The Nigerian Naira currently exchanges at N760/$ in the open market and about N460/$ in the official market. This means that for every imported product or service that a Nigerian needs, he/she would need to pay 460/760 Naira to get the equivalent of $1 goods and service. The primary reason for this is not exclusively the balance of trade but of trust. This trust deficit is the aggregate value of our (dis)reputation as a country and of our internal/local incapacity to survive without help.
For economies like Japan/China that have internal sufficiency in manufacturing/trade and have products and services to export to other countries, they are ever interested in ensuring that their currency is devalued to help create local wealth for their companies and industries.
Nigeria does not have that trust value or reputation that would enable it take advantage of a devalued currency and surely lacks the internal infrastructure for it to compete in the international market. Where foreign inflows of funds should have added value to our country, we often still have to outsource the human and material aspects to countries like China, who have developed local technology and capacity and are now selling services to us without selling the technology.
Nigeria has never really been led by leaders who truly do care for it’s citizens. If they did, we would have specific processes in place to solve out biggest problems. For instance, how do we ensure that localization of technology to serve our local markets without further need to outsource? Not one system can be found (for instance) to ensure that when we borrow from the international finance corporations, the funds are utilized only by local experts and companies and not by advantages.
There are a lot of economic jargons used by government to support the claims of our western creditors on the need to keep devaluing the Naira, most of which are colonial codes to ensure you don’t have the advantage. Nigeria can reduce the exchange value of the Naira to the Dollar if it wants to. It simply wouldn’t because of several factors, chief of which is that we are a country tied to the aprons of those who do not want it to survive; the West.
Let’s start by stopping all direct importation of tricycles, motorcycles and any other item that can we can force the merchandisers from India/China/Singapore/Malaysia to produced locally in Nigeria. Instead of allowing our country to become the dumping ground for manufactured goods from China et al, let’s compel the manufacturers to bring in the required equipment to manufacture locally. If you can’t manufacture here, do somewhere else. A mass market of 200+million Nigerians is not something to be triffled with. Unfortunately, the leaders are ever so willing to sell off our potentials for whatever little benefits they would get.
Let’s shut down several agencies of government that are multi-replicated across the country. The country can borrow money to payoff the entitlements of all employed staff, this reduces our forward/recurrent overhead, such as salaries and emoluments. When assets of those institutions are sold, we can repay those loans. For starters, let’s sell off the refineries, all federal broadcast stations (we don’t need TV/RADIO stations replicated in all states for crying out loud!). Surely, the Nigerians crying for a better Nigeria while stealing public funds, wouldn’t agree to this.
The country can also ban the importation of vehicles with engine capacities about 1.6L, with exceptions made for buses and essential service vehicles. We can increase levies to about 100% of cost value for vehicles with engine capacities above 3.0L. This would discourage their importation and help reduce the burden on fuel subsidies. Surely, the elite would not agree to this and the governors would oppose a policy that would deny them their access to bigger toys.
I do hope this government can find ways to solve our problems as a nation in the long term. I am not optimistic that we would see any significant difference in four years but we can not but hope.
May Nigeria survive it’s demons.
Zadok Akintoye
The WiD Institute