Recommendations on how to grow the Naira

Hey Readers,

 This article is linked to my previous post on What every Nigerian must know about the Exchange rate. Recently, we have watched the price of foreign currency rise by 100% in less than 6 months, Presently, 1 dollar in Nigeria costs 199 naira in Central bank of Nigeria and 375 naira in the Open market. Someone might say “I don’t make use of foreign goods so it doesn’t really affect me”? Before you make quick judgement on that, look around you, a bag of pure water now is 100 naira instead of 80 naira, we can rarely purchase bread for 50 naira, photocopy is now 10 or 20 naira for a page, Yellow bulb is now 100 naira among others. These are the things that we use daily so it does concern us. Most of the things we use in Nigeria are imported,virtually everything even down to our food stuffs. This situation affects everyone. Obviously, something needs to be done. Now, let's discuss on few steps that will help the system;

1: DEVALUATION

 To devalue simply means ‘to reduce value’. Yes, as crazy as it may sound the first step Nigeria should take to cleanse the land is to reduce the value of our money, our naira against foreign currency. Devaluating a currency is decided by the government issuing the currency. One reason a country may devaluate its currency is to combat trade imbalances. Devaluation causes a country's export to become less expensive, making them more competitive on the global market. This in turn means that imports are more expensive, making domestic consumers less likely to purchase them.

Presently, the Nigerian government is selling dollars at 199 naira per dollar while Independent bureau de change individuals are selling at 375 naira per dollar, because dollar is scarce in Nigeria. We already know that when things are scarce it tends to be more costly than when it is not. The dollar sold by the government to citizens are not enough, so most people buy from those who sell at 375 naira. So the first step is for the government to accept that the price of dollar has increased and increase their price to 210 or 230 naira at least so that they can recover some money. Assuming Mr. Salami was selling fish and he sells a cat fish for 300 naira while every other fish seller is selling at 500 naira, he will have more customers than the fish he has to sell and he might be making a loss. But, if he increases his price to about 400 naira, he will still have more customers and still make better profit than when he was selling at 300 naira. Nigeria has to raise the price of dollar from 199 naira to a higher price, since the markets now sell higher than government price, not as high as others are selling but a little bit higher than 199 naira.

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