President Muhammadu Buhari has been advised to prevail on the Central Bank of Nigeria (CBN) against devaluing the nation’s currency, the naira, to avoid complicating the current economic challenges facing Nigeria.
The advice is coming on the heels of plans by the CBN to devalue the nation’s currency by the first quarter of 2020. The apex bank has begun sensitization of stakeholders, including members of the Manufacturers Association of Nigeria and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA ahead of the exercise.
Renowned journalist and author, Michael Owhoko who gave this advice in an open letter to President Muhammadu Buhari said devaluation will not boost export, reduce trade imbalance and possibly scale down the country’s debts as those pushing for devaluation will want the country to believe.
He said country’s imports are far more in excess of export, and so, Nigeria has no enough exports that can effectively compete in the global market, thus devaluation will lead to pains and misery for Nigerians.
“Devaluation will surely cause the misery index to rise. Figures from the National Bureau of Statistics (NBS) do not inspire hope, as unemployment and inflation have continued to rise. Unfortunately, unemployment and inflation are two toxic factors that are responsible for anger in the land, and in some cases, uncontrolled anger among citizens of the country have led to suicide, relocation to foreign lands (even to take up menial jobs), banditry, prostitution, and other social vices that have contributed to general insecurity”, he said.
Owhoko added, “not many companies and organisations in Nigeria today are able to fulfill their wages and salaries obligations to their employees as at and when due. This is the trend in almost all the sectors of the economy, and it is a reflection of the state of the economy. Why making the problem complex through devaluation?
He advised the President to promote policies that will boost the economy and strive to ensure his administration provides the greatest happiness of the greatness number of citizens, rather than hopelessness and frustration.
Below is the full text:
An Open Letter to President Buhari over planned devaluation of the Naira
I have opted to write you again, as a citizen of Nigeria, knowing that this is your last lap of your two- terms tenure. This time, it is not about directing the oil companies to relocate their administrative headquarters to the Niger Delta, but about the planned devaluation of the naira by the Central Bank of Nigeria (CBN).
I hear plans to this effect have been perfected and all stakeholders, including members of the Manufacturers’ Association of Nigeria (MAN) and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) are being sensitized ahead of the devaluation date which may have been scheduled for first quarter (Q!, 2020) of next year.
Mr. President, it is my prayers for your administration to succeed, and by implication, Nigeria. One way your success can be measured is the extent to which your administration has brought happiness to Nigerians through socio-economic policies. When people are sad and depressed, resulting from prostrate economy and insecurity, the government is deemed to have failed.
This was why the British philosopher, Jeremy Bentham, said a good government is that which is able to provide the greatest happiness of the greatest number of people, using it as a basis for morals and legislation. In modern day government, it is a measurement barometer for citizens. A country where majority of citizens wake up hopelessly helpless, sad and frustrated, means such a government has failed. It is the responsibility of government to enunciate policies that will drive growth and development for improved quality of life.
Sir, I know you are doing your best for the country, but if this cannot translate to happiness for majority of people, your government will not be appreciated and this will not be good for posterity. Therefore, government efforts should centre around policies that will inspire hope and create value for the people.
Mr. President, I advise therefore you prevail on the CBN to stop any planned devaluation of the naira. This is imperative because of the attendant negative socio-economic consequences and hardship that will result from such exercise.
Please ignore those who say the CBN is autonomous, and should therefore be allowed to manage the nation’s currency as appropriate. Remember, as the head of government to which the CBN is part, you will be held accountable for errors of judgment by the apex bank.
Your Excellency, do not listen to those pushing for devaluation. When the negative impact begins to have a toll on Nigerians, their contributory role will not be remembered. It is you and you alone, as the President of the country that will be blamed. You are the head of the government, and the buck stops at your desk. How do you want to be remembered by the time you leave office?
The proponents of devaluation have argued that it will boost export, reduce trade imbalance and possibly scale down the country’s debts. For countries that export more goods than they import, devaluation is good. But in Nigeria, our imports are far more in excess of export, and so, we have no enough exports that can effectively compete in the global market.
Raw materials, equipment, including machine tools and even the technical knowhow in Nigeria are imported by manufacturers. Under this circumstance, the incidence of devaluation of currency will be passed on to the finished product, leading to astronomical rise in price of goods and services and attendant inflation, for which the average Nigerian may bear the burden.
Mr. President, have you imagined the foreign input in terms of imports (whether skilled personnel, raw materials and equipment) that goes into construction of good roads, turn around maintenance (TAM) of refineries, brewing, farming, oil and gas industry (Nigerian Content Development Management Board will attest to this), and so on? Even those who have opted to send their children overseas for quality education will not be spared the agony of devaluation, as they are bound to suffer financial volatility.
Devaluation of the Naira in the past never led to reduction in trade deficit, as imports have continued to rise in response to the country’s weak disposition towards research, development, science and technology which have made it difficult to increase export through manufacture of exportable products.
Even most of our farm produce earmarked for export, have failed to meet standards of recipient countries. Apart from crude oil, Nigeria can still not boast of exportable products that can earn realistic foreign exchange for the country. Our capacity as a country to compete in global trade is constrained by the mono commodity nature of our economy where Nigeria relies mainly on oil export for its foreign exchange earnings.
Besides, Mr. President, I do not see how devaluation can reduce our debt burden. Most of the country’s debts are currently denominated in foreign currencies, so, rather than ease repayment; devaluation may compound the problem and make repayment unduly expensive, more so, when reserves are heading south.
Sir, do not succumb to any pressure, even if it is from the International Monetary Fund (IMF) or World Bank, as devaluation will surely cause the misery index to rise. Figures from the National Bureau of Statistics (NBS) do not inspire hope, as unemployment and inflation have continued to rise.
Unfortunately, unemployment and inflation are two toxic factors that are responsible for anger in the land, and in some cases, uncontrolled anger among citizens of the country have led to suicide, relocation to foreign lands (even to take up menial jobs), banditry, prostitution, and other social vices that have contributed to general insecurity.
On the business front, not many companies and organisations in Nigeria today are able to fulfill their wages and salaries obligations to their employees as at and when due. This is the trend in almost all the sectors of the economy, and it is a reflection of the state of the economy. Why making the problem complex through devaluation?
Mr. President, think of the daily sufferings Nigerians will be subjected if the CBN goes ahead to devalue the nation’s currency. I urge Your Excellency, therefore, to direct the CBN to put a stop to the planned devaluation of the nation’s currency, the naira.
May God bless Nigeria and your administration.
September 3, 2019
Michael Owhoko is a journalist, author and public relations consultant who has mostly worked in the banking, oil and gas, and media industries. He is the author of The Language of Oil and Gas; Career Frustration in the Workplace; Nigeria on the Precipice: Issues, Options, and Solutions; The Future of Nigeria; and Feminism: The Agony of Men. He is also the publisher of Media Issues, an online newspaper that can be found at www.mediaissuesng.com.