Operation Rescue Our NAIRA – ORON
It is pertinent to note that the downward slide of our National currency the Naira, over many months and even years demands our urgent attention. The Central Bank of Nigeria, our Economists and well-meaning Nigerians must collaborate in well-thought and coordinated efforts to rescue our national currency.
Operation Rescue Our Naira – (ORON) is a term devised by me to initiate a conversation about how to save our national currency which is depreciating daily. The skyrocketing exchange rate between the Naira and the dollars or pounds sterling is disturbing and worrying.
Our Economy has become dependent on black market rates
The buying and selling of essential commodities are matched to the black-market rates, which are both pitiful and awful. Prices of essential commodities quadrupled while the labour wages were not rising or being paid. What do you expect the masses to do? Before social menace, degradation and protests on the streets happen something needs to be done!
Likewise, the exchange rate depreciation is of concern
The economy is upside down, and inflation is over 100%. The whole economy is sick and needs urgent help. There is inflation all over the world, but the Nigerian one is out of order. The Nigerian masses are going through a lot. The worrisome effect on our National Economy is what all concerned Nigerians are talking about. This is a valid question raised by many patriotic Nigerians. We demand answers as to what should be done to rectify the situation.
This negative trend will further increase the prices of essential commodities needed for the daily survival of our citizens, making their lives miserable. The current quadrupled inflation is a direct result of this trend. Our currency is becoming
WORTHLESS! The exchange rate as of today is 1760.00 Naira to a pound sterling. It is soon approaching 2000.00 Naira to a pound sterling. The concerned Nigerians should not stop talking about the Exchange rate. If necessary, we should shout and make our unhappiness known about this trend to our government.
A National Dialogue is needed to champion the discussion. One of the objectives is to help defend or support the Naira. No country in the world sits idle while its currency goes into the abyss or slides into deep depression. The Naira is the pride of our nation, Nigeria. It would be unpatriotic to watch our currency decay at such a rate. All Nigerian Economists and well-meaning Nigerians need to come together and propose solutions to this situation. We should not remain silent. The present administration before its inception to power promised solving the exchange rate problems and the economic downturn. Life has become unbearable for our citizens.
The Minister for Finance, Mr Wale Edun in one of his submissions admitted the Naira is undervalued. If this is the case, we are patiently waiting for him to take action to correct the abnormality. Our Nation is tired of the excuses being given as to why things are not the way they should be. It is imperative to rescue our national economy and exchange rate mechanisms. We cannot wait until our national currency collapses with the economy.
All respectful governments intervene to protect their national currency and Economy
The fall of the pound's sterling in relation to the dollars during the 2022 Lizz Truss era, was one of the worst events that impacted the British government over the course of her approximately 50 days Premiership. It started on the 6th of September 2022 and ended abruptly on the 25th of October 2023. The UK faced a cost-of-living crisis coupled with an energy supply crisis. The policy was to embark on large-scale borrowing and tax cuts, presented in a mini-budget. This policy was widely criticised. This eventually led to the UK's financial crisis with subsequent financial instability. The pounds sterling crumbled under her watch. The exchange rate of pounds to dollars went down to £0.97 penny to $1.00. This situation triggered a UK debt crisis as the parity with the US dollar caused a significant slump. This was the lowest record witnessed over a long period of time. She had to tender her resignation because of the economy collapsing around her and her cabinet was replaced by that of Rishi Sunak, who was elected unopposed as her successor. Liz Truss recorded the lowest approval rating of any UK Prime Minister.
The New Government intervened and restored sanity and confidence in the financial market. The pound-to-dollar exchange has now stabilised at £1.00 to $1.24. This is a prime example of the government quickly intervening to bring sanity to the exchange rate and the economy.
Another example where the government had to intervene was the Russian Federation's Economy and the exchange rate. Before the Russian-Ukrainian War, the Russian ruble had lost about 25% of its value. The currency was worth around 75 rubles per dollar. In March it hit around 120 rubble per dollar. The Central bank had to intervene and introduce reforms.
By improving the international trade conditions, the energy export of oil and gas, and finding alternative energy buyers like China and India, the ruble exchange rate improved. The Central bank reduced a large portion of the capital and financial market. It also announced that it was stepping up support for the rubles, tightened its monetary policy, and mandated the sale of foreign currency for certain exporters. They raised the interest rate to 20%. The Central Bank purchased millions of rubles to prevent the collapse of the Moscow stock exchange and prop up the currency against the dollar.
The Central Bank intervened in the currency market to avoid market volatility
Another country in which the government had to intervene was Brassil under President Lula's administration. He reformed the Transportation system and shifted towards domestic production instead of importation. This helped accelerate Brazil's growth in the areas of mining, agriculture and manufacturing. The condition of the Brazilian currency improved in relation to the dollar, leading to an improvement in the national economy.
Even the US Federal Reserve will not allow this sort of currency volatility to occur as witnessed by the Nigerian Naira. When things are not going well with the government policy, they quickly intervene to rectify situations. Only an Economy that wants to self-destroy itself will not act. Only in developing economies will they clamour for market forces alone to rectify their economy. This is an economy of deceit to help destroy our economy. They will not allow only the market forces to obliterate its economy.
Trends in the Nigerian Economy that have brought about the decline in the value of our currency
Firstly, there is a concerning trend in our society the way our national currency has been disrespected. The throwing of our national currency in the air and stepping on top of it during celebrations. I have never witnessed this behaviour in any other part of the world except within Nigeria and our community.
We want our National currency, the Naira to be respected. Some argue that this act of 'spraying is part of our culture a form of societal acknowledgement in society. However, the Naira is the legitimate property of the Federal Republic of Nigeria. It is our legal tender. It should be respected. We should be mindful in handling it. This illegality cannot continue. It must stop immediately. This act of insanity is ignorance of the highest order. At times l wonder what our security agencies are doing while this is going on in our society. What about the highest law-making organ in the land? Our legislative body needs to enact laws to ban the disrespect of our National currency, the Naira. The judiciary should also sentence the culprits of this unlawful behaviour.
Another worrying trend in our society is the way our public funds are been looted, embezzled or misappropriated without leading to properly sanctioned. The level of corruption in our government and public bodies is alarming. Under the last administration, this mismanagement of public funds was terrible. It should be estimated all money embezzled, and misappropriated will amount to a sum of over 500 billion dollars. All this money still needs to be accounted for and returned for public use. This is more than enough to help adjust the foreign exchange rate of our Naira.
There were not enough strict checks and balances under previous administrations, leading to massive corruption and embezzlement and mismanagement. The previous Central Bank governor was said to have amassed billions in sums of money both in local and foreign currencies. There was a case of a deputy Central bank governor amassing large amounts of money and even buying banks. There was a case of a Minister misappropriated 459 million Naira. However, she has since been dismissed.
Another thing worth mentioning is the decline in the forex supply in the economy. The foreign reserve as of Monday the 22nd of January 2024 stands at $33.34 billion dollars. The net forex inflow has been falling. There has also been a drop in direct investment in the economy. Some foreign companies are relocating to other African nations whilst some are shutting down operations. This abrupt currency depreciation is causing investors to withdraw their portfolio investment putting downward pressure on the currency.
There has been a decrease in the official dollars traded in the forex market. A fall in foreign export earnings and a persistent dollar shortage in the financial system. The current forex backlog of accumulated forex demand on the official market is driving people to head to the black market to satisfy the market demand for dollars.
Another factor contributing to this depreciation of the Naira is our weak economic fundamentals such as high current account deficits and high rate of inflation. High inflation raises the prices of commodities, discouraging exports and making them less competitive. Our country's inability to manage the economy correctly has led us to rely on black market exchange rates. The lack of trustworthy data on the money supply in circulation and the inability to measure the actual amount of money in the Nigerian Economy is a problem. Most money in circulation is kept hidden. The money does not circulate through banks. Therefore, the Central Bank of Nigeria does not know accurately how much is in circulation. It is a matter of guesswork. We cannot effectively manage an economy on guesswork.
Much has been discussed about the falling exchange rate of the Naira in relation to other foreign currencies. Now we need to shift the emphasis towards what we can do to reverse the trend of the Naira declining in value.
Reversing The Trend
- To reverse this trend, we need to instil confidence and transparency in our foreign exchange market. We need to reduce the backlog in our foreign exchange, until the forex inflow exceeds the huge demand for forex, thereby increasing the external reserves.
We need to increase our daily crude oil production from 1.4 million barrels to over 2 million barrels. It was currently projected to be 1.7 million barrels per day. The Nigerian navy and security agencies need to be vigilant to reduce fuel theft and eliminate bunkering. The Navy should be equipped with sophisticated modern equipment to help tackle the situation. Oil piracy should be discouraged by our security agencies. We need a modern security architecture to be developed to deal with this menace.
- There was an incident where a ship loaded with crude oil was seized by the security agency, and set on fire, with all the crude oil wasted. Would it not have been more beneficiary to hand over the seized crude oil to the Nigerian government? The decision to burn an entire shipboard of crude oil was a terrible and disgusting judgement by the security agency.
- Furthermore, the government needs to encourage more extraction of mineral resources which are in abundance in our country. There are still large deposits of untapped, unharnessed mineral resources in Nigeria. There are hardly any mineral resources that cannot be found in the Nigerian territory.
- We need to harness more tax revenue in Nigeria. We need to implement a computerised system of timely tax payments. Bigger companies like Dangote etc should contribute more to Royalties. We need to increase our foreign exchange earnings from oil exports and other export potentials. The Nigerian export promotion services should help to boost exports and encourage our manufacturers on ways of packaging our products for exports to avoid goods perishables so as to earn more earnings. Export earnings should be remitted back to the country on time. Those who refuse to reign back the foreign exchange earnings should be sanctioned. They should also boost the export of our locally made goods
- We need a very strong economy with a large industrial and production base. We need a strong and steady export market for our agricultural products. Our Economy is expected to grow at an average rate of 3.4% by the end of 2025. Our Economy needs urgent reforms in all spheres of activity including the manufacturing and agricultural sector
- We should encourage foreign direct investment. There was a time in the late 70's and early 80's when 1 Naira was equal to 1 pound. In 1981, while travelling abroad from Nigeria, l exchanged 1000.00 naira and received £996.00.
- Corruption, embezzlement and mismanagement of government funds meant for the Nigerian populace should be discouraged
- We should address the security concerns of the nation. This will restore investors' confidence back in the Nigerian Economy
- We should encourage efforts to rescue our Local currency, the Naira, from its downward slide in relation to the pounds sterling or the USA dollars
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Operation Rescue Our NAIRA – ORON
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