Godwin Obaseki
Godwin Obaseki

By AYOOLA OLAOLUWA, OBINNA EZUGWU and EMEKA EJERE

The shocking revelation by Edo State Governor, Godwin Obaseki, that the Central Bank of Nigeria (CBN) has gone full berserk and is printing tons of naira non-stop to stabilize the nation’s economy and keep the federal, states and local governments afloat, has continued to attract reactions from many Nigerians.

The Edo governor had last Thursday at the Edo State Transition Committee Stakeholders Engagement in Benin, the state capital, revealed that Nigeria is in huge financial trouble and that the federal government, owing to non-availability of funds, was forced to print N60 billion as part of federal allocation for the month of March 2021.

“Nigeria has changed. The economy of Nigeria is not the same again whether we like it or not. Since the civil war, we have been managing, saying money is not our problem as long as we are pumping crude oil everyday.

“So we have run a very strange economy and strange presidential system where the local, state and federal government, at the end of the month, go and earn salary. We are the only country in the world that does that.

“Everywhere else, government rely on the people to produce taxes and that is what they use to run the local government, state and the federation.

“But with the way we run Nigeria, the country can go to sleep. At the end of the month, we just go to Abuja, collect money and we come back to spend. We are in trouble, huge financial trouble.

“The current price of crude oil is only a mirage. The major oil companies who are the ones producing are no longer investing much in oil. Shell is pulling out of Nigeria and Chevron is now one of the world’s largest investors in alternative fuel, so in another year or so, where will we find this money that we go to share in Abuja?

“When we got FAAC for March, the federal government printed additional N50-N60 billion to top-up for us to share. This April, we will go to Abuja and share.

“By the end of this year, our total borrowings is going to be within N15-N16 trillion. Imagine a family that is just borrowing without any means to pay back and nobody is looking at that, everybody is looking at 2023, everybody is blaming Mr. President as if he is a magician”, Obaseki lamented.

While the revelation came as a shock to many Nigerians, Business Hallmark findings revealed that the money printing spree has been going on for years, while the intensity only heightened in 2015, with the President Muhammad’s Buhari’s administration virtually turning the CBN into a currency printing press.

For instance, the CBN printed ₦2.86 trillion in 2020 alone without matching the funds with proprietary economic activities.

The revelation was made by the Minister of Finance, Mrs Zainab Ahmed, while presenting the approved 2021 budget.

Though, the trend of printing money predates the present administration, BH gathered that it intensified at the assumption of office of the Buhari regime. Starting at ₦2.5 trillion in 2015, the funds rose to ₦11.7 trillion by the end of 2019, with the election year alone (2019) accounting for the printing of ₦3.52 trillion.

With the additional ₦2.86 trillion in 2020, the CBN has printed ₦19.03 trillion for the use of the current administration, available records from Dataphyte, a research and data analytics organisation indicated.

While the data for money printed in 2021 is not yet available, experts estimate it should be in the region of N1.5trillion.

Meanwhile, reactions have continued to trail the printing spree of money for the government by the CBN. Speaking, the Chief Executive Officer (CEO) of Global Analyst Consulting Ltd, an international consulting firm, Tope Kolade Fasua, while acknowledging the specific circumstances of 2020 (Covid19 induced economic meltdown), maintained that the CBN was lending too much to the government and that the action will have inflationary implication on the economy.

“While I acknowledge the specific circumstances of 2020, I should also state that these circumstances affected every economy in the world, not just Nigeria. And a majority of them did not print money in such volumes.

“However, I am aware that the CBN has the political backing to print and borrow to keep the economy flowing. This shows that it is a political decision rather than an economic one”, Fasua noted.

Also speaking, a development economist, Barrister Fred Nzeako, blamed the government for creating the current inflationary trend with its uncontrolled printing of money.

“By printing valueless naira notes that are not backed by productivity to the tune of N60 billion monthly, government is creating an inflationary trend.

“Quote me, by the next MPC meeting, the CBN is going to tinker with the monetary policy rate because inflation is going to rise further. The truth is that government is not earning much through tax due to low productivity occasioned by insecurity, high exchange rate, high unemployment and other factors and they have to pay the bogus allocations.

“That is why they resorted to printing paper money without commensurate economic productivity. Obaseki understands the implications, that’s why he is raising the alarm. You will see what the NBS figures will be when next they come out.

“When I heard that government printed money, I was so bitter because it is lack of productivity that has continued to kill the naira”, Nzeako lamented.

Echoing Fasua and Nzeako’s sentiments,, a political economist at the Lagos Business School (LBS), Dr. Austin Nweze, said the decision to print money for domestic consumption will stifle the economy in the long run.

“What the federal government is doing is inflation targeting that will lead to so much money in circulation since you have not created jobs. It doesn’t make any economic sense to print money and still allow such money to be in circulation because it has huge implications for the economy.

‘What Governor Godwin Obaseki said is cause for worry. What the federal government has done is that the country is broke and its economic management style is not dependable. I should have expected the government to take a cue from the Rwandan President, Paul Kagame, who had to resort to printing Rwanda local currency to pay up its foreign debts.

“That way the money is not in circulation and cannot lead to inflation. However, the experience in Nigeria shows that the money being printed is not productive money but free money to be spent and that is indeed a sad thing”, the LBS don stated.

Likewise, a former Kaduna Central senator, Shehu Sani, faulted CBN’s obsession with printing money. According to Sani, “Obaseki’s disclosure of printing and sharing cast us in the light of Idi Amin’s Uganda.”

However, a professor of Economics and Public Policy at the University of Uyo, Prof. Akpan Hogan Ekpo, said there is nothing new about the CBN printing money if it becomes inevitable. He nevertheless also insisted that such funds must be put into productive use.

“Central banks all over the world print money when there is a need for it. It is only if you don’t manage the huge amount of money in circulation that it becomes a problem.

”If it is not well managed, it will lead to a situation where too much money is chasing few goods and that could lead to inflation naturally and inflation hurts the poor harder than the rich.

“The first thing however, is to avoid printing money if possible. But if it becomes inevitable, it should be done efficiently in terms of being able to manage such funds”, Prof. Ekpo advised.

1 COMMENT

  1. Comment: Our country is like a damaged vehicle taking to a furniture shop for repair,instead of a mechanical workshop,the fact is that nigeria is currently in a wrong hand.

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