How Nigeria killed the Naira

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A close up image of Nigerian bank notes and coins

 

Nigeria, once touted as the giant of Africa, has seen its economic fortunes dwindle over the years. The decline of the Naira, Nigeria’s national currency, is not an isolated event but rather the result of a series of economic policies and decisions made over several decades.

 

In this article, we will delve into the factors that have contributed to the devaluation of the Naira, focusing on the shift towards an import-dependent economy, neglect of local agriculture, and the pursuit of foreign currency earnings.

 

The Era of Import Dependency:
In the early 1980s, Nigeria was a nation with vast potential for self-sufficiency in various sectors. However, this trajectory began to change in 1983 when significant institutional adjustments were made that reshaped the country’s manufacturing and production capabilities.

 

This marked the beginning of Nigeria’s transition into an import-dependent economy. The introduction of the Structural Adjustment Programme (SAP) played a pivotal role in this transformation.

 

 

The Impact of SAP:
SAP, introduced in Nigeria in the late 1980s, was intended to liberalize and restructure the economy. However, instead of strengthening indigenous industries, SAP opened the floodgates to globalization, which had a detrimental effect on local production.

 

The program led to the decline of many domestic industries, as Nigeria increasingly relied on imported goods, leading to economic stagnation.

 

Agricultural Neglect:
One critical area where Nigeria lost its way is in agriculture. While the nation boasts diverse agricultural potential, the national agricultural policy has primarily focused on export-oriented crops such as cocoa, rubber, and sesame seeds.

 

This approach, while aimed at earning foreign exchange, neglected the needs of local farmers who produce staple crops like yam, cassava, maize, and melon.

 

 

The Pressure of Balance of Trade and Payment:
Nigeria’s need to earn foreign exchange to pay off international bills has led to a skewed national policy. The focus shifted from what local communities needed to what could generate US dollars.

 

This has created a vicious cycle where local farmers and industries are marginalized, further affecting the nation’s economy and leading to the devaluation of the Naira.

 

 

The Path Forward:
To reverse the decline of the Naira and restore economic stability, Nigeria must undergo a significant economic transformation. This transformation should include a renewed focus on local agriculture and industries.

 

The country needs to prioritize the production of goods that can be consumed locally while also identifying opportunities to export products in demand internationally.

 

The decline of the Naira is not merely a matter of currency exchange rates but a reflection of Nigeria’s broader economic challenges. The nation’s shift towards import dependency, neglect of local agriculture, and the pursuit of foreign currency earnings have all played their part in this economic downturn.

 

To revitalize the Naira and strengthen the nation’s economic foundation, it is imperative that Nigeria reevaluates its economic policies, rekindles local industries, and promotes self-sufficiency. Only then can Nigeria regain its status as a true economic giant in Africa.

 

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