Can The Naira Be Saved?
Written by By Ola Kazeem
Tuesday, 19 May 2009 19:10
Fetishism of Money reigns supreme under Capitalism. Money assumes much more
importance even more than Human life. Money assumes the role of alpha and omega in human
society under capitalism. This explain s why many bourgeois economists most times want to
use money to turn around the health of general economy; they call it Monetarism. Marx over
150 years ago did a very detailed and outstanding analysis of what Money is and what its
strengths and weaknesses are in the overall Capitalist economy. He stripped it of its fetishism
and clearly exposed money in its true form.
This article is a Marxist intervention in the ongoing debate on whether Naira can really be
saved. There have been two main trends arguing out this debate and both are clearly wrong.
While one trend advocates the conversion of earned Dollars first by Central Bank to Naira
before distributing it to Beneficiary, the other trend wants Central Bank not to convert the Dollar,
but to issue a Dollar Certificate to the beneficiaries and the beneficiaries can now go later in the
future to convert their certificate to Naira. None of these participants is right because their point
of view is restricted within the confinement of Capitalism and therefore instead of seeing a real
Naira, they keep analyzing a fetish Naira. We hold it a duty to Nigerian Working class, the
explanation from firm Marxist point of view, at least to clear off the confusion that these
Bourgeois intellectuals have been selling all these while.
Is Strong Naira desirable?
Nigeria is an import dependent country .for its manufactured goods. Manufacturing’s share of
export revenues is estimated at 1 percent. By contrast, manufactured goods constituted the
largest category of imports since th
e 80’s. Therefore, the immediate effect of a devalued
Naira is inflation. It hits the middle class hardest especially those who can afford some of these
imported goods. Manufacturing machines are almost 100% imported and so also are many
sophisticated equipment. To crown it all, Nigeria is now a net importer of foods. Obviously, with
this state of affair, a weak Naira means hell for ordinary Nigerians. It means economic
stagnation, instability and general meltdown.
Why Naira’s Value is falling?
Nigeria is a mono-economy. She earns over 93% of her foreign earnings from oil exportations.
When oil price is good,
Nigeria is good; and prostrate when otherwise. A simple case of
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Can The Naira Be Saved?
Written by By Ola Kazeem
Tuesday, 19 May 2009 19:10
demand and supply of foreign currency has a serious influence on the value of currency
. When oil was $147/Barrel, it was not accidental that Naira was stable and started having
problems when oil price fell significantly. Over the past ten months, the apex bank had become
the largest supplier of foreign exchange in the domestic market, controlling almost 90 per cent
of total supply as against 10 per cent in the first quarter of the year. Other supply sources
especially foreign direct and portfolio investments: home remittances (Western Union etc) have
since dried up as a result of the global liquidity and credit crises. Side by side with this lean
supply is ever growing demand for dollar. The Dutch Agricultural and Trading Company states
that Nigeria spends $1.3 billion annually on the importation of rice. An Asian news agency
recently blamed Nigeria for the 13 per cent rise in the demand for rice this year.
Nigeria spends an average of $5 billion on fuel importation annually. Besides, it spends close to
$1 billion maintaining refineries that hardly refine crude oil into petroleum product
s. The
most significant pressure on Naira has been consistently coming from Bank’s demand. On
October 6, 2008 the banks bought $257.449 million, amounting to approximately four times the
$60 million that the Central Bank of Nigeria (CBN) put on offer in the market for that day. On
October 27 2008, the banks bought a whooping sum of $892 million which accounts to be the
highest single-day demand since the introduction of the Wholesale Dutch Auction System
(WDAS) in 2006.
The Wholesale Dutch Auction System (WDAS) is the window through which the CBN sells
foreign exchange to end-users through the commercial banks. This demand has been majorly
for speculative purposes. Banks, having lost over N 650 Billion, from stock exchange moved as
usual, to speculate on the foreign exchange and this is too easy for them, since they hold
significant wealth of the public in their vaults. With over $1 Trillion collective asset base of
Nigerian Bank, there is hardly any Government policy that they cannot subvert. With this
overwhelming wealth at their disposal, they control the life wire of our economy.
Can Currency’s supply and demand be reformed?
How did Central Bank respond to this subversive action of Nigerian Banks? Expectedly, even
the Governor of Central Bank himself is a major shareholder in one of these banks, so his
action is easily predictable. The Governor stepped in to strictly regulate the supply and demand
of foreign currency. Can chaotic market forces of Capitalism be regulated? This is the question
our learned Professor aught to have asked Himself before embarking on this blind path. Central
Bank has almost completely centralized the supply side of the foreign currency, but has been
consistently having problem regulating the demand side. Regulating supply can never be
difficult in a mono-economy country like Nigeria, where over 93% of foreign earnings come from
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Can The Naira Be Saved?
Written by By Ola Kazeem
Tuesday, 19 May 2009 19:10
oil and this proceed goes straight to Central Bank. It is easier for the camel to pass through a
needle eye than for demand side of the equation to be regulated. “Banks are now required to
provide more details on their customers to enable us track where the forex purchased from our
window is going,” an official of the central bank said, but despite this, no appreciable success
has been achieved and can ever be achieved.
Only Working Class solution can work.
No appreciable control can be exercised on financial systems while still leaving the ownership in
the hand of the greedy, over-bloated and highly parasitic Chief executive of the Banks. With
overwhelming amount of money in their possession, they will always have their greedy way.
There is little or no control you can exert on these masters of the game. There are million and
one ways they can use to subvert any policy that can challenge their raw deals and fabulous
profits. The only sure way of saving Naira and guarantee a healthy usage of credit at the
disposal of Banks is to Nationalize the Banks. This is what Central Bank can never do while the
Government is still in the hand of ruling class. Only a Working Class Government with a
socialist program can boldly take this step; therefore, only a government of the Working Class
can truly Save Nigeria Naira.
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