…How SAP in 1986 started Naira’s free fall
By Emma Ujah, Abuja Bureau Chief
President Muhammadu Buhari has launched the Central Bank of Nigeria (CBN) digital currency, the e-Naira.
While launching the digital currency, at the State House,Abuja, this afternoon, the president commended the CBN Governor, Mr. Godwin Emefiele, for his efforts towards ensuring a more efficient payment system in the country.
In his address, Mr. Emefiele announced a new financial instrument titled “The 100 for 100 PPP – Policy on Production and Productivity,” to reduce the nation’s overdependence on imports.
According to the governor, the instrument “will be anchored in our Development Finance Department under my direct supervision.
“Under this policy the CBN will advertise, screen, scrutinize and financially support 100 targeted private sector companies in 100 days, beginning from 01 November 2021, and rolling over every 100 days with a new set of 100 companies, whose names will be published in National Dailies for Nigerians to verify and confirm.
“The purpose of this instrument is to take further steps to reverse our over reliance on imports.”
According to Mr. Emefiele, working through banks, the financial instrument would be available to their customers in critical areas to boost the production and productivity, with a view to immediately transforming and jumpstarting the productive base of the economy.
He explained, “After these 100 projects by companies in the first hundred days from November 1, we will take the next 100 companies/projects for another 100 days beginning February 1, 2022, and then another 100 companies for another 100 days beginning from May 1, 2022.
“We believe that if we target and support the right companies and projects, we will see a significant, 14 measurable and verifiable increase in local production and productivity, reduction in certain imports, increase in non-oil exports, and improvements in the FX-generating capacity of the economy.
“This, in my view, is the best and most sustainable way to address the Naira’s value – whether in hard currency or digital eNaira – through production, production and more production.”
How SAP in 1986 started Naira’s free fall
The CBN boss lamented that the Structural Adjustment Programme of the then government administration in 1986, under the International Monetary Fund, plunged the Naira into a free fall from which it has not recovered.
Mr. Emefiele’s words, “Mr. President, as you make ground breaking reforms, there have been continuing debates on the true value of the Naira.
“Rather than worry today on the direction of the exchange rate, let us take a step back and analyze how we got here in the first place.
“Please recall that since the advent of the International Monetary Fund (IMF) led Structural Adjustment Programme (SAP) in 1986, and the introduction of the Second Tier Foreign Exchange (SFEM) market, the Naira has been on a one-way free fall from parity to the US Dollar in 1984 to over N410/USD today.
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“Some 35 years later, we have not been able to achieve the many promises and objectives of that programme. Instead, what we have seen is widespread import dependency, which has wiped out most of our production and manufacturing bases and exported all our jobs in the process.
“What has happened to the massive textile factories across our nation such that we import almost all cotton products when we are rich in cotton?
“What has happened to our vehicle assembly plants across the nation such that we import most vehicles and have become a massive dumping ground for dying second-hand vehicles?
“What has happened to our rubber plantations through which we made the best tyres and rubber products in the world?
“What has happened to our groundnut pyramids? What has happened to our Cocoa farms? What has happened to our palm oil mills?
“Under your leadership, Mr. President, we must stop this decline for good! We must return to massive homemade production; we must get our people working again. We must create the economic environment for massive domestic production and significant non-oil exports.”