Free fall of the naira and matters arising

The free fall of the naira against the dollar has gripped headlines and dominated media coverage in recent months.

As the value of Nigeria’s currency plunges to new lows nearly every week, it has become the most discussed economic issue across news outlets, social media and public discourse.

This rapid devaluation has Nigerians on edge as it threatens to exacerbate already high inflation and unemployment.

In Nigeria, everything is tied to fuel price and dollars. Even people who have never seen or touched a dollar in their lives base the prices of their goods and services on the rise and fall of the dollar. Even the tomato and orange seller will tell you they increased their prices because of the high rate of the dollar.

The naira, in the last four months, has been sinking faster than the Titanic. From N700 to a dollar in May last year, it is N1500 to a dollar now. Also, it seems it has defied all solutions so far. The government is also at a crossroads at the moment. All of a sudden, we have armchair experts on social media who have proffered their expert opinions on how to save the naira. As I always say, talk is cheap. It’s not that simple. Nigeria is a complex case.

In my opinion, removing fuel subsidy and floating the naira simultaneously was pure suicide on the part of President Bola Tinubu. He should have held off on floating the naira until fuel prices stabilised. In a country that ties everything to fuel price and the price of dollars, removing the two at the same time was bound to create excruciating hardship for Nigerians. No wonder the crime rate has spiked in some parts of the country.

Similarly, in Nigeria, you can’t leave things to market forces. It’s a place where everyone wants to take advantage of his fellow citizens. There is absolutely no price control.

At the heart of Nigeria’s persistent economic troubles is its unhealthy dependency on oil exports and imports of refined fuel and goods. With little local manufacturing, Nigerians are captive to the whims of global oil prices and the exchange rate.

Time is running out fast for President Tinubu to turn things around. He needs to stem the tide of the falling exchange rate. Last year, he said Nigerians want solutions quickly and fast. So he knows what he is up against.

The story that the three tiers of government have more money now because of the removal of fuel subsidy doesn’t resonate with the poor man on the street. States have money but how has it transformed the lives of the masses? Instead, life is harder. Prices of goods and services have gone through the roof and surviving in Nigeria is getting harder by the day. I have read stories of people selling their children to survive.

The government should look for short and long-term solutions to this. I think the report that our banks have $5 billion in the banking system is a serious cause for concern. Imagine half of those dollars in circulation. Imagine what it would do to the exchange rate. No doubt, the banks are keeping those dollars for some select privileged Nigerians at the expense of the majority.

We also need to find a way to stop the dollarization of the economy. I heard some schools in Abuja and Lagos charge their fees in dollars. That is irresponsible.

The federal and state governments should clamp down on these schools.

The government also needs to encourage our local manufacturers. We need to produce more for our market and also export to earn enough dollars. Time is running out for Tinubu to contain this currency crisis.

Businesses are shutting down or charging more, Nigerians are falling into poverty, and unrest is simmering. If he cannot find a way to stabilize the naira soon, the economic and social fallout may put his political future in jeopardy.