Nigeria @ 61: Salvaging naira, a panacea for economic growth 

 

 

COMFORT EKELEME, Business Editor

 

As Nigeria celebrates her 61st Independent Anniversary, stakeholders have stressed the need for the regulatory authorities to as a matter of urgency come up with strategies that would help salvage the ailing naira  in order to avoid a total collapse of the economy, maintaining that a strong currency makes import cheaper and can improve the people’s living standard.

 

Sixty-one anniversary is quite a milestone, coming after the diamond anniversary. Also, it has few official gifts or traditions associated with it, but there’s still plenty of room for giving a thoughtful and meaningful experience.

 

Independence is the National Day of Nigeria and is always celebrated on October 1st. It marks independence from British rule on this day in 1960.

 

It is, however, on record that Nigeria is presently the most populous country in Africa, with around one in every five Africans being Nigerian.

 

Despite being the giant of Africa, its economy has in recent times suffered setbacks due to poor leadership and the COVID-19 pandemic which is currently ravaging economies of the world.

 

Worried by the present state of the nation’s economy and the continuous fall in the value of naira against the dollar and other major international currencies, industry watchers are of the view that this situation requires urgent steps to save the naira for the desired economic growth.

 

They also called on the Central Bank of Nigeria (CBN) to digitalise operations of the Bureau de Change (BDC) operators to curb their excesses and monitor what they do, adding that what is happening now shows that there is a fundamental crisis in the Nigerian economy, while investors’ confidence needs to be regained.

 

Interestingly, they harped on the need for the National Orientation Agency (NOA) in collaboration with the CBN to sensitise Nigerians on the implications of converting their naira savings to dollars.

 

Meanwhile, the downward trend of the naira had fueled calls for the sacking or resignation of the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, by some political groups including the Peoples Democratic Party,

PDP.

 

They blamed Emefiele, who has been CBN governor since June 2014, for poor monetary policies. Unfortunately, the economy does not respond to political statements and does not respond to military orders; the market responds to its own dynamics which is demand and supply.

 

Investigations, however, revealed that many government officials in ministries and agencies and captains of the industry currently spend dollars in Nigeria unhindered.

 

Speaking with Daily Champion on the issue, Managing Director/ Chief Executive Officer of MaxiFund Investment Securities, Mazi Okechukwu Unegbu urged the regulatory authorities to take the right actions like controlling the rate of inflation.

 

He said saving the naira is important for economic growth, adding that a strong currency makes imports cheaper and can improve the standard of living.

 

Unegbu said, “The regulators should take advantage of the fact that we have people who can do the job and be willing to give them the job to do. Again, taking advantage of control of interest rate which is part of the monetary policy, the Central Bank has left the interest rate stable for several quarters; they need to tinker with it to know what to do.

 

“The economy appears to be on the verge of collapse because all the indices are all looking downwards and in such a situation, you can’t think of economic growth.

 

“The naira is an abused and undervalued currency. It is unfortunate that the CBN has left the naira to be abused. The CBN is supposed to manage the national currency and when things are not going fine, should support the currency at the foreign exchange market, the CBN should do its due diligence properly, study the economies of the world and come up with a policy that will firm up the naira.

 

“At least, in recent times, the oil market has been in favour of Nigeria and if such a thing happens, the CBN should take proactive action to make sure that the currency is stable, the issue is stability.

 

“Even if the naira is made stable at N500, they should not allow it to fall at N580, N590. Stability of the currency, stability of our economy, control of inflation, control of interest rate, control of exchange rate, all these put together will help to bring the naira back.

 

“Nigeria of my time, we were very happy because there were developments going on, that is why I doubt the Nigeria of today. Then, with N150 you are in London, with N1200 you have gone to America and back.

 

“This is a Nigeria where a lot of bad waters has passed under the bridge, a country that was boasting of 70 kobo to one dollar, and suddenly N581, N590 to one dollar. Something must have gone wrong, so it is not the Nigeria that we know, a Nigeria where we had good schools, universities were strong,” he lamented.

 

Speaking further, Mazi Unegbu said the last six years have been very horrible, stressing that the Buhari administration has destroyed Nigeria more than any other administration in the history of Nigeria.

 

“For us to really get it back, these issues must be addressed and I don’t see any other way of addressing it rather than restructuring, asking each region to be autonomous, so that they can develop on their own, otherwise” he added.

 

Unegbu maintained that a strong economy can also make export less competitive and lead to lower economic growth.

 

On his part, a former President of Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe who also spoke with Daily Champion called on CBN to come up with strategies geared towards protecting the naira.

 

He said, “The CBN, like they are doing now, should see how to improve their oversight mechanism, there is a need to ensure that what is brought into the country is correct at the correct price that will help save a lot of dollars.

 

“The economy has to be productive, it is not that we are producing, but there should be rap up of production of goods and services for consumption and export. If you are importing almost everything we consume, external volatility will affect the currency, which is what is happening currently.

 

“But if the economy is producing in such a way that we don’t import all these things we are importing and just import essential goods for industries, the naira will be strong, but the problem is that we are importing and importing.

 

“There should be an enabling environment so that the productive sector can thrive, if we are able to do that, it means that we are going to borrow less, people will be working and the economy will keep on growing. We have to work very hard so that our economy will start producing more massively so that what we consume will be produced here while only essential goods can be imported. Nigerian politicians don’t save money in naira; they save in dollars for political reasons,” Nzekwe said.

 

Similarly, a former Deputy Governor at the CBN, Dr. Kingsley Moghalu said, “If you have a massive rush of dollars into the Nigerian market today, the price of the dollar would crash and the naira can come to N400 in the black market, you may be shocked. So, it is about going to fix what would bring in the number of dollars that would rebalance the equation”.

 

Moghalu, who was a deputy governor at the apex bank between 2009 and 2014, also explained how the apex bank stabilised the naira against the dollar for five years during his time at the bank, noting that the CBN must work on gaining the confidence of investors.

 

During the period, the naira steadied around N150/$1. The naira now trades at 580 on Friday, while the Pound Sterling traded for 780 at the parallel market while it trades around N412/$ at the I&E forex window which is the only official rate recognised by the CBN.

 

Moghalu blamed the downward trend of the naira on the activities of speculators and the lack of autonomy of the apex bank.

 

When asked how he and Sanusi stabilised the naira against the dollar for years, Moghalu said the apex bank worked on investors’ confidence during the period.

 

He however, lamented that the CBN has lost its autonomy to the political class and has little or no investors’ confidence, adding that the government of the day does not respect the independence of the CBN and it becomes a choice for whoever is the governor whether to play along or assert his or her independence and bear whatever cost given the kinds of political leaders that are in the country.

 

Continuing, Moghalu said that by pumping more forex into the market, the CBN is depleting the foreign reserves of the government, noting that economic diversification and exportation were the way out of the FX crisis

 

A House of Representative member, Bamidele Salam (PDP-Osun), equally called on the CBN to stop the continuous fall of the value of naira against the dollar.

 

Salam, who decried the continuous devaluation of the national currency said that the naira was doing badly when compared to other currencies of the world.

 

The lawmaker said that the CBN should do something urgent about the situation to save the players in the Nigerian economy.

 

According to him, “Though the value of the naira is a functionality of many things, it appears to me that there is a deliberate policy of the CBN to devalue the naira consistently.

 

“This is very worrisome because of its effect on trade, investment and on the consumption of goods and services both locally and those imported which depend on raw materials.

 

“Are we saying that the Ghanaian economy, the Sierra Leonean economy, the Nigerian economy is doing better than the Nigerian economy? The Niger currency is doing better in the international market than the naira in the last six months.

 

“Are we saying that the economy of Liberia and the economies of all these countries are doing better than that of Nigeria? He queried.