Depending on where one is standing, what is good in one place may be bad in another and vice versa. This is corroborated by the dictum that one man’s meat is another man’s poison. Different cultures have their dos and don’ts. What might be taboo in one culture might be acceptable in another. It is foolish for one to live his or her life copying others. Philosophers call it inauthentic life.
Copycats never produce original. The photocopier machine, good and excellent invention as it is, never gives you the original of any job. It will always produce the duplicate. The circumstances of individuals, communities or countries differ. Wisdom demands that one should be aware of his or her circumstances and act accordingly, without imitating others.
Against this background, the controversy over whether or not to devalue the naira raises fundamental questions about Nigeria’s sovereignty. If this country is truly a sovereign state, then it should be able to stamp her feet on the ground and do things that are in her national interest without being pushed by anyone.
While the protagonists strongly support the devaluation of naira, with, of course, their reasons; the opponents, comprising people like me, equally, with reasons, are against devaluation. The truth is that both devaluation and non-devaluation have their positive and negative sides. It is a matter of which side favours Nigeria most.
Whereas President Muhammadu Buhari is vehemently opposed to devaluation, undue pressure has been mounted on him, especially, from among others, the International Monetary Fund (IMF), to devalue the naira. Like a spirit that passes and people start dying, the naira took a dramatic plunge to N300/$ after the recent visit of the IMF boss, Christine Lagarde. Economists regard that huge depreciation as unofficial devaluation. But the devaluation warriors still want official devaluation to match the parallel market rate against national interest.
During last week’s Monetary Policy Committee Meeting of the Central Bank of Nigeria (CBN), many people had thought that naira’s devaluation was a fait accompli. But the CBN, patriotically, resisted the pressure and left the current official exchange rate untouched at N197/$.
President Buhari has since endorsed the CBN decision, arguing that he is yet to be convinced that Nigeria and its people will derive any tangible benefit from an official devaluation. This is not the first time the president had taken that position. Buhari’s latest declaration in Kenya reinforced his earlier stand, which, obviously, is in our national interest.
The president rightly noted that while export-driven economies could benefit from a devaluation of their currencies, the case would be different for import-dependent economies like Nigeria, as devaluation will only result in further inflation and hardship for the poor. Buhari added that he had no intention to bring further hardship on the country’s poor, who he said, have already suffered enough. He likened devaluation of the naira to having it “killed”.
Moral theologians counsel that when one is faced with two evils, one should choose the lesser evil. It is not that either devaluation or non-devaluation is evil per se; the point is that the circumstances of countries differ. Devaluation or non-devaluation could become evil when misapplied. The lesser of two evils in this case is non-devaluation.
A country’s economy could go crashing with untold adverse consequences if by mistake the currency is devalued. There is one example in Africa – Zimbabwe. Because of the adverse consequences of irrational devaluation, sane countries make rational decision before devaluing their currency for a purpose without being pushed.
Strategically speaking, the strength of any country is as good as the strength of her currency. The currencies of the world powers – United States dollar, British pound sterling, French francs, Japanese yen, Chinese yuan, etc, command strength anywhere in the world in line with the strength of the countries. On the contrary, the currencies of the weak nations, found mostly in Africa, have no strength like the countries concerned.
Considering Nigeria’s strategic position in Africa and global geopolitics, the country cannot afford to let the naira turn to tissue paper in the erroneous belief that devaluation will bring any good.
Last August 2015, China devalued her currency, the yuan, for three days, to boost export. China is the industrial powerhouse of the world. As a major exporter, a strong yuan discourages export and harms her economy. So, it is rational to devalue her currency, which is in her national interest. I have lived in Japan and had the same experience. The Japanese always desire a weak yen to boost export.
What is Nigeria exporting that should warrant devaluation of the naira? How could an import dependent country like Nigeria devalue her currency and let the prices of goods skyrocket? The little foreign reserve garnered from oil will evaporate if the naira is devalued to say N300/$. The parallel market could exchange to around N500/$. What then will become of Nigeria? Nigeria is in soup because she misused the huge money garnered when oil sold for over $100 per barrel.
The exchange rate of the naira is not the problem.
Two of the reasons advanced by the proponents of devaluation include to attract investors and to boost manufacturing and by extension employment. Where in the world is the interest of investors given preeminence over that of the country and its citizens?
Foreigners dominate Nigeria’s oil-dependent economy while Nigerians suffer. Why should investors dictate what the exchange rate of the naira should be? Any investor who doesn’t like the official exchange rate of the naira but prefers the black market rate is a scammer. No investor goes to China or Japan to dictate the exchange rate of their currencies.
Second, the mass unemployment and low manufacturing in the country did not start today. These started in the mid 80s following the Structural Adjustment Programme (SAP). It is senseless to believe that non-devaluation of the naira would hamper manufacturing and employment. The naira was recently devalued to the present rate of N197/$. What positive impact did that make on the economy other than increase inflation?
One way to get out of the economic downturn is by opening the economy to the states and citizenry. The Federal Government should stop the culture of sharing money and let the states work by exploiting the resources in their domain. This is the right time to do it.
GUARDIAN
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