What Is The True Value Of The Naira?

share on:
What Is The True Value Of The Naira?

What Is The True Value Of The Naira?, By ‘Tope Fasua

CLICK here to read more opinion articles

The story goes about a debate between Dr. Tai Solarin and no less than Chief Obafemi Awolowo on the floor of the Western House in Ibadan and about a subject for which they were both passionate and which defined their sojourns on mother earth more than any other; education. The period was sometime in the 1950s.

This piece was written by Tope Fasua. The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of 360Nobs.com.

Whereas Awo saw the urgency for Africans – especially Nigerians – to catch up with the rest of the world by obtaining the enlightenment which comes with education, Tai believed we needed to worry more about the profound quality of that education. And he didn’t mean we needed to spend money on students. He meant the opposite; that real education meant being able to fend for oneself by using one’s brains and hands. He believed young people should be sent to school to critically imagine, evaluate and create that which they desired. If you want a better life, look at the elements around you and create for yourself and generations to come, that which makes you comfortable.

Naira Loses Ground Against Dollar | CBN Set To Inject Fresh $350m Into Interbank Market

Tai believed that students should build their own classrooms where necessary. If nothing, they would learn the art of creating things. He believed that what Nigerians needed was to learn how to conquer the elements, the way the white man had. He went on to try and build such an experience in Mayflower School, Ikenne. The route that Tai choose was longer, even if more sustainable when achieved. The length of time required, alongside the presence of mind that it would take, meant it was risky because it required huge staying power and focus. It could be said that Nigeria didn’t choose Tai’s path at the end of the day. Tai believed that we would ruin Nigeria by sending children to posh schools like Kings’ College, where they may imbibe elitism, develop a sense of entitlement, look down condescendingly on the rest of society, and general hurry off to enjoy what other peoples have painstakingly prepared for themselves abroad after many centuries of sweat, tears and blood. That is exactly what happened to Nigeria; for we ended up creating a generation of privileged people for whom achievement meant houses and cars in London’s West End. And today, we are led by the Kings’ College type. I quote one of Femi Fani-Kayode’s reminisces on that era: “Is this the nation whose wealth once knew no bounds and whose middle class once owned the finest cars and properties in London, Paris and New York? Is this the nation whose beautiful people once graced the streets of Belgravia, Chelsea, Hampstead and Knightsbridge?”

The stark irony that a people just stepping out of colonialism could afford those luxuries and waste does not occur to Fani. Neither did it occur to the vast majority of Nigerians, even till date. We are into personal comfort, even if such is not sustainable for generations to come.

Naira Strengthens To ₦435/$ From ₦525 As CBN Continues Intervention

And it is from this perspective that we should begin to look at the value of our currency, for at the end of the day, that value should critically derive from comparing what it produces with what it buys. Simple. Economists may call this Purchasing Power Parity (PPP), but traditional economics decides to omit a critical factor which should have otherwise been emphasised. The factor is that the only way nations can compete at all is when the intrinsic value of what they exchange is at par with what is sought, and when the effort, time and other input they put into the products they exchange are tightly comparable.

Otherwise, countries who produce and export goods and services into which they put in much time and human energy but which they sell for peanuts, and import goods and services into which other nations put little time and human energy because they are aided by technology, which they purchase for an arm and a leg, are permanently debauched. It is a one-way street to perdition. No mercy. And that is where countries like Nigeria have found themselves. Imagine selling cassava and yam, which take between six to nine months of waiting and backbreaking work to reap, in exchange for a simple mobile phone which can be churned out in all of 1 hour in a well coordinated supply and production chain manned by robots? Now imagine how many tubers of yam or cassava will be produced in exchange for one Samsung phone (which may cost like N150,000 or more)? In short, economies like Nigeria’s will never balance because the defect is so fundamental, and the mismatch actually predates our independence. The only issue is that we never properly defined this as a problem, and when we do, nothing gets done to change the trajectory in any profound manner. Our economists expect to find the solution to this unique problem in textbooks. Too bad. We were taught the wrong economics in university!

Naira Appreciates To ₦450 Per Dollar From ₦525 As CBN Pumps Another $221m

Let me quickly rescue the Great Awo in this matter. Another story told to me by my friend and Awo ‘historian’, Jide Lawal, goes that when Awo conceptualised the free education system and wanted to deploy, he asked his commissioners to cost the project. They returned with an amount that was way over the budget; for they had imagined that the classrooms would be built with cement. Awo then instructed that they should go and re-cost on the basis of mud buildings. He wondered why children who lived in mud houses would need to study in cemented schools. He believed the focus should be on the content and not the container. And so the ‘poultry shed’ school was born. I attended one – at Okota – for a year, before relocating to Akure in 1981. The result of Awo’s experiment was that he achieved mass education, and his thought converged somewhat with Solarin’s idea that we should take the frills out of education and start from the basics. His system was however unable to drill the fundamental understanding of what life and development is about into Nigerians like Tai would have wanted. That was how we became import-dependent. To change it would take a hard reset.

When we argue about why Nigeria got to this point, we should remember that post-colonial states are a recent phenomenon, and that this experiment is unique to itself. The inheritance of governance, social and economic systems that were alien to us, and their subsequent mismanagement is responsible for where Nigeria is today, where dependency on other nations for almost everything we need is as a matter of course; a fait accompli.

Traditional economics say nations should adhere to ‘comparative advantage’; that countries should produce and sell what they are best suited to. Of course humans have a natural default towards comfort and laziness. If it was possible to get everything for nothing, men would do that all day. But that is not how life works. Comparative advantage theory – like many of the theories we were taught in university – is a decoy; only foolish countries buy it. Stiglitz in his ‘Making Globalisation Work’ wrote that South Korea would have still been a rice-growing agrarian country if it had believed that rhetoric. Instead, it chose the hard grind, and while maintaining its ability to grow food for its people and for export, it struggled, focused, and emerged as one of the world’s technology hubs.

Get me right. It is entirely our fault. And the fault is not in our stars but in our heads. What I want to bring out is that even you – yes you – that are reading this, are part of the problem because we haven’t started thinking differently. Imagine the difficulty for you to create your own economic, technological and other systems today? Imagine the will power you will have to summon? Is it even worth the trouble? Now, imagine what our founding fathers were faced with in the 1940s to 60s. It just won’t, and didn’t occur to them to do anything differently.

Why the Naira Is Worthless

And so the other day I was generally browsing and researching sundry things. I came across a 1962 World Bank document for a loan of $13.5 million for the construction of Apapa Road in order to facilitate access to the Apapa Port and ease the clearance of goods. At that time, the Nigerian pound was stronger than the American dollar. It was $2.80 = 1 Nigerian pound. But as recently as late last year, the Director General of the Nigerian Shippers Council (our ports regulator) celebrated a loan of $40 million to be obtained from the same World Bank for the same Apapa Wharf access roads and for the same purpose of easing clearance and facilitation of goods from the ports. Only that now, the Nigerian currency has officially lost value about a thousand times over (from positive 2.80 to negative 375 – multiply the two figures).

CBN Succumbs To Pressure, Announces New Foreign Exchange Policy

So we can see that what is wrong with the naira is what is wrong with Nigeria itself. It is quite fundamental and predates most of the leaders that we like to blame for it. However all our leaders, without exception, have not been able to appreciate the enormity and profundity of what we are faced with, much less begin to do something original about it. Most, if not all, of them have simply exacerbated our situation. Many think it’s a joke. Millions are hoping God will come down in his glory and make things work for us. When I recently put up a commitment to frugality and responsible governance on behalf of my party on Facebook, many challenged our sincerity in committing to governance shorn of luxury. But 57 years after independence, and 55 years after we got a loan from the World Bank for Apapa Road, we not only have not generated any stable cashflow to do it ourselves, Apapa Road has apparently not paid for itself, but worse; we have no capability to do the job ourselves. Even the crude oil which is our mainstay, we have no capability to drill it 100 percent. To make matters worse, the artificial cash flow that we get have been wantonly frittered by our own; in a practice that is worse than slavery and colonialism put together. Our own brothers and sisters have gone into government simply to loot and deprive the majority of the basic hygiene needs of life.

Today, 80 percent of Nigeria belongs in a pre-colonial existence, only that they are forced to live in a fast-paced globalised world where they are daily taken advantage of by the rest of us. The ones who can react are doing so presently; you know, kidnappers, robbers and the rest. As we lay our bed we lie on it. I will expatiate more soon on how our choices got us to where we are and how on balance, even with the most frugal management of resources we shall still struggle. Be on the lookout for more reasons why the naira is debauched.

‘Tope Fasua, an Economist, author, blogger and entrepreneur, can be reached through topsyfash@yahoo.com.

This piece was written by Tope Fasua. The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of 360Nobs.com.



I am but your herald boy in the art of the pen.. An eccentric Environmental Biologist smouldered in the glorious epiphany of online journalism. If you ever find my article unduly insipid, sue me and i’ll refund you...

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.