Naira Depression and What Sanusi Can Do (III)e

By Sampson Iroabuchi Onwuka

For every money hard working Nigerians send in USD, Euro, Pounds Sterling, and so on to Nigeria, and received by Nigerians in Nigeria in USD, Euro, Pounds Sterling, the Naira suffer in value and quality. Naira’s usability depreciate with every currency you release in Nigeria other Naira. Consider an instance of transfer border trade. When as Alfred Marshall argued that one country invest in another country, the point will reach such that the investing country will earn gradually on the host because of the unit of exchange and trade exchange.

Of course the whole philosophy of the ‘competitive advantage of nations’ of Michael Porter and Krugman is not that dissimilar from this case saving for the fact that what happens in terms of commodity and in terms of new found gold mines, is closer at home to currency and transportation of hard and super currency to Nigeria via Naira only. Nigerians abroad is like that form of investment strategy and when they rover their currency from US into Nigeria, and from Europe to Nigeria, they trade in on the Naira.

Nigerian Naira currency rate to USD is 1 to 150. For every 1 USD we receive we exchange for 150 of our own. Think about it for a moment. A man in US has a house and you have 150 houses, and according to exchange rate, you will lose your 150 houses to gain 1 house. Perhaps we can cite a different example by suggesting that every American child is worth 150 fifty Nigerian kids. The above example cannot work for Nigerian market, the conditions are that different and there is rate at which each is determined. But the balkanization of Naira on a continuous time since 80’s means that other issues are at work. Either external debt to the rest of the world which took place under the last administrators or the current issue of excess currency importation in Nigeria




The problem becomes a question of original investment in the Hard currency. When there is investment on any local economy, there is a chance of growth of that economy. But the problem comes when investors want to repatriate the Hard currency from their local economy. But nothing crashes any market especially a third world economy than capitulation, recapitulation, and above all, repatriation of hard currency from the local economy.

If the information reaching us that credit is responding is true, then there is a possibility that Nigerian credit market has taken a given look. But who is quoting who? Accessibility of credit is only profits for banking as far as small businesses are concerned. The difference between a third world economy and first world is that one places too much emphasis one product and the other many multiple products with a view for small business.

But nothing is far from the compelling view that Nigeria is only waking up to the demands of the society which may only be viewed from bottom to the top by a statutory weight of the local unit of exchange - the Naira.

There is a possibility that perhaps a case for Nigerian Federal reserve system can be made via the 6 parts of the country to absolve future CBN chairpersons of the responsibility of running the economy and waging on price simultaneously.