Very painful indeed: the Central Bank of Nigeria (CBN) has made it official – Naira has lost more grounds to the US dollars. According to the Vanguard, Godwin Emefiele, the apex bank governor, “who spoke at a summit on the economy by Bank CEOs on Friday, said the drop in crude oil earnings and the associated reduction in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria”.
His words: “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/$.”
Meanwhile, the Vice President, Prof Yemi Osinbajo, noted within the week that Nigeria would be vigorously pursuing export-focused initiatives to improve our balance of trade and payment which will help the Naira. Call that a cosmetics solution: Mr. Vice President knows the real solution but somehow his party does not want to do the needful. Yes, Nigeria needs to make states competitive by restructuring our economic architectures. If we do that, we will see more organic innovations across states.
The VP #Osinbajo also commended the DMBs for their patriotic contributions to sustain growth but called for the need to further deepen the provision of capital that would allow businesses to grow over the long term.
— Central Bank of Nigeria (@cenbank) February 26, 2021
Today, a governor can camp in Abuja for six months without any interest in the affairs of his state, since he is aware that at the end of the month, Abuja will credit his state’s bank account with billions of naira to spend. He will spend that money and then wait for the next month. But if we restructure, that governor will have incentives to think and innovate because if he does not do so, he will not have resources to pay his workers and run the state. Until Nigeria does that, even the exports-oriented initiatives will not work at scale.
It is because of our outdated economic formulation that a nation like Nigeria would have 26 states not recording a single foreign direct investment dollar in a year, according to the National Bureau of Statistics.
Twenty-six Nigerian states recorded zero foreign investment in the whole of 2020, figures released by the National Bureau of Statistics show.
The report on capital importation into the country, compiled by the Central Bank of Nigeria, was released on Friday by the NBS.
It captures the total Foreign Direct Investment (FDI), portfolio investment and other types of investments into the country in a year the global economy suffered a terrible battering as a result of the coronavirus pandemic.
Those on the list like my home state, Abia, really did not do much: “By destination, Lagos emerged as the top destination of capital investment in Nigeria with $8.3 billion, followed by Abuja, which received $1.3 billion. The others on the list are Abia State with relatively lower $56 million, Niger with $16.4 million, and Ogun with $13.4 million. Anambra State recorded $10.2 million, Kaduna State recorded $4.03 million, Sokoto got $2.5 million and Kano got $2.4 million. Akwa Ibom received $1.05 million ahead of Adamawa, which received just $20,000.” Yes, Adamawa’s FDI for a whole year was $20,000, and that effort added it to the list of Nigerian states with FDI in 2020! Simply, no incentive to leverage on comparative advantages across the nation.
Nigeria needs to fix its weakest point: fix the structure of its economy, and unleash the ingenuity of its people, to use their comparative advantages to advance the commonwealth. If we do not do that, those export-oriented initiatives will fail, primarily because there is no incentive for the states to think. Yes, if oil continues to run, and the credits continue to flow into the bank accounts, why think when at the end of the day, everyone gets his or her portion?
People, Nigeria’s economic restructuring to add intra-state competition is the way forward! Do it for Naira.---
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