Nigerians Express Their Feelings On The Naira Devaluation

Naira may fall to the dollar at N1,000?

Over the last few months, there have been numerous articles,

OpEd pieces and social media rants about the devaluation of the

Nigerian Naira, and the ability that Godwin Emefiele (CBN

Governor) and President Muhammadu Buhari have demonstrated

in stemming the Naira’s downward spiral.

The most recent article (some might say rant) I’ve come across

on this topic is The Naked Convos piece in The Herald titled

“See Why the Naira May Fall to the Dollar at N1,000/$”. Naked

Convos argues that the Naira has declined, and will continue to

decline, because Nigerians favor imported items over

domestically produced Nigerian clothing, wine, shoes etc.

Too much wealth being transferred from Nigerians to other

countries

Leaving aside the sensational title and the fact that the article

actually does not tell us WHY the Naira would deteriorate to N

1,000/$, I believe the overarching premise that preference for

imported products is the root cause of the Naira’s deterioration

is a false narrative. While, it is true that there is way too much

wealth being transferred from Nigerians to the home nations of

LVMH, Spar and the iPhone, methinks Nigerians are not doing

much different from residents of other emerging economies in

today’s 21st century world. Most upwardly mobile citizens of the

world want to travel, want new gadgets, foods and the best

experiences that money can buy… i.e. they generally want the

most bang for their buck (whether that buck be Naira, Dollar,

Renminbi or Ruppee).

Where Nigeria may have gone off plan from other emerging

market nations is believing and acting like we are a rich nation.

Nigeria is not rich. Regardless of the substantial oil reserves

and FY2015E GDP of c. USD 500bn, the largest in Africa, we are

not rich. Tweaking that statistic to look at nominal GDP on a per

capita basis (i.e. GDP divided by population) results in c. USD

3,000 – in case you were wondering, this does not even result in

a top ten position in Africa. So while the country seemingly has

lots of money, there is way more mouths to feed than dollars to

feed them.

The polity’s expectations of Buhari’s presidency

Yet, Nigeria’s political and economic leaders continue to act like

it is a wealthy nation. The Naira has been devalued several

times over the last decade, yet we have not used the

opportunity of a weak currency to develop our export capacity

beyond crude oil nor promote exports. Crude prices have been

at record peak levels over the last decade, yet we have not used

these funds to develop basic infrastructure or improve the ease

of doing business in Nigeria. We have on one hand deployed

wasteful and lazy policies and on the other hand suffered at the

hands of corrupt officials, who have stolen the country’s future

and thereafter been celebrated by local churches, mosques,

universities and Nigerian society in general for their newfound

wealth.