By Louis Achi
Mr. Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company Limited, has advised President Bola Tinubu “to ramp up the skills in understanding federal and national economic dynamics” because experience garnered at state government’s level is not enough to run a federal government.
Tinubu is a two-term former governor of Lagos State from 1999 to 2007 and had also served as a senator in the aborted Third Republic.
Tinubu was sworn in as Nigeria’s 16th President on May 29, 2023, and has since constituted his government.
Presenting a paper, Wednesday, at the November edition of the Lagos Business School Breakfast Session titled “Policy Direction Misaligned with Economic Destination”, Rewane observed that Tinubu’s “management team is vast and experienced in subnational economic policies” and warned that, “transplanting a state team to run a federal structure has serious limitations.”
He also observed that, “Nigeria has moved far ahead in the economic decay curve,” warning that “subnational experience is inadequate for running a federal government. Therefore, new skills and capacity are required because state executive councils do not have responsibility for macros, i.e. growth, inflation, external obligations, exchange rate management, foreign policy and external affairs management.”
The Managing Director of Financial Derivatives stated emphatically that “the All Progressive Congress (APC) will have to prove that it is not an oligarch machine,” and advised that, “the presidency will have to maintain a distance from political cronies and hustlers and focus on pure economic management for the next 12 to 18 months.”
According to him, “exchange rate management and allowing for price discovery are critical to the political favorability calculus.”
Rewane expressed these views in a paper he presented.
While observing that the country’s domestic environment is “caught in a web of economic contradictions,” he pointed out that there was a “disconnection between policy direction and economic destination.”
Rewane identified the country’s economic destination in the next eight years as achieving a GDP of $1 trillion, average annual growth rate of 7.0 per cent, interest rate of 9.0 per cent, inflation rate of 13 per cent, an exchange rate of N550-N600/ dollar and a projection that unemployment would fall to 17 per cent from 33 per cent.
However, the policy direction is “monetary tightening but loose monetary conditions” and “foreign exchange reform in theory but managed fixed exchange rate in reality,” adding that personnel changes are not the same as policy changes.
The respected financial expert noted that “credibility gap makes policy ineffective” while “lags are increasing as people’s belief evaporates” and “credibility gap continues to widen making policy implementation more arduous.”
He further pointed out that “the lags between policy articulation, announcement, impact and peoples’ belief are becoming wider,’ adding that the recent “Supreme Court’s judgment (on the 2023 presidential election) and the bickering of retired judges are making a bad situation worse.”
“Macroeconomic stability is dependent mainly on good policies but more on credibility,” Rewane said even as he attributed the volatility in Nigeria’s foreign exchange market to the crisis of false expectation and lack of clarity on foreign exchange sources, which is fueling currency speculation.
