The year 2015 has come and gone leaving Nigerians with an indelible experience of negative economy growth, unemployment and increased poverty at each quarter. Within few days of 2016, the economy is still yet to find its footage as Naira volatility has continued to trail in both the parallel and interbank markets.
Despite the appointments of Ministers who have assumed their various portfolios, in the past two months, the economy has continued to grind to a halt as government at all levels have not been able to have a grip on it.
At the close of interbank market last week, Naira exchanged at 199.50 to the dollar, compared with 181.50 to the dollar a year ago, down 9.91 per cent at the official window.
On the parallel market, the naira exchanged at 266 to the dollar, weaker by 39.26 per cent from 191 to the dollar at the close of last year.
According to analysts, the inability of President Muhammadu Buhari in the last 7 months to communicate and effectively plan towards diversifying the economy from crude oil to agriculture, solid minerals among others, has continued to mount pressure on the Naira as Brent crude price have continued to decline.
The Central Bank of Nigeria, CBN, in a bid to checkmate liquidity need of the economy, introduced various monetary measures such as the weekly sale of dollars to BDCs, Open Market Operation, OMO, the Monetary Policy Rate, MPR, Net Open Position, NOP, and most recently the Cash Reserve Ratio, CRR, among several others.
According to the Director Financial Derivatives Limited, Bismarck Rewane, despite these measures to reduce pressure on the Naira, the currency has continued to suffer severe internal and external factors.
One of such is the lack of government policies, total mop up of cash from the system which has deprived emerging industry/companies from accessing loans to boost production with well known existing industries laying off staff, cutting production with several others folding up seeking alternative favourable business environment.
The ban on the use of Naira debit card has further compounded woes on the economy as industries which depend on importing raw materials abroad can no longer do business, investors who bring in goods and services can no longer recoup their money as the Apex bank can no longer meet their forex demand.
This by implication will deter so many investors from coming into the country as money invested cannot be easily made available for further investment.
The President’s body language from the 2016 budget obviously believes Nigeria can spend its way out of a looming recession by allocating more cash for his exotic cars, feeding and several other numerations in the presidency, while sensitive areas like agriculture and mining were giving minimal attention.
Most disheartening is that the Ministry of Information got more allocation than the Ministry of Agriculture and Mining. With this, the question is, where then is the diversification Buhari promised Nigerians?
State governments for decades have solely depended on federal government monthly allocations without thinking outside the box and according to Senator Olubunmi Adetunmbi representing APC, Ekiti North,
“The states face three tasks which present significant and debilitating obstacles to their economic revitalization.
“The states face three tasks which present significant and debilitating obstacles to their economic revitalization.
“First is that they all must regain fiscal sanity by ensuring that revenue matches expenditure.”
With the challenges of depleting revenues, growing unemployment, energy crisis and low growth and productivity, the year 2016 is set to be a focal point in Nigeria’s development. Hence, the need for Buhari to initiate a policy outlook aimed at taking Nigeria away from the looming recession as predicted by the Central Bank Governor, Godwin Emefiele.
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