CBN Set to Develop Its Own Poultry Farm
04 Jul 2011
Views: 921

Font Size: a / A


Reports reaching us indicate that the Central Bank of Nigeria (CBN) has concluded plans to build its own poultry farm, which will, upon completion, be the largest poultry farm in Nigeria.  This is in line with the latest direction of the CBN of becoming a diversified and profitable entity.  To further this dual purpose of profitability and diversification, the new CBN poultry will supply the public with eggs and old layers.  It will also supply chicken and eggs to the planned CBN hotel and conference centre.  The CBN is confident of the profit potentials of its latest ventures as both the poultry and the CBN Hotel will rely on the long awaited CBN power plant for cheap power supply.  Issues hampering the implementation plan for the CBN poultry were the delays caused by other stakeholders at the CBN who believe that hospital development is more lucrative.  The poultry farm won out after a vigorous debate between the members of staff of CBN promoting it and those who thought that fish farming and cattle rearing were more promising.  There is clearly a new creative impetus at CBN these days and the staff members promoting the fish farming and cattle rearing ventures are confident that if they can demonstrate vertical integration, their business plans would be implemented next.

So, you think that the above is far-fetched.  Think again.  Our CBN under Sanusi Lamido Sanusi has gone way off kilter.  The main job of a central bank should be price stability and the related task of managing interest rates and the exchange rate.  The CBN merely pays lip service to these fundamental primary tasks and therefore has failed woefully in these areas.  The National Statistical released by the National Bureau of Statistics (NBS) on June 16, 2011 indicates that Nigeria’s inflation rate climbed to 12.4 per cent in May 2011.  What this means is that the average farmer and civil servant just had their purchasing ability sliced to 87.6 per cent of their earnings.  As you will see later, this is merely a start, as the policies of this CBN are definitely going to take us to territories of more than 20 per cent inflation rate.  This is someone who was handed a CBN that had managed our inflation rates to below 10 per cent, during a period in which world oil prices were up to $145 per barrel.  In addition, this CBN has by its own irrational statements and actions dried up credit for businesses from the banking sector.  Additionally, with oil prices aided upwards by the Arab uprisings, our CBN has managed to maintain a fast dwindling foreign exchange reserves as a result of the poor management of the reserves by the CBN.  Every month, the CBN governor promises that there will be relief on the foreign reserves and every month, the opposite is the case.

As you can see, our CBN should have their hands full in carrying out the primary functions of a central bank, but that is far from what they have been doing.  We will not focus on the various political statements that the CBN governor has decided is his past time.  Instead, we will focus on the actions of our CBN that have contributed directly in its failure to actually achieve the price stability that is its primary function.

In the past one year, starting in March 2010, our CBN has spent over N900 billion on the so-called Intervention Funds.  These include the N200 billion Commercial Agriculture Credit Scheme; the N300 billion Power and Aviation Intervention Fund; the N200 billion Restructuring/Refinancing to the Manufacturing Sector/SME; and the N200 billion Small and Medium Scale Enterprises Guarantee Scheme.   Let us use the example of the Power fund.  According to Lamido, it was set up to help finance badly needed power projects in Nigeria.  Except that in light of the fact that most of the investments in the power sector are to come following the on-going privatisation process, there was no need to release the entire amount into circulation.  However, what our CBN does is that once it announces the creation of these funds, it moves the amount to the Bank of Industry who deposits them with partner banks for onward accessibility to the lucky recipients.  So if it takes another four years to disburse, the country is burdened with money in circulation that it did not need to be in circulation.  This is the case with all of the intervention funds.  CBN therefore has done more to spur inflation than any other government policy in Nigeria and economists like Henry Boyo have warned that CBN should look forward to inflation rates of 20 per cent or higher if it continues with these policies.

Even if the CBN should be the entity setting up these intervention funds (which it has no business doing), such funds should not be released out of the CBN until the recipients have fulfilled all requirements and are about to use them for productive activities.  A cynic would say that the CBN should know this and that the only reason for releasing the funds so prematurely is to extend the period of playing the same deposit kickback game that the CBN governor has accused Nigerian government officials of playing with their public sector funds (where the partnering banks pay something to the originators of the funds placed with them as deposits).  More importantly, when there is no oversight or accountability other than the CBN (a non-elected body) over the disbursement or spending of these funds, there is substantial room for significant corruption and bad practices.  The speed with which the CBN has established these funds in the past one year during a period when the CBN governor was warning about the inflationary impact of the elections speaks to the suspicion that these funds were not primarily meant for the announced purposes.  It is unfortunate that the CBN is the only entity in Nigeria that can spend public funds without a need for appropriation or such funds being earmarked in the corresponding year’s federal budget.  Our constitutional requirement of budget and appropriation does not cover the CBN.

Last month, our CBN placed various advertisements in Nigerian newspapers and magazines inviting tenders for the design and management of its new project of building a hotel and conference centre in Abuja.  Many people were relieved that this CBN has finally decided to start abiding by the Nigerian Public Procurement Act requirement of performing a tender for public procurements, which this CBN had not abided by in the past when it retained the services of advisers for its various activities.  However, even people who believe that Abuja may need world-class hotels and conference centres are wondering why the CBN is the entity building one.  A review of comments in various Nigerian chat rooms are negative, with many advising our CBN to focus on its set roles and leave property development to the likes of Tayo Amusan etc. One commenter in Nairaland even said that since our CBN has become a profit seeking entity, he should be allowed to buy shares of CBN, as he believes in the viability of this hotel and conference centre.  This is how ridiculous ordinary citizens of Nigeria now think our CBN has become.

It is instructive that one of the seminar acts of this CBN governor is preaching specialisation to the banks that he supervises.  By proscribing universal banking, he has forced banks to focus on commercial banking and exit other areas and sectors of the Nigerian economy.  Now that CBN is getting into real estate and other sectors, one is wondering if merely Sanusi was worried that the banks, with their deep pockets, posed bigger risks of competition for CBN in these sectors than Amusan etc. and therefore made sure to get rid of them as competitors prior to announcing CBN’s own ventures.  Otherwise, why is focus important for commercial banks and not CBN?

It is sad, because many people were hopeful that Sanusi would maintain the stability that Soludo had fostered at CBN, but Sanusi has sadly been wrong as a CBN governor and disastrous for the Nigerian economy.  He has failed to appreciate the limited role of a central bank in a country.  Our CBN under him is failing in their primary functions of maintaining price stability and reserve management.  Instead, our CBN’s own initiatives have been detrimental to these primary functions.  The CBN needs to dial back and leave governance to the government, but focus on fighting inflation and its other primary functions.  It needs to leave intervention funds to the appropriate ministries and the National Assembly.  Finally, one is embarrassed to have to remind CBN that it should have no business setting up its own hotel, power plant or for that matter its own poultry farm.
• Mr. Alewu is a lawyer/public affairs analyst based in Port Harcourt

Jarus:


But whatever the case, Nairaland will soon become the go-to for policy evaluation discourses in Nigeria, if well managed.

wesley80:

Dont kid yourself, we all know Nairaland and most opinions expressed on this forum are far removed from the reality that is todays Nigeria and wld therefor be nothing but a self delusionary gauge of the opinion of Nigerians. I'm sure the defunct team BB wld agree with me. As for your using the catchphrase 'if well managed', I just have to wonder what an Mod is insinuating.

Jarus:

Source: Thisday Backpage, Today: http://www.thisdaylive.com/articles/cbn-set-to-develop-its-own-poultry-farm/94427/

Being one of the greatest defenders of Sanusi on Nairaland, this is not a cheery article for me. But being a proud Nairalander, I feel happy Nairaland is gradually taking its place as source of materials for newspaper commentators.
Comments here are now being quoted to buttress opinions in national dailies.
I don't know whether this writer is a Nairalander, or a visitor or just bumped into the quoted comments through google search. But whatever the case, Nairaland will soon become the go-to for policy evaluation discourses in Nigeria, if well managed.

enyojo:

Despite the deafening public out-cry against some recent policy decisions of the CBN Gov, the truth remains that NOn-Interest banking, 150k Withdrawal limit and Steamlining of Banks are the hallmaks of his achievements

Jarus:

I'm insinuating: if we(all stakeholders: Admin, Mods, members) manage it well.

jmaine:

wesley80 sounds like my familiar gee . . El beaf  . . .

jmaine:

wesley80 sounds like my familiar gee . . El beaf  . . .

1money:

Wow, this day quoting nairaland Governors should also read nairaland, they'll learn a lot.

na_so:


Some of us(governors) do. some like me are even active members. _{I dont want to mention the state i govern.}

na_so:


Some of us(governors) do. some like me are even active members. _{I dont want to mention the state i govern.}