Nigeria’s Forex Liquidity Dilemma: Half-Baked Economy Theories Won’t Cut it

By David Adenekan

TO START WITH, no country in the world has floated its local currency the way President Bola Ahmed Tinubu did. As clueless as we might thought former President Mohammadu Buhari was, he refused to float the naira, because of the negative effect on prices of goods and services, hyper-inflation.

However, been as it is, we must move forward to proffer a best and lasting solution to bail us out of the current economic hardship. The deed has already been done.

It is not about playing dirty politics with the vast majority of Nigerians that are going through economic hardship, it is about advocacy for good governance to promote the good welfare of the citizenry. Please, stop seeing some of us that have personal convictions for good leadership as arch enemies of whoever is in position of authority and power, particularly those of us that are in the business of professional journalism. It is part of our duties as the fourth estate of government to act as watchdogs; be the last hope of the common man and always be ready to engage the people in authority in constructive criticism or debate, in order to perpetually keep them on their toes.

Yes, we must not allow absolute power in our democracy, it may drift the country to a state of anarchy. “Power corrupts, absolute power corrupts absolutely.” – Baron de Montesquieu (A French Writer).

Every country will defend its currency. This is regardless of the theory that, it is the forces of demand and supply that determine the prices of goods and services. The word laissez-faire economy is only in theory. What we actually have in practice is a mixed economy to protect human value.

Yes, this floating of Naira is counter productive; the inflationary gap defies all logics.

Suffice it to say, the naira is appreciating against the dollar but, we are not seeing a corresponding positive effect on the prices of goods and services.

What a people!

Prejudice apart and without mincing words, we should give some credit to Olayemi Cardozo’s led Central Bank of Nigeria for doing the needful to stop the bleeding in our forex market but, monetary or fiscal policy is never a permanent fix to boost our earnings in the forex market. The best pragmatic way to tackle inflation is increase in the level of productivity.

  1. Fix the refineries to boost our earnings from crude oil.
  2. Protect our farmlands against the marauders, so that, our people can go back to farming in order to increase our agricultural production.
  3. Save our mineral resources from illegal mining to boost our revenue.
  4. Encourage more diaspora remittances.

These are permanent fixes for now.

Monetary policy is never a permanent fix.

There is no other magic except increase in the level of productivity, supported by great economic policies. This is what will do the magic to put the country back to a prosperous economy.

Again, monetary policy without a corresponding increase in productivity is like chasing a shadow. We are only postponing the evil day. It is also called artificial fixing.

We must increase our level of productivity, so that, our great earnings can pay off the huge loans we have incurred to clear the back log in the forex market and still have enough to continue to grow our Gross Domestic Products, GDP.

Yes, Olayemi Cardozo, the Governor of Central Bank is doing his best as a financial expert but, his best may turn out to putting water in a basket, if the BAT’S led government is not taking the bull by the horns to increase the level of productivity.

Lastly, BAT’S decision, eight months ago to fix the Porthacourt refinery and kick it running by the end of December 2023 is now another empty rhetoric, more than three months after the deadline to kick it running.

Can we trust a government that seem like running the affairs of men on wiles political propaganda?

Hmmm, tell President Bola Ahmed Tinubu to get to work by increasing our level of productivity as that will permanently fix the lack of liquidity in our forex market and put the country back on the right track.


Time will tell.

David Adenekan Is the Editor of Shekinah International Magazine, and a media expert. He Writes from Chicago, Illinois.

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