By Mohammed Bello Doka
In a recent development that has stirred debates across the nation, the Minister of Agriculture has urged the Nigerian National Petroleum Corporation (NNPC) to facilitate transactions in Naira with major fertilizer manufacturers like Dangote and Indorama. The aim is to mitigate the rising cost of fertilizer, particularly as the country approaches the crucial 2024 planting season amidst soaring food prices.
This plea has shed light on a glaring issue: Nigeria, a major exporter of oil and gas, conducts its transactions with local companies in dollars. Such practices only serve to bolster the demand for USD, exacerbating the foreign exchange scarcity gripping the nation.
It's a perplexing scenario – the government's reluctance to trust its own currency while simultaneously expecting citizens and foreign entities to have faith in the Naira. The recent directive from the Central Bank of Nigeria (CBN) further complicates matters. The ban on Nigerians receiving hard currencies from abroad, with the intention of bolstering the Naira, illustrates a lack of confidence in the local currency.
The Naira's sharp devaluation, experiencing a staggering 250% loss in value over the past eight months, underscores the urgency of the situation. The CBN's rationale behind restricting access to foreign currencies is to reduce dependency on USD and stimulate the Naira's appreciation. Yet, the government's own practices tell a different story.
One striking inconsistency lies in the policy mandating Nigerians to receive their bank transfers in Naira rather than USD, while the NNPC, under the government's purview, continues to transact in dollars for oil and gas sales to local companies.
This incongruity creates a paradox where Nigerians are compelled to procure USD from the black market to engage in transactions with their own government at official rates, further straining the dollar and devaluing the Naira in the process.
Furthermore, experts have raised concerns about the long-term implications of this reliance on foreign currency. Dr. Aisha Abdullahi, an economist at a leading Nigerian university, emphasizes the detrimental effects on the nation's sovereignty and economic stability. "By prioritizing transactions in foreign currencies, we are essentially relinquishing control over our monetary policy and subjecting ourselves to external market forces," she warns.
Moreover, the lack of trust in the Naira undermines efforts to foster confidence among investors, both domestic and foreign. With businesses wary of the currency's volatility and the government's inconsistent policies, investment inflows are stifled, hindering economic growth and job creation.
As the nation grapples with economic challenges, addressing this crisis of confidence in the local currency is paramount for sustainable growth and stability. The government must reassess its policies and demonstrate a genuine commitment to strengthening the Naira, not only through rhetoric but also through concrete actions that prioritize the nation's economic interests.
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Editorial