

“Nigeria’s entire economy appears to have been sub-contracted to our central bank, including industrial and trade policy. In the process, the economy has fared poorly and the Bank has lost its independence. This is sad!” Moghalu noted.

While charging Buhari to leave the apex bank alone to discharge its mandate independently within the ambit of the CBN Act, and stop directing it, Moghalu also urged the CBN on its part to assert its independence assuming it actually believes it should be independent, stressing that the CBN Act states so clearly.

Also in a statement signed by its Lead Director, Eze Oyekpere, CSJ said the “there are no provisions in the CBN Act or any other existing law empowering the President to run or give directives on foreign exchange management or any other component of monetary policy.

“This directive erodes the independence and autonomy of the CBN and presents Nigeria in the image of the Idi Amin fable when he gave directives to the governor of the Ugandan Central Bank to print more currencies when told that the country was running out of money.

“This directive is, therefore, an illegal directive which the Governor and Board of the CBN will obey at their own peril.”

CSJ noted that the directive was fraught with danger and appears to be an illegal directive for a number of reasons. The first issue is on the legality of the directive. By S.1 (3) of the Central Bank of Nigeria Act 2007, it is provided that: “(3) In order to facilitate the achievement of its mandate under this Act and the Banks and Other Financial Institutions Act, and in line with the objective of promoting stability and continuity in economic management, the Bank shall be an independent body in the discharge of its functions.

“The second issue is that policies such as this, assuming it came from the CBN would have required a phased and gradualist approach in determining the point at which foreign exchange allocations for food imports will be reduced. This would have involved a multi-sectoral engagement of farmers, food processors, the banking industry, transport and electricity sectors, etc., with clear demonstrable milestones of achievements to indicate the attainment of food security.

“This directive is rather a knee jerk reaction to the euphoria of sycophants who tell the President that his agricultural policies are working. And very, unfortunately, there is no evidence to support this assertion in terms of more quantity, quality and cheaper foods available to Nigerians.”

Also reacting, Rewane who spoke with Reuters said a curb on foreign exchange for food imports could backfire after Buhari last month signed up to the African Continental Free Trade Agreement (AfCFTA). That deal seeks to create a continent-wide free trade zone where tariffs on most goods would be eliminated.

“At this point in time these rules will be manipulated in the interest of smugglers and their accomplices,” said Rewane.

Import controls on rice, imposed even as local farmers fail to meet demand, have kept prices artificially high and led to smuggling from neighbouring Benin into Nigeria.