By Adebiyi Adesuyi
Our national currency, the naira, has been losing its external value at a disturbing rate since the price of crude oil started heading southward. Besides, the country’s major customer, USA, is no longer interested in our oil as it has become a producer now. China, another big buyer, is currently experiencing economic slow-down. At home, crude oil theft has also exacerbated the problem. All the above factors have jointly contributed to the decline in the volume and value of our oil exports thereby causing a large fall in the country’s monthly inflows of foreign exchange.
Most people are worried about this negative development because Nigerians live chiefly on imported goods. As the supply of foreign exchange falls and its demand keeps rising, more naira will be needed to buy a British pound or American dollar. Consequently, imported goods will become more expensive for Nigerians. We need to appreciate how the economic forces of demand and supply play to raise or lower the exchange rate.
Recently, the Central Bank of Nigeria has been trying to control the demand for foreign exchange. The apex bank classified 41 items as not valid for foreign exchange. Let us hope that some importers will not obviate this policy by buying foreign exchange to import the prohibited items using different custom HS Codes. Most corrupt importers will always get their goods cleared with the connivance of equally corrupt officials assigned to our ports.
Banks have also been stopped from accepting cash into customers’ domiciliary accounts. Transactions in foreign currencies are to be done through transfers only. This measure is meant to prevent speculative practices. It will also give a trail on movements of funds acquired unlawfully. However, every effort to manage the demand side of the market will not succeed in the long run unless stakeholders resolve to increase the supply of foreign exchange phenomenally.
Nigeria must make deliberate efforts to increase the volume and value of non-oil exports within the next two years. Economic sectors such as manufacturing, agriculture, mining and tourism must be positioned for export drive. Entrepreneurs must be encouraged to invest in these critical sectors. Special institutions, not commercial banks, must be created by the CBN to give revolving equity funds to emerging entrepreneurs. Mentors should be arranged for nascent entrepreneurs for successful operations. Funds extended can be recouped through the securities market when an enterprise has successfully operated for three years.
Standardization of Nigerian products must never be neglected. It is painful that our agricultural foods are overloaded with harmful pesticides which led the European Union to ban Nigeria from exporting beans, sesame seeds, melon seeds, dried fish and meat, peanut chips, and palm oil into its markets. Relevant institutions must be equipped to guide producers and exporters in the area of quality for our exports to meet acceptable standard in the global market. For instance, Nigeria is blessed with good shea nuts but it has no factory that can process high quality shea butter that is acceptable in big markets like Europe and USA. Our cocoa must compete well with those exported by Ivory Coast and Ghana.
Lapidaries are needed in every state that is rich in solid minerals. Such facilities will be able to polish precious stones for exporters. Our mineral exports will be able to meet the specifications of foreign markets. Exporters can rest assured that they are not going to lose money when they buy and export solid minerals. The value addition through the services of a lapidary will help in raising the price that foreign customers are willing to pay for the products.
Let every state in Nigeria be organised into a Strategic Economic Area (SEA). Thus, Nigeria will have 36 SEAs . Each SEA must use the resources available in its domain to promote manufacturing, agriculture, mining and tourism with a view to earning sufficient foreign exchange. The 36 states should be categorized into 3 types namely 12 large SEAs, 12 medium SEAs and 12 small SEAs.
Each of the 12 SEAs must work assiduously to earn $5billion annually, each of the 12 medium SEAs must fetch $3billion annually, and each of the 12 small SEAs must bring $2billion into Nigeria every year. Thus, the 36 SEAs will begin to contribute a minimum of $120billion annually through the investors that have been attracted to their states. These targets should be reviewed upward periodically. SEAs that meet annual targets must be celebrated and rewarded by the Federal Government.
There is a compelling case for the removal of disincentives in order to encourage exports. My recent conversation with some merchant exporters revealed that they are extorted heavily by the officers of various agencies operating at our ports. I was surprised to learn that exporters are made to pay hefty bribes when they are shipping manufactured products such as Milo, Maggi, Knorr, Indomie Noodles, etc. These cases are never reported. Yet, most businessmen stay off because of this problem.
The foreign market must be easily accessed by Nigerian exporters. The Nigerian Export Promotion Council (NEPC) must be directed to get overseas buyers for each product that Nigeria can export. The supervising Ministry must create a schedule of all exportable products and request NEPC to get a specified number of foreign buyers for each of them. Exporters must have access to this information on request. The commercial sections of Nigerian embassies must be put under obligation to market and get large buyers for Nigerian products. Performance should be monitored and rewarded accordingly.
The local currency can and must regain its lost value. Expectedly, this goal will only be attained through shared responsibility and singleness of purpose. We can salvage the Naira!