Sustaining Naira Rally

Olayemi Cardoso, naira

By Uche Nworah, Ph.D

Whatever the federal government is doing to stabilize the naira, they should keep it up. Kudos!

The news this morning is that the World Bank has pre-qualified Nigeria for a ‘friendly’ $2.25B loan. It is ‘friendly’ because it comes at 1% interest rate over a 40-year term with 10 years moratorium.

According to the Finance Minister, Wale Edun, “There is no such thing as free lunch but this is the closest you can get to free money. This is also part of the flow you can count. These measures are crucial for enhancing our fiscal resilience and ensuring long-term economic stability”.

Most importantly is what this ‘friendly’ loan will do to investor and development partners confidence. I also think that the government needs to deploy communication materials and also apply moral suasion in the effort to bring down the rate of the Naira against the dollar and other currencies.

Peter Obi once spoke of an experience he had at Harvard University. He spoke about how a Professor explained to him that love for currency of a country contributes to its positive exchange value. If people love their country’s currency, they will value it and defend it through their actions.

They will want to keep and stock it against other currencies. That’s what the green back has against the Naira. Our people love the dollar a lot and carry it around. Some local businesses even demand payment in dollars. This is wrong and amounts to economic sabotage.

The idea of government officials including legislators always exchanging their Naira into dollars, preferring dollars as their store of value should be discouraged. If you go to the National Assembly, there is a Bureau De Change there. What is it doing there?

Long term future for Nigeria to stabilize the naira is to export more and earn foreign currency, and consume more internally produced products and services, against imported ones. We should as a matter of urgency stop importing refined crude products. These all contribute to excessive dollar demand which impacts negatively on the Naira.

About the author


Leave a Comment