The Dollar-Naira Valuation
OpenLife Nigeria reports that since the Central Bank of Nigeria Governor, Mr. Godwin Emefiele, publicly attacked and pointedly accused Aboki dealers in Foreign Exchange, abokifx, as responsible for the dwindling fate of the Nigerian Naira, many public affairs analysts have offered different perspectives into the raging controversies.
In some important respects, while the government points at sabotage as a reason for the low value of its currency against the dollars, stakeholders, on their part, have never failed to remind the government of its myopic economic direction, a development that accounts for the free fall of the Naira.
Besides, seasoned economists have also accused the government of sloppiness in procedural integrity.
However, as the International Monetary Fund and World Bank demand deeper reforms, Nigeria’s central bank has devalued the naira’s official rate twice last year and has weakened the exchange rate for retail users, limiting dollar access for imports and implementing restrictive forex policies to support the naira.
In the face of all this, Rabiu Lawan, on Friday opened a fresh vista on the fate of Naira and its celebrated worthlessness.
In a piece titled‘$1 VS N500 Brouhaha,’ Lawan maintained that the lamentation over the value of Naira especially in exchange for the dollars is misplaced.
According to him:
1. N500 can buy me 2 square meals in Nigeria but $1 can’t buy you a meal in the US.
2. N500 can buy me a 1.6gb worth of data in Nigeria but $1 can’t buy you a 250mb of data in the US. T-Mobile charges N32,500 for a 30gb of data, AT&T charges N37,500 for a 30gb of data, Verizon also charges N40,000 for the same 30gb of data in the US. Glo charges me N10,000 for 50gb and MTN charges me N10,000 for 40gb of data.
3. A 75cl bottle of water in Nigeria costs an average N100, a 55cl bottle of water in the US is $1.45 which is N725.
4. The most expensive place to live in Abuja is Aso Drive, a single room costs N400,000 per month, the same room goes for N350,000 in Lekki all in Nigeria. Same room in Manhattan, New York City goes for N1.8 million per month.
5. N500 can buy me a dudu osun bathing soap and a Vaseline for the harmattan season, $1 can’t do the same in the US.
6. N500 can buy me 3 litres of fuel in Nigeria, $1 can only buy you 1.3 litre of fuel in US.
7. It cost an average of N180 daily to earn a degree in Nigeria, it cost an average of N1,650 a day to earn the same in the US.
Responding, Yahaya Sanni, an Obafemi Awolowo University graduate who currently plies his trade in the United States concurred with Rabiu Lawan’s submission but slightly disagreed with him at the realm of Consumer Price Index, CPI.
Speaking to OpenLife on Friday afternoon from the US, Yahaya Sanni noted that
“A dollar shouldn’t exchange for anything less than N2000 if Nigerian economy must progress
“The only part of the analysis I have a problem with is number 4. This is because the standard of living in Manhattan and Aso or Lekki vis a vis infrastructure cannot be compared.
“ However, despite N500 having a higher purchasing power than $1, the ease at which $1 can be made is far easier than N500.
“Now, that’s the problem with the economy and not with the value of the currency.
“If I were to advise Nigerian government, I would say, devalue the naira even more. Allow aboki fx to raise the exchange rate of the dollar to about N5000 and ensure that dollar is completely scarce in Nigeria.
“That way, local contents can spring up. For instance, a leather belt in the US is worth about $30. It is the same quality as those made in Aba, Abia State. $30 is about N15,000. Am not sure there is any Aba-made leather belt that’s worth over N10,000.
“So if the dollar is N5000, $30 will be N150,000 which would buy a lot of locally made products in Nigeria.
“And that will discourage people from over-dependence on foreign goods and encourage local production.
“However, the CBN can still exchange dollars for N400 for those that genuinely want to import raw materials that cannot be found in Nigeria or machinery. That is the only way Nigeria will survive,” Yahaya asserted.