Who Will Save The Naira?
By Muiz Banire SAN
This is the question most Nigerians are gasping for breath over now. Nigerians seem to be finally exasperated with the continuous astronomical rise in the exchange value of the country’s currency, the naira. Is it devaluation of currency that it is called? The purchasing power of our currency is dwindling badly to the extent that it is gradually becoming an abomination to keep naira now. Even investments in naira are now bad news, particularly when inflation is running at above 18 per cent. Even the returns on investment are at best around 16 per cent, rendering same ab initio a deficit investment. Who wants to keep naira? No one.
Accepting naira for transaction is even becoming a challenge, notwithstanding the illegality involved. The least some Nigerians do now is to price their goods and services in foreign currency, even where naira will be collected for it. While not pretending to be an economist or a financial specialist, I suspect that the scarcity of foreign currency might not be unconnected with two recent events. The first was the primaries of the major political parties held recently in Nigeria in which the United States dollar played a key role. The American currency became the major instrument of compromise of delegates at the various conventions and congresses of the political parties. Most of the delegates that collected the currency, considering their status in the society, do not, in the first instance, have domiciliary accounts to deposit the collected sums and, hence, have had to store the sums collected at home. Thus, the substantial portion of the sums disbursed in the process are in the closets of most of the political parties’ delegates. Even those who probably have domiciliaryaccounts, negligible in number though, cannot, due to the Central Bank of Nigeria (CBN) policy, lodge them directly and wholly in the said accounts. The net effect of these is that the said dollars are cooling off in various homes with their new owners expecting appreciation as the Nigerian naira continues getting devalued.
Adjunct to that is the fact that in virtually all the commercial banks, customers with funds in their domiciliary accounts are unable to withdraw from the accounts due to the scarcity and unavailability of the foreign currency in the banks’ vault. It is now, therefore, fashionable for people to store foreign exchange in their homes in order to avert the frustration being experienced in the withdrawal process. The consequence of this is the scarcity of the currency in circulation, thereby forcing the exchange rate further up. A few days ago, the exchange rate of naira to a United States dollar went as high as N710. It will be recalled that at the inception of the current administration in 2015, the exchange value of naira to a dollar was N197. Between that time and now, the rise in the value of the dollar against the naira has been consistent, reaching the climax of N710 a few days ago. Interestingly, during the campaign of the current President of Nigeria, President Muhammadu Buhari of the All Progressives Congress (APC) in 2015, he promised to ensure that a United States dollar would exchange for a naira. Apparently, this must be a wishful thought then and probably not a genuine promise, or was one made from an uninformed position as characteristic of Nigerian politicians.
The implication of this astronomical rise in the exchange value of naira on all facets of our lives is better imagined than experienced. The economy is now at a crisis point. There is hardly any sector that is not impacted. Even agricultural outputs are affected with the continuous rise in the prices of foodstuff. People at times wonder why this should be, forgetting that, apart from the cost of transportation of these items whose major components of vehicles, spares and fuel are affected, the dealers themselves live in the same austere environment impacted by the devaluation of the currency. Foodstuff prices are becoming unaffordable to Nigerians. Shelter, another basic need of the people in terms of rents, is becoming equally prohibitive. The costs of building materials have soared so badly that affordability or sustenance is becoming a challenge. It is needless to state that corruption is now on the loose as the people must survive by any means, just like the political class must win elections by any means. The foregoing are non-negotiable items critical to the survival of the people but which prices are now suffocating for Nigerians.
Beyond my pedestrian rationale for the surge in the exchange value of the naira discussed above, the Central Bank of Nigeria (CBN), which is the regulatory institution of our currency, has over time given several feeble excuses for the fall of the naira. The reasons range from gaps in our exports, thereby leading to the introduction of several policies and fiscal measures, all to no avail. Agriculture was supposed to be boosted with various schemes, such as the Anchor Borrowers Programme, that have woefully failed, bringing no joy. At a point, 41 items were banned from importation, which, in the wisdom of the management of the apex bank, gulped a sizeable portion of our foreign exchange, yet the continuous fall of naira never abated. At another time, we were told that it was the manipulation of the rates by a private currency information platform called AbokiFX that was responsible, the organization was raided and castrated, and still no progress. At another point, the bureau de change and parallel market operators were held culpable and, therefore, sent packing. Commercial banks were then saddled with the responsibility of providing justifiable foreign exchange to deserving citizens, still no joy, except to exacerbate the sufferings of Nigerians that must be on eternal queues now in the banks, chasing unavailable foreign currency. Anyway, is it a bank that cannot return the forex deposited by a customer at the point of withdrawal that will now provide solicited currency to someone who has only naira to give? Certainly not.
The CBN also has blamed the crisis on the laundering and activities of politicians and terror sponsors. The latest of the excuses accounting for the continuous nosediving in the exchange value of the naira was the purported non-remittance of foreign exchange by the erstwhile Nigerian National Petroleum Company (NNPC). This was promptly debunked by the corporation, asserting that it had disbursed a sum of $2.7b to the CBN within the last six months. Within the same period, several endless chaotic policy measures have been imposed by the apex bank by way of continuous experimentation, all to no avail. Recall that due to the apex bank’s policy, Nigerians cannot use their cards abroad for purchases anymore. Availability of forex for medical and educational purposes were trimmed. “Naira-for-dollar” promo was introduced, and so many more. In this discourse, it is not my intention to interrogate the excuses and the measures given and taken, but assuming without conceding that they are genuinely made, the truth and reality is that none of the measures has significantly impacted on the value of the naira in the market. My contention, therefore, is that there is still a wide disconnect between the CBN’s policies as dished out and the reality, in terms of appreciation of our currency. In the last seven years of this administration, the Nigerian currency has become virtually worthless, with the untoward multiplier effects on the lives of Nigerians. We have been made to bear the agony and our endurance and tolerance level is vanishing. In the event that the President is oblivious of this fact, as is now becoming characteristic of the Presidency, let someone, somewhere like El-Rufai did on the terrorism issue, approach the President and whisper into his hearing that Nigerians are groaning as a result of this devaluation of our currency. Nigerians are dying no more silently, but loudly. This experimentation with the economy of the country and, by extension, Nigerians, is becoming one too many. We cannot bear it any longer. We are at the boiling point now, and I say, now.
The truth is even if the CBN governor meant well, not conceded though, his policies have been unhelpful so far. If in the last eight years someone has tried all measures to address the issue and no remarkable progress made, I believe a rethink is now imminent. A year ago, it will be remembered that the World Bank heaped the same blame on the apex bank. Interestingly, the CBN governor has, over time, acted as the de facto minister in charge of economic planning and as well as finance as he singularly rolled out all economic policies. The Minister for Finance has been minding her personal business despite doing so in public office. As if that was insufficient, the Central Bank practically runs a parallel government in terms of ministerial responsibilities. Rather than, therefore, focusing on its primary responsibility, the apex bank has derailed so badly that it has become a jack of all trades, master of none. It is CBN that wants to run agricultural schemes, build hospitals, establish tourism facilities, procure weapons, etc. Worse off is the assumption of the political space by the governor of the CBN to become a presidential aspirant in the last political parties’ primaries. Now that the chicken has come home to roost, can we start appealing to the occupier himself to dignify the office, as well as himself, by resigning so that he can effectively mind his own personal business too, whether political, business or otherwise? If for nothing, for the singular reason that his best has not helped the system, integrity demands yielding the space to another person to inject new ideas and strategy.
Certainly, I honestly believe the governor has run out of ideas. Nothing miraculous can emanate from him again. We cannot continue propping up naira, it is simply not sustainable. If the Governor is however unwilling, the president needs to do the needful by urgently replacing him. A new Governor that can change the country’s sorrowful narrative is urgently required. The current occupier has tried his best and before the house fatally collapses on our heads, please save the calamity. Although there are other aberrations in the manipulation of the forex as observed by the immediate past CBN Governor that is known to Nigerians but which I do not intend to dabble into in this piece so as not to muddle up issues, but letit be known that Nigerians are not ignorant of them. At the right time, these issues will be addressed. Mr.President, I believe that there are several eminent Nigerian bankers/economists, both within and outside the country, that are possibly better than the current occupier that can be brought in. We cannot continue with the same thing and expect changes. In a country like the United Kingdom, the fifth largest economy, ata point that the economy was not as tattered as the Nigerian economy, a foreigner was brought in to strengthen the system and the gains of which are there to see. The Governor of the Bank of England, between 2012 and 2020, was a Canadian head-hunted by the country and was still even retained as special envoy by the country. Mark Carney was a forty-eight-year oldCanadian when he was appointed. What then stops Nigeria from towing the same route if we cannot find acapable Nigerian. If the truth must be told, as recently suggested by a Nigerian friend, since the country’s situation continues to degenerate and it does not seem we are making the desired progress, could it be a bad idea franchising the management of the country to a foreign entity without necessarily losing the sovereignty of the nation? I think it is food for thought. Life has become miserable in the country and something definitely must give, one of which is the change of guards at the apex bank. This cannot wait till tomorrow otherwise the country will be buried in ruins. A multifaceted solution can then be mounted. This is how to save our currency.