By Emeka Chiakwelu
The currency of a nation is a vanguard bulwark and safeguard
to the wealth of a nation. Nigeria’s naira holds the intrinsic and inclusive
value to country’s GDP and wellbeing. A deteriorated and weaken naira invites aggressive
currency speculators to devour the wealth of a nation. Naira value must be
aggressively protected because a given currency can be use to monetize debt and
for settlement of debts but not necessarily for credit liquidity. This is why currency can be subjected to
herculean inflationary trend when its elasticity approaches a deformed point.
From the BEGINNING, President Buhari has never been
comfortable with outright devaluation of the naira. But as time goes and
changes comes, it becomes imperative that naira devaluation maybe inevitable as
pressure mounts from inside and outside the country.
Economic and monetary policy impulses notwithstanding, the
real clamouring for devaluation was coming from international bodies especially
IMF and top global financial media together with Nigerian experts that imbibe
any economic theories coming from London, Paris or New York. For some of our local financial experts, to
belong means to be carrying “banner of no pale pastels, but bold colors”
membership card of the neoliberal globalization gang.
Nevertheless, I am not implying that the apparent Nigeria’s
economic reality must not be acknowledged. The erstwhile propping up of the
fixed naira rate with dwindling foreign reserve cannot be sustained. The nosedived
of oil price and Nigeria’s incoherent economic policy are effecting the value
of naira Simultaneously, the uncontrollable free flow of naira has its
downside too. As Nigeria proceeds with new policy on naira devaluation,
interval evaluation and introspection cannot be neglected.
President Buhari questioned the benefit of the currency
flexibility policy that has brought about 40 percent of naira devaluation as he
spoke to the country’s business cream of crop at Aso Rock:
“I don’t like the returns I get from the CBN concerning the
devaluation of the Naira. In August
1985, the Naria was N1.3 to a dollar but now you need N300 or N350 to a dollar.
What do we derive from that? How much benefit can we derive from this ruthless
devaluation of the Naira? “I’m not an economist neither a businessman, I fail
to appreciate what the economic explanation is. What has happened to us now is
that we have maneuvered ourselves into mono-economy which led to the collapse
we are seeing now”.
The point Mr. President has succinctly made with above
mentioned commentary was that the peril of naira devaluation has detrimental
effect on the macroeconomic stability of Nigeria. The rising unemployment,
hunger and economic dislocations can be attributed to the steep-curve rising inflation
that has its root on the currency flexibility policy and the subsequent massive
naira devaluation.
I will recommend to the presidency and top monetary policy
makers to organize an international seminar in Abuja where the pro and cons of
naira devaluation can be debated for its worth. The outcome of the seminar and debate
will give Nigeria the upper hand to make a decision based on detailed and
coherent economic policy rationzation.
A review and evaluation of the state of naira will not imply
that flexibility policy will be abandon. But a measured, prudent and calculated
devaluation will be incorporated to avoid total destruction of the worth of the
country’s medium of exchange. If things are left the way they are with regards
to the unchecked currency floating, Nigeria’s lopsided economy cannot be
sustainable with limited supply of dollar.
(Chiakwelu is Principal Policy Strategist at AFRIPOL)
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