October 22, 2018

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On Naira Devaluation: Did President Buhari Get It Wrong 31 Years Ago?- Magnus Onyibe

On Naira Devaluation: Did President Buhari Get It Wrong 31 Years Ago?- Magnus Onyibe

Last week, my  gate keeper suddenly packed his luggage with the intention of quitting his job.

The reason he decided to withdraw his services and return to his country is the weakening exchange rate between the CFA franc-currency of the Francophone countries and the Naira.

If you have not guessed already, my security man, Honoree is from the Republic of Benin and after receiving his salary every month, he would change a portion of it into CFA franc and remit same to his folks back home.

Owing to the fact that the Naira was stronger than the CFA franc,he  migrated to Nigeria to work and earn income to be remitted home, but with  the current devaluation of the Naira- less CFA franc is now being exchanged for the Naira so working in Nigeria which was attractive in the past, has now become unviable for Honoree, necessitating his decision to return  home.

My gate keeper’s sudden decision has put me on notice with my chef, Micheal who is from Togo.

Only a couple of weeks back, Micheal requested for salary advance which l obliged him.

On hindsight, he might have done so because the portion of his salary that he usually retains in Nigeria after remitting to Togo was probably inadequate to cover his local expenses due to the inflation arising from Naira devaluation.

My gateman and chef are just examples of millions of Africans who owing to the fact that the Naira was overvalued, have been coming in droves to earn their living in Nigeria.

Before the infamous Ghana Must Go –expulsion episode of over 700, 000 aliens from Nigerians in 1985- up till now, the high value of the Naira, has been encouraging the steady influx of artisans from neighboring countries like Republic of Togo, Niger Republic, Chad, Ghana, eking out their living in Nigeria.

These foreigners fill up job vacancies as masons, tailors, mechanics, electricians, plumbers and marble tillers etc in Nigeria simply because of the oil boom-that is now fast turning into a burst.

But with the Naira now significantly devalued, as international oil prices plummet in the past couple of months , as they say in street lingo, levels have changed, and the foreign nationals who had been working in Nigeria and have been denying Nigerian  artisans of jobs, are now vacating the jobs and creating vacancies.

Unbeknown to me, and l believe most Nigerians, my two domestic staff who are foreigners from neighboring African countries constitute a drain on Nigeria’s forex because when we pay them salaries and as foreign nationals, they convert a portion of their salaries into remittances back home and that represents an import cost which has a negative bearing on our forex resources.

Now, this is contrary to the notion created by some anti-devaluation crusaders who have argued on the side of President Buhari that Nigeria does not export finished products like iPhones or high technology items like computer chips from Silicon Valley in the USA, neither is Nigeria like South Korea that has Samsung TVs or Kia cars to export which could have justified devaluing the Naira.

Conversely, devaluation advocates had fired back by validating their position with the fact that a strong Naira encourages higher propensity to import ‘cheap’ stuff like high end champagne or low end tooth pick into Nigeria including employment of foreigners to engage in jobs that Nigerians could have easily executed as illustrated by my personal experience. They conclude that it is such indulgence that has been leading to the unwarranted depletion of our foreign exchange reserve.

This is a classic case of the argument on whether the glass is half full or half empty.

One could have been compelled to net off the gains and losses of Naira devaluation, if it were to be that simple and possible at this point in time, but since it would take a while for gains and losses to manifest and be recorded , it may be too early to make that judgement call at this juncture.

For now, all Nigerians can do, is hope on the flashes of promises so far elicited by the flexible exchange rate policy alongside fiscal policies like the proposed massive funding of infrastructure and others like tax and financial services reforms.

As a member of the Economic Community of West African States, ECOWAS where an economic treaty for free movement of people and goods has been signed, foreign nationals have easy migration access to Nigeria and as the country with the largest economy in Africa, boasting of an estimated GDP in excess of $530 billion, nationals of less endowed countries have been making a beeline into Nigeria.

Considering that the recent referendum in the United Kingdom, U.K , tagged BREXIT that led to her exit from European Union, EU was influenced by jobs losses by British citizens to foreign nationals, ( white hotel guests preferred white chamber maids from Eastern Europe to non-white Britons) Nigerian authorities should have been studying the pattern of immigration into our country with a view to determining the implications on the economy in terms of employment and security/safety of Nigerians.

This is more so because it is free movement of people within the ECOWAS borders similar to what obtains in the EU which the UK just exited via a referendum, that  has been aiding terrorists in their recent bombing expeditions in France and Belgium. In a similar fashion, it is believed that the Boko Haram religious fundamentalists might have been migrating into Nigeria from neighbouring countries like Chad and Niger Republic.

The assertion above is buttressed by the fact that both countries that are our neighbours have been experiencing schisms related to religious fundamentalism for a very long period of time and of which Nigeria has been intervening over the years.

Naturally, humans migrate to safer places, where as the saying goes, the grass is greener.

Famine induced by drought in those countries are also believed to be very strong motivators for migration of our neighbours to Nigeria.

This is probably the reason Nigerian authorities had cause, about 31 years ago to shut down Nigerian borders to stem violent crimes and smuggling during the estimated 20 months reign of General Muhamadu Buhari  as head of state and commander-in-chief of Nigerian armed forces.

Writing in New York Times, NYT of May 12, 1985, Sheila Rule reported in a news item titled Ghanaians expelled by Nigeria, return to start over that “On May 3, the Nigerian government,  told 700,000 illegal aliens that they had a week to leave and that the borders previously closed to prevent smuggling, would be open for their departure. “In addition to the 300,000 migrant workers from Ghana, there were about 100,000 from Niger; most of the rest were from Chad and Cameroun”,she reported.

Continuing, the NYT reporter noted that “lt was Nigeria’s second mass expulsion of aliens, who had been attracted to African oil giant in hopes of gaining a foothold or fleeing drought.

Cash

Sheila Rule finally observed that “falling oil prices have slowed Nigeria’s economy, and foreigners viewed as depriving citizens of jobs are being expelled”.

When l came upon the foregoing excerpts in the course of my research for this article felt a sense of dejavu as l wondered how Nigeria has turned back 360 degrees to where she was 31 one years ago with the economy in doldrums, politics in shambles and the same personality-General Muhamadu Buhari, GMB back at the helm of affairs.

At first, the reality broke my heart, but thankfully instead of my heart sinking, it became buoyed by the fact that Nigeria is now practicing multi-party democracy and GMB has now transformed from a dictator to a democrat having been elected president of Nigeria .

As a result, President Muhamadu Buhari, PMB is now addressing the perennial socio-economic and political challenges with less draconian policies of deporting aliens, but with more pragmatic economic and strategic initiatives like devaluing the Naira which is a monetary approach  and other fiscal policy  measures like backward integration and investment in infrastructure etc.

However, to finally asphyxiate Boko haram, perhaps, president Buhari should revisit the strategy of shutting down our borders-as he is now doing with War Against Indiscipline(WAI),  which he is rebranding to promote discipline in our society- a hallmark of his days as military head of state.

This would enable each of the member countries of the task force against terrorism trap and confine the insurgents and other criminal elements within their respective borders and enable them deal squarely with them before reopening the borders again with more effective policing.

Reorganizing Nigeria’s border posts would benefit Nigeria in two folds: (1) protect our borders from religious insurgents like Boko haram and cross border criminal elements (2) enable our customs service working with consultants trap revenue leaking out through smuggling.

To be clear, l am not in any way advocating walling-off our neighbours like Donald Trump, the Republican Party presidential hopeful in the USA intends to do with Mexico.

But l’m suggesting that we become better organised at the border posts in order to keep track of the developments in that sphere and mitigate any further negative implications while earning the tax revenue through legitimate trade currently lost to criminal elements.

Nigerian can truly be what the United States of America; USA is to North America if we position ourselves very well for trade and politics that would facilitate mutually beneficial African hegemony.

Also, it needs pointing out that I’m not encouraging wholesome return of the War Against Indiscipline(WAR) with the horse whipping of citizens and other barbaric acts associated with the initiative, but just a variant of it with particular attention to forming anti-corruption marshals in ministries, departments and agencies, MDGs and cleaning up our environment.

Has anybody wondered why there is so much filthiness in our living environs, even in highbrow and very expensive real estate locations like Ikoyi in Lagos and Maitama in Abuja?

In Singapore, people go to jail for littering the street with items as innocuous as bubble gum, hence it is one of the cleanest countries in the world.

By and large, one good thing about the floating Naira policy is that as foreign nationals are now voluntarily exiting Nigeria owing to a weakened Naira, the vacancies that they are leaving behind would be filled by unemployed Nigerians hitherto denied the job opportunities by their probably more savvy foreign counterparts.

Another good thing is that a weakened Naira also compels Nigerians to descend from their high horses by toning down their epicurean tastes and settling for Nigerian made products.

Already, in place of imported tomatoes purée from China etc , fresh tomatoes widely grown in the Bauchi/Gombe State, a zone known to be our food basket are being processed into purée locally. Rice is also being aggressively farmed and milled in Kebbi State with the potentials of boosting local supply and reducing import.

Similarly, Irish potatoes endemic to the Jos, Plateau State area is now about to be processed locally into packaged chips for French fries as opposed to being imported, if the devaluation of the Naira is sustained. By the same token, an entrepreneur may come up with plans on how to harness the abundant cassava crops sprouting widely all over Delta State, so that it would be processed into starch to serve the pharmaceutical industry and others.

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