Emmanuel OchayiExperts have pointed out that local productivity can strengthen the Naira. This is coming as Nigerians continue to decry the unending depreciation of the Naira in spite of monetary policy initiatives by the Central Bank of Nigeria (CBN) to strengthen the currency.
According to Prime Business Africa report on October 23, the Naira, which traded at N883 to the dollar at the CBN official window, traded at above N1200 to the dollar at the parallel market.
Former Senator representing Bayelsa West, Ben Murray-Bruce had said that the value of Naira won’t appreciate just by increased crude oil sales. The senator, known for his advocacy for locally-made goods and services, expressed concerns about the Naira’s stability and the nation’s dependency on oil revenue.
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The founder of Silverbird Group stated during at the weekend on his social media handle “The Naira is finding its proper and natural value because the Central Bank of Nigeria has stopped the practice of defending the Naira with $1.5 billion monthly.
“If you want the Naira to rise, don’t come on social media to vent. Instead, it would be best if you now defended the Naira by coming on social media with Glo data. Coming to Silverbird Cinemas to watch Nollywood movies. Shifting from Manchester United and Real Madrid to Enyimba FC and Kano Pillars. Eating Dangote spaghetti and washing it down with Chivita juice, and flying home for Christmas and New Year with Air Peace. Only when we #BuyNaijaToGrowTheNaira will the Naira appreciate, not when we come on social media to vent.”
In an interview with an economist Rasaq Abiola, he emphasized the critical need for Nigeria to bolster its local production capabilities as a strategic move to fortify the Naira and address the current economic challenges. Abiola, renowned for his insightful analysis of the country’s economic landscape, dissected the multifaceted issues contributing to Nigeria’s economic woes and proposed a comprehensive roadmap for achieving sustainable growth.
“Inflationary pressures we’re witnessing today are a stark reflection of our current macroeconomic environment,” Abiola asserted.
He highlighted that the removal of fuel subsidies had led to an increase in transportation costs, which had ripple effects on both wholesale and retail prices of consumer goods. These price hikes, in turn, impacted the cost of living for the average Nigerian.
Abiola further dissected the influence of foreign exchange market liberalization on the value of the Naira. The economist argued that the depreciation of the Naira’s value exacerbated the increase in consumer goods prices.
The root cause of this problem, according to Abiola, was the dominance of imported finished and semi-finished products in the Consumer Price Index (CPI). As the Naira’s value depreciated, the land cost of these imported items continued to rise.
One of the alarming statistics Abiola pointed out was the steep rise in food inflation, which had reached a staggering 30.64%. This, he contended, underscored the impact of both monetary and fiscal policy actions, as well as the protracted weakness in agricultural productivity.
“In light of Nigeria’s strong fertility rate and implied population growth, it is imperative that we initiate a holistic reform in the agricultural sector,” Abiola urged.
He commended the progress made by the military and community leaders in restoring peace in the agrarian North, viewing it as vital support for a medium to long-term effort to revitalize agriculture. Nonetheless, Abiola stressed the importance of redirecting resources toward rekindling food and cash crop production in the South to support food production from the North.
This approach leveraged improved farm inputs and seedlings that could help enhance yield and overall productivity, as well as land reform systems designed to encourage investments in farming without concerns of land grabbing issues prevalent in the South.
Abiola’s stance was unequivocal: “It’s a complex challenge that goes beyond simply throwing money around. Incentives are crucial, but not just in monetary terms. We need a mix of policies, including legislative and judicial support for reform initiatives.” He emphasized that building local productivity was the key to reducing the economy’s vulnerability to imported inflation and strengthening the Naira through improvements in the balance of trade.
Recognizing the inevitability of short-term pain in the reform process, Abiola drew on empirical evidence from countries that had successfully navigated similar paths. He explained that the government must strike a balance between short and long-term goals. This approach includes using palliative measures to cushion some of the short-term hardships, particularly for the most vulnerable segments of society, to ensure social cohesion throughout the policy cycle.
Rasaq Abiola’s clarion call for Nigeria to prioritize local production as a means to alleviate its economic challenges was not merely a call to action but a well-reasoned roadmap for economic revival. His insights underscored the importance of addressing the multifaceted issues contributing to Nigeria’s current economic landscape and forging a path toward sustainable growth.
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