BY SUNNY CHUBA NWACHUKWU
Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or schubltd@yahoo.com
Going down memory lane, the economic history of Nigeria started with a robust and impressive performance in so many sectors. The high level of productivity and GDP growth rate recorded, along with other macroeconomic indices, were clear proof of a very promising, emerging market economy. Nigeria grew economically from the time she got her independence in October 1960. Businesses, as well as economic and commercial activities progressed well, with visible prosperity rising geometrically in all known sectors of the nascent economy.
The agricultural sector, however, appeared to have been the flagship and pride of the nation’s economic development. The sector was shaped by three major regional products available in commercial quantities (for exports) namely, groundnut, cocoa and palm oil (from the North, West and East, respectively). Things appeared rosy; the privileged, educated few in the public service, with white collar jobs, were accorded due honour and respect; and were duly and adequately placed on attractive job conditions of service (based on their educational qualifications), which was in line with the scale already planned and programmed by the British colonialists.
The emergence of the crude oil business, and subsequently, the boom in foreign exchange earnings, resulting from high crude exports, further gave the economy a galloping and speedy growth. This statutory impetus from export of crude oil qualified the economy to be recognised, globally, as an ‘oil-rich nation’. With the acclaimed rapid and simultaneous growth in all sectors – in different manufacturing value chains, transport, agricultural products, and so on – the economy kept attracting more foreign direct investments into the system. These productive activities structured the economic system with a backward integration strategy, and into, virtually, a self-sufficient economy. This brought about the transformative processes that came in rapid succession, and gravitated towards the national development plans. It led to the conversion from the British Imperial system, to the metric system (system international units counting) that replaced it.
The annual balance of trade on international trade was constantly posting surplus in the nation’s current account. This was a great indicator of a thriving economy, with very healthy growth in her foreign reserves. The exchange rate for the legal tender (the naira) in the 1980s was $1000 per N546; as against today’s exchange rate of $1 per N546. “How have the mighty fallen?”
In demonstration of the economic power of Nigeria and its economy, which enabled it to begin to assert its independence, during the General Yakubu Gowon regime, Nigerian fully converted to the metric system (System International units) in both its educational and financial spheres, with the popular jingle taught in schools and sung all over the country, being:
At 6:00am, on Sunday 2nd April 1972; all vehicles should move on the right, all pedestrians should walk on the left.
The nation’s new currency, the Naira and Kobo was not left out, and also came into existence on 1st January 1973.
In July 2021, the CBN governor, Godwin Emefiele, gave reasons why the naira was devalued in the nation’s monetary policy calculation. He explained that for Nigeria, an emerging market economy reliant on oil exports, the drop in crude oil earnings and retreat by foreign portfolio investors significantly affected the supply of foreign exchange into the country. The currency was actually devalued on 25th May 2021, from $1/N379 to $1/N410.25. By 12 June, the naira was exchanging at $1/N502 on the parallel market, where the majority of Nigerians purchase their foreign exchange. The exchange rate volatility, the scarcity of dollars and speculators making a premium from the currency crisis pushed the naira further down to its current level of depreciation.
The above scenario is a true statement of fact, but the country should not have folded its hands and watched the free-fall of the local currency, tumbling hopelessly. A sustainable strategic step ought to have been taken by the drivers of the economy; by repositioning the downstream activities in the nation’s oil industry. The situation ought to have been arrested in the nick of time, through local refining of crude oil, and subsequently, supplying our neighbours within the sub-region with these hotly sought after refined products (especially PMS). That strategy would have fetched even better foreign exchange earnings into the nation’s foreign reserves. The exploits ought to have been achieved from such already value added fossil fuel resources (with or without the declining demands for crude).
The disadvantageous position of the currency and rate of exchange appears like it is irredeemable and cannot be returned to its former glory. But there are assurances that the naira can still bounce back in exchange rate if macroeconomic indices, financial policies (fiscal and monetary) are sincerely deployed in all strategic sectors, and sources of revenue generation plugged from further leakages. The key word here is to eschew corrupt practices, and patriotically, decisively, put corruption behind us (with determination from the managers of the economy).
The federal government and the Central Bank of Nigeria, not too long ago, introduced the digital currency, the eNaira. This development makes Nigeria the second in the entire globe to have launched digital currency. Given the merits of the eNaira, would perpetrators of financial crime allow this noble initiative to thrive and record the anticipated success? The initiative, of course, is laudable and visionary, if perceived as a low hanging fruit towards the recovery of the nation’s financial system from total collapse.
Virtual legal tender, as it appears, could be optimised for the growth of emerging sectors like the entertainment industry, especially with the recently signed MoU by the federal government and the United Kingdom on intellectual property rights. As technology keeps advancing through Artificial Intelligence (AI), robotics, and so many other applications for infotech, I would urge everyone who has the capacity to contribute creative ideas, not to relent in moving forward this economy by any amount of innovative solutions and positive input required at this critical time of our national life.
The wealth of a nation could be estimated as the total realisable potential content and capacity that could be easily quantified in monetary terms, if converted into goods and services that are in demand at the market place by prospective customers and consumers. What Nigeria lacks is the honesty and integrity needed to sincerely serve patriotically, putting self secondary.
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