The astronomical rise of dollar against the Naira in the forex market is no doubt causing economic catastrophe for Nigeria. The value of the Naira is so weak that it beats the people’s imagination. If the pundits had predicted some twenty years ago that a time like this would come when the Naira value would become an embarrassment to Nigeria and the Nigerians, some people would have seen it as a mirage. But here we are, the incredible is staring us at the face. It is neither a dream nor a myth, but a reality in our lifetime. $1 is being exchanged for N1,500.00. Without sounding immodesty, this is outrageous, and indeed calamitous.
What were the immediate causes of this ridiculous Naira depreciation? Where did we get it wrong? What are the consequences of all this? Is the current worrisome trend redeemable? These are the questions that I intend to answer in this article without bothering your pretty head with unnecessary economic jargons such as fiscal policy, GDP, per Capita income, liquidity ratio and so on and so forth. We have no business in technicalities as we are not in the classroom.
THE IMMEDIATE CAUSE.
The immediate cause of the devaluation of the Naira was born out of the reformative pronouncements made by President Bola Ahmed Tinubu on the day of his inauguration deregulating the forex market. He announced the cancellation of the dichotomy in the exchange rate between the official market and the black market . The intention was for the Naira to assume its true value as against its hitherto cosmetic and unrealistic value artificially created by the past administration.
Somebody has to take the bull by the horns. And that was exactly what PBAT did. Two critical sectors of the economy, The Forex Market and The Oil sectors were simultaneously deregulated by PBAT. The essence of this measure is to clear the mess prevalent in both sectors which is already causing economic paralysis for the country.
WHERE WE GOT IT WRONG.
In an interview granted by the former governor of the CBN, Charles Soludo, he laid it bare on the table the point at which the Naira became outrageously bastardized. The man who presided over the affairs of the CBN when the dollar slid from N138 to a dollar, and down to N112 to a dollar was very frank in his analysis.
According to him, he specifically pointed accusing fingers at the immediate past governor of the Central Bank of Nigeria, Emefiele for his reckless violation of the CBN Act of 2007. The Act actually has a clause forbidding the CBN from granting ways and means advances in excess of five percent of the actual revenue of the previous year to the federal government. The Act also stipulates that such loan must be paid back to the CBN at the end of that particular year. Failure to make the repayment attracts a penalty of not granting any further ways and means advances to the federal government.
But contrary to this, Mr Godwin Emefiele was accused of brazenly and illegally granting advances by printing monies to the tune of N22 trillion and crediting same into the accounts of the federal government without any economic backing. And what happened to the bulk of those monies? They were stolen and squandered by the hyenas called public officers and their cronies in the private sector.
The above analysis of the man that saw it all, Gov Charles Soludo was accurately corroborated by Economic Analyst, Nnaemeka Obiaraeri while featuring in a programme (This Day) anchored by Dr Reuben Abbati of the Arise Television. He specifically made references to the illegal printing of Naira by the previous administration and that over $100 Billion was alleged to have been criminally taken out of the economy by those that worked with President Muhammadu Buhari. Without mincing words, the foundation for the economic crises in Nigeria today was laid between 2015 and 2023.
THE CONSEQUENCES
The immediate consequence of the above scenario was that PBAT inherited a “dead economy”. In the word of Charles Soludo, “the economy was a dead horse standing, but people didn’t know it was dead”. He revealed the encounter he had with Messrs Yemi Cardoso and Wale Edun, the CBN governor and the Minister of Finance and Coordinating Minister of the Economy respectively where he congratulated and commiserated with the duo at the same time. The implication of this is that pitifully, both of them have taken up difficult jobs. Today, it is an herculean task managing the economy and specifically speaking, taming the galloping inflation.
THE WAY FORWARD
A lot of factors are contributory to the economic woes, so to speak. The root cause in this case as previously stated was the arbitrary printing of Naira during the past administration. There is no economy where monies are recklessly injected into the system without backing it up with production that will not suffer a similar fate. Therefore, CBN management at this point in time must not fall into the same pit.
Secondly, Mr President has been counseled not to relent on his strong political will by going after those corrupt public officers that served under President Muhammadu Buhari. Most especially, the ones that actually benefitted from the bazaar that characterized the period of his administration. They must be brought to book without further delay.
Also important is blocking of leakages in the petroleum sector so that the daily production quota can be achieved. The government must not also lose sight of accountability in the oil sector. And to this extent, the president recently directed that all revenues acrueable from the crude oil should be remitted directly to the CBN. In fact, hoarding of the dollars by the elites must be criminalized as the practice is now seen as the store of value.
Dollarization of the economy must stop. That is, the idea of using dollars for business transactions in the place of Naira which is the legal tender is not healthy for the economy. The EFCC has already taken interest in those institutions, stores and other businesses that engage in such illegal practice.
CONCLUSION
Finally, this current economic quagmire facing Nigeria is not insurmountable. The first thing Nigerians need is understanding and patience with the present administration. But unfortunately, many Nigerians are calling for the head of PBAT over the problems he inherited. The most painful aspect is that those who supposed to know better are exhibiting warped reasoning in their public utterances.
The oppositions too are inciting the public and calling for insurrection instead of proffering alternative solution to the problems. They are just interested in rocking the boat for obvious reasons.
However, the fact remains that Nigeria will not end. This is a passing phase. It will surely go, and Nigeria shall come out of it bigger, stronger and better.
B. Aderemi Ogundele
(Jagunmolu)
