A financial expert, Babatunde Salami, has advanced reasons why it would be difficult for the country to escape the pressure of economic hardship currently plaguing it.
He asked Nigerians to brace for more hardship in the next three years as the nation’s revenue is very low, and susceptible to external debt.
“I don’t see us getting out soon of this economic challenges and attendant consequences, regardless of who is in power. It is not a two to three years period because majority of transactions entered into by CBN on behalf of the Nation, some have matured but yet to be settled. Leading over due liabilities and others will soon mature leading to further default.
“In addition, the national Revenue is equally not encouraging, as it is very low for a country of huge population, and with the facts that 90% of national revenue was to service the interest of the national debt last year,” he said.
Contrary to the notion that resuscitation of the refineries will rescue the situation, the financial expert said all the money expended on Turnaround Maintenance in turning around the refineries proved to be wasted over the years.
Salami said: “The refineries have not produced anything for years, money spent on them have been good money thrown into bad rubbish.
“The three refineries in Warri, Port Harcourt and Kaduna haven’t produced a litre in years and we are paying salaries of an average of N13billion monthly to the people who are just resuming to office and producing Nothing, what is the productivity level. These were part of the structural problems in the Nigeria.”
The financial expert took a swipe at the Central Bank of Nigeria (CBN) for allegedly shrouding its account in secrecy, thus making it difficult to be audited.
He said: “The implication of failure to audit account is that you don’t know where you are or financial status or standing and CBN account not been audited for 5 years. It was a long time and the implications are becoming very obvious on our economy.”
In reference to the report of the world renowned financial management firm, JPMorgan Chase & Co., Salami alleged some hidden transactions in the Audit report by the CBN and also blamed the current financial crisis on some questionable transactions made by the Apex Bank in recent years.
He said: “In balance sheet, we normally see figures like $33.7billion and the figure is not the actual money belonging to the Nation, because there are some borrowings that have been included in terms of wanting to know how much Funds Nigeria has
“The audited account exposes many things that ordinarily people may not take cognizance of, one of which was the Forward Contract that CBN entered. ‘Forward Contract is one of the Derivative product use to hedge volatilities in prices of good and services, Currency. Upon maturing of the Forward Contract you are obligated to settle, the CBN has not settled the matured Forward Contract leading to Past Due liabilities and some other Forward Contracts will mature and the CBN will not be able meet its obligations of $6.1 Billon. This will be liabilities on the Nation and it might lead to a ripple effect of people going to court to make sure they get settled but is quite worrisome why the CBN has failed to deliver.
“Recently, there was a issue of cashless policy and the complaint of the CBN Governor was that there was too much money in circulation and there is need to reduce it where at the percentage of money in circulation then was 6% while America had 10% and Britain had about 9%.
“A report came out through JPMorgan, which is different from what was reported in the audited account of CBN. JP Morgan claimed CBN is owing them $7.5 billion, which hasn’t matured but will be netted off the $33billion. The figure is coming down
“There is another worrisome aspect of it that JP Morgan, being a Bank most of External Reserve Fund are kept, had a fair of our Balances, It is like saying you have N10,000 in your account but the bank manager is saying that you have only N3,000 on your balance sheet. So, you need for the CBN to explain why its your figure is different from that of JPMORGAN.
“JP Morgan said at a particular point in time any individual who is in need of dollar maybe for travelling or payment of school fee you have to make application for weeks or months and it was difficult but the question is what happened to the cash in circulation in Dollar.
“Apparently, JP Morgan exposed that $21billion was used as swap with local banks and Foreign counterparts where Dollars and Naira were swapped leading to scarcity of Dollars and the law of demand and supply came into play, meaning Dollar price rose against Naira and still continuing.”
He noted that the failure of the CBN Governor to maintain price stability is due to what he described as an unwise decision, saying this is similar to Nigerian/Chinese Bilateral swap where Chines Yuan were swapped with Naira in March 2018.
“The responsibility of CBN Governor is to regulate and maintain price stability whereas he is making transactions that are opposite to bringing Dollar prices downward I don’t think that was a wise decision.
“By the time you net off $21billion, $6.1billion and $7.5billion in an open environment, Nigeria just has only $3.7 billion left whereas we have reported that we have $33.7billion.
“How do we now settle majority of these outstanding that is $21billion, $3billion and $7billion, how do you manage this? As at the time of taking over of the last government, there were some balances in the account and it grew to about $44billion. So, what happened to those balances, this is begging for answer”, he said.
Salami observed that the inability to stabilize price will further affect the country trade balance as well as compound the already affected living standard of the citizens.
He added: “Implications are, firstly, our trade balance will be affected. Secondly, our living standard will also take a hit as the country is currently struggling with productivity due to insecurity.”
On the anchor borrowers programme, Salami lamented that majority of the funds were given out for political patronage and lauded President Tinubu for taking the step to recover money from the defaulters who are yet to redeem the loan.