It is now eons ago that the Naira was a respectable and widely accepted currency. It did not only exude strength, it had the purchasing power that was the envy of many African countries. Even though it was not a convertible currency, you could take it anywhere in Africa, Europe and the Americas and spend it. It was that strong.
In the 1960s and ‘70s, Naira was exchanging for one to US$1.65, and N1.1 to one-pound sterling. Then you could walk into any bank, fill the currency purchase order form right there on the counter and got your dollars or pounds in less than 20 minutes. During that period – Nigeria’s golden economic years – oil had not become a curse and we had not developed an addiction for imports at the expense of local manufacturing. Industries were springing up all over the country and manufacturing was booming. And we could feed ourselves as agriculture was doing very well too.
Economic growth was steady and consistently incremental and was anchored on well-thought-out development plans broken into five-year phases. Nigeria not only had a great promise as a budding economic giant, it was marching assuredly towards fulfilling its potential as one of the new emerging world economies. It was bracketed with countries like Brazil, Mexico, South Korea, India and Indonesia.
The story is sadly and embarrassingly different today. Those other countries are now playing in a different economic league. South Korea especially has achieved First-World economic ranking powered by global corporate giants like Samsung, Hyundai and LG. And the country is the world’s largest ship builder by gross dead weight tonnage and total value. While Brazil is now the world’s sixth-largest economy, with a gross domestic product, GDP, of $2.3 trillion as at 2013. Mexico and Indonesia also have positive stories of their economic trajectories to tell the world.
The objective condition of any currency is mostly a function of the country’s economic health. Our mono-cultural economy of oil-export dependency has been gravely wounded by the precipitous collapse of oil prices. And the naira’s current anaemic condition is an unvarnished reflection of our deeply troubled economy.
Who could have imagined that one year into the current cycle of global oil downturn, the Naira would be hurtling towards a terminal weakness? It is being relentlessly bastardised in the so-called parallel market. By last weekend, it exchanged for an average of $1–N390. At this rate of erosion of its value, it could be down to $1-N500 well before the end of March.
Since the advent of the Mohammadu Buhari administration, the gap between the official and black-market dollar-naira exchange rates has grown exponentially. The official rate is $1-N197, which many economists have dismissed as being unrealistic, given the continuing decline of dollar inflows caused by low oil prices and poor sales of Nigeria’s crude. What is even more frightening is the government’s inertia regarding the problem. It has adopted the policy of not devaluing the Naira officially, which is compounding the problem. But at the same time, it hasn’t done anything to arrest the naira’s free fall in the unofficial market. The government, either out of sheer frustration or a wrong assessment of the impact of the dysfunctional exchange rates, seems to be content to let it swim in the very turbulent waters of the black market…
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