The Nigerian government and CBN have engaged themselves in game of tug-of-war against currency speculators that normally accompanies a fall in prices of a major export of any country. This fight has been fought in recent months in major economies from oil dependent nations of Russia, Venezuela,saudi arabia to advanced economies of japan and china.As in a typical tug-of-war,not much happens first.The teams are evenly matched and there is no motion for a while,just lots of tensions on the rope. The rope in this case is the foreign exchange markets.Eventually one side will collapse,and the other side drags the losers over the line to claim victory. This has been the battle for 16 months now in Nigeria foreign exchange market. While government has been wallowing in " money illusions" by not accepting that there is need for adjustment in the face of present day realities of fall in oil prices and its attendant effects on foreign exchange inflows. The currencies speculators and experts like IMF chief Christine lagarde,former CBN governor Sanusi lamido, renowned economist bismack rewane e.t.c the list is endless.This experts hell bent on forcing government to follow its policy prescription of devaluation have been overbearing in recent months.Added to these voices are the currencies speculators who who have kept their assets in foreign currencies ready to make short-term excess profits should CBN accede to their demands and devalue. Together this set of people constantly blow the trumpets of devaluations which it in itself unpleasant to the buhari administration.It is therefore instructive to look at both side of the coin.
Fear of inflation.
Some have been strong advocates against devaluation of the naira because of fear of inflation. This argument cannot be justified because without official devaluation prices have already in adjusted to devaluation in the parallel markets. So what's the catch? If you go to the market prices have already increased by 40% across board from essential items of food and clothings to luxury items of electronics and gadgets.There is general consensus that prices have increased and so the arguments of inflation is not tenable.While assuming devaluation has taken place earlier the price increased could have been marginal. As was the case in december 2014 when devaluation was undertaken under Gej before elections.
We don't export anything so why devalue?
This arguements is the most stupid because of serious ignorance attached to it. On daily basis crude oil and natural gas are being exported in billions of dollars. Devaluation will increase Nigeria's competitiveness in the oil sector. Since devaluation will increase the naira supply at the disposal of oil companies after converting proceeds from sales of crude oil. Thereby reducing job losses in the oil sector.It will also reduce the cost of production per barrel and enabling oil companies to sell our oil faster in the oil markets by offering discounts in the era of oversupply without incuring losses.
Fear of political backlash.
After buhari's made for fools campaign promises he now faces the reality that it is easier said than done. The mountain of exaggerated optimisms his now weighing him down.Since himself used the value of naira at N225/dollar to ensnare Gej campaigns and promised $1 to s N1. While buhari's supporters of fawning admirers and praise singing sycophants danced to the music of kwam 1 and wallowed in pornography of propaganda without asking how he was going to fulfill his campaign promises. The implication of his failure to fulfill his near impossible campaigns remains the major driving force of buhari's hard stance on devaluation.The oppositions parties are already scoring cheap political points even without devaluation.With people like fayose heating the airwaves with doomsdays scenarios and heaping the blame of exchange volatility on buhari's incompetence.There are already political backlash from the opposition whose raucous noise will cheer any bad news as victory.
Unnecessary wastages.
I read in many articles where Nigerians have been blamed for the exchsnge rate crises for their tastes for quality.But have we looked at government contributions to the crises. The unnecessary foreign trips of Mr president with no meaningful benefits are also contributing factors to the volatility. The hard earned foreign currencies need to be conserved not wasted on fulfilling Mr President youthful days fantasies of traveling round the world.This should be reduced.The unnecessary pilgrims personal allowance of purchasing $1000 at N160/dollar is totally unnecessary in this season. Traveling abroad for religious pilgrimage is a luxury government cannot afford to subsidize with Nigeria hard earned currencies.
Economic backlash.
Alredy foreign investors are living Nigeria in doves.This is underscored by the fact that Nigeria's capital markets capitalisation shed a total of N2.354trillion in 2015 as it moved from N11.478trillion in 4th quarter of 2014 to N9.12trillion in December 2015. Foreign direct investment also reduced in the same period from $21billion in 2014 to $11billion in 2015. No foreign investors will invest in a country where there is no certainty in its abilities to repatriate profits and investments when necessary.The CBN foreign exchange controls is a major contributing factors to this huge capital flight. The lagos chambers of commerce noted that its members had lost N1.4trillion in the last 6months owing to inabilities of its mrmbers to access dollars to purchase raw materials and machineries used for its manufacturing.
Conflicting policies.
The CBN seems to be confused as his momentary policies is in conflicts with its determination to defend the naira.The CBN reduction in interest rate from 13% to 11% indeed inreased supply of naira when it supposed to mop up excess liquidity in the markets. The administrative policies CBN as introduced is suitable for controling capital inflows not outflows.The CBN under buhari has lost its autonomy,with buhari in his highfalutin publicly declaring that he his in charge of the CBN and not the its governor. This was underscored when buhari categorically stated that " He won't kill the naira".The CBN according to the act that established it should be shielded from political sentiments when making its decisions.In other climes the central banks are completely shielded from politics but this is complete departure from what the CBN acts says.
Lessons most be learnt from other countries that have in the past followed this same script ,the case of Venezuela and Zimbabwe readily comes to mind where their currencies are either no more or have completely lost it value due to this kind of exchange regime being implemented by CBN.The inability of Jonathan's administration to prop the foreign reserves are not tenable excuses because had Jonathan had enough reserves he won't have devalued the currency and introduced austerity budget in 2015.All reserves saved would have been exhausted within a year and we would have been back to square one.Thou notwithstanding the serious oppositions and; courts and verbal threats that was hauled at okonjo when she wanted to prop up the excess crude account and the sovereign wealth fund, she should have tried harder. Buhari and his supporters cannot blame past administration for this because leadership his about taking responsibilities not making up excuses. Leadership is an obligation and you need to step up everyday.The blame game is old news, yesterdays paper.The banks themselves have not helped as you can't work into any bank and request for dollar and get, they will simply refer you to an Aboki man in sabo to whom they have sold available hard currencies. This off the books activities have made abnormal profits for banks in billions,they are illegal and most stop.
Devaluation is indeed inevitable as oil prices falls and are predicted to fall further. It is like living in a fools Paradise to think that not devaluing is a better alternative. I personally wish there are better feasible options to devaluation but non exist.It is therefore expedient for CBN to embrace the forces of demand and supply.The cost of not devaluing simply outweighs it benefits. In the long term lets support concerted effort towards import substitutions.
Email: olaniranoladotun@yahoo.com

Ghana has recently devalued their currency, how well of is their economy?, what if N3 exchanges for a dollar, but u by joy soap of N50 now, for $2. Where is the sense in that?, salary earners will earn about N50-100, the end result is that we'll close the gap in the exchange rate, but won't grow our local industries. I was in Ghana few years ago, I was told that their currency was better than ours. I took a tour, bought few items and imagine peak milk sold for over 1 cedi which is rubbish. This shows PMB's fight is just. we should not be an import base country. Dollar is not our currency and should not control our economy. Have u asked yourself why a bag of cement is selling low?.

Say no to naira devaluation
Devaluation is not the way forward
Folks should just leave the dollar alone
The dollar craze is freaking to much
People should look into alternative business
The naira will bounce back definitely

Wailers are getting bored.