Dr. Okey Anueyiagu
Naira, our local currency has taken a huge tumble and a nose-dive that is unprecedented in the history of any monetary instrument. The naira over a protracted period of time has almost become a non-convertible currency. It has assumed the position of an unenviably worthless piece of paper suffering the vicissitudes of it’s own circumstances and redundant fate.
The change of fortune of the naira and its unwelcome and unpleasant pestilence did not begin today. It started way beyond the times that our common imaginations can ascertain. It started from the era when the men in khaki with zero clue on how to run an economy, seized the reigns of government, and down to the period when the same men, donning civilian clothes., babanriga and agbada, pretending to be democrats and bearing all the solutions to our problems, transitioned into politics. In these periods, the rapid fall of our currency began and never looked back.
I recall with nostalgia events that occured in the mid 1970s when I attended the University of Nigeria. Prior to our graduation, we the graduating students were interviewed on campus by prospective employers from the public services and the private sector. I was interviewed by the Central Bank, Customs and Immigration Services, the Foreign Ministries, and by companies like UAC, Lever Brothers, John Holt, Breweries and others. All these organizations were jostling for the bright students and dangling incentives to attract our attention and services. The top pay at that time was a monthly emolument of about N2,000. This was more than sufficient for a new entrant to the world of employment. This amount, at that time, was equal, if not more than US$4,000.
Upon graduation, I and other graduands were very anxiously holding on tightly to the admonition delivered at our Nsukka campus Convocation grounds by the former Nigeria’s President, Nnamdi Azikiwe. The great Zik in delivering his speech, after dwelling on the bright promises our country held for us, asked us to go ahead and see our country and the world as our Oyster, urging us to seize all the beautiful opportunities they had in stock for us. Azikiwe’s speech stayed on with me for a long time, but little did I know that the Oyster he talked about was very soon to turn into a deformed crab without any legs or claws.
After graduation, I was posted to the then peaceful and beautiful city of Jos in Plateau State to serve the one year compulsory National Youth Service assignment. After orientation, most of us were offered accommodation and our monthly allowance was N180. Out of this allowance we fed, clothed and transported ourselves to work daily. Looking back now, I must confess that this allowance was more than sufficient for us. We never complained, but lived a very decent life out of N180 per month. I belonged to a group of “bobos” who held weekly parties (we called it shindigs then). We would contribute N5 each to a common purse and we gathered enough funds to buy a goat (N10), Chickens (N1 each), some beer (10k per bottle), and other requirements to host a decent party with very little funds. Our naira had value, and was as strong, if not stronger than many other currencies.
When I began a journey to the United States of America for graduate studies, my first port of entry was the JFK airport in New York City. My ticket on board the brand new Nigeria Airways Boeing 747 piloted by the legendary pilot Captain Allwell Brown, was N300. Upon arrival at the airport, I visited a money changing kiosk and handed over N400 to the cashier who in exchange gave me about $600. Today, if I attempted to exchange the naira currency at this airport or any other parts of the world, not only will this currency not be recognized or accepted, one may risk being detained or arrested for passing off a strange Instrument of payment. In less than 50 years, the naira has lost its glory, and has become as worthless as the paper on which it is printed.
Nigeria’s exclusion from the global currency ranking should not come to anyone as a surprise, given that the country has ascended to one of the world’s poorest and undeveloped nations. The lack of respect that the naira commands amongst many, if not most other legal tenders, is a long festering indication of the economic disaster plaguing the country over many decades. Eventhough the Nigerian economy is supposedly the largest within the continent of Africa, a strong and influencing factor that should elevate the evaluation of its currency, the benchmark of this naira, remains abysmally and dangerously low and disappointing.
The continuing decline in the value of the naira may be traced to various factors; the decline in oil production and prices, the waning global dependence on oil and the detrimental effect, stifling inflation, expenditure of foreign currency to honour obligations to international creditors, distorted economy with unstable governments and democracy, incoherent and dependent monetary policies, and the most significant being, the indolence and lack of vision of those in charge of our monetary and economic affairs.
To further probe the circumstances and find a perfect distillation of the melange and the sickness that befell the naira, is to observe the weak fiscal performance that pushed the country closer to a fiscal precipice. The past years of Buhari’s administration brought a mix of heightened political tension and deteriorating socioeconomic conditions that relapsed economic growth. During most of Buhari’s tenure the economic performance was driven mostly by the Non-oil sector, which posted a cumulative average growth of about 5 percent, while the Oil sector contracted by well over 20 percent. The oil sector decline was due to the prolonged reduction in domestic crude oil production as a result of massive oil theft and other disruptions. The Agricultural and Industrial sectors while experiencing weak productivity levels contracted significantly, posting negative growth that also affected the value of the naira.
The Central Bank of Nigeria is responsible for manufacturing, issuing, controlling and protecting the naira. In discharging its monetary policy postures, the CBN in the recent past has taken a somewhat hawkish position by increasing the Monetary Policy Rate (MPR) several times. The monetary institution, similarly increased other policy parameters, such as the Cash Reserves Ratio (CRR). All these measures were adopted to constrain the money supply growth in the economy and rein in inflation while shoring up the value of the naira and reducing capital flight.
The efficacy of the Central Bank measures have been questioned and doubted by economists who pointed to the adverse effects of these policies when they triggered further depreciation of the local currency against other foreign currencies, mostly the US dollar. The critics blamed the redesign of the naira in December of 2022, amongst other factors, for the catastrophic collapse of the naira.
Between 2022 and today, the naira has depreciated by well over 50 percent in the Investors’ & Exporters’ (I&E), and the parallel market rates to N700/US$ and N900/US$ respectively. The consequences of these rapidly accelerating variables are the dire distortions aiding the volatility of the naira.
Amongst the many structural and vulnerability variables that have over the decades been bedeviling the economic well-being of the country, the most devastating is the shocks presented by the fall of the naira. How can any economy grow when its local currency has gravely lost value and indeed, lost current? What has worsened the poverty index in the country, is that food insecurity, energy crisis and inflationary pressures have persisted, thus driving the cost of living over the roof. Similarly, the economy’s negative positions and vulnerabilities got exercabated due to the adverse effects of the importation of petroleum products and the ever-nagging petroleum subsidy issue in a country that is one of the world’s largest producers of crude oil. The amplification of these issues further worsened and weakened the position of the naira locally and globally.
The fragility of economic growth in Nigeria is conversely tied to the stability of the naira, but its somersaulting acrobatics over several years, have rendered the people despondently poor and impoverished. The diminished value of the currency has completely decimated the prosperity for the people. Try buying pepper in our local markets and hear the local traders lament that the low value of the naira against the US dollar and perhaps many other currencies, is the reason food items have become extremely expensive. The local motor park economists are all quick to tie the deficiency of the naira to its inconvertible value and to its incapacity to sustain any bargaining powers or strength.
As we ponder the many unstable economic environments, especially the macroeconomic ones that have rendered the various sectors incapacitated and unable to drive economic growth, is there any hope, is there any light at the end of the proverbial dark and swampy tunnel? To present a drastic reversal of the impending doom, particularly with the dying currency, our objective should require that we sustainably achieve at least an 8.5 to 10 percent growth rate per annum in our Industrial and Manufacturing sectors. This projection if achieved, will create more jobs and ensure that our unemployed graduates receive decent and well-paying employment. Additionally, we must reduce our overreliance on oil and gas and their petrodollar inflows, and avoid our vulnerability to the external shocks that occur as a result of microeconomic and macroeconomic instabilities in terms of volatile exchange rates, huge external debts, mounting local debts, diminishing foreign reserves, high unemployment, high inflation, and unstable fiscal and monetary regimes.
I am particularly troubled by the total enervation of the naira, the weakening and the draining of its energy and vitality. It has been made naked and deprived of the strength that it used to have. There is ample acknowledgement and evidence of the thrashing and beat-down of this currency, and the ripple and devastating effects of the cycle upon cycle of malevolent destruction and repeated obliteration. It appears that the nature of its tralatitiousness and its malfeasance in the hands of our leaders and policy makers over the decades, remain unabetted.
I began this essay as a raconteur; telling the stories of the glorious days of the naira, deliberately, and with an anecdote for every reason for us to evaluate the evanescence of our currency; its fleeting tendency to vanish like vapor, and fading away before our own very eyes. I have a certain feeling of torschlusspanik; a fear that time to act is running out, and that we may have dug a deep grave for our generation and many more to come for an implacable and an unstoppable fall to disgrace, hunger, and dystopia.
Our situation is not completely hopeless even as I am more pessimistic as any realistic person should be. The reason being that it appears that we may still be dwelling in paramnesia, and a condition of confabulation where those who should provide us with solutions are still living in confusion and fantasy. I am yet to see any serious policy thrust from our new government aimed at reversing the misfortune of the naira. Instead, what we see is what one may call a pococurante and almost apathetic statements without much weight or power.
Even as I have always stated that no one person or group has the solution to our myriads of problems, there are various reform solutions that have been advanced by well-intentioned Nigerians, of which I have been fortunate to be one. Unfortunately, it appears that the advice of these very few persons and groups has not been taken into consideration.
There are many critical reform strategies that I believe will create stability for the economy, and rescue the naira. Some of them are; to increase foreign exchange availability by removing capital controls, and encourage and promote the inflow of stable investments in the oil and non-oil sectors, ensure the appropriate pricing, rationing and management of foreign exchange by instituting a transparent and clear forex policy that will ensure market stability and restore investors confidence, control the spiralling inflation by synchronizing the fiscal and monetary policies of enhancing the efficiency of the CBN to project expansionary fiscal thrust policies. In addition, the authorities must develop agricultural value chains that encompass the much talked about, but nothing done, Commodity Exchange Market, and the integrated agro-processing industrial chain. This will enhance local production and competitiveness and save the country from dependence on dollar-based imports. Also of importance, is the removal of all export and foreign exchange restrictions by promoting and facilitating trade and exports that will support and deepen foreign exchange earnings.
Say and write what we may about the economic conditions of our country and the floundering position of the naira, the abundance of the aporia remain with our policy makers and our leaders. The wisdom, stoicism and selflessness found in true and upright leaders will determine the growth and development of our country. However, my philosophical inclination is the difficulty inherent in our leadership issues which imply that those who govern must first achieve governance of themselves, straighten out their souls, conquer their appetite for stealing, set their soiled characters aright; for the one who is tipping over and falling all over the place, cannot straighten others, nor can a thief teach or organize a disorganized country.
How can our naira not go to the pits when the custodians have been bent and toppled over by their innate idiocy, greed, avarice, foolishness and slippery fingers?
Dr. Okey Anueyiagu
A Political Economist
Writes from Ikoyi Lagos
