How can local currencies appreciate when we have excess hidden in graveyards, warehouses, bullions vans and safes that can flood the bureau du change at will? We all know this, yet we keep on ignoring the obvious. By repeatedly ignoring facts and expecting different results is the height of hypocrisy. You cannot quench fire without turning off the source. As African politicians punish us with impunity, instead of fighting back, we back into the wall and melt into the wall.
Why are Africans so wicked to their own people and disloyal to their countries? There are no consequences or deterrence like other countries that went through the same type of corruption, put in place to stop the bleeding of their economy and people to death. A few of the politicians could not believe they got away with impunity; daylight armed robberies of allocations and silent killing of deprived masses. One politician wondered aloud: we loot because you don’t stone us!
If anything, the poor masses that have children and relatives abroad are the ones exchanging their foreign remittance sent to spend on local necessities, with the big boys, most of whom have surplus local currency. This is the pointer to where the problem is. Chase the source of those who bring looted local currency to the market, not just harassing those who hardly make a dent. Since Africans started devaluing their currencies, they have never recovered.
The tactics of chasing the little guys only create temporary fears that make local currency appreciate like a yoyo but not enough to rely on by serious honest businesses. It is like the hypocrisy of declaring war on drugs by only chasing retailers in poor neighborhoods while you leave their suppliers, the big boys, untouched. How much money does the average citizen take to Bureau du Change compared to the big boys that can flood the market in a day with stored local currency?
The easy temporary measures do not appreciate local currency, they only give time to local currency hoarders to unleash at will their old crumbling naira from vaults, graveyards, file cabinets and wherever they hide the loot. Of course depreciating local currency further as they besiege Bureau du Change again. If anyone thinks these money launders do not know the timing and when to flood the market, think again.
Many countries have their form of Bureau du Change and Central Bank but most African countries turned theirs into round tripping enterprises or private banks for the privileged politicians and their cronies. As other countries have checks and balances in place, so do our local regulators that just ignored them with impunity in Africa. It started with the military strong men and got worse regardless of civilian or military government.
Indeed, military presidents changed uniforms and turned into civilian presidents. Each time African currencies are devalued, our politicians promised before elections to return local currency to days before the Structural Adjustments. As soon as they get elected, they perform cosmetic surgeries to demonstrate that they know how to arrest depreciation by temporary enforcement of the laws and regulations, leaving the big culprits untouched.
Since people who gain by their repeated indifference are the benefactors, pretending they are working to solve the real problems, we are all in trouble. They spend lavishly like a drunken sailor. While privileged Africans in our local communities swallow foreign currencies that cannot be printed in their countries, without sweat. They cannot work their butts off like the people earning euros, dollars and other foreign countries abroad. Could have been prudent if they did.
Banks are commercial enterprises that trade on people’s savings by lending out to borrowers at predetermined interest rates. When the interest rates get too high, it dampens business activities discouraging those who want to start businesses and employ workers. Low interest rates encourage the society and spur commercial activities. The interest rates are so high in many African countries, you wonder who can afford to borrow from banks, make enough profit in order to pay back.
If banks and financial houses are not able to borrow, the banks cannot make a profit from people’s savings. So the banks and financial houses are raided by unscrupulous businesses and politicians. When these banks are no longer viable and they go bankrupt, people lose their life savings. Unfortunately, new generation banks are not in the business of savings and lending but into attracting life savings with high rates of return and looted hidden local currency. Once they gather enough to share within, they liquidate and ask for a government bailout.
The Only people that have access to the printed local currency are the privileged Central Bank senior staff, politicians and cronies. They do round tripping to flood Bureau du Change in exchange for the foreign currencies they don’t print. This is nothing short of vicious circles. But each Government does it to satisfy their pockets and then look for rescue by tightening up laws and regulations to curtail the small activities from the masses that can never apply to the few of them with the greatest amount of liquid cash.
In retrospect, it is lunacy to use one hundred to one billion of foreign currency you do not print in the country to support the currency you print freely. Small banks swallowing big established banks with looted local currency also allow them to gain access to the Central Bank foreign currencies like Bureau du Change! So you print excess local currency understanding it is going to cause inflation and spend one billion foreign currency to buy local currency from yourselves hoping to clean up the excess you printed. Wouldn’t it have been wise not to print excess local currency in the first place? https://moneycentral.com.ng/markets/article/cardosos-100m-firepower-fails-to-stop-naira-weakness/
We are too busy and occupied with what politicians use to distract us: ethnic bashing rather than putting looters on trials. There are reasons for this. Some of us have no loyalty or love for the motherland. Others see their country as conquered territory that must be looted for the spoils of war. They hardly support the country’s interests and are ready to jump into opposition against any reasonable measure. They could care less or more if their country was destroyed. So they point to their community with a left hand in derogatory names.
Farouk Martins Aresa @oomoaresa
