THE Hope candidly recalled that the Naira was a strong currency in the 70s and the 80s. For example, the Naira exchange to the dollar in 1976 wasN0.62; N21.89 in 1997 and N360 in 2018. Now, it has reached a pinnacle of N1000 in 2023. While the Naira has hovered in the valley of the shadow of death for a long while, the dive for the bottomless pit began with the structural adjustment programme. Since then, it had been a journey of no return even with the pegging of the exchange rate by the President Buhari led administration.
WE also understand that one of the conditions for accessing external loans is the devaluation of the nation’s currency. The idea behind currency devaluation is the attraction of foreign direct investment, establishment of foreign countries in Nigeria to benefit from cheap labour, and to discourage the importation of foreign goods into the country. However, we have seen that the reverse of the intentions of the currency devaluation had occurred over the years. Many foreign industries have left the country over the years; foreign direct investment has grown less and Nigeria (ns) having killed the local industries are depending and feasting more on foreign goods. Hence, Nigeria(ns) needed more foreign currencies. As the demand for more foreign currencies soared, so also the exchange rate took a flight.
DESPITE the pegging of the Naira to the dollar; raid on Aboki FX, pegging the number of foreign currencies to be made available to travelers and currently, floating of the Naira, the exchange rate has refused to obey the natural law of gravity. We, submit that the Nigerian government, though in full knowledge of the Naira’s predicament and the cause(s) is yet to take the proactive steps that can ameliorate the downfall of the currency.
FOR example, there is a substantial difference between Nigeria’s total exports and imports with her five most economic related nations. Exports to the five export destinations (USA, Spain, France, India and Netherlands) in the first quarter of 2023 stood at N837.65billion while the total imports from the five major importing countries (India, Netherlands, China, Belgium and USA) was N3,101.42billion. Of these, imports of crude oil derivatives (PMS and Gas)wereN1.964.86billion. This shows that Nigeria(ns) spend(s) more of foreign currencies than earned, hence the demand for it soars leading to the increases in the foreign exchange value. Given this, it would be a wrong approach for both the government and the governed; to pursue policies that seek to reduce the exchange rate without combating the trade imbalances.
THE only solution to the downfall of the Naira is the reduction in the demand for foreign currencies through the reduction of imports. This can be achieved with the country’s possession of a functioning and reliable refinery. Since 1999, the federal government had succumbed to the lies that such a feat was unachievable as the nation could have built more than three new refineries since we got ‘independence’ from the military. However, kleptomaniac and spendthrift leadership has robbed the nation of this attainment. Government should look at areas where the spending of international currencies can be curtailed. For example, why should we even import the Naira that we spend? Nigeria could revive and own the national carrier for international flights, have a national cargo airline, and consciously invest in the import substitution enterprises in Nigeria.
FURTHERMORE there is the need to create an enabling environment that would facilitate the domiciliation of foreign companies in Nigeria. This would reduce the cost of production, demand for foreign currencies and increase the nation’s earning of foreign currencies. Enabling environment could be created by improving on our electricity supply; provision of prompt and effective national security as well as the provision of more incentives that reduce production cost.
IN addition, instead of fighting ASUU and other education related unions, government at all levels should listen, for once, invest and revive the education sector. Between January and September, Nigerians spent$1.38 billion on foreign education. This huge demand for foreign currency of course contributed to the fallen value of our Naira. This exodus of funds and people could have been averted if only the country had saved her education system from imminent collapse.
WHILE we insist that corruption and money laundering must be tackled to a standstill, there is a need to also admonish Nigerians to curtail their desire for foreign goods and services, especially when the local produce could as well satisfy their needs. The Hope believes that it is not too late to save the Naira.