Forex crisis: Nigeria’s battle to restore the naira’s glory

BY GIDADO SHUAIB

For Nigeria, the naira stands not only as the country’s currency but also as a symbol of its identity. Besides ensuring that citizens thrive in their everyday lives, it also signifies the country’s stature in the international community. While this holds true for other nations as well, certain factors contribute to inequality among them.

It’s widely acknowledged that in Africa, no nation surpasses Nigeria in every aspect, and even the most developed and powerful countries maintain significant ties with Nigeria, recognising its importance on the global stage. However, the challenges Nigeria has faced since gaining independence, through successive regimes and administrations, have steadily eroded its standing, both in the eyes of other nations and among its own citizens.

Presently, the country grapples with a forex problem, where the currency of the “Giant of Africa” struggles against others, notably the US dollar, the ubiquitous currency for international transactions.

The Economist Intelligence Unit, a branch of The Economist in London, projected last July that Nigeria would face high exchange rates going forward, beyond the control of the nation’s central bank. Previous administrations, prior to Tinubu’s, subsidised forex for citizens at the expense of the country’s economic health.

However, President Ahmed Bola Tinubu, renowned for his economic expertise, opted not to continue this practice. Since assuming office, the value of the naira has fluctuated significantly. Consequently, many citizens, who previously benefitted from forex subsidies, now find themselves sinking deeper into poverty. Poverty persists in Nigeria, often disconnected from the country’s perceived status. Therefore, according to trusted economic experts, short-term austerity measures are deemed necessary to strengthen the economy and alleviate poverty.

Successive governments, despite understanding the nation’s challenges and potential solutions, lacked the resolve to implement these measures, fearing short-term backlash.

Tinubu, arriving in office with a reputation for catalysing economic growth during his tenure as governor of Lagos state, initiated these measures, contributing to the hardships citizens are currently enduring.

Difficult times, such as Nigeria’s current struggle with the depreciation of the naira, are transient. Just as healing from an illness requires enduring painful medical procedures, Nigerians must endure these hardships for the sake of future generations. It’s time for Nigeria to fulfil its destiny as one of the world’s greatest nations.

However, it’s unacceptable for government officials to live extravagantly while the masses suffer from policy repercussions. As a remedy, reducing the cost of governance and combating corruption are essential. Empowering small and medium-sized enterprises through tax cuts and other forms of support can stimulate economic growth and attract international investors, providing employment opportunities for the youth.

Additionally, resolving Nigeria’s long-standing power issues could revolutionize the economy, aligning it with technological advancements observed in other nations.

I wholeheartedly agree with Tunde Rahman, a senior presidential aide, who advocates for the Central Bank of Nigeria (CBN) to lead a comprehensive campaign to bolster confidence in the naira and stimulate its demand.

Admittedly, Nigeria’s industrial productivity remains low, exacerbated by dwindling forex earnings primarily derived from crude oil exports. Floating the national currency, thus dismantling the multiple exchange rate regime, exposes the naira to market forces, increasing its vulnerability.

However, initiatives to boost industrial production, exemplified by projects like the Dangote Refinery, can help reduce forex expenditure on imported petroleum products and stimulate economic growth.

Reducing reliance on imports by nurturing domestic production is crucial. The government must prioritise enhancing the capacity of local industries to discourage luxury imports and foster sustainable economic development.

Moreover, the CBN should strengthen its monetary policy framework by resuming regular monetary policy committee meetings to ensure financial market stability and boost investor confidence. A thorough review of the Tinubu administration’s currency policies is also necessary to assist the naira in regaining its strength in the forex market.

In conclusion, a unified and nationalistic approach is essential to halt the decline of the naira. Every citizen, from policymakers to ordinary individuals, must recognise the intrinsic value of our currency and prioritise its use whenever possible.

Defending the naira transcends economic concerns; it’s a moral obligation for all citizens. Let’s unite in reclaiming the dignity of our currency and preventing its further decline.

Gidado Yushau Shuaib, a media and communications expert, can be reached at [email protected].