The Fight To Save The Naira Can Not Be Fought By The CBN Alone, It Needs A Fiscal Backup

For months the Nigerian Central Bank has been fighting a solo battle to ensure that the Naira does not collapse as speculators fret over the decline in oil prices. It has refused to provide FOREX for the importation of some commodities and it has also tightened the currency outflows too. It has kept interest rates a bit high, and has rationed forex to banks while stopping the activities
of Bureau de Changes across the country. But everybody who knows a few things about economics knows that these activities should never be practiced for long, neither should they be done in isolation from fiscal planning and policy.

Nigeria has been an oil-dependent nation since the 1970s. It has ignored or, rather, not taken serious any advise to diversify the economy from oil. Thus making the economy vulnerable to any swing in oil prices. And in addition to a spendthrift culture (including corruption), the govt at all levels regularly finds it difficult to sort out even mundane financial obligations, such as pensions and paying wages, when oil prices swing in the negative.

The latest price swing, at first however, saw a more adept approach from the govt. It had anticipated the effects of a fall in oil prices, and had prepared well for the short term. But that was in 2015 when the country had the sophisticated talents of Ngozi Okonjo-Iweala.

Since 2015, however, the country has made very little progress irrespective of what government supporters say. The country has maintained nearly the same economic and fiscal stance since 2015. It has artificially propped up the Naira, and keeps interest rates high. It only recently lifted a ban on the importation of certain commodities, a policy it had supported since 2015. But aside this, nothing has happened. In fact, the government looks even more lacklustre than ever. It only recently passed the budget for 2017, meanwhile fiscal year started in January.

The delay was not due to any form of bi-partisan politics between the ruling party and the opposition, the line between the two actually looks pretty blurry. It was actually due to lack of any effort by the executive. It didn’t seem quite eager to get anything done this year. Everything remains stale and businesses continue to witness severe stress on their activities and the populace are, once again enduring the situation.

Worst Than Before

But the problems in the country is actually quite annoying and painful than ever before.

Recently, the price of tomato shot up more than 200% as another spell of destructive pests are causing problems for farmers. The situation is no different from that of 2016, yet the failure of the agriculture ministry to anticipate this or even put in place measures to avoid a repeat of the problem is parallel to how the entire government functions.

The country is in a free-fall. And everything is done haphazardly and without regards for the people.
Many state owe salaries to workers, and Kogi state owes as much as 15 months, while Bayelsa, an oil-producing state owes more than 5 months pay.

This issue is striking because the governors have received bailouts before. Also monthly, they and the Federal and Local Govts share government revenue. Last month Kogi got over N5bn. And the governors even received some money out of the Paris Club refunds.
So how come they still owe debts?

Nigerians can only hope things get better soon. Because if not, then the 2019 elections should be an opportunity to get things right.

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