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So day by day it appears that we are drawing closer to the inevitability of an intervention tool that we deployed when the country found itself in this same position 30 years ago, 1986 precisely. SFEM, also known as the Second Tier Foreign Exchange.
Who remembers the Federal Ministry of Information’s sensitization radio jingles;
Oya make una come oh!
Akuko don nack tori!
Join the political debate!
Oya oh!
Oya oh!
That debate, if my memory serves me right was partly about the IMF’s proposed loan and packages. IBB and his cohorts in a bid to appear more democratic than the regime they had ousted, wanted the people to decide, as my people will say, ‘whether or wedant’ to accept IMF’s conditions. The rest, as they say is history.
The Two Tier FX market that was part of the IMF deal was intended to reduce the pent up FX demand pressure while giving the country maneuvering space to implement the much needed fiscal reforms. The September 1986 SFEM diffused the catapult effect that built up between 1984 to 1985 when the black market exchange rate became progressively more detached from the CBN’s official rate (the only other period when the detachment has been worse was during the Abacha days) until the markets where ultimately unified as FEM. The objective of SFEM was “to enable the naira find its true value; to achieve a more optimal allocation of foreign exchange; gradually eliminate the parallel market; and to attract inflow of foreign capital (including funds held abroad by Nigerians)”. With the introduction of SFEM the Naira depreciated Fiam by 66% to N1.57/US$ (which was the black market rate) and by the time SFEM and FEM where unified in 1987 the exchange rate was at N3.74/US$1.
The entire IMF Structural Adjustment Programme (SAP) (of which SFEM was part of) was on its part intended to reduce Nigeria’s import dependence through a more realistic exchange rate and deregulation of the economy; privatize commercial interests of government; stimulate research and development; increase local sourcing of industrial inputs; revitalize the agricultural sector to ensure that the nation becomes self-reliant as far as food production is concerned; promote export and stimulate inflows of foreign capital. The import tariff structure under SAP was supposed to ensure that importing is not more attractive and more profitable than producing locally so we would #BuyNaijaToGrowTheNaira….ah! Otio! Sorry oh! That wan is still 30 years ahead. Back to our past joor.
Pheeew!
You can now catch your breath and read SAP’s objectives again (the wheezing you hear is the sound of inevitability). Doesn’t it sound like all we are mouthing to achieve today?
In truth actually not a bad development if we remember to carry onboard the lessons learnt from bros SFEMs last time out. Why didn’t we achieve those laudable and lofty objectives, why are we still discussing the same maladies 30 years after? So let us make sure that if we have to invite egbon SFEM again that it will not be as a sole silver bullet but a bouquet of well thought through and actionable polices. Even more important is to ensure that we have the people (intellectual capacity and drive) and the political will to see this through…then all that is left is to cast and bind the scourge of rats, mafia and typos into the Kalahari Desert.
If you throway dem for Sahara Desert quick-quick-quick dem go trek enter Abuja.
Jekwu Ozoemene
Chai! We have gone from the frying pan into the fire.
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