Nigerian Justice Minister Michael Aondoakaa said he is freezing a plan to re-denominate the Nigerian currency, the naira.
The plan had been announced by the governor of the Central Bank, Chukwuma Soludo, last week.
Mr Aondoakaa said the plan was frozen because President Umaru Yar’Adua had not given his written permission.
It was a little more than week ago that Nigeria was set to free its currency.
There are a couple of elements to this. The first, obviously, is telling the world that one’s currency is to be re-denominated, and that one’s central bank will cease all but the accepted norm of ForEx interference, only to have the Prime Minister Colin Powell that central bank’s governor a week later.*
* Colin Powell, the active verb, refers to the pollaxing Powell got while travelling solo as Secretary of State, trying to patch-up Bush’s cock-ups while Cheney’s chickenhawks tore his nest to pieces in his absence (as per the cowards they are).
An almost-irony of this, of course, is that the move was intended to increase investment in Nigeria (a key ingredient to long-run economic growth, catching up, etc.). The churlishness of non-economist leadership has left less confidence in the naira than ever.
The other is the position of Chukwuma Soludo in the management of the currency (and, by extension, the stability of the economy).
… this is a major humiliation for Mr Soludo and there is growing speculation that politically he will not survive this debacle.
As head of the Central Bank for the past few years, he has overseen major banking reforms in Nigeria.
But just a few weeks ago the country’s new President, Umaru Yar’Adua, chose Mr Soludo’s deputy, not him, for the job of finance minister in the new cabinet, and the central banker has been dropped from the government’s economic team.
All I know is that I would neither build nor buy a factory in a country whose President doesn’t listen to his central bank chairman (it’s usually the other way around). I could be unfair – the President may have a team of very capable economists around him.