There are multiple factors weighing against the rise of the naira viz a viz other currencies
Recently, the naira took a fast but steady plunge against the dollar and other foreign currencies like never before. In less than a year, the naira slid from four hundred and fifty naira to a dollar in the black market to seven hundred and ten naira to a dollar.
This all- time low for the naira which value keeps depreciating by the day against other foreign currencies has become a source of worry to all. This is because everything in the market is dollar-denominated hence leading to an astronomical rise in everything; from locally produced /domestic goods, household equipment, foodstuffs to imported industrial products. The hike in all of these commodities has led to drastic falling standard of living with per capital wage of the average Nigerian remaining at less than one dollar per day.
Nigeria has had more than its fair share of bad luck. Since it became an independent nation over sixty years ago, the country has suffered bad governance. A country rich in natural and human resources ; with an all year round good climatic condition has no reason whatsoever to be poor. Ironically, a country so richly endowed by nature is sadly, one of the poverty capitals of the world, owing to bad management of its vast resources. The country has been unfortunate enough to have leaders who were more interested in plundering than building. Rulers after ruler find themselves in the corridors of power without the slightest clue on what to do to grow its economy; but are driven purely by selfish interests. Though, seen as a poor country. Nigeria has produced ex leaders and current ones who are far richer than the Nigerian state.
Consequently, the country became a confused state that squandered its rich productive potentials, producing nothing while developing an insatiable appetite for consuming all manner of imported items.
The country then became a dumping ground for all manner of imports. The leaders and people of Nigeria grew lazier and eased snugly into a life of luxury, such that during the FESTAC ‘77’ that Nigeria hosted, the then military Head of State, General Yakubu Gowon (rtd.) had boasted to the world that Nigeria’s problem was not money but how to spend it. People flocked into the country. Nigeria had many fair weather friends who were more interested in tapping from our petro dollar than in any meaningful lasting relationship – at least for as long as the oil flowed. Then, Nigeria’s currency was stronger than the dollar; exchanging at less than sixty Kobo to one US dollar. We were sought after then – the beautiful bride.
What we failed to understand then, was that a country that favoured importation over local production was doomed. It was only a matter of time, before the inevitable happened. Our leaders then and now failed to read the writing on the wall – they were, and are, too short sighted to save up for the rainy day, which was most certainly going to come.
Sixty years after independence, which came with very high hopes, the country is worse off, despite being rich in oil, the global price of oil keeps fluctuating; and for a country solely dependent on income from oil for everything, our fortunes took a turn for the worse; heightened by the kleptocracy of our leaders.
A country that lacks the ability to add value to its raw materials gave foreigners the undue advantage of making fortunes out of us. The international markets continue to buy our raw materials at ridiculously low price, develop them in their countries by adding value and sell back to us at very exorbitant prices in scarce foreign exchange.. Hence our reserve of foreign currency was always depleting. We couldn’t replenish because we aren’t producing anything to earn us foreign currency except oil , which we lack the expertise to refine despite spending huge amount in building refineries that have been rendered obsolete through sheer lack of use.
For instance, the war in Ukraine offered Nigeria a golden opportunity to reap appreciable economic benefits from the sale of oil and gas, if we had sufficiently prepared for it. But alas! No! We blew it
According to reports , the price of crude oil, the country’s main revenue generating resource, had increased to above $100 per barrel since the Russia/Ukraine conflict; yet, Nigerians continue to grapple with low revenue, depreciating Naira and dependence on debt to finance budget deficits and capital expenditure.
It will be recalled that the Minister of State for Petroleum Resources, Timipre Sylva, had said that the increase in prices of crude oil was not in the best interest of Nigeria. He was alluding to the massive crude oil theft in the oil producing states and the Niger Delta. He added that the theft was responsible for the precariously low gains from high crude oil prices.
With increased oil theft in the oil producing areas, the economy is on the verge of collapsing. Nigeria government is spending more than it gets worsened by crippling subsidy payments.
Only recently, the Minister of Finance, Budget and Planning, Zainab Ahmed had at a public presentation in Abuja warned that the economy was on the brink and that urgent action was required to fix the revenue underperformance and expenditure inefficiency at the national and sub-national levels.
For decades, the southwest region of the country had produced large quantities of cocoa for exports, without thoughts of going beyond marketing and selling of raw cocoa for exports to adding value for greater income. For instance a bag of cocoa will sell for like a million naira, but when processed could cost about seven million naira.
By so doing, manufacturing business became less and less lucrative, even the banking system was not designed to favour any kind of productive venture. It was and is still easier for importers of finished products to get loans from the banks than for manufacturers to access these facilities. The banks were more interested in quick profits than in helping to grow the economy by encouraging productive activities. As a result, the economy contracted and is still shrinking till date so long as the old habit persists..
The absence of a vibrant industrial and manufacturing sector in the country exacerbated various economic challenges, like rising inflation and an unstable currency (Naira)
Politicians, bankers, government officials all got deeply involved in all sorts of sharp practices that made them instant billionaires in hard currencies at the detriment of the economy. They all killed the hen that laid the golden egg .
Today, our problems are hydra headed. We are not only battling low self- worth, but rising insecurity concerns, secession, electricity crisis, fuel scarcity, hunger, ritual killings and out- of- school youths who have gone into yahoo yahoo. The country is experiencing brain drain never before witnessed in the history of Nigeria; our professionals are leaving in droves. The hospitals and class rooms are empty. The perennial face- off between the Academic Staff Union of Universities, ASUU, and the government all add to compounding issues in Nigeria today.
World Bank Group recently affirmed that Nigeria’s human capital development ranks among the worst globally. Unemployment in its record high in ten years and inflation at almost twenty per cent, official figure, a burgeoning debt crisis and a government that appear clueless on how to tackle the problem the atmosphere is gloomy and the future seems bleak.
The day of reckoning is here and we are all reaping what we sowed. Our currency is worth nothing before other currencies of the world; with naira exchanging at seven hundred and ten naira for a dollar. It’s a shame!
But all hope is not lost. We can still retrieve our lost glory, only If we chose to have a change of heart. We have the answer. Let’s hope that as the coming elections near and we have another golden opportunity to pick a new crop of leaders that will navigate the affairs of this nation for the next four years .
Meanwhile, experts have advised that in order to correct these anomalies, government must encourage the production and manufacturing of essential goods, which will go a long way in revamping the economy. In addition, federal government must strive to address fundamental dislocations in the country like boosting investment, reducing the unemployment rate and cutting down on inflation.
Government should try to reduce the tax rate so as to increase the volume of investments to enhance economic growth. The more employment you get, the more tax you will get, and that will boost the government’s revenue drive
The apex bank, Central Bank of Nigeria, CBN, should adopt effective monetary policies that would strengthen the naira, A strong currency is indicative of a performing economy. It should be more innovative and proactive and transparent in foreign exchange operations.
The federal government should a a matter of urgency embark on reforms designed to accelerate and sustain economic growth.
Of paramount is the rising state of insecurity in the country; government must do all it can within its powers to put an end to it. No meaningful development can take place in a country ridden with violence and so much uncertainty.
Also government should embark on the deregulation of the country’s oil sector to boost investments and also save huge government revenue expended on fuel importation.
“.