The new Forex policy of the CBN as directed by the federal executive recently is not sustainable, and may actually limit national economic growth and development. Its present salutary effect of shoring up the value of the naira is at best palliative with no long term socioeconomic benefit to the Nigerian people.
Nigeria, in the best of time earns between $20-$25B annually from crude oil sales after all deductions and dues.
This amount is not a lot of money for a country of nearly 200m people. Especially if one views it against the fact that Wall Mart an American global supermarket on a public holiday sometimes this year made sale of about $40B in one day! While McDonalds a burger company has an annual budget of over $100B.Meanwhile Nigeria, its citizens and rulers live under a false notion that Nigeria is blessed with abundant natural resources, especially, oil, when, without oil, Brazil(population about 200m) earns close to $80B from export of sugar and ethanol, alone, annually All from tilling their soil.
Currently the CBN since its new intervention has spent close to $1.4B to bring the value of the naira down. Meanwhile there is no statistical evidence that prices of goods and services have dropped correspondingly. So who is benefiting?
Beneficiaries are elite patents like me, who were at the verge of withdrawing our children home from schooling abroad. Others are former colleagues of the CBN governor, the bankers, and rent seekers licensed by the CBN as bureau de change operators. Others are real and fake manufacturers who collect Forex, some, under false pretenses of importing needless raw materials.
By the end of this year if the CBN must maintain its intervention, we would have committed about $5B (or 20% of our total inflow from oil) or more to this obnoxious scheme.
I am not absolutely condemning this intervention, but I am stating that it is not a permanent solution to our Forex dilemma. We must as a nation stop employing “knee jerk” solutions to deep rooted economic problems.
Government must have a focused economic policy which must clearly be made to target a growth and developmental objective. These policies in the process of their implementation may bring some hardships, change of attitude, which we must of necessity endure. If we must employ palliatives as we are doing with this new Forex policy, it must be with rational timelines, just as a prelude to our ultimate developmental objective.
In south Africa they are also going through similar devaluation process, but the life of the average citizen to a large extent is insulated the economic pressure the average Nigerian face here.
The average elite south African does not need to send his child ten child then abroad for quality education. When he falls I’ll he does not need medical treatment abroad. South Africans grow their foods and manufacture building materials locally from locally sourced raw materials. The cars they ride are mostly made locally.
I cannot in good conscience blame the current anomalous Forex debacle on this administration alone. This is a malaise we should have addressed over the last 20yrs.
But the fact that this regime itself that came in on the promise of change is yet to show signs it has a deep understanding of this issues, nearly two years after, is deeply worrisome.
We need to build and strengthen our educational institutions such that our elites will no longer need scarce Forex to pay for their children’s school fees abroad.
We need world class health institutions that will guaranty that our leaders do not need to rush abroad for all medical emergencies and chronic illnesses.
We need policies that will allow non essential industries requiring importation of 100% of their raw materials to die and encourage the establishment of industries with very high local raw materials contents.
Devaluation by itself may not be absolutely undesirable, provided it can be used as instrument to create wealth, reduce poverty , create jobs and improve the living standard and well being of our teaming population.