Many cannot simply understand how anyone can talk about excess money in circulation when their lived experience is that the naira is hard to come by. If at all there is any excess liquidity in the system, what such cash trapped Nigerians ever think is happening is that it is evidence of the crisis of the grossly unfair distribution of our resources whereby some have so much when a vast majority have little or nothing at all.
Experts, however, explain that the move is meant to stem inflation, strengthen the national currency, the naira, and ensure economic stability. But the immediate response to this policy measure was negative in that the naira fell slightly against the dollar, closing at N160.10 to $1 on the inter-bank market, weaker than the 159.65 to$1 it used to be. What is even more disconcerting is that the inter-bank lending rates rose to around 19 per cent from around 12 per cent. This of course means that banks will find it very difficult to lend to the productive sector of the economy.
The negative but clearly unintended consequences of that policy measure have prompted many analysts to posit that what Nigeria needs to do to stabilise the naira is to attract foreign capital inflows. We, on our own part, feel that the answer to stabilising the naira and ultimately the nation’s economy lies essentially in embarking on a bold, nationalistic and radical measure to massively increase our domestic production of top quality goods and services. The value of the national currency of any country is the measure of the goods and services it is able to produce to exchange for the goods and services of other countries. The uncomfortable truth about the Nigerian economy is that it produces very little and consumes a disproportionate amount of what other countries produce.
A huge country like Nigeria with a population estimated at about 170 million which is as well a net importer of virtually everything from the factories of other nations cannot have a stable economy. We have lived with this scandal for so long that we have almost become used to it. What the CBN is doing is a rather desperate and ultimately ineffectual way of guaranteeing the health of the economy because seeking to keep the naira at a certain value without the required amount of production is merely artificial if it is not out rightly deceitful.
We have lamented for too long the unfortunate ‘programme’ of de-industrialisation in which over the past decade over 70 per cent of our industries have closed shop as a result of smuggling, unfavourable business climate, lack of concern on the part of those charged with the responsibility of growing the national economy and many other factors.
Rather than resorting to some clever games of artificially fixing a problem that requires a much more fundamental approach, the CBN and other managers of our economy must hammer continually into the heads of our political leaders of the need to take steps to increase the productive base of this economy. We must embark on industrialisation. We have talked about this for too long without any well enunciated programme of doing so. We must also embrace tourism for which much potential abounds. We have for long recognised the fact that agriculture should be the mainstay of our economy. We should leave rhetoric and go for concrete steps that will yield massive dividends.
In light of frightening development in the oil sector, Nigeria has no option but to wake up and diversify its economy, embracing principally agriculture, tourism and industrialisation. Our dependence on oil and massive importation of goods cannot guarantee our country its political, social and not to talk of economic stability, no matter what short-term political or professional tricks anybody or institution seeks to play to achieve some predictably short-term objectives.