Good policy matters a lot in development of any country. Good policy makes all the difference in transforming a country from developing to developed country without the government spending enormous resources to make it happen. Adam Smith in his Wealth of Nation book written in 1776 argued that the result of everyone pursuing their own interest will lead to the maximization of the interest of the larger society. That the invisible hand of the free market will transform the individual pursuit of gain into the general good or utility of the larger society. The new policy implemented by the Central Bank of Nigeria(CBN) which ordered Nigeria commercial banks and International Money Transfer Operators (IMTO) to pay diaspora remittances to the recipients in dollars and other foreign currencies, who will then sell collected diaspora money to whomever they want is a very brilliant policy. This policy will make substantial difference in alleviating foreign currency shortage in Nigeria and reduce the difference between black market rate and government approved Autonomous Foreign Exchange rate (NAFEX) over time.
What has been happening before the new rule was implemented is that Nigerian banks and other International money Transfer Operators gives Naira equivalent of the foreign remittance to the recipients at an exceptionally low rate and then turnaround and sell the foreign currency at the black market at a far higher rate. Sometimes, they hold back foreign currencies which creates artificial scarcity to boost foreign currency rate. Nigerian economy has suffered because of these foreign currency shortages and manipulations.
Liberalization of foreign remittance will permanently check mate the gap between government approved rate sold via NAFEX and black-market rate and will reduce depletion of Nigeria foreign reserve over time. Nigerians in diaspora will now be more willing to send money to Nigeria since they can now get a better market rate. However, a lot of Nigerians in diaspora transfers money from the country they reside to their own domiciliary account in various Nigeria commercial banks and then distribute the money from their domiciliary account to various relatives in smaller amount. For the Central Banks new policy to yield desired result, Central Bank must compel commercial banks to allow diaspora account holder to freely transfer dollar or other foreign currencies to another bank account or to accounts within same bank with little or no fees. This limitation must be fixed before the new policy will achieve CBN desired objective. The government can monitor the transfers via Bank Verification Number (BVN) to make sure that some people will not use the new policy to launder money.
Centralization of governance and power at the federal level has devolved into preventable calamity for Nigeria. The result of over centralization of power has kept Nigeria poor and under-developed since our independence in 1960. The federal government built and centralized NITEL management and then ran it into the ground. They built and managed Refineries and ran it into the ground. They built and managed Railways and ran it into the ground and they are at it again. They owned and managed Nigerian Airways and ran it into the ground. They built and ran National Electricity power and ran it into the ground. They have mismanaged practically everything they built, managed, or still managing. When one takes an honest look around the states that make up Nigeria, they will find out that the only sectors that are thriving are sectors build and managed by private companies and corporations. MTN, Globacom, Airtel, Dangote Refinery which will commence operation soon, Dangote cement, BUA Cement, Innoson Motors, Air Peace and other private companies and corporations are doing what governments at the federal and state level have not been able to achieve. The reason for government failure to thrive where private businesses and corporations have succeeded is because Adam Smith rightly stated that people are at their best when they work for their own self-interest which ends up benefitting the larger society, unlike most government employees who does not feel same way. It is simply human nature and how human beings operates. Federal and State governments must be barred from owning controlling interest in any enterprise in any Nigerian firm.
Devolution of power to the state, Local government Area and community level, individuals, businesses, and corporations is the only way to re-position Nigeria to achieve her much anticipated potential. The closer government is to the people, the more likely they will look at it as their own and something worth protecting. Communities in Nigeria will not sit by and allow their resources to be stolen if they are allowed to incorporate and set up community government equipped with all apparatus of government. Government responsibility should be limited to the creation of enabling environment for businesses to thrive and protect the country against domestic and foreign threat.
Insecurity in Nigeria today is a case in point. The federal government centralized police force which has failed Nigerians and will continue to fail Nigerians until decentralization takes place. Each community, Local Government and States must be able to establish their own police force. If these entities are allowed to establish their own police force, crime rate in Nigeria will be cut down by over 75 percent within 2 years because the locals will be more committed and they know criminals that live among them and will not allow them to steal, plunder and terrorize their communities, local government, or state. Such good policy will put a stop to the crime wave sweeping across Nigeria today. Federal police force can remain in places they are needed or support local police forces. Every community, Local government Area and state are protected in United States which is far larger in land mass and bigger in population than Nigeria because their police force is highly decentralized. Decentralization sometimes looks like duplication of functions, but it is amazingly an effective way to keep crime down.
Nigerian government must change course. Doing the same thing over and over and expecting different result is a definition of insanity. Nigeria will not disintegrate if devolution of power to states, Local government Areas and communities takes place. Such policy will disarm separatist groups all over Nigeria and unify the country. Preoccupation of Nigerians about re-structure is a direct consequence of Nigerian citizens feeling powerless. The new Central Bank Policy if adjusted will once more show that good policy is the key to unlocking potential of Nigerians. First, wealth needs to be created by the Private sectors which will lead to large tax base which the government can then use to help the lower- and middle-class Nigerians and build adequate infrastructure for all Nigerians. Nigeria is doomed without substantial wealth creation and larger tax base. CBN need to extend this policy to other sectors of the economy. Excessive regulation of foreign currency inflows and outflows is impending commerce and overall development of the country. Foreign direct investment cannot be fully realized if the investors cannot repatriate the profit. Domestic investors cannot be fully engage if they cannot be allowed to do what they want with their money. Most Nigerians have now seen that continued dependency on oil is unsustainable. Devolution of power must not be confused with restructure of Nigeria into regions which some Nigerians are clamoring for. Nigeria must never go back to regional government which pitted on section of the country against the other and reduced Nigeria into collection of warring ethnic groups and religions instead of a nation with common purpose and destiny.