Being the Full Text of A paper presented by Dr. Bolaji O. Akinyemi at the Win9geria Conference, on the 30th of October 2021, at The Nigerian National Merit House, Maitama, Abuja.

Preamble:

Over the last decades, the idea that civic engagement and social accountability can contribute to service delivery has been one of the focal points in development policy. It has been established especially in developed countries that civic engagement and social accountability are intertwined factors for good governance and corporate productivity.

They are the driving forces to rapid development and growth in all areas of human endeavors especially governance and other areas associated with it.

This informed the advent of advocacy professionals; away from the past time advocacy was decades ago!

It is part of productive polity for civil societies and people to engage with government and her agencies as well as other private organizations whenever they perceive that something is not being done right.

Deliberate consultations are made by government with civil liberty organizations to enable effective policy formation and implementation.

Civic engagement and social accountability have made leaders in various fields of endeavors to sit-up and be alive to their duties at giving nothing but the best.

Leaders in developed countries know the implications of not being able to give account of their stewardship when they are in power or outside power.

We can go on and on to give vivid examples on how civic engagement and accountability have been able to stabilize not only the government of the developed countries but have been able to improve service delivery through accountability in the corporate world!

These two methods; Civic Engagement and Institutional Accountability, since arriving this millennium have really impacted growth and development in the global village that our world has become!

What is Civic Engagement?
Civic Engagement or participation, is individual and collective actions designed to identify and address issues of public concern.

What is Institutional Accountability?

The system put in place within an institution for checks and balances to ensure maximum productivity and operational transparency.

The main focus of this paper is not about the impact of civic engagement and social accountability on developed countries. This paper tends to focus on building the right civic engagement and accountability in an ideal society, contextualizing same for Nigeria and using the Central Bank of Nigeria as a case study.

The question we need to ask is, why CBN?

It is difficult to find a developed economy central bank that engages civic societies before policy decisions are made, particularly in times of crisis! Central Banks are given independence for a reason. They need to act in time.

The only difference between us and them is that most developed worlds use quantitative easing to escape the effects of their debts on the currency and economy, but even that is a temporary reprieve.

And they can pull it off because they are highly productive! Nigeria can’t use the method. We do need to be cautious on these debts though. We need to focus them on sectors that will boost the economy, not mosquito nets!

The eNaira application designed by the Central Bank of Nigeria (CBN) and launched on Monday, October 25, 2021, in Abuja by President Muhammadu Buhari has been pulled down from Google Play Store. Many users encountered problems after downloading the app from the play store.

The main issue experienced was registering to create a wallet to enable them to enjoy the services. Negative reviews from Nigerians about the app is responsible for the removal from Play store.

Stuffs like this would have been avoided if would-be users were engaged and their observations and suggestions factored in to designate the template!

You will all agree with me that the CBN as government bank cannot be exonerated from the current economic woes our country is facing. Reason being that the CBN is in a better position to advise the government on fiscal policy, budget, debt management, exchange rate and other economic policies that will help the government in its development plan viz-a -viz improving the economy.

This paper will tend to narrow its discussion on monetary policy and government loans; their implications on the micro and macro indicators of the economy.

The paper will be divided into 6 sections:

1. Introduction
2. Global Best Practices Template in Central Banking.
3. Developmental Economy: the option of loans and its crippling effects on the Nigeria economy.
4. Fintech evolution; e-financing and the e-naira model.
5. Civic engagement and Institutional accountability of CBN.
6. Conclusion.
7. Recommendations.

Introduction.
It is important to note that loans are not evil on their own when they are engaged in the productive sectors. The reason(s) why there were public outcry against loans is because they have not been judiciously used to provide the needed service delivery to get the needed growth in the economy.

It must be established here, that United States’ debt is higher than that of Nigeria and yet heaven did not fall. Simply because they have the capacity to pay back because they are productive country and not consumption country like ours. A loan can be considered a bad debt if the money borrowed is spent on a depreciating product.

For example, if you borrow money to construct roads that will degenerate within a year and there is no toll taking on the roads. That of course will be nothing but a bad debt. People may argue that social amenities are among the responsibilities of the government and that it improves service delivery. Fine!

Nobody is contending with that but a social amenity that will not service the cost of borrowing is not worth taking. On the other hand, a good debt is that which is able to service the cost of borrowing. We have heard how government have borrowed billions of dollars and are still borrowing to fund bad debt projects.

I believe, that CBN as government bank who are also engaged in the act, should have been in a better position to advise the government. There have been a lot of civic engagement and need for accountability from citizens, civil organizations and other pressure groups to make the government see reasons why the borrowing should not be spent on consumption but on production.

But because we have a government who feels that they know better than the people and that their development approach of Top- Bottom policy is the best rather than engage in civic engagement before embarking on the issue on borrowing.

Global Best Practices Template In Central Banking:

Independence of monetary authorities is a key tenet of modern central banking. Independence, however, must go hand in hand with accountability towards the public and its elected representatives. Prudence and responsibility are essential ideals to operate by in times of crisis.

In the developed world, when a government faces the risk ofgetting caught in a high debt trap, debt monetization may become an appealing option.

However, in certain cases, independent central banks may be able to allay debt concerns without compromising price stability. This is because of the size of their economy.

The functions of debt management, monetary policy and financial stability have often been looked upon as an impossible duality or trinity. But post-crisis, their interdependence is increasingly being recognized.

In most emerging market economies, Central banks issue securities to finance the acquisition of assets like essential infrastructure projects and building of foreign exchange reserves. This is becoming very expensive as the cost benefit ratio is being ignored in decision making regarding these debts.

When an economy faces the prospects of being caught in a debt trap, the consequences of central bank policies on debt dynamics become particularly important. Monetary policy and fiscal dynamics are inexorably linked.

Unsound fiscal policy overburdens central banks. The limited fiscal space observed in many economies in the aftermath of past crisis was in part due to high debt levels accumulated before the crisis.

The Central Bank of Nigeria has had significant battles over the past few years as it wrestles the illicit financial activities in the country which had benefited a host of clandestine operations of all sorts across the country, and this has left Nigeria in a precarious position, with ever mounting pressures to tip our stability over the edge.

This has not been an easy battle. This we can grant the Central Bank. But as we know, rash and poorly thought out judgments, mainly born out of difficult realities and positions, subject to necessities and strategies, while wading through fall outs and unexpected costs, can be very catastrophic to the efforts, morals, structures, integrity and stability of our frail economy which several generations have pieced together over the decades with sweat and hardship.

Therefore let me say, due to the risk exposure to our collective economy and the future of our country that our forefathers have entrusted us with to carry forward for our children, we recommend that every citizen of our great nation be tasked with civic responsibilities along this lines to engage our essential monetary management apparatus.

The policies of the Central Bank of Nigeria, for the past few years have been quite confusing for investors and the business sector as a whole.

Firstly, the effects of the multiple exchange rates on the fiscal structure of the economy brought severe complexity in cross-border dealings.
Bloomberg considered this strange exchange rate policy a mine field for businesses and investors; yet, the Central Bank stood by it for years before agreeing to merge the rates gradually.

By this time, the damage was done to investor confidence. With the multiple interest rate policy imposed by the apex bank, the financial sector and currency of the country has become very volatile.

The World Bank advised that what is important, and the government should focus on was transparency, credibility and predictability on which way the currency of the country might move.

Secondly, any government with a history of fiscal irresponsibility should not have the power to borrow at will on behalf of the country without any trusted mechanism to protect the country from excessive deficit financing.

Even the European apex Banks of countries that have more options in managing the negative impact of high debt rate using their buoyant and productive economy to weigh with have precautionary mechanisms to warn the civic society and give power to representatives to shut down more borrowings.

External debt management has to be involved in the process of administering the national debt that is providing for the payment of interest and arranging reinforcing of maturity bond. Like a surge protector guarding the fiscal responsibility with utmost care.

The Nigerian government should try to maintain strict budget describe and strive to avoid huge budget deficit. Government should restrain its spending especially with respect to non-directly productive as these aggravate the external debt outstanding.

The government should increase its exports of goods and services and should not limit its export mainly to oil but diversify its export base to other sectors. To do this, the leadership needs to engage with the civic society and discuss options.

The consequences of taking on insufficiently productive debts will not only put on inflationary pressures on the collective economy, it will also burden future generations with a slippery starting point in their race to the next line.

Perhaps we need better models to build our economies around. If we are leave the reigns of leadership to the future generations, it may be prudent to seek options that would not build debt burdens to shackle our childrens options in developing our nation to be better than we leave it.

Developmental Economy: The Option of Loans and Its Crippling Effects on the Nigeria Economy

Our dependency on the colonial template of running our economy must give way to a pan African model! This is no longer an era of ports created for British Trading Company to dump the goods on Nigerian soil. Our ports should be export driven and friendly.

Bata trading that leaves us with no burden of loan must be considered! Private Partnership Model of Investment in Infrastructural development will free up money that are tied down and create fluidity of funds without necessarily creating inflation!

The implications of loans/debt on the economy can be said to be positive or negative. Positive if the loans/debt are invested to pay the borrowing cost that debt servicing brings and still have surplus for development.

However, if a loan is unable to service its debt and we still have to borrow to service debts, then something is wrong somewhere. It is the function of the CBN to advise the government when embarking on getting these loans and to advise them on the area of priority in the economy that will be beneficial to the economy in both short and long runs.

Inspite of public outcry from economic experts, institutions, civil society going against the borrowing, the government still went ahead to borrow to the detriment of the economy!

Fintech evolution; e-financing and the e-naira model:

By policy and for the purpose of monetary stability, Central Banks are expected to be independent of the country of their services.

The world of financial technologies has been very impressive in Nigeria. With the innovative young minds taking on the problems of the sector for the past ten years or so, the financial industry as seen some remarkable advancements.

These advancements have put the Nigeria banking sector on the world stage as one of the most advanced and innovative financial institutions in the world.

These young innovators have help Nigerians and Nigerian businesses access services they would never have had the chance to receive without these Fintechs. Merchant systems, Payment systems, Insurtech, instant loans, crypto wallets, stock trading and so on.

That was until the great successes of these young companies drew the attention of the apex bank. Several of the fintech in the country has come under attack of the alpha financial institution in the country for one thing or the other.

Granted, some of these fintechs have push the boundary of the financial sector and crossed the proverbial regulatory line once or twice, but we were under the impression that this was inevitable if we are to allow creativity in problem solving to aid our growth and development as a nation.

But instead of the Central Bank to come up with new regulations to guide these fintech in the new market they have discovered and are building to suit the interest of the country, they have chosen to enter the race with the technology start-ups while freezing accounts, threatening and out-right banning some of these young startups.

The creation of digital currency is a laudable accomplishment as Nigeria is one of the first countries in the world to create its digital currency. This can be good news. The country could use the block chain technology to create an even more accurate ledger of its transactions than the previous methods, and this can help fight illicit financial flows, or cut cost on money printing, not to mention several other benefits.

One main concern with the roll out of this great technology is the need for the apex bank to create its own wallet with an inbuilt payment system. One would have thought the apex bank would have left the wallet and payment system to the small fintech which already offered these technologies in the market.

In the quest for better control of the financial sector, the Central bank, now offering free wallet and transaction services, has the potential to push several young fintechs out of their space with their tails between their legs and seizing that market space primarily for itself like they do in China.

This has the ability to give draconian powers to the central bank if explored by the Governor. The Central bank could also use this wallet to enable more services in this space, granting it more powers to cast its net over the rest of the fintech market space.

The financial digital space is for innovators, and wealth creation, and job creation, and opportunities for anyone who can come up with better ideas to explore it and test it in the market. It is not for government technologies that historically have proven to be void of innovation and slow to evolve.

I believe a discussion is required over this matter. It is because of these inconsiderate decisions that civic engagement is essential for the citizens of Nigeria to point out these problematic potential future and mitigate against it.

Idiamin era, witnessed an arbitrary use of executive power over their CBN which crumbles their economy and reduced the value of their currency to tissue paper!

Recently, a presidential hopeful and party leader of the government of the day was of the opinion that more naira should be printed to create liquidity of funds to stern inflation.

This advice seems to have made sense to government against the book, because just after then we were informed by the Governor of Edo State that Government was actually printing money to meet her obligations!

Though a welcome development that CBN responded to global trend in fintech, it appears she did it to be the first in Africa and not necessarily for effectiveness of e-transaction!

Those who downloaded and funded their e-naira wallets, have unfortunately “entered one chance”.

Asides the fact that the app has been yanked off from play store, CBN has said they are also not responsible for corruption of data on the app.

This is looking like another misplaced priority of Government simply to score cheap political points. Air Nigeria should come to our mind. The whole thing wasn’t properly thought through as typical with anything associated with this administration!

Civic Engagement and Institutional Accountability:

In December 2003, a Diagnostic Audit team of expert was committed by President Olusegun Obasanjo to review the state of service delivery by Ministries, Departments and Agencies of Government in Nigeria and produce a roadmap for improving service delivery.

This led to the establishment of SERVICOM, Service Compact with All Nigerians in 2004 as an outcome of a three-day Special Presidential Retreat on Service Delivery with the President, Ministers, Special Advisers, Presidential Aides and Chief Executives of major Extra-Ministerial Department and Parastatals.

SERVICOM PRINCIPLES:

a. Affirmation of commitment to the service of the Nigeria nation.

b. Consideration for the needs and rights of all Nigerian to enjoy social and economic advancement.

c. Dedication to delivering services to which citizens are entitled, timely, fairly, honestly, effectively and transparently.

SERVICON had a measure of results at orientating a culture of service delivery. Whatever the challenges are with the SERVICOM must be investigated.

The impunity of the day and arrogance in behavior of certain officers in the present administration is possible because of non-Civic Engagement and lack of Institutional demand for accountability on our leaders.

Those arms of governments such as the States/ National Assemblies, EFCC, ICPC and the judiciary who supposed to question or demand for accountability on behalf of citizens are also part of the rot in the society.

Not until civic engagement and social accountability begins to take its rightful position in our society, the government and organs such as CBN will continue to lag behind in productive expectations!

CONCLUSION AND RECOMMENDATIONS:

1) For Nigeria to win, Government and parastatals that are in position to advice the govt on certain public policy must embrace civic engagement.

2) That the govt and govt parastatals must be accountable for their actions/ inactions.

3) That there must be a forum created by the govt to engage its citizens on public policy that affects the welfare of the people.

4) That Organizations such as EFCC, ICPC etc. will not be selective in their actions. It should not be a case of if I see the broom I will pass over, but when I see umbrella I will tear it into shreds. All must be equal before the law.

5) That Government should always embark on projects that will bring development and growth to the country.

6) That govt should have short, medium and long term development plans which will help the economy to grow.

7) That govt parastatals/ organizations should assist/ advise the govt on programs that will bring rapid development and growth to the economy.

8) That we either humbly abolish the 1999 constitution, enact a new constitution, embrace RESTRUCTURING NOW! Or in pride be prepared for the consequences of a peoples revolution!

May Nigeria Win, so life can be better for all of us and not just some of us!

This I believe is the philosophy of Win9geria.

Thanks for your time.

This paper was delivered at the Nigerian National Merit House, Maitama Abuja on October 30, 2021