By
Sampson Iroabuchi Onwuka
I Charles Soludo and Re-Denominating Nigerian Naira
We should begin by citing that the man who began this effort to stabilize the Nigerian Naira is the former Central Bank Chairman Charles Soludo. Charles Soludo was perhaps the first in recent years to speak of re-denominating the Naira and the persecution he got for it didn't seem to raise the curiosity of many Nigerians. The question is no longer if he was right or whether his suggestions of re-valuating the last 00 integer on the Nigerian Naira is a good canvass or not? The question is now how exactly did he propose to integrate his suggestions or other right course of action as from Sanusi into the growing economic gap of Nigerians and the World.? The other question which we should not try to answer is if Soludo's fall from grace was from this issue or from other public matters of incompetence or personal problems which we do not know?
It must be said that Nigeria from its earlier years has always stressed the importance of its currency, and from those earlier years until fairly recently, it has tried its hands with various means of managing its currency including the occasional attempt at reprinting its notes to stem the tide of laundry. Some of these measures seem to have worked their miracles but not all the time, and presently, we are dealing some problems which deserve the attention of all our well wishers. But in the currency cut throat business and its 'Currency War' of nations, no country can better advice Nigerians than Nigerians
Is the country called Nigeria attracting foreign investment - if not why? The answer is that Nigeria like many West African Countries is doing its bit to attract foreign businesses but the attraction is of no consequence given the chartered nature of these businesses and investment categories. For instance, majority of Nigerians are now aware of Euro currencies floating into the Nigerians, some of which are used in Euro-terms to buy preferred stock of Nigerian Companies, and in many cases, some of these companies establish themselves without due consultative and without original Nigerian portfolio.
Why would Nigeria as big as it is, allow paper currency from Europe and from United States to come and occupy the heart of their hard fought businesses? The question is also the answer since these investment are no necessarily long term and the rest are amount quoted from air and others derived from exchange rate that Nigerian Central Bank has tried to maintain.
Some of the sectors in Nigeria that are struggling are so over-poached with paper that these papers and those who enforce the interest-rate ridden loans to Nigerians, do not necessarily expect Nigerians to pay. The Collateral has always been the Natural Resources, which is gradually lost to foreign investors with stupid paper currency. All baits on Nigerian Economy is through resources that the papers can't produce, either through Crude Oil, deferred collateral from Bad Credit such as Federal Houses or National property in the name of privatization.
In reality, what Europe for instance and gradually China, has brought to Africa and particularly Nigeria, is mainly paper currency and this likely to continue till some other problems more demanding than Boko-Haram shows up from no where. And to the merit of these planners in Nigeria, there is no good News about Nigeria anywhere, is all bad, and until recently all about Boko-Haram. Where as Nigeria as a country is doing as good if not better than some of these European Countries and can further incur a retreat of bad investment on the Short with a leveling up of Naira.
There is also the issue of liberal notes of foreign denomination in Nigeria, the prevalence of foreign notes or currencies in Nigerian Black Market and on the street may have paved the way for several attempts at money laundry, where as criminal organization would have found it hard to earn through currency exchange if they are not readily available in Nigeria. The Nigerian Black Market and the sell of currency is increasingly lucrative for no real reasons, and in terms of China import para-ire, currency exchange via China is seriously indulgent.
There is no one who inveighed against this sort of business circle, rather, we are witnessing a broader and deeper penetration of China into Africa and into Nigeria. It is Nigeria that majority of China investment has counted but since their contamination with SHELL, they are doing what other before them did.
It's probably part of the demands of world market or perhaps the economic consequence of having a floating currency. But all these can be arrested and Nigerians given a level playing field if the right course of action is taken and in terms like this, if the currency is re-denominated.
What we have noticed so far, its that Balance of Trade, Deficit Spending, Inflation, and improper employment gauges are part of its sickness, then there is issue of 'implosion', characterized by undue plutocrats and monopoly by a new and rising few in Nigeria. To suggest that Nigeria as a country is actually doing better than its looks is hard case given the fact that many people living now around the world have not seen or heard of MADE IN NIGERIA product.
The question is, how do Nigerians fail to profit from the big booms in the world, for instance the Internet, where as the poor crowd in countries will be expected to have to manufacture these products themselves or import it a highest price to the country. In force, one of the problems why Nigeria, to some degree Ghana and West Africa is a dumping Ground for all illegal products - particularly drugs - is the issue of import Tariffs which many of these importers have no time of day to follow.
It needs be mentioned in current time, it was Ghana that took the advice seriously and went the distance of removing the re-denominating their Ghanaian Cider. Ghana today is a success story largely for the fact that the age of Military finally gave way to a way of life in Ghana, and with that new way of life is the discovery of crude oil in Ghana.
Whereas the same advice for currency re-denomination that Soludo petitioned for was resisted in Nigeria, and some of the basic reasons for the resistance is that many persons of interest stood to loose a lot of very personal business and there was also the problem of exchange rate. Perhaps the resistance was due to the fact that the country was not ready for it then, which does not in anyway mean that Nigeria is now ready for it. For the fact that country is not ready was any changes with its currency does not mean that it is not the right course of action. Whatever may be the case, we can argue that Nigerian Naira has not exactly attracted the attention of the world since the currency is relatively new and that Nigerians, may not be doing something that wrong or unheard since the end result of any currency is in its application.
It is this author argument that re-denominating Nigerian Naira is however appropriate now in the country now than anytime and that the nation need act decisively and without excessive consultation regarding the placement of its resources and foreign embargo, since any such future would force the notional speculations on Naira's future and adverse outcome in shorting on the Naira to be fully exercised. That will be very bad for Nigeria or for the exercise. I also recommend an Indian System of adjusting the more to be less and as far as foreign business community, I encourage a dalliance with crib notes.
The re-denominating the Naira (even if it means removing a couple of Zeros of the Naira as Soludo suggested) is appropriate since the Nigerian Economic Structure, efficient money system is not well developed for that, Nigeria re-denominating its currency will propel itself into the future with the new resolve of creating a new from the old. It is not advisable to engage this exercise when your economy is doing badly, it is better when you are fairing better than expected. This is the whole meaning of St. Peterburg's Paradox and ordinals of Daniel Bernoulli.
II THE PROBLEMS ECOWAS
May 28th, 1975 is a date that many old West African citizens living now remember as a date when the theory of economic "self sufficiency" of the Economic Community of West African States was initiated. The first phase of that initiative was designed to cover the ECOWAS experiment was slated to include the questions of trans-border trade and then the process of economic unity between the member states. Ultimately these economic co-operation - not unlike the European Model - was meant to land West African nations a home run on one single currency. Some of the assumptions from the ECOWAS resolutions was eventually challenged by Nigerians and Ghanians, with individuals of import such as Ralph Onwuka (no relation) throwing in their dissent, including latterly, Amadu Sesay, and Aluko Olajide who joined the fore mentioned in 86 'The Future of Africa and New International Economic Order';86. Some of the assumptions from Onwuka and Aluko are not new and there is however a privileged insight into a future of world market and the role of Ecowas - if it survives.
Needless to say that their book raised several questions about the illusions of West Economic Society and NIE 'New International Economic Order' as derived from Europe, but did not exactly convert the questions to answers. But from the defense pact and from policies prodded by individual Government, it seems common sense that the business structure on between these West African countries was likely to change or expected to change, so also the structure and business of its local Community. What have witnessed in the last decade or so is that the paper currency and the call for a new Nigeria and West Africa is actually hijacked by private interest from all and asunder.
The full implementation of ECOWAS took place in 1979, set against the cultural unity of Expo '77, West Africa, braced the region for a future which included single currency money, but did not incorporate the price of that economic banter, for instance, debt across the border, problems of credit and the issue of acceptance in the Global economy.
In Nigeria and in West Africa these days, we hear of the 'Millennium Development Goals', 'Privatization Schemes', 'Balance of Payment', 'Austerity Measures' (removal of oil subsidy), 'Foreign Direct Investment', IDAs, FDI; Foreign Direct Investment', 'Debt Crisis', but all of these are IMF measures which Nigeria that is U.S centered has no real party. But these Schemes exist and part of Nigerian politics and part of the Nigerian running of their plans for BETTER LIFE. This better life the case of Argentina and Mexico, like Brazil of the 70's and Korea of 70's, will not be achieved under these programs that are run by IMF.
If the total amount of energy required to create a business circle is equal to the force produced, then the growth of a third world Nigeria is priced into the overall growth of the IMF owner countries, and such endless conundrum is created to enabled degree that the present continuous time economic scheme and development project in Nigeria or other third world economies would never be enough to break free from the grips of the G-7. By accepting loans from IMF and WORLD BANK, the good fortunes of these Nigerians is stymied by process such that they can never succeed in current market and by future adverse effects since the Schemes creates an uncontested cyclonic pyramid and the end result is that Nigeria for instance, will always diminish in value.
Speaking of the politics, Nigerian President Goodluck Jonathan, who is battling the insurgence, the Boko Haram may have 'started' by the support of AUST; African University of Science and Technology and the promise to help Nigerian the Film Industry with a 3 Billion Naira, is supposed to be a welcome news. He has also began work on Electric Power Authority; NEPA and has signed new contracts concerning the Rail Roads, all to be settled in dollars. Under his leadership Nigeria received all sorts of incentives and in the riverside areas of South South, there is an international help, some from World Bank in tackling the problems associated with growth over these areas.
But these things are not done for free and for the most part it is a product of IMF loans which is bound to the Nigerian Crude Oil. This is not without the help and lengthy court process and going by the effects of business transaction, there is more of less that can be said about this. Pump money into Nigeria system is supposed to devalue Naira, meaning, that that with an end of year speculation of the Naira, Nigeria would probably end from where it began. The aggregate amount of financial loses that Nigeria could incur, does not correspond to the overall investment.
III IMF
Nigerians has been forced to blend in to the fact that there is a New World Money Order called Euro. There is nothing wrong in accepting the doctrines of European Union and it does not seem that the policies pursued by Europe is as bad and misleading policy. Yes, some versions of the policies are desperate conceived for Third World economies or whatever name that is applicable and in terms of the quality of European Economy and its no-grow economy, these IMF programs and loans are very not called for and are basically predisposed to debtors damages.
Nigerian Oil Subsidy, ECOWAS; Economic community of West African States, Government policies driving currencies, SAP; Structural adjustment programs, WAI; War against indiscipline, Better life Program, 1986 Austerity Measures, Privatization Scheme, Removal of Crude oil Subsidy have all come and gone but IMF has still tied the country's future to these schemes and to Debt that don't count as a credit and has forced Nigeria and some West African countries downward with its policies, policies that even a progressive third world economy like Nigeria, can no longer absorb.
It may be shown that these Scheme may not be appropriate since the structure has not lasted and that Nigeria has become a tool for G-7 countries of the World to survive. By so doing, it may just be said that Nigerians have done much of their job as the case with this specialist Banks such as IMF, which is one the Banks that tare owed by the International Banks through Banks operating across European Border. Yet in all Nigeria Naira is traded freely and floating freely and the economy itself is not doing that badly compared to many other Nations in the world. If Nigerian Naira is trading freely by the day and Nigerian Central Banks spend all the time in the world, conducting foreign currency from these same G-7 countries into Nigeria, the countries is basically hurting itself a sheer equivalence of Unequal Treaty. But International is product of a given market and the nations responsible for these trades are entirely responsible for it.
From that vintage of Economy corporation of West African Economies, we can now begin to understand the full measure of these theories since it also managed to lay the foundations for what became an IMF dominated economic theories in West Africa and particularly Nigeria. It was only a question of time that the theories of 'Structural Adjustment Program' which the IMF first used in Mexico, was applied to Indonesia and Nigeria, all of three whom fell victims to SAP as IMF defrayed its economic losses to these countries, to some oil-rich Asian Tigers to South Americans saving Brazil but not Argentina.
But all these may not have been the original intention of IMF, but as some people may have also indicated that it didn't matter at all given the recurrent problem of debts incurred by these countries, and going as well with IMF's willingness to defray these unpaid Debts to Crude oil or to Gold. Above all, IMF and eventually World Bank is intent of pursuing through some of the highlighted options for industrial development in these areas, and in return for the funding which even India got, these countries with crude resources where to meet the obligation in debt without knowing that the total accumulation of white elephant projects in the third world economies was one of the reasons why structural damage of their finances was possible in the first place.
It was supposedly initiated in keeping to the Brenton Wood Agreement and it was done through IMF in order of John Maynard Keynes.
Conclusion
Nigeria can better serve the World, the Africans, particularly West Africans, and above all itself if it chooses to abandon the current ratio of Nigeria Naira to the rest of World. The currency is struggling to survive where as it can't and it forces Nigeria to operate from negative territory. The note was changed after the Nigerian Civil War and from day one has struggled to escape the systems and structures inherited from its Colonials years. There is also the issue of world markets which forced Nigeria into all kinds of instability and one that failed to create jobs.
The exchange rate of this country can better enhance its business portfolio in the World Markets, if as suggested by others, that the last two '00' of its current note be denominated away from its current hiatus. Since the expensive the Naira is a currency that suffers in neglect due to competing attention and currencies in the world, it does help itself by sticking the policy of a floating currency. There are several countries that seek to regulate their currency and many of these countries are considered Developing Countries including a few of the BRIC nation. Yet Nigeria, as a dominant economic market in West Africa, has not benefited from a floating currency which is in keeping with the demands of World Markets. There is also the problems of history and the interesting position of its military past.
The current democratic government should not inherit such sickness or squander the gains of privatization through the 'Balkanization' of its currency in times of peace. The Seating government should not force Nigerians (general market) to suffer the excessive devaluation of its goods because of poor currency rotation. Nigerian currency rate makes it impossible for Made in Nigerian products to reach others outside Nigeria, and for that, export tanks in Nigeria saving for the diminishing 'crude' oil and for Human resources; Nigerians traveling abroad.
When any nation on earth is producing for public use other than its market, it is in fact not a market in the global macro and it is ultimately an economically dependent country. If, or when, the country decides to act, it must remember that the Great Migration of Nigerians into China and into the United States is a not a change in political landscape, it has economic consequences are well. The advantage that this Great Migration has earned, cannot be easily overcome saving for more parallel markets where Nigerians and other West Africans will question such migration when Nigeria with 00 less integer offers higher protection and growth.
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