• Mon. Jul 22nd, 2024


Dec 4, 2023


By: Augustine Omilo


Since the naira, Nigeria’s currency and the recognized medium of exchange’s value before other currencies of the world became subjected to market forces in the 80s, it has not recovered from value depreciation. The negative trend has continued to cause nightmares to economic planners in the country. This downward slide of the nation’s measure of value started with the international monetary policies introduced to the nation by World Bank and IMF-trained economists like Dr. Onalapo Soleye, Dr. Chu S.P Okongwu and Dr. Kalu Idika Kalu. They all served as finance ministers before Nigeria returned to democratic governance in 1999.


The Naira faced the challenge of determining its value through the Dutch auction system where the Deposit Money Banks, DMB went to the Central Bank of Nigeria daily to bid for foreign currencies. The Commercial banks’ demands for dollar were based on the needs of their customers whose businesses required importation of foreign items.


However, this method of obtaining the foreign currencies from the apex bank gradually became abused when banks began to spring up without established norms in income generations through robust customer base. Many of them solely relied on the buying and selling of FX for survival. They indeed began to post profits that were not commensurate with their level of economic activities.


Buying and hoarding the dollar became the order of the day. They created artificial scarcity helped the banks to buy at official rates but sold to customers with outrageous profit margins. As a result of this, manufacturers needing foreign exchange began to suffer deprivations. Some of them thus, began to fold up. Other unfavourable economic challenges such as epileptic power supply and unstable government policies compounded matters for importers.


As if the damage done to the country’s currency by these policies was not enough, the federal government introduced the Bureau De Change, BDC window dominated by those who hitherto obtained foreign exchange from unclearly defined sources and sold at reasonable black-market rates on the streets of major towns in Nigeria. No sooner the government began registering BDC offices than they started conniving with banks to sell dollars and other currencies to companies and individuals that did not need them in the first place. This was at the detriment of genuine importers.


In the time past when the Naira was protected against other foreign currencies, approval was not granted to those wanting to travel overseas to study courses that were available in Nigerian Universities. But with BDC and some unscrupulous elements in the society, anyone could obtain FX to even study religion in countries that do not believe in God.


Amidst all these, many individuals started importing foreign goods to stock their supermarkets and fashion outfits. Of course, the citizens’ preference for goods made outside the country began to increase. The infant industries became helpless. Many of them shut down their factories and started importing ready-made goods from abroad. Today, a greater number of the nation’s population relies on countries like China, Singapore, USA and India for their material needs.


The elites do not even help matters. They spend foreign currencies in public places while some Nigerians prefer to be paid for goods and services in dollars. This is in spite of the fact that there is no known law yet validating the use of foreign monies for use locally. When the former Governor of the Central Bank of Nigeria introduced the redesigned naira notes with a view to mopping up all Nigerian monies circulating outside the banking system, no mention was made of the amount of dollars and pounds sterling dominating financial transactions in the country and the need to mop up same.


Though, it is true that manufacturing activities do not yield quick returns on investment, they remain the best way of ensuring that businesses remain going concerns, outliving their founders. They also guarantee stable economic growth, guaranteeing wealth transfer from one generation to another through family businesses that willingly sell shares to the public.


It is therefore imperative that in shoring up the value of the naira relative to other foreign currencies, Nigerians must shun their penchant for foreign goods and services. “Container” business men amongst the populace need to also consider patronizing local manufacturers or better still, migrate manufacturing like companies such as P.Z and Liver Brothers that began as trading outfits in Europe but today rank among the best conglomerates in the world.


Teachers and educational planers at all levels Owe the nation a duty to help government ensure that schools in Nigeria chum out graduates that are skillful enough to handle different segments of the economy outside government circle. After all, it is the private sector that drives the economies of the advanced countries.


In as much as one agrees that it is the responsibility of government to put measures in place to ensure a good financial policy in the direction of foreign exchange management, the men and women of this country must brace up to their patriotic responsibilities and collectively work towards protecting the Naira. The CBN can do little or nothing to save the Naira.