In faraway
Nairobi, Kenya, President Muhammadu Buhari settled the issue. He told a group
of Nigerians in that country, that his administration will not devalue the
Naira. The President gave the informed reasons that nothing will be gained from
devaluing Naira since Nigeria is not export-driven. He also stressed correctly
that poor Nigerians will suffer more as devaluation will fuel inflation in the
economy.
Currency
devaluation is usually carried out to achieve some economic and social
objectives. The ultimate ones are to make a country’s exports more
price-attractive while making imports more expensive and thus, less attractive.
Thus, trading partners are encouraged or influenced to buy more of the
country’s export products and services while its inhabitants are discouraged
from importation of foreign goods. In so doing, while foreign exchange earnings
increase, they are also conserved. Thus, from both sides of the trading
relationship, the country’s foreign reserves will trend upwards.
As it is
well-known, Nigeria is a mono-product export country. Apart from crude oil,
there is nothing to export to earn handsome foreign exchange. On the converse,
the country is import-dependent and any attempt to further devalue the Naira
will lead to massive importation of goods and depletion of foreign reserves
perhaps, to a level that can hardly support further imports. Such a situation
will automatically result in hyper-inflation and aggravate poverty, civil
unrest and criminality across the country.
However, a
mere decision not to devalue will not lead the country out of its present dire
economic circumstances. As emphasized in basic economics, what makes an economy
thrive is its level of productivity – both for internal use and exports. Based
on this, the Nigerian government should urgently embark on actions that will
reverse the current trend of a low level of production or productivity in the
country.
Towards this
end, there are quick wins accessible to government. For instance, government
and its officials, together with leaders across board and the entire citizenry,
should curb their appetite for non-essential imported goods and those that can
be produced domestically. Another is to focus on and unleash productivity in
agriculture, mining, manufacturing, tourism, information and communication
technology, etc. For a re-incursion into agriculture especially, it must be
remembered that agriculture was the mainstay of Nigeria’s economy prior the
advent of crude oil.
It is still
the hub of most economies as substantial industrial raw materials come
therefrom. A re-enactment of the years of the groundnut pyramids and cotton in
the North, cocoa in the West and Palm oil and kernel in the East, will portend
growth for the economy. With modern technology and advanced processes, much
value can be added to the products before exportation in order to attract
handsome revenue. In addition, quick stimulation of activities in the small and
medium scale enterprises sector of the economy is very essential.
Nigeria,
with an estimated population of 170 million, has a substantial number in the
youth category that are, either unemployed or under-employed. These are readily
available for government’s deployment in order to activate and realize the
productive potentials of the country. Utilised aright and along the paths that
will assure comparative advantage, the country will be on its way out of its
present precarious economic situation.
The case of
providing and up-scaling infrastructure such as power, roads, etc is a
sine-qua-non. This has been one of the greatest challenges the country has in
taking advantage of its potentials. Without adequate and functional
infrastructure, the economy will not operate at its optimum and expected
productive results will be a mirage. Further, it is high time standards similar
to, or better than, those in the countries from which Nigerians import their
goods were set. Where the standards already exist, adequate quality control and
monitoring are called for to ensure that products from Nigeria can compete
favourably.
The need for
operational efficiency in all public and private sector endeavours – a sure way
to eliminate waste, be cost and price competitive is an urgent one. Making
sufficient and affordable credit available to the real sector to catalyse the
economy also needs to be emphasized. Of importance also is that specialized
government institutions, such as Bank of Agriculture, Bank of Industry, Nigeria
Export-Import Bank, Nigeria Export Promotion Council, Standards Organisation of
Nigeria, etc, set up to positively impact the economy, must scale-up their acts
for a quick turnaround of the economy. Finally, fiscal and monetary policies as
well as their implementation frameworks, need to be fine-tuned towards
fast-tracking the achievement of improved productivity and consequently, a
stable and sustainable Naira exchange rate. (Guardian)
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