Naira"A business class seat on British Airways is over 2 million naira, while Arik is a quarters of it, yet we travel with BA."

This will easily pass as the most debated economic policy in Nigeria in resent times, especially whenever there is drop in (foreign) earnings. Different opinions springs up as to how the government should treat the Naira, being the victim of our financial recklessness.

Everyone is quick to conclude on how the government should run the economy, but just like a football match, the best players are always the spectators on the stand. It takes political will to make strategic decisions that will affect the life of over 170 million Nigerians, and because of the ripple effect of these decisions, it tends to affect all sector of the economy . Policy decisions needs to be well evaluated and simulated before they are implemented by the leader, because of the burden of responsibility.

There has been series of debate about whether or not to devalue the Naira, mine is just another opinion. I'm a public commentator not an economist, but I have been around for a while to be able to lend one or two words to this debate that doesn’t seems to be ending any time soon. There are those that belongs to the school of thought that devaluation is the way to go, and others like the organized labor who threaten to demand for wage increment should the government dare devalue the Naira. Its is not out of place to find the third group who supports partial devaluation.

A simple analogy of devaluation is a situation where Nigeria makes $1 billion naira in a month, and exchange it at the official rate of 199 Naira to a Dollar. This means that the government now have N199 billion Naira to share among the states, with a state like Osun getting like 5 billion. The government can decide to devalue the local currency to the parallel market rate of 400 Naira to a dollar, the government, after exchanging will have double of the initial amount, and Osun state will have 10 billion. While the allocation of Osun state doubled, Nigerians earning is still $1 billion, we have only pretended to earn more, while in actual fact our earning has not changed, and the purchasing power of the Naira has been reduced by half. That is called " clever by half".

Resent history of devaluation in Nigeria

Devaluation is the act of reducing the value of a currency by it monetary authority like the central or principal bank.This is not the first time this issue will heat up the polity, in fact, the Naira had been devaluated several times in the past, and it has failed to make any meaningful in pact on the economy apart from increase in government revenue in local value, which will only weaken the Naira more. Naira was devalued by 71.5 per cent in 1986 by the then government of General Ibrahim Babangida; 23.9 per cent in 1989 by same government; 42.1 per cent in 1992; 74.65 per cent in 1999; 3.18 per cent by Obasanjo in 2001; 7.73 per cent in 2008; January 2013, 13.23 per cent, November 2014, 5.58 per cent, and February 2015, 14.25 per cent. The current shortage of forex as a result of sharp decline in the price of barrel of crude oil from as high as $140 to an abysmal $28 has necessitated some economic policies like, ban on sales of dollars to the parallel market operators also known as Bureau De Change (BDC), import restriction on certain 41 items to discourage unnecessary importation of goods that can be produced locally and prioritization of forex needs.

We can devalue as much as we want, but our forex earning remains same. If we want to have more earnings in Naira, instead of reducing the value of Naira to have more money, we should focus solely on increasing our forex earning, and starve our quest for forex spending. When a country earns more forex, it in turn has more revenue, and the local currency will appreciate. Depreciation is like a short cut that leads to no where, it will only end up addressing the symptoms while the disease (shortage of currency in this case) will continue to fester. The general assumption is that once we devalue, we will absorb the pressure on Naira and leverage on that, but in the real sense, we have never achieved that assumption.

Who Benefits From Devaluation

We have found ourselves on different divides, depending on our political, tribal, emotional affiliation. This situation is quite unfortunate has we have allowed emotions to take better part of us, we have sacrifice deep down analysis and patriotism for sentiment and sensationalization. Need to mention that both argument for and against devaluation are valid and both can suffix, but its strongly depends on determination and political will. This is what has been lacking over the years.

It is not uncommon to find state governors clamoring for devaluation as seen recently, the reason is simple - if at $1 to 200 naira, we share 2000 naira, by devaluing to 300 naira a dollar, we will have 3000 naira to share. This scenario has been well explained above with analogy, and its eventual implication mentioned.

Another set of people in this class are Nigerians in diaspora who earns forex, with a yearly forex inflow of $25 billion into the country, they might be tempted to see the Naira loose it value for their earning to translate to more Naira, especially when there is direct forex withdrawal (must be converted at the counter) restriction on domiciliary accounts in Nigeria.

Economist who want to apply theoretical angle to the issue might also want to argue that since our foreign reserve has been depleted, and decline in forex revenue, we don’t have the financial capacity to support the naira at present rate. But many at times, we have seen economic events defied bookmakers to unfold contrary to perdition.

The way forward: #BuyNaijaToGrowNaira

Much has been said about Naira devaluation, and virtually everyone has been able to argue out its own part, as earlier mentioned, both are valid, has we have seen seasoned economists on different sides on this matter, offering different explanation.

This most fascinating comment given by an economist was during the colloquium organized by TheCable. Bismarck Rewane, CEO Financial Derivatives urged Nigerians and indeed government to worry less about whether or not to devalue as this should be left to be determined by the market forces, government should worry more on generating forex through mass production and exportation, as this is the only means the dollar can be strengthened. In his words, the current situation has moved “from whether to devalue or not to devalue, to the implications of the absence of an exchange rate policy. In the end, we have two options: do something and have a policy, or do nothing,”. While he doesn't really subscribed to devaluation, he also doesn't want to give legitimacy to governments adamancy not to devaluate. Just has expected, only the end can justify the means.

The governor of Edo state, Adams Oshiomole, as the keynote speaker, on his part urged Nigerians “to curb the demands for imports and reorder our consumption pattern.” He further stated that foreign reserve was $65 billion in 2007, $42 billion in 2014, and now $28 billion. As this reserve is dwindling, our taste for foreign goods and importation is ever on the increase, even as the reserve can be totally depleted in the next one year if something drastic is not done.

We are where we are, and things needs to be done differently, we have to start producing, and not just producing, but also exporting and consuming our local produce. This is the only way the Naira can be eased of the pressure and more jobs will be available. The economy will be buoyant, and investor friendly. Nigerians spend half a billion dollars on education abroad, if half of this is diverted into our economy instead, our GDP will increase, the education sector will flourish and even generate income for government as it is in UK, US and other developed countries.

A situation where the rich and wealthy run abroad for ordinary checkup has to stop, medical is not cheap abroad, especially for foreigners, if a fraction of this amount can be expended on our health sector, no doubt we will compete with other nations like India. The cost of flying plain abroad also contribute to another country's GDP at the expense of ours. Its high time we get serious, the government needs to strengthen our health institutions to encourage people to treat themselves locally. A situation where FG budget 3 billion naira to upgrade the villa's health facility in order to ensure that medical trips abroad are reduced to the barest minimum is a welcome development.

We need to start patronizing local companies if we want our economy to improve. No matter the quality of the products locally produced, we have to keep patronizing to encourage competition that will ultimately makes the quality be at par with world standard. Chinese products was not long ago termed as a substandard and inferior goods, now it’s the cynosure of every consumer's eyes, not just in Nigeria, but all over the word. The Chinese leveraged on their population to woo potential investors, now virtually all manufactures and vendors has their production factory in China. Just like China, we have the population, we have the brains, what we lack in leadership, we gain in abundant natural resources, all these just needs to be harnessed. A business class seat on British Airways is over 2 million naira, while Arik is a quarters of it, yet we travel with BA. Manufacturers are folding up everyday due to lack of patronage, yet we want government to provide jobs for our youths. We can not possibly eat our cake and still have it.

I will end this by sharing a personal experience. I went to a book store to get a white board for my study room, the store attendant, with confidence presented a locally made one, though not as good looking as the imported one I used when I was in Ghana. I told the gentle man I wanted the imported one, the question he asked made me look stupid - "what do you want to use it for". It was then I realized both will serve the same purpose perfectly well, with a disappointed look, he advised I should always patronize made in Nigeria goods to encourage the local producers. I had to apologize to save my face. BuyNaijaToGrowNaira.

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