BY MOYINOLUWA BAMIDELE-LUCAS
The constant fall of the Naira to the dollar has built up over the years and there doesn’t seem to be light at the end of the tunnel yet, because regulatory failure, breaches, trade in-balance and economic migration are not abating.
Former Deputy Governor of the Central Bank of Nigeria, Obadiah Mailafia, stated in an online interview, traced the changing point of the naira to 1985 during the military administration of General Ibrahim Babangida, retd.
He said, “The changing point came around 1985 when we had the military administration of General Babangida. He ushered in the structural adjustment programme, which I think was very misguided.”
He pointed out that Babangida, “devalued the currency and by 1986 to 1987 naira was N22 to a dollar.”
He opined that the import dependent nature of the Nigerian economy was also a contributing factor for the continuous slide of the naira.
“There is a deficit balance, because Nigeria is importing more than she is exporting so there is a deficit in the balance of trade,” he added.
He knocked the CBN for the quality of policies and regulatory guidelines being dished out, which, he observed, has dampened the confidence of the people in the leadership of the apex bank.
He averred that “the value of a currency is dependent on whether or not people have faith in people managing the system.”
He would not hold the CBN solely responsible for the lax regulatory situation, because “there are some big men and politicians benefitting from the predicament of the naira because they don’t even spend in naira, so, it is in their best interest if the naira keeps falling.”
He cited instances of highbrow estates and outlets that bill in dollars against a standing policy of the CBN, yet nobody seems to be paying attention.
Mailafia said, “There is a CBN directive that all invoicing must be done in naira except the oil companies, because oil is traded in dollars. Unfortunately, if you go to highbrow real estates in Lekki and other places the landlords are invoicing Nigerians in dollars, and if you go to some of these top schools the school fees are invoiced to Nigerian parents in dollars, in violation of standing regulations.”
He observed that a certain class of Nigerians don’t get to see the local currency and that the law enforcement agencies like the Economic and Financial Crimes Commission, could not detect anything, because the perpetrators weren’t relying on the local banks.
These set of people have accumulated huge fortunes in dollars, which has placed them at an advantage, and conferred on them higher purchasing power locally, which consequently eroded their interest in saving the naira.
He expressed concern that the current exchange rate had made things hard for average Nigerians because there had been a steady increase in price of commodities and “if you asked why? You would be told that dollar is expensive. In a country where the minimum wage is N30, 000 ($72), how is the average man to survive”? Mailafia pondered.
He observed that people and businesses were migrating out of Nigeria in droves, including the superrich.
“Even Dangote, Africa’s richest man announced not long ago that he is going to shift 60 per cent of his assets offshore to the U.S. In fact, he has set up a building in Manhattan for that purpose. His reason being that exchange rate has made it difficult for him to keep the value of his assets,” the former CBN official added.
