A former  Deputy Governor of the Central Bank of Nigeria, Dr Obadiah Mailafia, and a professor of Political Economy, Pat Utomi,  have faulted the CBN Governor, Godwin Emefiele’s justification of printing money to support government.

Mailafia and Utomi, in separate interviews with The PUNCH on Sunday, stated that there was no basis for comparing what Nigeria did with a similar practice by other countries.

Although the Chief Executive Officer of the Nigerian Economic Summit Group, Mr  ‘Laoye Jaiyeola, in an interview with one of our correspondents, supported the CBN governor’s position on the printing of money, he warned that it was not sustainable.

He, therefore, urged government at all levels to generate revenues so that the country would not be printing money to support government every time.

Recall that the Edo State Governor, Godwin Obaseki, had on April 8 warned that the country was facing a serious economic problem, adding that the CBN printed N60bn which was added to what was shared at the Federation Accounts Allocation Committee by three levels of government in March.

But the  Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, in an interview with State House correspondents on Wednesday,  described Obaseki’s claim as untrue.

Although   Emefiele, in an interview with journalists at Tunga, Nasarawa State on Thursday did not admit that the apex bank printed N60bn in March for FAAC, he explained the practice of printing money for government to borrow.

He stated, “If you understand the concept of printing of money;, it’s about lending money.

“Most countries of the world today are confronted by not just the health crisis from the COVID-19 pandemic, but also economic crisis. I keep saying this: it would be irresponsible of the Central Bank of Nigeria or any central bank to stand idle and refuse to support its government at this time. Whatever we do in Nigeria is being done in any clime.”

Unlike advanced countries, Nigeria printing money to pay salaries – Mailafia

Reacting to Emefiele’s explanations, Mailafia, in an interview with one of  our correspondents in Jos, insisted that there was no basis for comparing Nigeria’s printing more money to other countries’

He said Nigeria was printing money for the wrong reason unlike advanced countries who engaged in the act to save their economy.

Mailafia said, “Some people just understand it (printing of money) to mean that the central banks of those countries just printed money directly for consumption.

“That is not what they did. They did not print money to pay salaries of workers. The Japanese and other advanced countries which printed money did that to buy back securities from companies and financial institutions as a way of kick-starting their economies all over again by putting more money in the hands of these companies.

“But what they are doing in Nigeria is a different thing and they are just printing money for consumption. No sane government will do that.

“But in Nigeria, after profligacy and wasting the money on all kinds of consumption and dubious projects, with nothing to show for it, they now want to continue on that wasteful path by printing more money for consumption. That is very unfortunate.

“The danger is that if they continue to do that, there will be more speculation for the naira and the value will further collapse.”

Printing of money will weaken exchange rate, Utomi warns

Utomi said Nigeria should not look to other countries printing money to stimulate the economy as they were not in the same circumstances.

He said it was normal for the CBN to translate foreign income into domestic money by printing domestic currency.

According to him, what printing of money in Nigeria will do is further to weaken the exchange rate and push the country into hyper inflation.

Utomi said, “The Bank of England printed £160bn, however the context of England with inflation at two per cent and interest rate at close to zero is a different context from Nigeria with inflation at 20 per cent.

“If this is done in England to stimulate consumption and power up production, they can take the risk of a little inflation. There’ll be some inflationary impact maybe one or two per cent addition, but the consequence of the production that is generated by that consumption will stimulate economic activity.

“On the other hand, you can’t do the same in an economy like Nigeria where inflation is already at 20 per cent and where the barrier of the political culture is that the palliative money you print will go to government not to consumers. They have cornered all the money that the CBN has been saying it’s been putting into stimulating agriculture.”

An economist, who spoke on the condition of anonymity, likewise, said it was inappropriate of the country to print money with the state of inflation, devaluation and its interest rate.

He noted that other countries that were printing money, like the United States and the United Kingdom, had zero inflation and so were permitted to print money to help the economy.

He added that the money was also given in form of stimulus to the public instead of the government, like in the case of the US.

But the Chief Executive Officer of the NESG,  Jaiyeola, corroborated Emefiele’s statement that the central banks of other countries facing a similar crisis as Nigeria also printed money.