Thursday, February 25, 2016
I heaved a sigh of relief yesterday. The Naira appreciated to N250 = $1 yesterday at the parallel market.
Alas, my sigh was too premature.
Ibrahim - my dollar ‘merchant’ - has just told me as I type, that the Naira now sells for N320 = $1.
I would usually leave discussions of all things economic for the economists. But the past few months have been really traumatising, in terms of the rate at (and to) which the Naira has plummeted.
The annoying thing is that the official value of the Naira is still quoted at N197 = $1 by the Central Bank of Nigeria, whereas the obtainable rate at the parallel market (i.e. Bureax-de-Change, and other dollar ‘merchants’) has been doing this dangerous dance... going as low as N405 = $1 earlier this week.
How did we get here??
Oil. The immediate culprit.
The low price of Oil in the international markets.
The more remote cause however is our general penchant for foreign goods and services. Hence, making us a country almost totally dependent on imports, without generating enough exports to strengthen our currency.
Imported food. Imported clothes. Imported education. Imported vacays.
This Government has expressed indignation at the continuous importation of goods by Nigerians, and has adopted the hardball stance that for persons seeking to import goods other than few items approved by the Government for the official rate, they are left to their fate and should bear the burden of the exploitative cost of dollars in the parallel market.
The summary of the Government’s solution: YOU ARE ON YOUR OWN.
The new mantra in town is “Buy Naija to grow the Naira”.
(Like it would magically blow all our problems away, and the Naira would suddenly return to its ‘glory’ days of N150 to a dollar).
Produce and buy local goods, the Government says.
True, Nigerians ogle over foreign goods and services, always eager to show of their Hermes (of course, I had to do that!) and other designer bags, or quick to share pictures on social media; frolicking in other countries for vacation.
But the Government cannot just turn its back on its citizens, and “punish” them for their gravitating towards foreign goods and services, because the Government over the years has pushed, and pushed its citizens to adoring foreign goods, and is the single largest contributor to this non-producing quagmire the country has now found itself.
(Before you subconsciously absolve this Government as not being the same as the immediate past, or other previous Government, remember that while the individuals may change, the institution is continuous. In any case, this Government is basically a recycling of the powers that have always ‘been’.)
So I have questions:
What exactly is the Government’s position or proposed strategy in encouraging production by small and medium Enterprises? How business friendly is the regulatory and business environment in Nigeria for production, and ultimately, exportation?
Is it this one replete with obsolete commercial practices and administrative bottlenecks; lackadaisical civil servants and corrupt officials always seeking kickbacks, thereby squashing a business even before it has taken off?
What of unnecessary overhead costs? The cost of getting alternative electricity sources? Sinking boreholes? Navigating horrible roads to get your goods delivered??
If after calculating the kickbacks and overhead costs an intending businesswoman would have to bear in beginning her start-up, and in comparing same to importing the end-products of the business, she finds importation less stressful (not stress free, just less stressful) why would she not turn to importation?
And for the businesses that have somehow found a way (whether such way is ‘legal’ is discussion for another day) to surmount these obstacles, how has our Government used its machinery as the single most empowered entity in the country to bring to the limelight the local goods we have in the country? The way the U.S would boost the visibility of its products, from General Motors to Game of Thrones. (Remember when the white house released pictures of Obama as the ‘Game of Thrones’ King?)
Shoes made in Aba - Photo Credits :www.channelstv.com
For example: what programs has the Government embarked on/ does the Government intend to embark on to rehabilitate our lone surviving tannery in Kano, or to encourage production in tandem with international standards and exportation of those bags, shoes and clothes made by those magicians in Aba?
Up till about last year, most of us had no knowledge that there was a Nigerian Company manufacturing cars. Government cars were in arrays of Toyota, BMWs, Peugot, Ford, all foreign-made brands. It is only recently that Innoson Motors has come to the limelight.
How many Government vehicles are Innoson Motors? How many cars on the Presidential Fleet are Innoson Motors?
You must not travel to other countries for vacation, the Government says.
Asides Obudu Cattle Ranch, what vacation resorts do we have in Nigeria? How would Obudu Cattle Ranch host the over 170 million of us, if we all decided to vacation during one of the holiday seasons??
What are this Administration’s plans for local tourism, if any? Would it toe the paths of previous Governments, and totally ignore the gold-mine tourism could rake in?? How does the Government intend to sell tourism to its citizens, little less foreigners??
(Case in point: the highlight of my recent visit to the once popular Abuja Park and Zoo is a purple-butt monkey. The other animals are either dead or malnourished. The location is a reminder of the “Evil Dead” movie series I dreaded –and loved! – to watch as a kid)
In any case, how do I know that if I travel to the North-East for vacation with my family, we shall not all be slaughtered by terrorists? Has the Government conquered the security challenge it has on its hands??
Cut your spending, the Government says.
This one really gets me.
Did you see the caricature we called a budget proposal? For a country facing quasi-bankruptcy, I find it totally irreconcilable that we could consider a budget running into trillions of dollars. IN DEFICIT!
Oh wait… when it comes to the Government, the answer to being broke is to keep borrowing.
So while the citizens prune their personal tastes and sacrifice luxuries, the Government is at liberty to be imprudent in making its financial predictions??
This is not saying that as individuals we shouldn’t embark on some personal lifestyle changes to contribute to saving the naira. We may honestly require a lifestyle overhaul.
This is saying that it is not enough for the Government to abandon the citizens to their fate, and sentence them to either ‘buy naija’, or buy dollars for personal use at the stupendous rate.
As a responsible Government, bearing in mind that the citizens did not solely bring about the problems on Nigeria by themselves (remember our depleted foreign reserves??), the Government should work and walk had in hand with the citizens, in exploring ways to grow the naira.
For starters, rather than the clapped-mouth approach this Government seems to favour, there should be constant town-hall meetings, constant State-of-the-Nation addresses, constant and continuous press releases keeping Nigerians well-informed on the ongoing crisis, the dichotomy in the value of the naira at the official rate and the parallel market, and steps being taken by the Government to alleviate the hardships caused meted on the people.
The Government should roll out programs to boost local production and provision of services, and discuss various incentives for new business ventures to motivate them. Where possible, the Government should invest in and partner with local brands, create platforms to bring them to international limelight, encourage them to upgrade the standards of local production, and produce for exportation, so as to compete internationally.
Boost electricity supply. Create better road networks. Ensure steady water supply. Reduce the unnecessary costs for business people.
On corruption… while it is important to catch the ‘big-fish’ in the corruption fight, it is fundamental to also turn the search light inwards on the “small-fish”; Government officials who drag feet on their work, expecting kick-backs. Government officials should be made accountable to the citizens they serve, and as much as is possible, unnecessary bureaucratic bottlenecks which would stifle business-growth should be done away with.
Invest resources in fixing the Nigerian education system. Rather than spend a huge chunk of the nation’s resources upholding the lofty lifestyles of its ‘leaders’, invest same into the Universities, the secondary schools, even the primary schools.
Invest resources in tourism. Let Nigerians and foreigners alike have a reason to want to spend their vacation in Nigeria. If necessary, sit with the originators of the Obudu Cattle Ranch, the Tinapa Resort, the Calabar Carnival; brainstorm; get tips.
Most importantly, the Government has to come up with a realistic budget which gives adequate consideration to the times we are living in. If the Government means to ask its citizens to cut down their expenses, it must primarily lead by example.
There is no economic sense in making a budget deficit, where we as a country are already running at a loss. Even if a chunk of the deficit came from previous budgets, the least the Government could do is ensure that the irresponsible items and unnecessary items do not feature in the budget. The budget must be a very lean budget, properly reflecting the lean economy. Discrepancies are not forgivable. Inflation of items should be punished. Cut down the budget.
Bottom-line, this Government must work hand-in-hand with the citizens in order to surmount this financial crisis (in the short run) and strengthen our Naira (in the long run), to enable the people understand its vision and run with it.
After all, we are all in this together.