Just as America has its Dollars and Cents, Britain its Pounds Sterling and the Penny, Nigeria has had its Naira and Kobo since world currency notes became decimalized. Prior to the naira, Nigeria had used the pounds, shillings and pennies which Britain introduced during the colonial era. Britain, however, phased out the shillings in 1971 to conform to world decimal standard.
The decimalization made people count in 10s and 100s, easing off the rigorous money arithmetic that our fathers faced while buying and selling. It set the pace for clearer and better calculations and enabled easy digitalization in a world that rapidly turned to the computer as a do-all machine of the modern age.
The naira, a paper currency note, came into circulation in 1973 as a decimalized currency note, with its younger brother, the kobo, a coin made of bronze. We counted 100 kobo to get one naira. Then the money had value over and above the American dollar because of the huge export of crude oil that earned foreign exchange for the country. In the late 1970s to early 1980s, one dollar exchanged for 60 kobo.
The naira value, then, was helped by the Organisation of Petroleum Exporting Countries (OPEC) monopoly of the international oil market. Various Nigerians who studied in the United States of America in those days were comfortably sponsored from Nigeria by their guardians and parents. Of course, the idea of a naira that is stronger than the dollar and is equal to the pound did not go down well with the West, America and Britain specifically. They plotted and stockpiled oil in the early 1980s, and suddenly stopped buying, creating a false sense of oil glut, all in the effort to crash oil prices and reduce Nigeria’s oil earnings. The drop in earnings subsequently affected Nigeria’s foreign reserves.
This created a big problem for the Shehu Shagari administration when prices of essential commodities began an upward movement, away from the reach the common Nigerian. The mechanics was that oil earnings had dropped and the nation’s purse could no longer carry the enormous volume of imports that the nation was allowing in the country, from tooth pick to pencil, to chicken, to vegetable oil, virtually everything.
When the Muhammadu Buhari-led military junta took over power in a coup against Shagari in 1984, it restricted imports to essential commodities and tried the production of certain items at home. It also introduced the counter-trade policy in which Nigeria bought goods from the countries that bought its oil, therefore, shunning goods from those that refused to purchase our oil. The policy opened the gates of Nigeria’s huge market to the emerging Asian Tigers such as Hong Kong, Taiwan, Singapore and South Korea, as well as Japan, Indonesia and China. It was yet an extension of the import-orientation, but this time, another group other than the West was beneficiaries. Generators, cars, and many other goods made in Japan, China, Taiwan and other countries flooded Nigeria at cheaper rates and at a fair balance of trade for the nation. The West did not rest. They began to work on the leadership of the country, searching for puppets.
The Ibrahim Babangida administration that ousted Buhari had a romance with the International Monetary Fund (IMF), a Western contraption that sold the Structural Adjustment Programme (SAP) to it at a point, and Nigeria was to adopt the foreign exchange market in which the naira was thrown into to compete with other currencies under an unprepared economic climate. The result is that today, the naira is exchanging, at best, N1,600 to the dollar, and threatening to hit the N2,000 mark. Hurray, the West has triumphed!
The naira’s slide downwards was gradual. At a stage, it was reduced to a silver (or was it aluminum) coin. One naira was no longer a paper note but a coin! Gradually, they came up with the N10, N20, and N50 notes made of cellophane that melted under intense heat of the sun and got torn easily. So, as the naira was reducing in fiscal value, it was equally reducing in physical value.
With today’s exchange rate, and attendant inflationary trends, to buy with the kobo, one needs a truckload of it for a paltry quantity of goods. And so, the Kobo fizzled out. What has continued to happen since the introduction of the forex market is that Nigerians have preferred to trade on their currency as the commodity rather than use it as a means of exchange. This is promoted chiefly by the import-oriented economy that the nation runs. Productivity is deemphasized.
Ghana suffered the hyperinflation fate in the 1970s when the Cedis began to dance naked in the marketplace. The crazy dance saw the currency note sliding dangerously against other world currencies and life became unbearable for Ghanaians. Many japaed to Nigeria. Quickly, new rulers of the West African country that, from independence, could boast of quality leadership until their hero Kwame Nkrumah got chased out of the scene by a group of neo-colonialists, did some smart arithmetic that restored the Cedis to some normalcy. They simply moved the currency two decimal places backwards, such that if you had 1,000 cedis, for instance, it would then translate to 10 cedis. The idea was to have to carry less volumes of money that could buy a reasonable quantity of goods.
When the hyperinflation bug bit the naira, which started its downward slide in the foreign exchange market, astute economist and present governor of Anambra State, Prof. Chukwuma Soludo, who was the Central Bank of Nigeria (CBN) governor under former President Olusegun Obasanjo, tried to apply the Ghana formula on the naira. The Nigerian populace was not as receptive and accommodating to wise counsel as the Ghanaians. They thought that quantity rather than quality was the mark of money. That concept remains with us and continues to be the albatross against the health of the naira.
The cents and pounds are still in circulation while our kobo has been forgotten. One could buy over the counter in these other countries that have stronger currencies and get their balance in coins. Not in Nigeria. The Nigerian gets offended if you brandish the kobo coin before him. Of what use it is to him? Impliedly, the naira is irredeemable in value. Seriously, the irrelevance of the kobo in the market signifies one thing – that the naira is critically sick.
The West is, to a great deal, responsible for the fate of the naira and they are not done yet with Nigeria. They will do everything possible to stop the genuine leaders in Nigeria from ascending to power and applying the necessary economic measures to restore the status of the naira in the money market. While they rue their mistake of not stopping the Asian Tigers from gaining substantial foothold in the global economy, they are not ready to let Africa go, especially the most populous Nigeria that threatens to rival them.
How do we bring back the Kobo? The answer, my friend, is blowing in the wind.
Dr. Odu can be reached through dirimrich2018@gmail.com or SMS 07016722929