The Naira’s free fall: Which way, Nigeria? (1)

With mixed feelings and sadness, we are collectively experiencing the economic hardship and the miserably failing economy of the country. Nearly every Nigerian openly laments and talks about the uncontrollable tumbling of our local currency, the naira, on a daily basis. The nation’s foreign reserves ought to be the wedge to stop further weakening of the local currency exchange rates, if it were to be stable in terms of a conservative cumulative value and progressive growth in the nation’s current account (no matter how insignificant its pool might be). But, it is neither here nor there. This is lamentable when one looks back at the pre-independence incidence of 1947 (some 76 years ago), when the United Kingdom (UK, our colonial masters) looked up to Nigeria for financial assistance and support. This development of the Anglo-Nigerian co-operation, involved a public meeting (“How can Nigeria help Britain?”) on Tuesday 9th September that very year at Houldsworth Hall, Deansgate in Manchester. This was the instance that contributions and comments were made by the likes of one Mr. Creech Jones (a colonial secretary), regarding collaboration with Britain, to win through conditions of her economy’s greater stability and property. But look at the same Nigeria today and where we are.

In retrospect, let everyone in the country look back and copy the original economic template of the former Nigeria, and make efforts (with sincere determination both by the public and private sectors of the economy) to revisit such economic performance and replicate the same. Today, the naira exchanges at over N1,340 to $1. As at 25 July 1980 (42 years ago), the exchange rate was N0.80 to $1. We shouldn’t be surprised that we are currently biting our fingers because (you can’t eat your cake and have it), we all have resorted to a sluggard life of being a “consumptive” rather than a “productive” economy. The chief among all reasons is that we are no longer a net exporter of refined petroleum products. Today we import virtually all our refined fuels without any effort whatsoever by the NNPCL to resuscitate the four government owned refineries that are moribund yet, they spend a whopping sum of N136 billion in salaries on about 1,603 staff, without refining a drop of crude oil. The breakdown of these unproductive/redundant but paid staff  is about 660 at Kaduna Refining and Petrochemical Company (KRPC), 506 at Port Harcourt Refining Company (PHRC), and 437 at Warri Refining and Petrochemical Company (WRPC). One cannot stop lamenting these self-inflicted economic pains against the helpless citizens of this country, especially in the face of the present hardship occasioned by the removal of fuel subsidy because for which all blames must be heaped on the managers of the petroleum sector. What happened to the widely publicized rehabilitation of the PHRC that was funded by Afrexim Bank since 2021 at the value of $1.5 billion? What really has become of it? What has stopped it from being functional as projected, after the given expected and stipulated time of completion?

This singular sector of the economy is significantly the cause of this nation’s economic failure because, it’s on record that the pressure on daily dollar demands for imports of refined products alone, is the highest among all imported goods in Nigeria. How can the economy survive, when we have such a situation at hand that drains the national treasury, yet we have its natural resources (the capital stock) in abundance? All that we are good at doing is to operate crude oil swap, instead of adding value to our God-given raw material by being productive, and internally shed the overloads on our foreign exchange demands from this singular sector. If you talk about productivity (GDP), you are talking about the national economic efficiency (NEE), where “efficiency” is the core duty of the management. NEE in mathematical terms in economics simply means the sum of Investments + Consumer expenditure + Government expenditure/capital Projects – Imports! We can now see how and why this economy is failing and inflicting economic hardship with hyperinflation on every Nigerian, both the rich, the very rich and the poor masses. The chain reaction impact of this removal presently affects the manufacturing sector a great deal, with its heavy cost element/burden on cost of production resulting from the unbearable cost of energy that powers production. So, where are we, in this economy? Let the truth be told because, we are all involved, as stakeholders in the economic affairs that impact on all of us within the economy!

To turn this economic table around is a tall order at this time of our national life but it is still very doable. All it demands is the will power, determination and the political will (of those in authority and in charge at this point in time). When this challenge is taken and attacked from the angle of applying business ideas, every needed result shall start to unfold/manifest (after all, businesses fail and could at the same time, equally be resuscitated back on their footings). To achieve this feat, the nation must sincerely pass through austere times/seasons with all hands on deck; of which Nigerians (the masses) are already paying their dues, save for the leaders (with a style of governance) that are still insensitive to this unfortunate situation in a country, presently with hyperinflation and deep poverty. These crops of leaders do not give the right direction, nor give the right advice. They also do not lead by example by showing how to do things right; to momentarily shun ostentatious lifestyle at this terrible and trying time in our national life. In the past, our former political leaders, the founding fathers of the nation, were “other-people centred”. Hence, the economy then was virtually self-sufficient; making the local currency very strong because of the net excess balance constantly recorded in our favour from international trade, in the nation’s annual balance sheet (our foreign reserves). The economic performance, no doubt, was achievable through application of the right economic stimulus on the local content within the economy.

The second part of this article will be published next week