Egypt was one of the first African countries to devalue her currency. Today however, the Egyptian currency is nearly 10/1 to the United States dollars. Nigeria on the other hand has devalued her Naira over and over again and as at today it presently stands at about 300/1 United States dollar.
The major reason for devaluation is to drive exports. However, in a situation where there is no export and we continue to devalue our currency we are only making our currency sheets of paper and devaluing the goods and services on sale in the country. Without export, you are devaluing the standard of living of the citizens.
Before we started devaluation of our currency, Nigerians could afford to ride new cars,buy new furniture, new clothes, buy new home appliances etc. However, as we started devaluing our currency, we started reducing the standard of living of our citizens and this subsequently led to an influx of second hand goods such as cars,household appliances, clothes, shoes etc.
Since crude oil prices have fallen so drastically, restrictions on refineries should be lifted. We should have about 20 refineries so that we can drive up production. We should also strive to make use of local expertise. Rather than talk of devaluation, we should rather take an audit of the amount of United States dollars that flew out of the country as against the amount of products and services that came into the country in the last 15years. The difference will not be less than $15b. That difference is enough to boost the nations foreign reserves.
The devaluation of the Naira has also ruptured our industrial services as the factories cannot afford to buy new machines. What they have resorted to doing is buying old, second hand or obsolete machines which are not efficient and broke down at will, led to higher cost of production, poor quality goods etc. Devaluing our currency has also led to our products not been competitive both in domestic and international markets. To ensure survival, industrialists have resorted to cutting corners to compete.
In the last 3 decades, we have consistently devalued our currency however, it has not led to a corresponding increase in the standard of living of our people. Rather, the more we devalue the more improvised our people are. Standard of living has declined, industries have shut down (there is no textile industry operating in Nigeria today) thereby creating unemployment and attendant socioeconomic effects. Nigeria should learn from other developing nations that we need to strengthen our production base to be competitive, to be able to access international funding and develop core competence and ultimately strengthen the currency and increase exports.
The Brazilian economy has been internationally adjudged as one of the fastest growing economies in the world due to its policy reversal as it concerns the devaluation of her currency by the previous government. The Brazilian currency was made equivalent to the US dollar. They tightened their economy and today rank top in vehicle production, aircraft manufacturing, building/construction equipments to mention a few. This has today led Brazil to being a choice destination for world manufacturers to set up shop. The result of this is economic stimulation, include increased employment, increased GDP, newer roads, better health services, more social infrastructure etc.
Investigations have revealed that in the Nigerian case, devaluation is deceitful as it is based on ruse. The major aim is to pay the salaries of workers however at what cost. A worker on the 18k minimum wage in the actually earns less. The Naira is today exchanging for 300/1 USD. What this translates into is that the average worker is earning less than $60/month. With an average family of a wife and 3 children it further translates to the family living on $10/month, these is a far cry compared to the earnings of his mates/counterpart in developed economies. Even less endowed countries in the developing nations have a higher GDP than Nigeria with her oil wealth has.
The devaluation of the Naira, our farmers are unable to buy fertilizer and pesticides. They where forced to buy from cheaper markets and in most cases what they bought was either expired or not good enough for use and it either killed the crops, made them poor when harvested and not competitive or worst case led to diseases such as fibroid or cancer due to the toxins in the fertilizer that was used in growing the crops.
Devaluation acts as a stimulant for corruption. The level of corruption under President Buhari is higher today than in his 1st term. Since the hospitals are unable to access drugs from the foreign manufacturers what they are left with is to import from India and other lesser places and the level of fakes is really high. The educational sector is also not better hence we produce half baked graduates.
We want to use this opportunity to appeal strongly to our arm chair economists and propagandist for devaluation that they should desist from deceiving the present government.
Part of the blame for the preponderance of collapsed buildings in Nigeria today is due largely to the importation of fake and sub standard equipments.
It will be very heartless, thoughtless, degrading and fraudulent to continue with the devaluation of the Naira as it is been advocated for by some individuals today.
1. Government must totally eradicate extra budgetary spending particularly by government officials. The government must ban the use of luxury cars and cut all areas or avenues to/of wastage.
2. Nigerians must be given the right of first refusal in the area of job executions. We have had technology and competences before and their is nothing new in such today. If we do it consistently, we will see a marked improvement in 90days. India, Malaysia, China, Singapore, Brazil are great examples of domestication of jobs and services as they do not contract out jobs. No nation ever develops by giving out over 80% of jobs to foreigners. It is a recipe for disaster for a 3rd world country to engage the services of a high earning foreigner to execute services in an economy such as ours will only lead to higher cost of doing business in the country. As a people however, we have to exercise some manner of restraint in terms of our consumption patterns. We should go back to the Abacha days and pick up some of the policies of then that served us well. One of such is that the income from oil which should be used to develop other areas instead of been kept in banks or used in the acquisition of luxury goods. The PTDF should also be resuscitated.
3. Income from telecommunications should be set completely aside for the training of Nigerians. The telecommunications companies must also go public on the Nigerian stock exchange.
4. Law making should be part time and not full time or an occupation as is presently the case. We already have existing laws so revision or amendment is not or should not be an all day or all week affair as it presently stands. The Nigerian lawmaker must be ready to work on pro bono basis.
5. A lot of our retirees from the education, health, legal etc should be encouraged to come back and give free lectures/services instead of allowing them to wallow away at home idle and eventually die away.
6. Intensive agriculture with integrated export drive should be embarked upon within 2 months. The federal ministry of agriculture must be relevant and involved in the process of exports crops an grains from the Nigerian market. The government can also encourage or support Nigerians in the diaspora by building malls to showcase Nigerian exports. With the support of government, the country must encourage Nigerian farmers to access African Development Bank (ADB) and Exim bank loans. These area has been neglected due to the oil boom in the country.
7. All funds recovered from looters should be diverted completely to Agriculture and Industrialisation only. These funds should be used exclusively for the two sectors.
8. Exclusivity. Commerce should be the exclusive preserve of Nigerians as it is done in developed countries. You just don’t walk in and take over the entire commercial activity of a country like the Chinese, Indians, Lebanese are doing in Nigeria today. No foreigner should be allowed to do trading in the country except he is ready to set up shop in Nigeria.
9. Businesses that Nigerians had been doing well before devaluation such as quarry, construction, trading etc should be resuscitated. We should desist from running after foreign direct investment (FDI) .
10. Government should also help get jobs for Nigerians as is been done by the developed countries. The United States has used her influence to get reconstruction jobs for Americans in Iraq, Egypt, Syria etc. We should as the giant of Africa be able to help/support Nigerian companies execute jobs in Benin, Angola, Cameroon, Chad etc.
11. Government should as a matter of urgency start a mortgage system with very low interest rates in the region of 2/3% and long repayment terms. This will immediately boost and stimulate the economy. It will lead to job creation in the region of over 1 million jobs.
The Federal Government should liberalise the importation of fuel by cancelling licenses and allowing people import fuel freely with pipelines products marketing company (PPMC) perform supervisory roles of monitoring, quality control, compliance etc. The granting of crude oil export licenses should be linked up to the establishment of refineries. Arrangements must be made such that those given licenses to export our crude oil must establish refineries in the country. This will lead to competition, efficiency and a reduction in the prices of petroleum products. This will also bring down energy cost which will in turn lead to inflating the economy and also improving the standard of living of Nigerians.
Olusegun Abraham is a consummate technocrat, and a frontline governorship aspirant of the All Progressives Congress in the 2016 Ondo state election
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