Nigeria naira versus dollar history
In the 60’s and 70’s, the naira was more valued than the dollar. As at 1985, the dollar and the naira were just about even with the naira slighty higher. The decline of the naira have been staggering, today the official rate is about $1/305 and black market rate is $1/475.
WHAT HAPPENED TO THE NAIRA
-Too much reliance on Oil
– Weak export/Manufacturing sector
-Tough economies measures impose by IMF/World bank
From Obasanjo regime till present, the leader and govt officials have been looting the country massively with no accountability. Imagine how much foreign reserve have been looted, billions in dollars
Too much reliance on Oil
Successive govt have ignores Nigeria Textile mills, Rubber, Cotton, Coal, Steel plant, opening of other sea ports in addition to Agriculture and many other domestic sources. Instead they have been relying heavily on the money from Oil boom. Now oil prices have crashed spectacularly, the govt is running out of funds.
The mentality of the govt and the people need to change. Govt need to invest heavily in other sectors and encourage small and medium enterprises. Provide tax relief to made in Nigeria goods.
Weak export/Manufacturing sector
This sector is dying fast in Nigeria and the there is no enterprenuer spirit any more in Nigeria. Most youngster always prefer the fast lane. No drive to make or create anything instead we are a heavy consuming nation. Successive govt have failed so far, neglecting this sector. The revenue from this sector is quite limited for a population of over 160 million.
Tough economies measures impose by IMF/World bank
The policies attach to IMF and other loans have been detrimental to the economy and the value of the naira. Noting not long ago Osibanjo -vice president of Nigeria hinted nigeria loan stands out $60 billion. Those policies are not disappearing any time soon, one of such is SAP – Structural Adjustment programme.
BENEFITS OF A WEEK CURRENCY
-Encourage and boost domestic manufacturing sector
– Increases export
Encourage and boost domestic manufacturing sector
A weak currency encourages, industrialization and manufacturing of goods in the home country because imports are more expensive but when you export you get more money for your exports.
Usually, when you devalued a country’s money against $$, there is always some upside. The manufacturing sector has to boom. This will help raise revenue from other sector apart from the oil.
Nigeria or individuals can net huge some of money exporting to countries with strong currency. Nigeria can raise huge forest reserve via export.
Made in Nigeria product will be cheaper compare to imported products
DOWNSIDE OF HAVING A STRONG CURRENCY
–Discourage exporting and encourages importing
One downside of a strong currency is that it hurt the export businesses, especially when exporting to a country with a weak currency. Exporters can end losing large sum of money depending on the volume of their export.
-Not by in CBN
Trying to stabilize the currency by using Nigeria forest reserve to artificially fix the rate is a loss cause. Nigeria will end up losing all her foreign reserve.
– Revive Made in Nigeria
Revive all Nigeria ailing manufacturing sector, invest in equipment and people. Lets Nigeria start exporting
Although manufacturing is growing today,it still grows at 3% a yr, whearas it should be growing double digits to make a huge difference.
-Address Bad Trade Policy
The govt should also stop implementing bad IMF Policy. Allowing the western Govt to easily dump all their manufacturing goods in Africa and Nigeria is bad strategy for currency.
At the same to not allowing Nigeria or Africa access to western market. The imbalance must be address.