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A major reason for the fall some experts have said is the increasing demand of foreign items. Though the current administration efforts and in-roads in diversification and industrialisation are yet to begin its yields there have been call to collaborate on the way out of this logjam, which is bring untold hardship to Nigerian’s as many companies are closing shops. For instance, Nobel laureate Professor Wole Soyinka, last week called on Federal Government to organise an economic conference to confer on solutions to change the economic fortunes of Nigeria. Soyinka who blamed the dire economic situation in Nigeria on the years of bad governance, stated this in a press release issued from the offi ce of the Minister of Information and Culture. Soyinka said “I think we really need an emergency economic conference, a rescue operation bringing as many heads as possible together to plot the way forward.”
While stressing that the government should maintain its war against corruption, Soyinka also stressed a need to pursue the anti-corruption campaign “within the confines of the law”. But even in the midst of this challenge experts have said the Nigerian economy continue to grow remarkably making the top 10 fastest growing economies in the world as ranked by reputable institutions such as World Bank, CNN, Bloomberg among others. According to the experts the non-oil sector has continued to experience a steady growth.
Also Managing Director, Cowry Assets Management Limited, Johnson Chukwu, has said that Nigeria economy still has high potentials and prospects despite the continued slide in crude oil prices and the failing value of its currency when compared to some other currencies. Speaking at the weekend during a Bi-Monthly Forum organised by the Finance Correspondents Association of Nigeria, FICAN, in Lagos, Managing Director, Cowry Assets Management Limited, Johnson Chukwu, said the economy is still a huge market for consumer goods, capital goods, fi nancial services, information and telecommunication services, agricultural goods, oil and gas products.
Chukwu who spoke on the theme: ‘Policy Options for Nigeria Economy Recovery’ said the country’s trade, real estate, transport infrastructure, power infrastructure; entertainment potentials remain a plus for the economy. “There is no single sector of the Nigerian economy that has fully developed, talk less of being matured,” he said. He said a look at the movement in exchange rate of other oil dependent economies indicate that most of them have allowed their currency to adjust to the strength of their export earnings apart from Venezuela and Egypt. Many experts have said that what Nigeria need now was to increase local production and reduce dependency on imported items, adding that devaluation would not perform the magic.
Perhaps it was on this backdrop that President Muhammadu Buhari has reiterated his opposition to the devaluation of the naira. According to a statement by his Special Adviser on Media and Publicity, Mr. Femi Adesina, the President spoke on Saturday while contributing to a Presidential Panel Roundtable on Investment and Growth Opportunities at the opening of the Africa 2016: Business for Africa, Egypt and the World at Sharm El-Sheikh, Egypt. Buhari was quoted as saying that Nigeria could not afford to devalue its currency because the country imports everything, including toothpicks.
“Developed countries are competing among themselves and when they devalue they compete better and manufacture and export more. But we are not competing and exporting but importing everything including toothpicks. So, why should we devalue our currency? “We want to be more productive and self-suffi cient in food and other basic things such as clothing.
For our government, we like to encourage local production and effi ciency,” he said. The President added that those who have developed taste for foreign luxury goods should continue to pay for them rather than put pressure on the government to devalue the naira.
He added that the priority of his administration is to ensure national food security before export of food products, while stressing that Nigeria being a mono-economy dependent on oil, with a teeming unemployed youth population, the way out of the current slump in the global oil market, is for the administration to focus on agriculture and solid minerals development. Buhari however expressed optimism that Nigeria would get out of its current economic downturn.
According to many Nigeria this is a time to look inward and seek avenue to reposition the country’s capabilities towards becoming West Africa’s leading manufacturer. In this regard recently, the National Agency for Science and Engineering Infrastructure, NASENI and Nigerian Machine Tools Limited, NMTL, have concluded talks to jointly increase national capacity. Both agencies want to move the nation away from mere assemblage of machines, to production of the parts that make up the machines, and their eventual full production in Nigeria The plan, according to both organisations, is to work closely together and share technical and human capacity from both ends to boost the production of most of the machine tools needed by various industries, instead of the huge export currently going on in the country.
Executive Vice Chairman of NASENI, Engr. Dr. Mohammed Haruna, said at a technical collaborative meeting with the management of the Nigerian Machine Tools Limited in Osogbo, that both organisations have already signed a Memorandum of Understanding (MoU) to boost machine tools production in Nigeria. He said the primary aim of NASENI was to empower SMEs through the impartation of technologies, engineering principles and practices for the production of equipment that would meet international standards as well as sustenance of a fl ourishing science education sector, local capital goods and industry. “We cannot be doing our research and development activities in isolation. We need to collectively see what is happening, then prioritize based on the needs of the industry, not necessarily what we want to do, but what is needed in the industry. That is essentially what this is about.
“Already, we have started feeling the impact. We are already working together in some of the assembly plants that you have seen here, with a view to producing the components in Nigeria, instead of only assembling. We are doing some degree of manufacturing. So, we want to marry both efforts in order to have substantial local content in our products.” He stressed his agency’s competency in research and development for certain kinds of industrial machines, noting that limited resources for the actual production of such machines had been an issue. In a similar vein and as a solution to the falling value of the naira Nigeria’s First Lady Mrs. Aisha Buhari has urged Nigerians to patronise made in Nigeria goods with a view to creating employment and strengthening the country’s economy. Mrs. Buhari made the call when she inaugurated the Made in Nigeria Tomoto Paste Factory, Erisco Foods Limited, in Lagos, recently.
She said that the need to patronise Nigerian goods had become necessary as it would encourage the production of local farm products and improve the health of citizens. She also urged manufacturing companies in the country to emulate Erisco Company by using locally available raw materials to produce their goods to ensure economic development. Chief Executive Offi cer of Erisco Foods Limited, Mr. Eric Umeofi a, urged the Federal Government to sustain the formulation of positive policies that would enhance the production capacity of manufacturers. He said that the foreign exchange restriction of 41 items from the Central Bank of Nigeria (CBN) offi cial corridor had compelled Nigerians to patronise home-grown foods. Umeofi a said that the company had fast track its backward integration programme by developing a technology that synchronised its existing machines to produce tomato paste directly from fresh tomatoes to tomato paste and tomato ketchup. Justifying forex ban on some products, Director, Corporate Communications, Mr Mu’azu Ibrahim, has encouraged Nigerians to patronize made in Nigeria products. CBN excluded importers of 41 items including rice, processed meat, vegetables, toothpick, among others, from sourcing Forex, Ibrahim said it was only temporary.
“By not importing those items we are saving the Forex demand on the market and the reserve and, at the same time, boosting local production. “The ban of these products, particularly agriculture products have begun to have positive effects on the economy. “I was in Ibadan recently and was encouraged by a producer that rose from Cassava farming to processing and that farmer is now producing industrial starch which is in high demand. “Some companies, large corporations that were importing industrial starch are now sourcing from that company in Ibadan. “I was happy when the producer said that last year, they were able to record nine billion dollars in exports; this is encouraging. “There are many like that and once we give them time, the market will improve. So my advice to Nigerians is to think Nigeria, act Nigeria and buy Nigeria; let us patronise made in Nigeria goods,’’ he said. But according to Chukwu the CBN, has been engaged in aggressive demand management with the disqualifi cation of 41 items from accessing the foreign exchange market so as to keep the naira exchange rate within the N197 to dollar and a band of plus or minus three per cent. He said that trade policies are better tools to use in discouraging the importation of goods whose import hurt local manufacturers.
“We have proven cases of successful use of appropriate trade policies to develop specifi c industries in the country. A classical example is the Cement industry where local manufacture has grown from 2,000 metric tonnes per annum, to more than 40,000 metric tonnes per annum in 15 years. Nigeria has moved from a net importer of cement to a net exporter as a result of targeted use of trade policy in the sub-sector,” he said. Speaking further, he said the ongoing naira volatility in the parallel market is being triggered by the inability of the CBN to meet legitimate demand for foreign exchange adding that while the regulator has effectively maintained the offi cial exchange rate at N197 to dollar, it has been impossible for the apex bank to meet all legitimate demand at the offi cial window.
He said a backlog of unmet demand which has spilled over to the shallow parallel market is driving down the naira to its current levels. “With legitimate importers of raw materials and equipment migrating to the parallel market to satisfy their demand, the parallel market has effectively become the ruling market for pricing of imported goods and services within the country, with the exception of refi ned petroleum products, which seem to enjoy some preference in the allocation of forex by the Central bank,” he said.
He said the shallowness of supply in the alternative markets and huge demand are already driving importers to a state hysteria, as they seem to be ready to pay any price to meet their demand. “We suspect that ordinary folks and foreign residents have joined this fl ight to safety and may be converting their naira assets into dollar to mitigate additional loss in value. The danger of an unmitigated progressive depreciation of naira is that our national currency may lose one of the most critical attributes of money, which is “as a store of value” and should this happen, the concerns about the dollarisation of the economy will become real,” he said. Soyinka Godwin Emefi ele, CBN Governor Chukwu Cover
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