BY RICHARD ODU
The Nigerian naira is at it again, playing hide-and-seek with famished and angry citizens of this country. Banks have resumed rationing money for reasons yet to be made known to the public. Very obviously, the naira is one of the most bastardized currency notes in the global financial market today. Apart from its scandalous serial fall in value in the foreign exchange market, there was a disgraceful scramble for the naira early this year, which was occasioned by the redesigning policy of the last administration that attempted to replace some denominations.
Unfortunately, at the time the old currencies of the N200, N500 and N1000 denominations were supposed to go out of circulation, the new notes were grossly out of stock at the Central Bank. The result was stampede. People were injured as they struggled in banks to obtain money to buy essential goods.
With that naira re-colouration, the administration of Muhammadu Buhari might have targeted recalling excess money in circulation to curb the galloping inflation in the country.
The move, however, failed to achieve its aim because it was implemented close to the controversial 2023 general elections and so was given several political interpretations. Among the misconceptions that surrounded the policy was the notion that the Federal Government initiated it to checkmate votes buying in the elections. Even if that was the underpinning goal, it still failed because the dollar, which was a far stronger currency, was available for use in buying votes in the heat of the paucity of the naira. Besides, online payments went on.
The legal fireworks that followed the policy later came to the rescue. Delivering its judgement in a suit challenging the federal government’s decision, the Supreme Court ruled that the scarce new naira notes and the old ones which had already been locked up in the vaults, waiting to be discarded, should remain in circulation until December, this year.
The same Supreme Court recently ruled that the two should coexist as legal tender until further notice. Nigerians must, however, be a little more careful in transacting businesses with the current N100 and the new N200 bills so that they would not be interchanged on account of their resemblance in colour. Viewed from whichever angle, it would appear incongruous to established principles that the old currencies are not being withdrawn fast enough to give way for the new ones. The Central Bank owes Nigerians an explanation to all that happened in those days.
Still notable is the age-long abuse of the naira at places of merriment where the naira is usually strewn on the ground and matched on as if it was not hard-earned. It is only in Nigeria that pieces of torn or worn-out naira notes are found littered on the streets, especially the ten-, twenty- and fifty-naira notes made of polymer.
Shall we talk about the rumpling of naira notes by market women and even policemen who collect “tolls” from commercial vehicle drivers and hurriedly tuck the note into their pockets?
Be that as it may, the life of the Nigerian economy hinges on the strength of the naira. With a weak naira, Nigerians would have no choice but to live within an unstable economy which translates to a low standard of living that breeds anger, strife and protests. For as long as that lasts, the nation would bear the derogatory appellation of the world’s poverty capital. On the other hand, a strong naira like the one the country had in the 1980s when the dollar exchanged for 60 kobo would set the nation on the path to a healthy economy, prosperity and relative peace.
A currency’s strength is determined by the interaction of a variety of local and international factors which include inflation, balance of trade, and growth in the domestic economy, among others. The nation’s real productivity quotient can go a long way to strengthen the naira. From elementary economics, we learnt that a productive economy will always have what to export to earn foreign exchange which it uses to import goods that it is unable to produce locally. A nation that imports more items than it exports ends up with trade imbalance in the international market.
Nigeria needs a strong naira to tackle its myriad of economic problems ranging from high rate of unemployment to food insecurity. What are the initial steps to take? To use similar words of Yusuf Datti Baba-Ahmed, the Labour Party vice presidential candidate in the last presidential elections, Nigerians must love the naira so much as to feel the obligation to protect it. Then, a tight fiscal discipline and anti-inflationary policies must follow from the government. Without love across the country, the naira would not appreciate.
Of note on the down side of the ladder are the machinations of dubious persons who carry out activities inimical to the economy. Nigeria’s major foreign exchange earner is crude oil. This oil, in recent times, has fallen into the hands of thieves who cart away a substantial amount of revenue accruing from it, leaving the nation with far less than it would have earned to boost its foreign reserves. We might not also rule out the shenanigans of some international groups who see Nigeria as a rival.
On our side, we cannot help ourselves in the campaign for a strong naira if we choose to import every item, including refined petroleum that drives the nation’s economic engine. Nor can we be better off with frivolous spending on imported luxury goods. Our moves to firm up the naira can be imperiled by our epileptic electric power supply and our being laid back in local production of consumer goods. Where are the Michelin and the Dunlop tyres of old? Where are the Bata and Lennards shoes, the Peugeot Automobiles in Kaduna, the Volkswagen plants in Lagos, the Layland and ANNAMCO Mercedes trucks, the Philips Radios, the thriving cables production companies, and many others?
The travails of the naira have been many and our abuse of it reflects our level of patriotism to the nation. Its performance in the forex market has not been impressive since the 1990s when military President Ibrahim Babangida threw it open to the vagaries of the market. The currency has been on the decline in value, and this is gradually dragging the country down the cliff. Professionals and young people who would have stayed to boost the nation’s economic growth prefer to earn hard currency abroad. Nigerians can’t wait to see a reversal of the present situation.
Dr. Odu can be reached through dirimrich2018@gmail.com