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February 28, 2024

Economics 101 About Current Nigeria’s Economy

By Akib Abiola

Why the Naira is falling. Even if an Angel is our President right now, we would still have the same problems unless we Nigerians change our attitudes and spending habits.

In a robust economy like China, Israel and Japan, every dollar they earned circulates through their economy six to eight times before it goes out. In Nigeria, it only circulates twice before it is used for imported goods.

Secondly, every currency earned by an individual in a developed country circulates within the community eight to ten times before it leaves the country but in the case of Nigeria, it only circulates three times before it is spent on imported goods.

Another factor for Naira devaluation is artificial inflation. Prices of local commodities being artificially inflated due to dollar exchange rate. Corn production has nothing to do with dollars.

Finally lack of comparative advantage in our spending habits and the use of our time contributes to the Naira weakness. What do you get out of spraying money at a party compared to investing the money. What do you gain from the time you spent on making stupid video on social media compared to spending same time farming or trading.

If Nigeria is going to be better, we need to change our mindset and stop blaming the President.

The Naira will only get stronger when we change our spending habits and value the currency. Sweeping your money with a broom at a party doesn’t add value to your currency.

Nigerians if you want a stronger Naira and a better country, eat Nigerian, dress Nigerian & tour Nigeria. Voluntarily give up pilgrimages to Saudi and Israel. Pay your taxes before your tithes.

The value of the Naira, exchange rate is determined by the law of supply and demand. The availability and Nigeria’s earning potential (supply) for dollars cannot meet the demand for the hard currency. We are all chasing to buy dollars with our Naira.

All things being equal when demand exceeds supply, prices increase, inflation rises and the exchange rate for your currency increases and your currency is devalued.

Finally, to compound the problem, the previous administration has collected and squandered all the payments for future oil deliveries. We are only delivering oil now to the purchasers without collecting revenues.

Imagine if a cocoa farmer has collected the money for the next ten to twenty years for his cocoa and spent it on a lavish marriage wedding or a naming ceremony party, would he have money to send his children to school?

This is the peculiar situation President Tinubu has found the economy of the country. It is going to take more than six months to dig us out of the hole that the successive governments have put us in.

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Mustapha Salisu

Mustapha Salisu is a graduate of BSc. Information and Media Studies from Bayero University Kano, with experience in Communication Skills as well as Public Relations.

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