The Nigerian Naira falls to N410 per US dollar, officially. The Central Bank of Nigeria (CBN) governor noted: “In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$.”
If you look at that statement, you will agree that Nigeria is in a vicious circle. Yes, our inability to reform our economic structures has muted the comparative advantages within the nation. So, just like that, a nation of extremely brilliant people, is lost, with no national vision to galvanize economic vibrancy and growth towards a hopeful future.
With political stasis evident everywhere, Nigeria is at a crossroads, and nothing can fix this paralysis until Nigeria decides to produce things it could sell internationally or substitute some it currently imports. But with the banks not lending at scale (not entirely their fault), and economic restructuring that will bring intra-state competition, to boost productivity and efficiency, not happening anytime, Nigeria’s only core hope is that Aliko Dangote’s refinery business will rise.
Yes, Nigeria waits for Dangote because only him has a credible roadmap to change the economic trajectory of his nation. His position today is very vital and critical because he could be the only cousin to make Naira stronger. Naira looks like an orphan with no one helping it to compete globally. Dangote will come to assist it to find its space in the league of global currencies. Across human history, nations rise when pioneering entrepreneurs emerge. The moment of truth is here – and Naira needs pioneers in markets to save it from the ruins of the scale of Mexico, Venezuela, Argentina and even Zimbabwe, at different times of their histories.
I have written extensively on Dangote’s positioning in my book – The Dangote System. I have also accepted an invitation to meet the business legend in Nigeria anytime I make it home. Certainly, it may be a while since I have no plan to fly until they have solved the last case of Covid-19!
Saving the Nigeria
According to the News Agency of Nigeria, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has noted that Dangote Refinery will possibly sell refined crude to Nigeria in naira when it begins operations. When that happens, Nigeria will save about 41% of its foreign exchange, currently expended on the importation of crude oil products. That 41% will give a breathing space for Naira and that could be a turning point for the nation.
Emefiele said, ”Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira.
“That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with the freight will be totally eliminated.
“This will make the price of our petroleum products cheaper in naira. If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.
“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency.”
Emefiele was confident that the refinery would be completed by the first quarter of 2022, adding that this would put an end to the issue of petrol subsidy in the country.
He said, “I am saying that by this time next year, our cost of import of petroleum products for petrochemicals or fertiliser will be able to save that which will save Nigeria’s reserve. It will help us so that we can begin to focus on more important items that we cannot produce in Nigeria today.’’
For years, Nigeria has approached strengthening the naira through financial engineering at CBN headquarters; Dangote Refinery will help to strengthen Naira through technical innovation, at international markets through products and services, shifting equilibrium points to improve the balance of payment for Nigeria. The latter has always worked! Nigeria waits for that day because that refinery could be the most important national asset for a long time. Then, we will note that the N100 billion intervention to the projects, from the apex bank, is a good deal for the nation.