By Nnanke Harry Willie
Nigeria’s currency, the Naira is on a rollercoaster ride to the abyss. The immediate effect is the acute impoverishment of the citizens of Nigeria. While the rich are getting less rich, the poor are getting a lot poorer. The ultimate effect is too catastrophic to imagine.
The big quetsion is therefore “How can President Tinubu arrest the Naira?”
As of Thursday, January 25, 2023, the Naira fell to an all-time low of N1,438 to $1 in the black market where the majority of Nigerians source their forex from, while the average official rate was N900. It had however crossed over to N1,100 in January. Meanwhile, recall that as of May 29, 2023, the Naira exchanged for N770 in the black market and N464 at the official rate.
For a country declared as the poverty capital of the world, this is nothing short of a ticking time bomb, a pending calamity of gargantuan proportions. All espoused efforts of the Tinubu administration to reign in the Naira’s precipitous fall have fallen flat and exposed the Tinubu administration as being tall on rhetoric and shockingly short on effectiveness.
Even the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has declared that the Nigerian naira is undervalued but promised, yet again, to expedite the discovery of genuine price in the near term. He said, “We believe that the naira is currently undervalued, and coupled with the coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate.” Nigerians hope it is not another vacuous promise yet.
The erratic behavior of the Naira has real-life consequences for citizens and businesses on the ground. Soaring inflation rates, shrinking purchasing power, and an economy grappling with the aftershocks of a global recession create a challenging and asphyxiating environment for businesses and households alike. The Naira’s rogue behavior threatens not only the stability of our nation’s economy but also the aspirations and well-being of millions of Nigerians.
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As the Naira continues its downward spiral, President Tinubu finds himself at the helm of a nation grappling with economic turbulence, reminiscent of a historical decline that stretches back to the era of President Babangida. The Naira, once a symbol of national pride, now languishes as one of the world’s worst-performing currencies, plunging Nigerians deeper into poverty and pushing the Nigerian economy to the brink of collapse.
The genesis of the Naira’s depreciation can be traced to the late 1980s, marked by the implementation of the structural adjustment program (SAP) under President Babangida. While intending to address economic imbalances, SAP set the stage for a series of devaluations that marked the beginning of the Naira’s troubling journey. Despite subsequent attempts at economic reforms, the currency’s decline persisted, culminating in its current status as a struggling symbol of a beleaguered nation.
Today, the Naira’s woes have reached alarming proportions. International financial markets now rank it among the world’s worst-performing currencies, and the consequences are stark for ordinary Nigerians. Rampant inflation has eroded the purchasing power of the Naira, contributing to a decline in living standards and leaving citizens grappling with the harsh realities of economic hardship.
President Tinubu is superintending an economy at the precipice, and the question on the minds of many is whether he can arrest the freefall of the Naira and navigate Nigeria out of this economic quagmire. The solutions to this complex challenge require a strategic and multifaceted approach.
The question echoing through the international financial community and across the nation is whether President Tinubu, now at the helm, can arrest the freefall of the Naira and salvage Nigeria’s economy. Proffering sustainable solutions to this multifaceted crisis necessitates a comprehensive and strategic approach.
Economic Diversification
Firstly, diversification is paramount. Nigeria’s over-reliance on oil exports has made the Naira vulnerable to fluctuations in global oil prices. President Tinubu must howver start by ending the scandalous oil theft industry even as he prioritizes and expedites efforts to deepen and diversify the economy. He must, in addition, introduce proactive and progressive policies to truly open up investment opportunities the value chain in the oil and gas and energy industries as Former President Olusegun Obasanjo did in telecommunications.
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President Tinubu must do away with the traditional opaqueness in the various critical industries that serves to disincentivize genuine local and foreign investors who would otherwise have brought in their prized resources and expertise to make the industries nay the economy flourish.
He must also do the same to attract investments in sectors such as agriculture, technology, and manufacturing to create a more resilient economic foundation.
Manufacturing and Exportation
Manufacturing is at an all-time low in the country. By bolstering the manufacturing sector, Nigeria can simultaneously address key issues plaguing the Naira. Increased production capacity will diminish the need for extensive imports, helping to narrow the trade deficit and reduce pressure on the country’s foreign exchange reserves. Furthermore, a vibrant manufacturing ecosystem will foster innovation, technology transfer, and skill development, positioning Nigeria as a competitive player in the global market.
Exports, another linchpin in the economic lifeline, play a pivotal role in shoring up the Naira. The exportation ecosystem needs to be streamlined and made easy and fast. Diversifying the range of goods and services exported can create a more stable income stream, less vulnerable to the fluctuations of global commodity prices. Nigeria’s overreliance on oil exports has exposed the Naira to the unpredictable whims of the international oil market, underscoring the urgent need for diversification.
A strategic focus on non-oil exports, such as agricultural products, technology, and services, can provide a buffer against external shocks. This diversification not only ensures a more stable revenue base but also positions Nigeria as a dynamic player in the global marketplace, attracting foreign investment and bolstering the Naira’s value.
Corruption
Every Nigerian with a scintilla of intellect knows that corruption across the board is the bane of Nigeria’s underdevelopment. It has also been alleged by those who should know that it is the activities of highly placed Nigerians who rush to convert ill-gotten and stolen Naira into dollars that keep on pushing down the value of the Naira. This was very apparent during the primaries of major political parties when the Dollar rose exponentially as the political gladiators sourced Dollars to issue humungous dollar bribes to delegates.
Institutional corruption as revealed by the scandal at the Ministry of Humanitarian Affairs and Poverty Alleviation is only one example of an epidemic that will cripple any well-meaning administration. The time to begin a massive onslaught against the hydra-headed monster of corruption across MDAs is now!
Arresting the Naira from further decline by addressing corruption is thus another critical facet of the solution. A transparent and accountable government can restore confidence among both domestic and international investors. Stringent anti-corruption measures, combined with effective governance, will ensure that public funds are utilized judiciously for infrastructure development and social services, fostering economic growth.
An anti-corruption revolution is urgently needed!
Monetary and fiscal policies
For inexplicable reasons, Tinubu’s recomposed CBN has refused to hold the legally binding mandatory monthly Monetary Policy Committee (MPC) meetings since September. . Could this be responsible for the galloping inflation in the land? The CBN has however announced that it will be holding its first MPC meeting under Yemi Cardoso on February 27, 2023. Hope things will not have gone beyond redemption by then.
Monetary and fiscal policies must undergo thorough review and reform. Collaborative efforts between the Central Bank of Nigeria and fiscal authorities should aim at stabilizing the Naira and curbing inflation. Prudent fiscal management, along with the effective implementation of economic reforms, will be instrumental in rebuilding the Nigerian economy.
Reducing Public Debt
High public debt can scare away foreign investors, as they fear that their investments would be trapped, and they would not be able to take their money back to their countries.
Discerning Nigerians were scandalized when the Tinubu administration last year took huge loans to finance wasteful projects such as buying luxury vehicles for National Assembly members and vehicles for the First Lady. Nigeria should work on reducing its public debt to make the country more attractive to foreign investors.
Cost of Governance
Naturally, any administration that delights in profligate spending is sure to put the economy in jeopardy. It appears President Tinubu is, unfortunately, leading by example in this direction. From a bloated cabinet to excessive budgeting on recurrent and questionable expenditures, the Tinubu administration has not demonstrated the financial prudence and social intelligence required for a time like this. It is a no-brainer that we are in deep recession, therefore, cost-cutting should be the way to go, especially for unnecessary luxury, duplicated job functions and ‘pepper-them’ spending.
Improving Infrastructure
Tinubu should invest in modern infrastructure projects and upgrades such as railways and highways to improve the movement of goods and services, which can boost economic growth and increase the value of the Naira. This is not just necessary, it is also very urgent as most federal highways have either collapsed and are too dangerous to traverse due to insecurity.
Tackling Insecurity
The correlation between security and economic stability is not a novel concept, but its prominence in the context of the Naira’s fate has taken center stage. From the Boko Haram insurgency in the Northeast to the herder-farmer clashes in the Middle Belt and the rising incidents of kidnapping and banditry across the country, Nigeria’s security landscape has been a persistent cause for concern.
President Tinubu needs to purge Nigeria of these epidemics.
As the security situation worsens, the Naira feels the reverberations. Foreign investors, crucial for the stability and growth of any economy, hesitate in the face of uncertainty. Insecurity becomes an economic deterrent, leading to reduced foreign direct investment, a weakened external reserve, and mounting pressure on the Naira.
The implications are not confined to international perceptions. Domestically, businesses face disruptions, agricultural activities decline due to insecurity in rural areas, and the cost of security infrastructure adds an extra burden to both the private and public sectors. All of these factors contribute to a weakened Naira and an economy in distress.
To save the Naira, President Tinubu must confront Nigeria’s security challenges head-on. This involves not just a military response but a comprehensive strategy that addresses the root causes of insecurity. Social and economic interventions, community engagement, and political will are essential components of a holistic approach that can create an environment conducive to economic growth and stability.
President Tinubu’s mandate is clear: to arrest the Naira from further decline and indeed restore it to a currency of African pride. It is also to steer Nigeria away from the calamitous economic abyss. there is no more room for buck-passing and excuses.
The clock is ticking, and Nigerians are watching. The fate of the Naira and the future of the nation’s economy rests on the shoulders of its leaders with Tinubu at the top. The time for bold and decisive action is now. For Tinubu and the Naira, it’s indeed now…or never!
