The Managing Director/Chief Executive Officer, Cowry Assets Management, Mr Johnson Chukwu, has said lifestyle changes of Nigerians, among other reasons, made the Naira to lose its pre-1986 strength against the dollar.
Chukwu spoke as part of panelists at a colloquium on ‘Addressing the Foreign Exchange Question in Nigeria” during a seminar for Finance Correspondents and Business Editors, in Akure.
The Central Bank of Nigeria (CBN)-organised seminar, which entered its second day on Friday, has the theme, “Exchange Rate Management and Economic Diversification in Nigeria: The ‘PAVE’ Option.”
Chukwu said the Naira, over the years, lost its strength partly due to the change in taste of Nigerians, the country’s growing population and some policies, among others.
He said in 1960 for instance, the population of Nigeria was about 46 million and the taste for foreign things was rather low.
He said travelling abroad was also not very attractive as it is today, while the groundnut pyramids, cocoa and oil palm were utilised in strengthening the nation’s economy.
He said with many industries operating in Nigeria, importation of many items was not necessary, resulting in low demand for foreign exchange.
He said today, the situation had changed, with the population exceeding 200 million, industries ‘killed’ by policies, and a love for foreign goods.
Chukwu said all these put pressure on demand for foreign exchange, which was worsened by the non-addition of value to products in the country.
He said Nigeria must look seriously at the kind of labour being produced by reviewing its educational system, to have products that would be competitive internationally.
Chukwu said the government must embrace Science, Technology, Engineering and Math (STEM) to be able to increase productivity, enhance exports and reduce imports, and attendant foreign exchange demand.
According to him, human capital development is very important to be more productive and have internationally accepted products that can help earn foreign exchange to shore up the Naira.
Prof. Mike Obadan, Chairman, Goldman Education Academy, Benin City, said the Naira recorded a 99.51 per cent depreciation between 1986, when the Structural Adjustment Programme was introduced, and 2021.
Obadan, in his paper titled, “Overview of Exchange Rates Management and Economic Diversification in Nigeria,” said a table indicating the depreciation showed that the Naira in 1985 was 0.85 to a dollar, but closed 2021 with N435 to a dollar.
As at February 2022, it stood at N419.98 to a dollar.
Obadan suggested ways to improve foreign exchange earnings and achieve exchange rate stability.
Obadan, also a member of the Monetary Policy Committee of the apex bank, said there should be moral suasion to encourage Nigerians to patronise home-made goods.
He said they should be encouraged to reduce their high propensity for importation of all kinds of goods and services, and import only when absolutely necessary.
“They should also eschew unhealthy speculation in foreign exchange as well as rent-seeking behaviour and adopt positive attitudes towards ensuring a stable exchange rate for the Naira,” he said.
Among other things, Obadan also called for revival and rebuilding of the productive sectors of the economy to achieve higher capacity utilisation and competitive manufactured exports.
He said there was a need for strong government encouragement of local refining of petroleum products for both domestic consumption and exports as well as reduce foreign exchange demand to import refined petroleum products.
A business journalist, Mr Boason Omafaye, who anchored the session, said Nigeria should consider the South Korean model of teaching STEM subjects in local languages.
He said by so doing, everyone would understand what was taught and learners would be able to maximise their potential for the benefit of the country.
Dr Tope Fasua, CEO, Global Analytics Consulting Ltd., a panelist, said the CBN interventions to stabilise foreign exchange rates were in order as it could not afford to sit back.
