WHILE the government appeared distracted with the coup in Niger Republic, the naira plunged further in the foreign exchange markets last week, exchanging at a record high of N955 to US$1 on Thursday, and spreading panic through the business community and apprehension among Nigerians. President Bola Tinubu and the Central Bank of Nigeria need to move fast, creatively, and pragmatically to avoid losing control of the currency and the economy.

The omens are bad. Since Tinubu pushed the CBN to merge the exchange rates two months ago, the naira’s southward descent has accelerated. The twin goals of facilitating a “realistic” rate, and eliminating the wide arbitrage gap created between official rates and informal market rates have remained elusive. At the official exchange rate of N767.76/$, the gap, and hence, room for illegal arbitrage, raced from N100/$ towards N200/$.

Absent an economic management team, direction, or cabinet, and no accompanying reforms of the regulatory agencies, all colliding with high inflation and business contraction, the naira is on track to crest the N1,000/$ mark and beyond soon, raising real fears that the CBN could lose control with dire consequences. The IMF added to the anxiety last week, saying existing “loose fiscal and monetary policies” make it difficult for the naira to stabilise.

Wale Edun, Tinubu’s longtime economic adviser and ministerial nominee, signposted N700/$ as the realistic rate, saying the higher rates are not backed by the fundamentals of the economy. The Economist Intelligence Unit’s forecast of a N1,000/$ rate up till 2027 now appear overly optimistic. Things could get really nasty well before then.

This is not surprising. Supply is constrained by low non-oil export earnings. Demand is artificial, driven by speculators and hoarders, and massive, unchecked money laundering by state and non-state actors. Politicians, public office holders, bandits, kidnappers, and connected contractors, facilitated by lax oversight of the deposit money banks and the bureaux de change, are driving the market with ill-gotten naira, not producers or genuine commercial enterprises.

Tinubu must shift from his unfocussed, ill-planned, and uncoordinated decisions to strategic, well-planned, and comprehensive economic policies. He desperately needs an EMT and more economists and technocrats on board than the motley politicians he has nominated as ministers.

To avoid losing control of the naira and hyperinflation, the CBN should for a few weeks, fund the forex market; next, restrain the BDCs and errant banks from round-tripping and illegal arbitrage. There should be closer collaboration with other regulatory agencies, and the anti-corruption and law enforcement agencies to monitor operators and swiftly and firmly punish infractions and offenders.

An economy battling high unemployment, inflation, production contraction, and dwindling public revenues, needs strong stimulus to achieve recovery. These should target protecting strategic sectors – agricultural production, pharmaceuticals, transportation, and small businesses. Special attention should be paid to SMEs; how to subsidise their power supply, access to low-interest credit, and overthrow crippling taxes and levies.

Hard decisions lie ahead, but should be taken only after rigorous diagnoses and preparation. Shortage of dollars is leaving supply to the market in the hands of black-market operators, thereby effectively subverting the goal of reducing the gap between the official Importers and Exporters window and the parallel market rates. A temporary bolstering of the market to defend the naira for a very short period and funnelled to legitimate businesses is desirable to halt the naira’s downward spiral.

The economy requires very close attention and rigorous planning to avoid a collapse: Tinubu should, going forward, stop taking hasty measures without them.

AsomughaChuks05:
This is an opportunity for Nigerian entrepreneurs to start local manufacturing of most of the things Nigeria imports. It is the only panacea to reverse high rate of joblessness in the economy. It is an apt response to the current situation of the economy. Check out Japan. They became the second largest economy in the world until recently by heavily devaluing their currency against the dollar. Tinubu is on the right path.

AsomughaChuks05:
This is an opportunity for Nigerian entrepreneurs to start local manufacturing of most of the things Nigeria imports. It is the only panacea to reverse high rate of joblessness in the economy. It is an apt response to the current situation of the economy. Check out Japan. They became the second largest economy in the world until recently by heavily devaluing their currency against the dollar. Tinubu is on the right path.

AsomughaChuks05:
This is an opportunity for Nigerian entrepreneurs to start local manufacturing of most of the things Nigeria imports. It is the only panacea to reverse high rate of joblessness in the economy. It is an apt response to the current situation of the economy. Check out Japan. They became the second largest economy in the world until recently by heavily devaluing their currency against the dollar. Tinubu is on the right path.

AsomughaChuks05:
This is an opportunity for Nigerian entrepreneurs to start local manufacturing of most of the things Nigeria imports. It is the only panacea to reverse high rate of joblessness in the economy. It is an apt response to the current situation of the economy. Check out Japan. They became the second largest economy in the world until recently by heavily devaluing their currency against the dollar. Tinubu is on the right path.

SalamRushdie:


I am 100 percent sure you have never run a business

SmartPolician:



Do you know what it takes to produce something in this country?

How will you power your machines? With diesel or petrol that's very expensive?

In fact, many people would prefer to import things than produce in Nigeria because importing from China is cheaper than producing in Nigeria.

Nigeria has no enabling infrastructure for driving businesses like steady power supply. If you run on diesel, you will incur huge losses.

ogododo:
Tinubu no sabi how to run economy. Na tax and tariff be him specialty. See how Lagos wowo.

yesloaded:


You need 247 stable power supply

Adequate security

Good government policy

To achieve what you suggested

leokid866:
There are pockets of those already in place. In fact several people have taken advantage already.....na you just no look

yesloaded:


Where n when?

SmartPolician:
For floating the naira knowing that Nigeria runs an import-dependent economy, Ebola no just get sense. $1 may reach #1k before December 2023.

AsomughaChuks05:
This is an opportunity for Nigerian entrepreneurs to start local manufacturing of most of the things Nigeria imports. It is the only panacea to reverse high rate of joblessness in the economy. It is an apt response to the current situation of the economy. Check out Japan. They became the second largest economy in the world until recently by heavily devaluing their currency against the dollar. Tinubu is on the right path.

helinues:
May? When we are in August

Ikaeniyan0:
Why is it taken tinubu this long to appoint ministers 😕

SalamRushdie:
I called this first many weeks ago and I never call Anything wrong..like I said then Tinubu had lost control of of the economy because of his poorly implemented fuel and Naira deregulation and remember I predicted that that naira will get to 1200 to a dollar and Petro 1050 per litre abd Tinubu will be forced to start regulating them again other to save his govt from a popular uprising....Nigerians will be the ultimate losers

leokid866:
but you Still carry your head enter......