The year 2020 is challenging across all domains in Nigeria. Covid-19 came and threw everything out of order. The escalating insecurity paralysis moved to another dimension. We experienced police brutality which remains a wound in the hearts of many citizens, well beyond the physical wounds. Then the Naira. Yes, Naira is falling like a domino with economic gravity doing its thing.
As the Naira pandemic unfolds, what can companies that need foreign currency for importation do? We are seeing micro-patterns, as I explained yesterday in Tekedia Live. Simply, some traders are banding together to fund Nollywood movies with the hope that those movies will earn decent income on YouTube via adverts. YouTube pays in US dollars and everyone wants to have a product that earns in foreign currency!
Unfortunately, that will not likely work. Why? YouTube devalues its own “metrics” more than even the Nigerian government does on Naira. On Dec 31 019, if you needed 1000 views to earn say $2, from Jan 1 2020, Google devalued, and that means you will need double the views (i.e. 2000 views) to earn that $2. By October this year, Google halved it again. Largely, Google does this and no one challenges it: you keep growing your audience but you keep making less money. On that construct, building to harvest dollars via YouTube ads may not work.
Pure and simple, import dependent businesses in Nigeria need to ask for a new economic playbook to change the trajectory on the Naira. Unless that is done, nothing else offers a long term solution.
Where is Naira Heading to?
Where is this thing heading to? It seems by Dec 2023, Naira could be touching N800 per US$1 in the black market. That was my call in 2018. I also noted that by 2023, some commercial banks would be taken private, from the public markets. Unless we fix and bring stability on Naira, Nigeria has no game plan. By now, we ought to have called a national emergency on this paralysis. Yes, everything should be on the table to arrest the decay in our national currency.