Naira devaluation: Who gains?

The restrictions introduced by the Central Bank of Nigeria (CBN) on the issuance of foreign exchange to importers as well as its resolve to stop Bureau-de-change operators from accessing it are two strategies which implementation by the country’s apex bank has continued to generate reactions from Nigerians. To help the naira appreciate, the CBN has […]

The restrictions introduced by the Central Bank of Nigeria (CBN) on the issuance of foreign exchange to importers as well as its resolve to stop Bureau-de-change operators from accessing it are two strategies which implementation by the country’s apex bank has continued to generate reactions from Nigerians. To help the naira appreciate, the CBN has also placed certain restrictions on withdrawals outside Nigeria. For instance, withdrawal is allowed on an Automated Teller Machine (ATM) while abroad only to a maximum of $300 per day just as withdrawal per annum is allowed on an ATM outside Nigeria only to a maximum of $50,000. One unmistakable truth that is apparent from these restrictions is the fact that those who require foreign exchange to import goods or pay tuition for their children studying abroad or seek medical attention in foreign hospitals would get such at prohibitive cost because of the current value of the American dollar at the parallel market.
The arguments advanced so far by government, the CBN; some economists and workers do not favour devaluation of the naira. President Muhammadu Buhari has repeatedly said that he is yet to be convinced by the argument of those calling for naira devaluation. The most recent forum where arguments against naira devaluation took center stage was the summit organized by an international news magazine, The Economist. State governors present at the event queued behind President Buhari as well as the CBN to oppose naira devaluation. According to the governors who spoke separately at the summit, Nigeria’s economy would do better if it seeks out alternatives to the devaluation. This could be through a reduction in the cost of governance and a re-think in the craze of Nigerians for imported goods.
In his remarks at the summit, Governor Nasiru Ahmed El-Rufai of Kaduna state explained why it is unfair to continue to subsidize foreign exchange for the elite group of Nigerians because, “it was not the elite alone”, according to him, “that voted this present administration into power”. Similarly, Governor Ibikunle Amosun of Ogun State who expressed support for President Buhari’s position against naira devaluation said, “it is not good to devalue the naira when we are still an import dependent nation which imports almost everything”.
The madness by Nigerians for anything foreign in addition to their reckless taste for medical tourism and schooling abroad all combined to put the naira under severe pressures that weighed it down to its current abysmal value. Besides a craving desire for foreign fabrics, electronics, and furniture, Nigerians in the past three decades developed an incredible obsession for foreign foods and drinks. They want to eat foreign rice, foreign chicken, foreign fish, foreign mango, foreign tomatoes, foreign pepper, foreign garlic, and even foreign locus bean. They want to drink foreign honey and foreign bottled-water even though Rivers Niger and Benue and their tributaries are waiting to be utilized!
One wonders at why Nigerian businessmen or women should be so unreasonable to import items such as invitation cards for weddings and other events given all the countless number of printing press scattered all over Nigerian towns and cities. Even the craze for foreign furniture is uncalled-for given the large vegetation of Iroko trees in southern parts of the country. This writer once described Nigeria on this page in his September 14, 2013 edition of the column as “Federal Republic of Importation”. Nigeria spends billions of naira annually to import items that we do not actually need their foreign versions. People should know that each time an item is imported into the country; millions of Nigerians are deprived employment opportunities in the same way that unregulated importation kills the naira.
If government were to accept the argument for the devaluation of the naira, Allah forbids for now, the only people to gain immensely from it are importers, payers of tuition fees in foreign institutions and medical tourists who travel to India to treat headache or malaria fever. These three groups of Nigerians will certainly benefit from naira devaluation more than others as that would ease their access to foreign exchange at reasonable cost.
Talking about losers, the working class and poor Nigerian masses would be the worst victims of naira devaluation. With a devalued currency, the value of their income would have diminished. They would also be required to pay more for goods and services. The little capital in the businesses of small and medium scale entrepreneurs would have also suffered great loss after the devaluation of the naira. Devaluation of the naira shall no doubt lead to hardship and worsen the already critical economic predicaments of the Nigerian masses; a group considered by President Muhammadu Buhari as his prime constituency in the politics that saw him to victory in the 2015 presidential elections.
Because this writer is opposed to naira devaluation, it is his view that importers should source for their foreign exchange requirements at whatever rate they can find them. If the prices of imported items become too exorbitant for Nigerian consumers of foreign goods to purchase, importers will choose to either import goods that will eventually tie down their money or export locally manufactured goods that are marketable within and outside Nigeria. Nigerians who are fanatical about foreign goods may also be forced redirect their taste.
As a matter of policy, Nigeria needs less import in order to ease and lessen the pressure on the naira; and greater export to improve upon the value of the naira. Nigerians must equally have a change in their taste for anything foreign. To attract the interest of Nigerians to locally manufactured goods, indigenous manufacturers must strive to make their products appealing and competitive. Better schools and improved healthcare delivery system in the country will respectively help to curtail the scramble for foreign education and medical tourism. May Allah (SWT) guide us to curb our excesses in the things our eyes and heart covet, amin.