Forex Crunch, Bad Choices And Nigeria’s Future


Whether on TV or radio, newspapers or magazines, websites or blogs, or even on facebook and twitter, different reactions continue to trail the current forex challenge in the country and the announcement by the CBN Governor, Godwin Emefiele, days ago, that Nigerians should prepare for hard times ahead. According to media reports, the CBN had disclosed after its Monetary Policy Committee meeting in Abuja that while the period of low oil prices which last occurred in 2005 lasted for a maximum of eight months, the current situation is expected to continue over a longer period of time. He warned that the situation would necessitate huge sacrifices from Nigerians as well as hard and uncomfortable choices.

However, despite the diversity of opinions and the multiplicity of comments from all those who have been reacting since the news broke, there is a common thread. It is the fact that, as a country, we have made very bad and terrible choices over the years, and some of them even dating back to political independence in 1960. Truly, if we won’t mince words, these bad choices have been many. Indeed, very many!

For instance, successive leaders in the country, especially those that took office from the end of the First Republic, and their ministers of planning and national development, only talked about the necessity of diversifying the nation’s economy so that oil would no longer be the major source of our national revenue. Yet, while the good times lasted, they did little or nothing to concretely ensure that this lofty agenda was achieved during the tenure of their regimes and administrations or set on an irreversible course for their successors to complete.

For many of the former military leaders we had, after delivering their annual budget speeches, it appeared things ended there so long petrodollars rolled in easily. Even their ministers who stood on podiums to speak at conferences and meetings failed to achieve anything worthwhile in that direction. No detailed, actionable, and realistic long-term strategic plans were put in place. Meanwhile, in the few occasions where these were in place, there were no stakeholders’ consultations to get the necessary buy-in let alone for the plans to be implemented. And even in the few times when policies were put in place, the aftermath was usually policy summersaults years later when another government comes to power!

But to really demonstrate how unserious we have been as a country, and indeed, how we evidently cared little about our national economic well-being, we saw nothing wrong wasting billions of dollars importing fuel and settling oil barons claiming fake subsidies every year when the sane and sensible thing we could and should have done was ensuring that our refineries were all working at optimal capacity and satisfying our internal consumption needs while exporting the excess. That way, the 40 percent of official foreign exchange demand being used for importation of refined petroleum products would simply have been unnecessary.

I think our insatiable craze and appetite for foreign goods was also another of our bad choices. We adamantly refused to wean ourselves of the inferiority complex and belief that all things foreign or imported are superior and better. We assumed all things indigenous or locally-produced are not good enough and of lower quality. In fact, we so loved importing all kinds of things, some of which could even be produced here in Nigeria, that the average import bill of the country skyrocketed from N148.3 billion in 2005 to N917.6 billion in 2015, a whopping increase of over 500 % , all within just 10 years according to the CBN.

Yet, if we had developed our manufacturing sector as well as focused on further expanding agriculture, we would have leapfrogged our economy to higher heights beyond even our own imagination.  Unfortunately, we didn’t think along those lines.

Many of these actions not only underdeveloped the country, but also further worsened the poverty level among Nigerians. This is aside the fact that our leaders and elites further worsened the situation too by sending their children to study overseas when they could have made our own educational institutions first-class and world-class if they really had the vision and will. After all, it is said that where there is a will, there is a way. They equally believed our hospitals aren’t good enough to take care of them when they are sick and started flying abroad for treatment instead of fixing our own hospitals here. They flew to places like Germany, London, France and Switzerland. Of course, many of them sadly died over there. It’s unnecessary to mention their names here. I believe you know them. Desperately-sick average Nigerians, on their part, flew to India.

The final nail that sealed the coffin for us was the pervasive corruption in the system and the scandalous salaries and entitlements politicians gave themselves when the national minimum wage of N18, 000 can’t sincerely take any worker home. Even aids and loans from development partners and international agencies were diverted and not fully used for the purposes they were meant for.  Till date, billions of dollars looted by the General Sani Abacha regime are still being recovered from Europe.

Now, since gaining independence in 1960, Nigeria has received no less than $400 billion in aid, that’s six times what the United States pumped into reconstructing the whole of Western Europe after World War II, yet we really have nothing super-impressive or outstanding to show for it when we compare ourselves to Asian countries like Malaysia and Singapore which got independence around the same period as we did. This accounts for why at global gatherings and international meetings today, Nigeria is being derided as suffering from ‘resource curse’ -the paradox that developing countries with an abundance of natural reserves tend to enjoy worse economic growth than countries without minerals and fuels.

Meanwhile, the decline in foreign earnings we are experiencing now wouldn’t have been as high as almost 70% if our past leaders had used Nigeria’s oil wealth to diversify and deepen the structure of the country’s economy. It’s really sad we haven’t been too fortunate and blessed with visionary and uncommon leaders like the legendary Lee Kuan Yew of Singapore who moved his country from Third World to First, or the excellent team of leaders ruling the United Arab Emirates from Dubai to Abu Dhabi who built an amazing and beautiful country for their people from desert land which is now attracting visitors from around the world as the tourist destination of choice with its man-made wonders.

That is why Nigeria is the third country in the world with the highest percentage of the world’s poor. While India has 33 percent of the world’s poor, China has 13 percent and Nigeria is in third place with 7 percent. We are followed by Bangladesh with 6 percent and the Democratic Republic of Congo with 5 percent. 70 percent of Nigerians, most of them residing in the rural areas, live below the poverty line of $1.25 a day according to the World Bank.

That is also why when popular columnist and TheCable founder, Simon Kolawole, wrote in his brilliantly-presented back-page article, “The Parable of Dollars and Dullards” in THISDAY Newspapers a few weeks back, that our age-old poor investment decisions and lack of foresight got us snookered, he was saying nothing but the undeniable and absolute truth. I believe our eyes are clear now. The cumulative effect of poor leadership decisions and choices including unpatriotic lifestyles adopted by some of us as Nigerians over the years is what we are now experiencing.

Whichever way we may want to look at it or analyse it, I just think the country would need to manage the outflow of forex from the economy until oil prices rebound and the inflow of forex improves. What we must however not overlook is that the scope of options or solutions are seriously limited since  scaling-up its supply into the country is clearly not within our control as a country or that of even the CBN. The little piece of good news though is that something can be done concerning what the country’s diminishing stock of dollars in our foreign reserves can be used for because this is in our control. And I think this explains why the CBN decided to put some restrictions in place by limiting the list of goods that officially-sourced forex can be used to import aside the bank’s other intervention activities.