Stabilization of the Naira is Contingent on the Stabilization of Investment Climate in the Niger Delta!

Part Three: The last on the Stabilization of the Naira series!

Finally, it is my fervent belief that we are not likely to experience the desired results in any monetary or fiscal policy we design at the moment, without first, stabilizing the investment climate in and around the region that harbors the mainstay of our economy - the Niger Delta. Revenue earning is fundamental - a core component of macro economics of a given nation. Therefore, our revenue source or sources must be secured. The starting point calls for a concerted pragmatic approach. The Presidency and the stakeholders in the petroleum industry must be selfless, proactive and persistent in managing negotiations with the militants and the various community leaders in the region.

After a careful reading of the situation, and having regard to the fact that we have successfully funded the construction of an ultra-modern mega city like Abuja, and in the long past successfully fought a brutal civil war for three years, without resorting to external borrowing, one would have thought that funding the reconstruction of the Niger Delta, curbing pollution and gas flaring in the region, as well as meeting the social expectations of the locals wouldn't have been a subject for endless debate. It is not right, it is not fair and it is morally repugnant. Now, they are fighting back, demanding their pound of flesh by any means necessary. 

In spite of everything, the ongoing U.N sponsored cleanups exercise in Ogoni Land is a positive development that must be sustained. But we can do better.

Reality Check: 

Indeed, the region is beginning to enjoy federal attention, but they cannot, with the same age-old cosmetics remedial measures, overcome 50 years of abuse of federal character, quota system, environmental degradation, and the indiscriminate destruction of their aquatic resources by the multi-national oil companies - aquatic resources that they overwhelmingly depend on for sustenance.

They survived 50 years of neglect and deprivations. That is a fact.

They were fishermen, they were into rubber and they were into timber. They were industrious, self-secure and self-sufficient in food production. 

They were loyal landlords, until the uninvited quests confiscated their land, took away the riches of their earth, and imperiled their means of survival.

And yes, they produced and drank ogogoro (local wine), but there was no drunkard and there was no insane delusional or hopeless mind rummaging the swampy landscape scavenging for a piece of the black gold simmering from crevices along the pipelines. They were loyal and very accommodating a host.

IOCs and the Federal Government of Nigeria took their humility for granted and left them economically pulverized. They were mentally colonized and psychologically conquered.

There was no burning, and there was no looting. There was no kidnapping of white men and not so white men for ransom. Yes, they were loyal; minding their own misfortune.

There was no vandalism. And there was no declaration or lamentation of force majeure by Shell, or BP, or by Chevron. These companies cleaned up their mess in the Gulf of Mexico and elsewhere in the developed and developing World; that they must clean up their mess in the Niger Delta is not too much of a demand.  

While crude oil business has made some very privileged Nigerians stupendously rich, and sometimes, made them rich overnight, it has irretrievably impoverished a greater majority of the inhabitants of Niger Delta. 

Moving Forward 

In the past one year, the price of a barrel of crude oil has taken a severe beating in the international market. That's not the worse cut. We cannot meet our OPEC quota due to the calamitous exploits of the AVENGERS, as well as, the general hostile investment climate in the region.

Granted, the AVENGERS have legitimate demands; nevertheless, I do not espouse their modus operandi. I believe in dialogue. 

In addition, the idea of "handouts" or "welfare package" to emancipated militants and the unemployed youths in the region shouldn't be a lifetime commitment on the part of the federal government. It must be transitional in scope - a gateway to empowerment and self-enrichment. 

Be that as it may, in light of the escalating, but disturbing successes they have garnered in the past one year - blowing up gas and petroleum pipelines on land and sea in the region, with unhinged alacrity - one must not be at pain embracing the idea of a road map for dialogue and enduring peace.

This is not about who is the conquered or the conqueror in the conflicts; the AVENGERS must cease hostility and come to the negotiation table in good faith and unconditionally.

Pollution and environmental degradation aside, I have no doubt in my mind that something is inherently wrong with the allocations and ownership of oil blocs in the Niger Delta. Niger Delta is not a conquered territory. I have repeated that lines ad infinitum on this Blog over the years. The earlier our Federal Government is willing to place that distortion (ownership of oil fields) on the negotiation table for an amicable resolution, the better it is for our earning capacity, foreign reserves and economic development. 

The truth is the shortfall in revenue earnings from crude oil that we suffer every day due to our inability to meet our OPEC quota, coupled with the funds invested in security, procurement of gunboats and fixing damaged gas and petroleum pipelines are more than reasonably necessary in meeting the demands of the region. Do the Maths. It is called Penny wise Pound foolish.

The White men (all outstanding Energy Lawyers, some of them happened to be my Professors in Graduate School) who developed the concepts of "social license" and "Land Reclamation Funds" (naively written as Host Community Fund by the drafters of the Nigeria PIB) are not short sighted like the Nigerian leadership. 

In their judgement, stakeholders and investors engaging in oil and gas, including mining, must strive to balance their investment goals (profits), with the socioeconomic expectations as well as environmental concerns of the local communities where they operate - not taking anything or anyone's interest, including human rights obligations and redress mechanisms, for granted.

They came up with these concepts conscious of the fact that, in spite of the unconscionable nature - the enormity of the lopsided scripting of the Investment Agreements they structure to strengthen the bottom-line of their clients (IOCs); undermining, and most often, eliminating the adjudicatory and sovereign rights of host nation, trouble and conflicts always follow their clients (IOCs) all over the place in the host communities where exploratory activities do take place. And most often, cascading uncontrollably to protracted mayhem and declaration of force majeure. It is the same story all over the world.

So far so good, successive Nigerian rulers, with the exemption of President Musa Yar'Adua, are seemingly lukewarm buying into or embracing these universally acceptable concepts, referred to in the energy circle as "emerging trends in Natural Resources Agreements." You abandon them; you abandon them at your own peril. You embrace them and integrate them into your agreements and the overall exploratory activities from the onset, you will have an uninterrupted revenue stream to boot. 

I would like to add at this juncture that when it comes to meeting the expectations of the host communities, corporate social responsibility, noble as the term has become, is a distant second compared to integrated agreements. An integrated agreement is a total package - an all embracing agreement that encapsulates everything that matters to the host communities at the formation of the agreement. 

Therefore, until we manage and secure peace in and around the Niger Delta, knowing that the region is the major source of our revenue generation, no economic policy developed or contemplated will manifest as anticipated. It begs to repeat; the distorting surrounding the allocation of oil blocs must be corrected.

Bench-marking GDP on oil revenue and production quota that we do not exercise much control over will continue to create an amateurish air over our economic war room. We need to earn revenue - uninterrupted revenue – to make sense out of our economic and fiscal projections. 

In addition, as a modern-day student of the industry, it is my greatest concern that a modern day energy policy, without a, designated fully funded "Set Aside Account" for unanticipated adverse environmental occurrences is not sustainable. 

Without mincing words, the Host Community Funds clause in the PIB is plainly a misnomer. The preferred term is "Land Reclamation Funds." If that was the case in the new Bill, the resistance from our brothers from the North would have been plainly ill-conceived.  That's by the way.

Today, to say all is not well in the region and in the industry is an understatement. It is time President Buhari and stakeholders in the petroleum sector get pragmatic, strengthening their negotiation skills, jettisoning ethnic or regional biases, with a view to ensuring sustainable peace and uninterrupted flow of petroleum products in the region.

At this juncture, let it be on record that I will support the elimination or merging of the Ministry of Niger Delta with NDDC to assuage powerful Northern political leaders who have consistently argued against the passing into law of the new Petroleum Industry Bill (PIB) on the ground that the region is already awash in federal presence.

Now, this! Indeed the resources in the Niger Delta belongs to all of us, as pundits always want to argue, but truth is, the environmental hazards associated with petroleum activities, belongs, not to all of us, but exclusively to the communities in the Niger Delta. And that is the disturbing fact. You and I do not want gas flaring and water pollution in our backyards. Let's clean up the Niger Delta. All it takes is commitment, audacity, and adherence to merit in the hiring process.

The End

By the way, I did not address the issue of DIVERSIFICATION OF THE ECONOMY for obvious reasons: Erratic power supply and the difficulties associated with movement of goods and services in Nigeria - bad roads as well as the incessant Police, Soldier, NDLE, Customs, FRSC, Local Vigilante and VIO checkpoints. Checkpoints must first be eliminated or curtailed to make diversification of our economy meaningful. Quality transportation services  - ease of movement of good and services across the length and breadth of the country is fundamental to a diversification of economy that is sustainable.

Thank You, Everybody. And Happy New Year! Please do not expect a new post from me anytime soon.

Stabilization of the Naira: How The CBN Regulatory Regime is Aiding and Abetting Money Laundering and Devaluation of the Naira

Part Two

Attention: Minister of Finance and Governor of Central Bank.

Spending and investing catalyze economic recovery during a recession. The austerity package is stultifying, suppressing growth and leaving chaos in its wake. Ask President Obama, and he will tell you better. It's all about investment and breathing life into cash-strapped industries by way of new funding, referred to colloquially as "Bailout."

The hardship Nigerians in their thousands encountered at the Banks and at ATMs on the eve of Christmas, trying, without success, to execute withdrawal from their Bank Accounts feeds into the narrative out there that the corridor of power and the upper echelon of the CBN are populated by voodoo economists.

Leaving the affected Nigerians cashless before and during Christmas, and no one within the Banking sector or within the corridor of power to offer any explanation for the unavailability of cash is despicable, callous and completely illogical.

Economic growth is about spending and investment - on infrastructural facilities, road-networks, research and technological innovation. The present trial and error (austerity of cash) monetary policy championed by the Governor of Central Bank and the Presidential Economic team is patently haphazard, lacking the steam germane for economic revitalization.

There is a huge difference between (1) having stack of cash in one’s possession or at the Bank and not being able to find foodstuffs to buy (inflationary), and (2), having goods and foodstuffs readily available for purchase by consumers, but they cannot consummate purchases, because the regulatory regime has foreclosed on their savings accounts as it is presently the case in Nigeria.

Let's simplify it even more: If there is a shortage of money in circulation, consumers won't be able to buy and suppliers won't be able to sell. If suppliers are not able to sell, distributors or wholesalers won't be able to distribute. If wholesaler cannot distribute, manufacturers won't get paid or be able to offload their inventories. What that means is that they (manufacturers) won't have any need for new workers or retaining existing workers, leading to a profound lull in economic activities - depression.

Spending or investment paralysis catalyzes depression. The ongoing austerity package is stagnation -prone - it strengthens recession. Though the market situation today has traces of inflation, there is no too much money chasing too few goods. And there is no shortage in the supply and demand for goods and services. It is the Government's policy that is killing the Naira, leading to a price hike. Because Naira's worth is being measured as against the disappearing Dollars.

The truth is the Nigerian currency market is over regulated. Too much Naira is chasing too few Dollars, because of the restriction placed on demand and supply of Dollars in our domestic market. And that explains the precipitous decline in value of the Naira juxtaposed with the Dollars. The shortage of the Naira will not only kill the economy, it has the potential to exacerbate social unrest nationwide.

In sum, the situation is not too much Naira chasing too few goods and services, but too much Naira chasing unavailable Dollars. In a similar vein, the shortage of the Dollar will not only erode confidence in the Nigerian economy, it will exacerbate money laundering. I will explain.

Money Laundering By Other Means.

Since the inception of this administration, Nigerians at home can no longer walk into the Bank or the Western Union to withdraw money sent to them from overseas in the currency in which it was originally sent. That's not all, the recipients are not only paid in Naira but at the government regulated rate. In other words, the patronizing of Western Union to execute withdrawal and exchange at Black Market rate is no longer feasible.

On the other hand, when you are sourcing for Dollars or Pounds at government regulated rate from the Banks or the Western Union, you are not likely to succeed. At that point, the only alternative left before you is to proceed to the Parallel Market or Black Market to buy, where there is already shortage and price hike. But not the same story with the uber privileged. 

As anticipated, Nigerians living abroad who labored for their Pounds, Euro, and Dollars under excruciating conditions are not willing to be held captive by a regulatory/monetary framework they considered dubious and ill-defined. And they went to work.

In the past eight or so months, the situation has changed, placing the government and the Central Bank, in fact, the entire Banking system in Nigeria at the receiving end. The major foreign currencies are no longer coming to Nigeria as "Hard Currency" subject to governmental control.

Nigerians living abroad can now take their hard currency and paid them into the accounts of other Nigerians living in the same country as they do, who will in turn instruct their agents in Nigeria to pay the specified recipient at home in Naira, at a little less than the prevailing Black Market rate, but significantly higher than the regulated rate.

Now, if you consider the magnitude of Dollars and Pounds and Euro Nigerians abroad remit home every month - Dollars, Pounds, and Euro that have been swelling the Nigerian economy over the years - you should be able to fathom the volume of foreign currencies presently accumulated overseas by Nigerians who are funding the transactions behind the scene back in Nigeria. What a smooth way to repatriate their accumulated Naira out of Nigeria, without wasting time patronizing "Bureau de change" or Banks!

The CBN, arguably, wanted to corner a chunk of the hard currencies being sent home by hard working Nigerians abroad by forcing them to "exchange" at the regulated rate. In the process, they have succeeded in pushing them to devise alternative means to repatriate their money to their loved ones at home, notwithstanding the fact that such alternative means have constituted smooth sailing channels for roguish Nigerians, their friends, and cronies to ferry their ill-gotten wealth out of Nigeria, unhindered.

I do not subscribe to the culture of money laundering, especially one developed by taking advantage of a loophole in the regulatory regime. What I consider nauseating though is the discriminatory application of the exchange rate policy in Nigeria. While highly placed government officials can simply walk into the Central Bank or any Bank and procure their currency demands at the official exchange rate, poor and underprivileged Nigerians do not enjoy such luxury. They patronize the Parallel Market, buying at the prohibitively high exchange rate. That's a major lapse in the policy that needs to be corrected.

Stabilization of the Naira: President Buhari, Managing Expectations and Overcoming the Sin of Disengagement!

Part One

Leadership is about "First-hand Knowledge" of a given issue - an on-the-spot assessment of major adverse occurrences, empathizing with victims and crafting redress mechanisms as appropriate.

A President must endeavor to confront realities as they evolve; otherwise, they linger and continue to hurt the leadership, causing enormous distractions along the way. President Buhari should not have canceled his planned trip to Ogoni land to flag up the UN-Sponsored clean-up exercise.

Niger Delta is not Sambisa Forest. Gunboat cannot establish the peaceful investment climate germane for an uninterrupted revenue stream as naturally expected from a petroleum-rich region like the Niger Delta.

Make no pretense about it; President Buhari must be seen to feel the pains associated with pollution and environmental degradation. He must exhibit, by any means necessary, a body language that is consistent with the reality or acceptance of the fact that indeed Niger Delta is not a conquered territory.

Addressing or meeting these expectations is fundamental, and it encompasses addressing the lopsided allocation of oil blocks and oil fields executed over the years mostly at the behest of Military dictators of Northern extraction.

Also, the rejection of the Host Community Fund in the new Petroleum Industry Bill (PIB) by political leaders from the Northern region is not encouraging. The reasons given by the adversaries of the Clause for their rejection are not consistent with the realities on the ground in the oil-rich communities. A 10% of the net profit made by IOCs doing business in Niger Delta as a set-aside fund for the host communities, referred to as The Host Fund in PIB is not enough to perpetually impede the passage of the entire Bill.

A modern Petroleum regime without a set-aside fund for addressing unforeseen catastrophic occurrences is not sustainable. The not too recent spillage in the Bongo Oil Field in the Niger Delta, as well as the spillage in the US Gulf of Mexico, poses a real test for having a set-aside fund.

In addition, and as a timely warning, President Buhari should not dilly-dally on confronting separatist agitators head-on in their territories with a view to structuring a compromise or restoring sustainable peace.

Managing and Eliminating Disconnect

A situation where a sitting President made more trips to countries outside of Nigeria than he has made to states and cities in his own country exemplifies an attitude of disinterest in the well-being of his subjects.

He didn't go to Chibok to empathize with the family and friends of the returnee Chibok Girls in the captivity of Boko Haram. Family members and the rescued girls were nevertheless invited to Aso Rock. Following his inauguration, the Presidency didn't consider it worthwhile to meet with the parents of the kidnapped girls and the community members. That is the best approach to rekindling hope and a sense of belonging to the grieving community.

Watch President Obama: He has perfected the craft of taking the fight or the message to the enemy's territories. And the impact has been a tremendous success.

On the contrary, our DSS and security agencies who are surrounding our President, would rather he cancel his trip and stay at home for unfounded security concerns, than beef up security around him to meet firsthand with Nigerians. That is the first step to displaying purposeful leadership. It shows that you care. Otherwise, the contrary remains the dominant view. To wit, you love and want their crude oil, but completely deft to the magnitude of their environmental worries. 

President Buhari is not an Emperor. The President's men should realize that and let him loose. Let him loose, guys to feel the love, pains, anguish, affection, and concerns of Nigerians.

The ritualists in the Western region must be placed on the alert. The proprietors of Child Factories (under-age pregnancy for sale) in the Eastern region must be placed on the alert. Heads and Stakeholders of Educational Institutions in Zamfara State must be placed on academic probation. A state whose candidates cannot score more than two or three points passing grade in Federal Unity School entrance examination, when candidates from some other states must score above One Hundred points to pass the same examination, deserve indictment.

Also, University students, academic staff, and non-academic staff in all our universities must be made to understand that the President is not foreign to their concerns and well-fare.

Kidnappers in Edo and Delta must be placed on the alert. Killer Herds-men in Enugu and Middle Belt must be placed on the alert. Ethnic cleansing in Southern Kaduna, Jos, and Benue communities must be addressed.

The President, in addressing each of the mentioned ills, will have to pay a visit to a city at the heart of the crisis to prove to Nigeria that he is indeed in charge - that he can feel their worries. In a similar vein, he must also pick two or three academic institutions for a visit with students, staff, and lecturers. impressing it upon them that no child, staff or lecturer must be left behind.

Talking about the recession; President Buhari, with his presence and body language, can breathe confidence into our stagnating economy for a sustainable revival. The long lines at all the ATMs visible everywhere in Nigeria portray liquidity. In other words, Nigeria's buying power (the market) is real and robust.

Also, consider once again, the profit margin of the Telecom sector, they rake in more money in Nigeria than anywhere in the developing words. Buhari does not need to go cap in hand international fora soliciting for funds. We have the resources, we have the market, and above all, we have oil and gas.

We ought to be better than China if we know what we are doing. We have the resources, entrepreneurs and a huge market for goods and services. China does not have the resources that we have, yet they are prospering and we are hoping.

President Buhari should be engaging and create time to travel out of Aso Rock to socialize with Nigerians. We want to feel your presence, Mr. President. You must be genuinely perceived to be inspiring and caring. That is the Obama Way.

Take a chance on these common-sense suggestions, and I am confident that you will not only restore peace in the country, but the economy will also be rebound on its own. Above all, you will emerge as the best President Nigeria ever had. Merry Christmas.

Merry Christmas, Folks: Remember; It Is About Living Christ-Like!

From the bottom of my hearth, I want to wish every one of you a Merry Christmas and a prosperous 2017 in advance. I want to also use this opportunity to thank my friends and family members who made my stay in Nigeria and back to the US one of a memorable experience.

To my cousins, nieces and nephews, you guys were amazing. You rock. And to the men of God who were there for me, I cannot thank you enough. Specifically, I want to thank Pastor Charles Osazuwa of Rock of Ages, Pastor Sylver Wealth Iyamu of Canaan Land Ministry, Pastor Pius Egualeona of Open Heaver, and last but not the least, my good friend and cousin, Pastor Cyril Okoh. Above all, I thank God for His infinite mercy and protection.

As we celebrate Christmas, let's shrive to be Christ-like in all that we do. As a country and as a people, we worship God or Allah more than any country or group of people on earth, but we know who we are as a people, as a society and as a nation-state.

There is no denying the facts that there is a total disconnect between the Holy Books and Nigerian realities, our existence and life style as believers and teachers of the faiths.

Time was when it was all about the gospel, the teaching, and of faith, atonement and repentance of sin. Yes, it was about the healing and forgiveness of sin - "your faith has saved you; go in peace."

Today, at Churches, at home, offices and political gathering, we devote so much quality time and energy invoking Holy Ghost fire, and wishing death and destruction upon our imaginary enemies and political opponents. At the end, so little quality time is spent on perfecting the gospel and the teaching of acceptance, tolerance, peaceful co-existence, and empowerment.

Who is teaching about love, acceptance, tolerance, and dignity? What about "love their neighbor" or "thou shall not steal or convert their neighbor's goods?" What happened to "being their Brother's Keeper?"

We display superficial love, professing bogus piety in the social media. Inwardly, we are ravenous wolf.

As a people, we are born great and honorably inclined. But when call to serve, we promote and champion avarice, dispensing with honor and dignity.

Call this soul searching; I really don't know the answer, but what I do know is that Jesus Christ would definitely have indicted Nigerians of apostasy and perversion of the gospel long ago.

There is no doubt; there is more to living the message than in preaching it. It’s about you and your conscience, expressed in your actions and pronouncements.

But fear ye no Satanic or demonic forces. For it is written: "when a man's ways please the Lord, He makes even his enemies to be at peace with him." Yes, it's more than being born again. It is about remembering to be Godly, living the life of Christ and what he represents.

Remember, "render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's." That's the first step towards redeeming the image of God in us and reinventing our society and governmental institutions/constituted authorities.

Therefore, "do not withhold good from those to whom it is due, when it is in the power of your hand to do so." And "do not strive with a man without cause, if he has done you no harm." That, indeed, is the beginning of wisdom and enduring legacy.

I am not perfect and do not lay claim to perfection. To those I have wronged, in my writing or pronouncements, in what I have done or failed to do, I ask for forgiveness.

Once again, Merry Christmas everybody.

Barr Alex Aidaghese