I often wonder why, when China devalue her currency, the almighty USA cries “BLUE MURDER.” And even threaten “TRADE WARS.” Or perhaps why the Japanese currency is twice as worse compared to the US Dollar vs. the Nigerian Naira. Yet the Japanese are smiling and the almighty USA doesn’t seem to like that smile.
But when Nigerian currency devalues, only Nigerians cry.
The answer, Nigeria has a different economic pattern and economic activities compared to China and Japan.
You cannot have a “Mono Economy” that’s totally dependent on crude export for external revenues and imports almost everything else for her citizen use.
Any economy in this category will definitely be hurt by Exchange Rate differentials – Yes! Foreign Exchange Rate fluctuates like wild FIRE!
But what do you make of a society that’ll travel from Lagos to Paris just to get Ice Cream. Make it trend on Social Media and sing a hit song about such useless expedition. You think you’ll not have to pay for such madness?
The exchange rate differentials will definitely come for your head and your economy too!
I don’t even want to argue about how you can have a complete meal in Nigeria for 500 Naira or $1 while a coffee at Starbucks cost $6.
To me, this comparison/argument is not worth the conversation because it only makes clever comparison without profering solutions.
THIS IS WHAT I THINK!
Nigeria is not a rich country. You can argue about this all you want! But before you write your response to my assertions, I’ll like you to pounder on the following;
Assuming Nigeria extracts 2,400,000 barrels of crude oil per day at $60pb. Now multiply the dollar figure and share it amongst 200 million people to see what that amounts to per person per day – then you’ll understand how poor we are as a country.
The above analysis doesn’t consider the cost of exploration and other biz/logistics expenses or what accountants call OPEX.
Yet you’ll see that we don’t even earn $1.5 per person per day. How poor can a country be?
Remind me again. What’s the yardstick that measures the extremely poor? $1 I think, is that correct?
Nigeria must move from being a 100% oil exporting country and begin to create value in other sectors.
We get it wrong when we keep calling for Foreign Direct Investment (FDI).
Nobody will bring FDI into a country where civil servants are openly asking for pasentage share of the FDI, blatantly asking for kickbacks and even asking for stake in prospective businesses.
We need more than a call for FDI, We need a people that are engaged in economic activities that creates value – I’m talking about Economic Values that’ll directly benefit Nigerians and also attract foreign customers.
Discussing the solutions I’m considering will require a bigger space. Maybe I’ll talk about the other options Nigeria can utilize in subsequent epistles!
But untill then, what do I know?