On September 9, 2021, the Nigerian media was awash with the stories of the Naira depreciating to its lowest level in 48 years, trading between N540 and N545 to a US dollar in Lagos.
Since then, the “weeping” Naira has seen more bashing against major global currencies, with Nigerians waking up to new lows of their currency almost every day.
Call it free fall, bashing or depreciation, the woe of the Naira seems worse now, amid fear of sustained fall.
Amedu Isah, a parallel market bureau de change operator in Ikeja, Lagos, captures the reality with missed feelings.
“Dollar is rising now and if you don’t buy now, it will be more expensive tomorrow. But I am not happy because the cost of everything is rising because the dollar is rising. See petrol price now” he said.
Truly, many people are rushing to buy the greenback, even those that do not have urgent need for it, leaving the Naira to suffer more woes.
However, one stack reality is, as crude oil price increases in the international market, so also the price of refined crude oil, which translates to increase in fuel pump price, increase in the cost of living and higher inflation, which combine to weaken the Naira further against major global currencies, especially the United States of America Dollar.
But, is there no solution or should the government and Nigerians watch until the weak Naira drowns the economy?
Pundits believe that there are many solutions from the government, corporate and individual Nigerians to save the Naira.
According to Ejoor Finimah, a member of Manufacturers Association of Nigeria, Rivers State, the artificial demand and hoarding of the dollar are unnecessarily increasing its exchange rate against the Naira.
“If we can be sincere enough to stop hoarding dollars and pounds and go for them when we truly need them, Naira will rise. People should not save their money in dollars here; it is squeezing our struggling currency further. You can buy property, gold or land, overtime they will give you more value than saving in dollars,” he said.
In the same vein, Samuel Onikoyi, a Nigerian academic in Brussels, noted that the Naira would breathe if Nigerian parents stop sending their children abroad for education and politicians stop flying abroad for medical checks.
“Do you know how many Nigerian students are schooling abroad or the number of elite that visit hospitals abroad for health checks yearly?
“All these require foreign currencies to facilitate them and they are 95 percent sourced from the country, so how much dollars or pounds will remain after such scramble for them. We need to change our lifestyle to help the Naira gain weight,” the researcher said.
He also noted that the government needs to improve the standard of education and healthcare delivery in the country to give parents and the sick confidence in the system and to curb the negative trend and keep more dollars and pounds in the country rather than the soaring capital flight.
Considering the huge amount of foreign currencies Nigerians spend on air tickets and hotel accommodation for holidays abroad, whose payments are in foreign currencies, Nkereuwem Onung, president, Federation of Tourism Associations of Nigeria (FTAN), pointed out that if more Nigerians travel within the country for holiday, less dollars would be spent, while more Naira would exchange hands, creating jobs and wealth and helping businesses to stay afloat in the long run.
He thinks that encouraging domestic tourism will help the Naira to gain weight if indigenous resorts, destinations and attractions are being patronised by Nigerian holiday makers, who usually scramble for foreign currencies for their holidays abroad and putting pressure on the Naira by doing so.
“Our glamorous lifestyle is negatively impacting the Naira. We must travel abroad for education, medical and holiday just for status symbols. But the Naira is drowning and is taking us along if care is not taken now. Before government policies come to the rescue, let us cut down on our need for dollars, we can and that will help in saving our weak currency. In my hotels, we now source some items locally, which were imported before and the alternatives are good too and saving us the few dollars paid by our foreign guests,” Philip Udeala, a hotelier and member of Hotel Owners Forum of Abuja, said.
If less dollars are spent on education, medicals and holidays in foreign land, pundits assured that the Naira would breathe.
But apart from providing the needed infrastructure and ensuring quality standards to encourage people to stay back and patronise indigenous educational and healthcare facilities, the government has a huge part to play too in saving the Naira, in terms of policies, their implementation and sustainability, according to the pundits.
While diaspora remittances should ordinarily boost the Naira, Onikoyi regretted that the funds often do not pass through the Central Bank of Nigeria, rather through some smart fintech apps and platforms that share commissions with their partners abroad.
“I do send money home through the official windows, but some of my family members in Nigeria prefer new apps and platforms that enable them to receive the funds without hassles. There should be regulations and improvements by the CBN to ensure easy transfer by senders and access by the beneficiaries of the remittance in the country,” he said.
He argued that if the huge remittances by the Nigerian diaspora are well captured and passed through the official financial system, liquidity of the dollar would improve, without the CBN pumping more to increase its liquidity.
Another way to save the Naira, according to Finimah, is by closing the gap between the import and export (I&E) window and the parallel market.
“When the dollar sells at N700 at the import and export window, it goes for N900 at the parallel market. The N200 difference is huge and banks that have dollars will rather sell to bureau de change dealers and make N200 from each dollar sold than giving people like us that need the dollar for the importation of raw materials to resort to the parallel market. Also, individuals will go to the road-side bureau de change because they will get more than going to the banks and the local traders will keep nurturing the artificial scarcity game. It is impacting the naira negatively,” the manufacturer said.
He thinks that the exchange rate unification policy of the present administration is not working, so he called on the government and the CBN to rethink the policy and save the Naira.
While all the above measures will impact the Naira positively, the most impacts, according to pundits, are by improving the non-oil export sector to enable the country to earn more foreign exchange that will defend the Naira.
“Nigerian cashew nut, cassava, yam, plantain, gold, limestone among others are in high demand abroad. But we need to encourage quality and better processing and packaging to appeal more to the international market because there are alternatives out there for buyers. The government needs to formulate enabling export policies and reduce taxes for these indigenous exporting companies. If you visit Kogi State you will be surprised at the huge deposits of solid minerals that have high export values. They need to be tapped,” Finimah said.
Again, Nigeria has not been meeting its OPEC approved crude oil production quota. Considering that the bulk of the country’s dollars come from the sale of crude oil, the government is urged to increase our production quota in order to earn more foreign exchange that will impact our foreign reserve and defend the Naira.
“I think the most important thing to do now is to increase our crude oil production quota. The government should as a matter of urgency do whatever it takes to increase it now in order to earn more dollars,” Akanumoh Essien, an oil and gas investor said.
According to Essien, former employee of Mobil, who now runs chains of fuel stations in the South-South geopolitical zone, government should be sincere in the fight against crude oil theft as sustained fight and sincerity of purpose will dislodge the perpetrators, and leave the country with more crude to sell and earn more dollars.
“We have been producing our crude oil under capacity for a long time now, the government should make necessary investments to boost our production level and should also be sincere in the fight against oil theft because such crimes are organised and happen when those in charge look elsewhere,” Akanumoh said.
In their conclusion, the experts assured that if the government and the people do all these, export more, more dollars flow in, less is taken out for school fees, medical charges and for holidays abroad, “the Naira will smile again.”