Shortly after independence in 1960, the new Nigerian democratic leadership found itself faced with temptation to devalue the country’s currency, the Nigerian pound.
Amidst the debate in parliament, a highlife tune became popular with one verse in these lyrics:
Devaluation gave me a blow
With the pound that went down so low
The cost of living gone up so high
You’ll want the things but you cannot buy
So went the popular highlife song in the 1960s immediately after independence from Britain, and I wish I knew who promoted the song. Just like today, the new Republic was faced with dire economic circumstances clearly a test for the emergent leadership, and intense pressure came from western powers to devalue the Nigerian Pound. Those were the days of the hand wound gramophone and wax records, a time when Nigeria exported only its raw agricultural produce to import virtually every manufactured product. Yet the government came under pressure to devalue the local currency. Government in those days I believe must have used the song to explain to the populace that it was not in the national interest to devalue then, the Nigerian pound.
With possibility of devaluation the popular hit we learnt to sing then as a children, without even knowing the meaning, played back in my mind and in
understanding it now, it amazed me that after over 50 years, the lyrics still applied to Nigeria’s circumstances. Devaluation would give the citizenry each a blow, bad as the situation already is. We would want the things, but we simply cannot buy them due to the sudden rise in cost.
With devaluation, the difference would be astronomical and without opportunity to adjust, the general public reaction to the impact of a risen cost of living would be untoward. It was thus a relief that President Muhammadu Buhari, addressing an interactive session with Nigerians living in Kenya, argued that while economies driven by export could benefit from the devaluation of their currencies, it would only trigger sudden inflation in Nigeria, and impose instant hardship for the poor.
Be this as it may, there is a grave economic situation on ground requiring that dynamic instruments are employed to prevent a free fall and eventual crash of the Naira.
Often we are told that devaluation would make Nigerian goods cheaper and therefore encourage export. This begs the question of what exports our country boasts of, for sight is often lost to the fundamental truth that there are hardly commensurate Nigerian goods for export. Nigerian citizenry, for long spoilt by the oil based economy have not been productive.
In grappling with Nigeria’s sudden economic downturn the Government has applied monetary policies that have made foreign exchange scarce. Changing at nearly N300 to the dollar, it can be said that the Naira has in effect been devalued. There is a marked increase in the rate of inflation, and this has directly affected the poor and the middle class, particularly those addicted to foreign tastes.
The policy has also adversely affected local industry, but if you look closely, the affected local industries are those that depend on imported raw materials to manufacture supposedly essential items. To opponents of devaluation, such industries should die natural death. We must agree that an industry that only adds water to concentrates to make fruit juice is not an industry that helps the economy. Pressure on foreign exchange for imports such as rice, flour, vegetable oil, exotic fruits is not in the national interest, and suggestions that government reconsiders its exchange policies in favour of such frivolous comforts should be discountenanced.
My cattle merchant friend could not be convinced of any need to devalue our currency not just because he did not even understand it. He is nearing 70 years and says even from the days of his own father, the cost of going to perform the Hajj has been the value of four sold cows, and still is. What justification would there be the, to reduce the value of our Naira? In the fish market of Tingno, as far back as the 60s, one basket of smoked fish exchanged for one complete babban riga with the inner wear, and this value has remained so to this day. The fish seller thus makes no meaning from devaluation.
To me, this simple appreciation of the economics of devaluation appeals strongly. Nigeria can turn the current adverse economic conditions to great advantage if a look inward for relief is forced. You do not fight an economic downturn with devalued currency, but rather with local production of essential needs, particularly food. We should raise more cattle and other livestock, grow our own rice, eat and process our own local fruits, and apply local solutions to our problems. We should learn from Kenya, which even earns from exchange from flower exports. Nigeria should strive to restore its neglected capacity to export tea and coffee from the Mambilla Plateau, exotic fruits from Benue and Taraba States, vegetables form the entire country, and processed groundnut products such as oil and cake for animal feed. My stance against devaluation is based on the arguments of the cattle merchant and the fish seller, crude as they seem. I see the salvaging of the economy more in the promotion of local growth of the agricultural sector and the guarantee of food security. Let the country endure a stress of only 2 years to intensely pursue the growth of agriculture. The impact would be more than noticeable.