By Adisa Adeleye

THAT Nigeria is a great country is axiomatic; that the Nigerian economy (with all its imperfections) is the greatest in Africa has now been widely accepted through the rebasing of the country’s Gross Domestic Product (GDP) by the Nigerian Bureau of Statistics (NBS).  Nigeria is so great that it is often described as the ‘Giant of Africa‘.

Many celebrated apologists of the Federal Government including of course, the paid officers of the nation (ministers, advisers and assistants) have continued to render sonorously the chorus of ‘Stability of the Economy‘ to anyone who cares to listen.  In fact, the elegant statistical figures are there to support the joyful mood of an economically strong nation.

Recently, the sturdy Minister of Finance, Dr (Mrs) Okonjo Iweala, who also bears a romantic acronym, Coordinating Minister for the Economy asserted that inspite of Boko Haram bombs all over the places, the new 25 investors would prefer only the maintenance of economic stability.  Here is a scenario where political instability and insurgency are no longer factors affecting the flow of foreign investment into a country.

It is also true that in certain peculiar circumstances, foreign investors would not care about the present (temporary) impediment but would be concerned mainly about the future yields (prospects) of their investments.  Nigeria is adjudged lucky if such ‘godly‘ investors are still lurking around in the world.

But as it is often noted and agreed in some quarters: Let the Truth be told.  By statistical figures, macro-economic stability is claimed to have been achieved in the Nigerian economy.  In 2013, the rate of growth (GDP) was 7.3 per cent (one of the highest in the world); Inflation rate was kept below 10% (between 6% and 9%); foreign exchange reserves figure was about $40 billion (9 months import coverage); foreign exchange rate hovering between N155 to N172 to one dollar about two weeks ago.

And worse of all, the Naira (the Nigerian currency) is always under pressure at the foreign exchange market every day, that experts expect eventual devaluation.
It should not be assumed that the band boys of economic stability have been bewitched to the extent that all the respected band leaders are getting away with economic misdemeanors.

The apologists of macro-economic stability often confess that though stability has been achieved, there are strong challenges in areas of unemployment and inequitable distribution of national income.  The growing wealth of the country is unevenly distributed to the extent that extreme wealth and abject poverty grow side by side and unabated in many parts of the country.  Also, little or no attention to rural areas has led to mass drift to urban centers which by civilized standards, lack tolerable living conditions.

It is also to be noted with considerable regret that the country‘s macro-economic stability is being achieved at the expense of full employment.  The country‘s unemployment rate is estimated at about 30 per cent of the working population with young graduates, the unfortunate victims.  It is like the slogan in the pre-colonial days, ‘we prefer self-government with danger to freedom in servitude‘.

To the curious but rich supporters of the present management of the economy, it is, we prefer macro-economic stability to attract foreign investments to deepening poverty and stunted manufacturing growth at home.  The price is clear – unrest and social disorder.

The highly acclaimed macro-economic stability has been built on a punitive foreign exchange rate of more than N160 to one US dollar and a callous bank lending rate of over 20 per cent (MPR is 12 per cent).  Rational economic thinking demands that an oil rich nation with good agricultural land (good prospects for export) should adopt a strong currency with low interest rates for domestic industrial expansion.

It is unbelievable, if not unthinkable, that an import dependent country like Nigeria, would continue to operate a devalued currency and high  bank lending rates at home in the interest of ‘shaky-shaky‘ foreign investments and elusive inflation.  There is no doubt that the persistent adherence to the policy of devaluation (low value of Naira) has affected local industrial production and expansion which is necessary to counter inflation.

Importation of costly necessary capital equipment, spare-parts and raw materials would certainly affect domestic cost of production and prices – giving room for importation of cheaper goods and smuggling (incentives to manufacturers notwithstanding).

A more disturbing aspect of the foreign exchange market is the increasing role of foreign oil companies in the supply of dollars – foreign oil companies sell dollars to relieve pressure on the Naira.  It is known that the Nigerian crude oil is sold in dollar, and paid into the Central Bank.  The Central Bank pays the Nigerian recipients in Naira denomination at its own determined rate, instead of the ‘dollar certificate‘ often canvassed by Mr. Henry Boyo, a Vanguard Columnist.

However, the local foreign oil company also receives its sale of Nigerian oil in dollar, keeps a junk of it at home, and sells a small part to us at a rate of about N160 to a dollar.

What a bonanza to a foreign oil company which seems to be living free and bearing substantial cost of its operation from its profit derived from the exchange of dollar to Naira.  The Nigerian receiver of oil money in Naira (States, Local Govt, etc) would have to purchase its needed dollar at higher price when the need arises.

The ideal policy for an import dependent country with oil is to adopt a strong currency in order to be able to have access to cheap imported materials.  With a strong Naira, Nigeria will be able to import necessary capital equipments, spare-parts and raw materials at comparative cheaper prices and thus, should be able to produce cheaply at home for domestic consumption and exports.

Some countries pursuing common-sense economics, multiple exchange rates which would favour importation of certain necessary products and punish consumption of luxury goods.  Many are suggesting an exchange rate of about N80 to a dollar or even less.  It is a pity that Nigeria at the moment, because of low value of the Naira could only import second-hand goods while necessary goods can be brought in at enormous cost not available to many Nigerians.

Many patriots argue, and justifiably so, that what Nigeria needs is macro-economic stability with tolerable inflation and mass employment.