There are many facts about the Nigerian nation that are impressive and many would agree should lead to even more impressive outcomes for her. Facts such as Nigeria being the nation with the largest population in Africa, with, (according to the AfDB (2015)) a middle class of 23 per cent of her population who are well-educated with 92 per cent of this having completed post-secondary school education. This powerful group of consumers is demanding quality goods and services and should be the foundation of a market-oriented economy. Nigeria is the 13th largest producer of oil in the world with the 10th largest proven oil reserves. Nigerian immigrants to the United States of America have the highest levels of education in the nation, surpassing whites and Asians. This fact is supported by research and census data conducted in Rice University (2008). The facts above certainly point towards Nigeria being a country with the intellect, population and money for being at least a world economic power.
An “enigma” is while there are very many good and exciting things about my fellow Nigerians, a reality is that “Nigeria is one of the poorest and most unequal countries in the world, with over 80 million or 64 per cent of her population living below poverty line. This is a fact asserted by the United Nations Development Assistance Framework IV in 2016. The UNDAF IV (2016) goes on to explain that the situation is increasing. Poverty and hunger have remained high in rural areas, remote communities and among female–headed households and these cut across the six geopolitical zones, with prevalence ranging from approximately 46.9 per cent in the South-West to 74.3 per cent in the North-West and North-East. Youth unemployment, which is 42 per cent in 2016, is very high, creating poverty, helplessness, despair and easy recruiting ground for crime and terrorism. Over 10 million children of school age are out of schools with no knowledge and skills. This is a painful and embarrassing fact for well-meaning Nigerians to swallow, and was hard to notice till the obvious ongoing recession.
Well-meaning Nigerian economists and philosophers are asking themselves why in almost 60 years of self-rule Nigeria has not even come close to her potential of socio-economic development? When one considers the fact that one out of every five persons of African origin is a Nigerian, then the answer to the question above takes on an even more sensitive and important significance for the true socio economic development in Nigeria and Africa. In further exacerbation of the scenario, in 2016 alone, Nigeria lost its place as Africa’s largest economy, fell into a bitter recession, is reported to have lost over $100bn of FDI and her currency lost over 40 per cent and counting of its value. While it is impossible to address all Nigeria’s economic woes in this article, the aim here is to briefly identify and share highlights of the fundamental issues in the author’s opinion, that need immediate change if true and tangible progress is to be achieved in Nigeria’s economic development.
At the heart of most of Nigeria’s social and economic woes are unscrupulousness, misconduct and lawlessness constantly perpetrated at different times by a different collection of some citizens against Nigeria and her laws, in spite of written consequences spelt out in the law. This simple fact must be taken into consideration in the formulation and implementation of any strategy or policy aimed at correcting any or all of Nigeria’s economic and social problems. Enforcing the law equally across all levels of the Nigerian society against unscrupulousness, misconduct and lawlessness is imperative if Nigeria will make planned and significant economic development. It is also critical for social engineering to be executed to achieve the goal of imbibing a culture of rigorous indigenous scientific research that would guide the formulation of policies and their implementation. Such indigenous scientific research is needed to determine what policies to formulate, to have a homegrown understanding of why a policy was formulated, to know when and how implementation is best executed, to know what to expect during implementation, and to have a previously simulated response to possible reactions during implementation. This is equally logically imperative if Nigeria will make planned and significant economic development. Deliberate efforts to influence or change particular attitudes and social behaviours on a large scale in Nigeria, in order to produce desired characteristics for socio-economic development is a fundamental foundation for Nigeria’s success in achieving her potential as a developed nation.
Second, there should not be more that one foreign exchange rate in Nigeria. Nigeria has an economically unhealthy dependence on foreign imports for the “normal” flow of day-to-day life. Therefore, the ease or difficulty at which foreign goods can be imported has a deep impact on daily life for most Nigerians. The foreign exchange rate for the Nigerian currency has a direct impact on how easy or difficult it is to import goods. It also determines to a significant extent the prices of many goods “manufactured” in Nigeria, because much of the so-called manufacturing process in the country is dependent on imported raw materials. The Nigerian currency, the naira, has lost much of its value, the difference between the official rate and the black market/parallel market rate continues to grow alarmingly. Nigeria implements a multiple foreign-exchange rate system. With this type of system, a country has more than one rate at which its currency is exchanged. In this context, the Nigerian economy has been divided into many different segments, religious pilgrims, manufacturers, government officials, commercial banks, Bureau de Change outfits, petroleum product importers etc each with its own foreign exchange rate. Importers of certain goods “essential” to an economy may have a preferential exchange rate while importers of “non-essential” or luxury goods may have a discouraging exchange rate. It is a mechanism by which governments can quickly implement control over foreign currency transactions.
A system of multiple exchange rates may seem good, but it has undesired consequences. Favoured industries will not necessarily reflect their actual needs because its performances have been artificially inflated. On the other hand, a logical instrument for dealing with economic shock and inflation is to allow a full depreciation, which should bring stability to the foreign exchange market. Nevertheless, most developing nations such as Nigeria are faced with constraints such as essential imports that must remain protected.
In Nigeria, there are additional negative consequences owing to a multiple foreign exchange rate system. In a parallel market where the vast majority of Nigerians get foreign exchange, a sabotaging amount of the foreign currency obtained from the Central Bank of Nigeria at lower official rates illegally finds its way to this parallel market to be sold to the vast majority of Nigerians at a rate up to 40 per cent higher. This is known as round – tripping. The author stresses that with the nature of the Nigerian economy today, the crime of round-tripping represents a huge complication and impediment to recovery of the economy let alone its advancement. Round-tripping must be recognised as the barrier it is and be eliminated. To do this, the author contends that Nigeria must urgently implement a single foreign exchange rate for the economy. Implement and enforce it for all. This will pave the way for the economy to perceive the positive effects of other economic policies such as tariffs and bans on certain imports.
To be concluded
Dr Chibo-Christopher is a development economist and international business strategist based in Abuja
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