The ongoing debate surrounding the politics and policy of the devaluation of the Naira is further evidence of the anemic health of Nigeria’s economy. Consistent with the travails of an unhealthy entity, so many prescriptions are offered with different motives including veiled neocolonialism of the Western financial system. In its April 13 editorial, the Financial Times of London – the influential mouthpiece of London - Washington axis of financial manipulation declared that “Nigeria’s new start is in danger of derailing” because President Muhammadu Buhari rejected the matching orders of Christine Legarde, head of International Monetary Fund and other leading world financial oligarchs to devalue the naira.
President Muhammadu Buhari’s refusal to bow to the demands of western financial capitalists to devalue Nigeria’s currency is the right thing to do. Nigerians of all backgrounds should support their president in his resolve to ward off these international predators who contribute to the destruction of the country’s economy. If history is any guide, currency devaluation as a monetary policy designed deliberately to adjust downwards the value of the naira against international currencies has not always helped Nigeria.
In fact, Nigeria’s current economic predicament can be traced to Ibrahim Babangida’s regime’s naira devaluation that preceded the infamous structural adjustment program and acceptance of IMF -engineered reforms. In 1986, Nigerians for the first time saw the value of naira collapse from roughly parity with the dollar to today’s rate of nearly 400. Clearly, the IMF program failed the country at that time and there are no signs that history will not repeat itself should the country embrace IMF’s suggestion to devalue the naira which in fact is already devalued. Already the value of the naira has dropped precipitously over the past several months with prices of basic commodities going through the roof and manufacturers struggling to pay for imports. How further can a currency be devalued? The same IMF that prescribes devaluation of the currency is predicting that growth of Nigeria’s economy will slow down by 2.3% this year and yet the Washington-based lending institution recommends what it phrased as a “speedy unwinding” of the currency controls to help revive the economy. What these international financial dictators and manipulators want is for Nigeria’s naira official exchange rate to fall to the same Black Market rates. In other words, the naira should be exchanged as much as one dollar to four hundred naira instead of the official rate of one dollar to about two hundred naira. The specter of a devalued naira in the face of years of mismanagement of the country’s economy would only further bankrupt Nigeria and increase the suffering of its already poor citizens.
The choice to succumb to international financial vultures or resist them and embark on pro-growth domestic policies is a tough one. Understandably, Nigerians, like most citizens in a democracy are impatient with the sluggishness inherent in reaping democratic dividends. So, the average Nigerian electorate who voted for Buhari in the name of change is probably frustrated today given the pace of economic slump and cascading effects of a weak currency. There are no easy options to get Nigeria out of the hole dug by the Nigerian elite and their western collaborators. Every way you look at it, the measures required to set Nigeria’s economy on a sustainable growth path are painful but doable.
The good news is that Nigerians are very resilient people. As history teaches, great countries rally together and especially with their leader to overcome challenges and unhealthy foreign interference epitomized in the disastrous prescriptions of those who pretend to love Nigeria more than its citizens.
It is in this connection that Nigeria’s Finance Minister, Kemi Adeosun, a product of London - the headquarters of Western financial system and President Buhari feted in a blaze of glory in London and Washington shortly after his historic election last year are both determined to be on the side of their motherland instead of being wiling tools of neocolonialism. Speaking at the IMF-World Bank Spring meetings in Washington DC, Adeosun made it clear that Nigeria would not use the IMF loan facility to go further into debt and backed Buhari’s policy of supporting the naira and said she will not implement policies that harm the Nigerian economy “just to be the darling of the IMF and other multi-laterals.”
This is not the first time Buhari has challenged the West over Nigeria’s national interest. During his brief period as Nigeria’s military leader 1984-85, Buhari together with his deputy Tunde Idiagbon seized British Airways plane in retaliation to that country’s grounding of Nigeria Airways plane sent to bring former Transport Minister under the Shagari administration Umaru Dikko wanted in the coun¬try for alleged corrupt practices. The subsequent diplomatic row proved that Britain could no longer take its former colonial territory and citizens for granted. This is history unfolding. Today’s economic diplomacy requires some form of aggression and national self-interest and not beholden to imperial powers of the west and United States.
As romantic as resisting foreign dictates to the governance of the country might appear, it will be more heroic to match such nationalism with true embrace of pragmatic domestic pro-growth policies to jump start the economy. Further devaluation of the naira will not rebuild the economy as some western economists suggest because the citizens have to live first of all before helping to rebuild the economy. Nigeria’s population is a strategic asset in Africa and the world, and decimating the population consciously by sending citizens to scavenge in waste bins will be an egregious mistake. The pathway to rebuilding the Nigerian economy is in the diversification of the economy so as not to be dependent on oil as the only revenue source. Everyone knows this truth and every administration and pundits sing the same song and yet little is done to face this reality. This is the challenge before Buhari. The administration should remove all the cogwheels that stifle innovation and creativity in the polity. It should embrace disruption in the system and avoid mistakes of the past.
One disruptive step which is commendable is the administration’s switch to China and gradual de-Americanization of Nigeria’s economic worldview. For too long, Nigeria looked up to the West for salvation but as events have turned out in the face of gloomy global economy caused by unbridled avarice, the Western financial system is corrupted and can hardly save itself and not to talk of helping others. It is time to look eastwards as a growing number of African countries seem to be realizing today. So, Buhari’s Eastern pivot is huge, meaningful, and timely. Nigeria is the most populous and largest economy in Africa while China is the world’s most populous country and second largest economy after the US. Such similarities make Nigeria’s embrace of China critical. It is true that befriending China and US for example has its gains and pains but the important thing is that unlike US and the West, China does not seek to dominate a country psychologically, politically, and financially. It seeks to help and ready to do business as partners and not masters.
Buhari administration’s decision to integrate Nigeria’s economy with that of China is therefore a good move. During his recent visit to China, Buhari is believed to have secured a currency swap agreement between Nigeria’s Central Bank and the Industrial and Commercial Bank of China, the largest lending intuition in the world. Although the details of the exchange remain sketchy, the goal is to facilitate trade between the two giants and integrate the two economies so that Nigeria could use the Chinese yuan as a reserve currency. This means Nigerians have alternative international currency and will no longer rely on the dollar alone. The policy change will enable traders to bypass dollar pricing and dollar conversion for exports and imports.
The interwoven nature of economics and politics of currency manipulation is understood but Nigeria’s leadership owe its citizens the obligation to protect them economically from external wolves bent on keeping the country stagnant and stunted. Buhari needs to rally Nigerians and explain more coherently about the administration’s policy priorities and reasoning. Together the government and citizens can effect change and real change.