In 2015, 1 CFA franc in Cotonou would have given you N0.25 (or 25 kobo); today, you will get N2.50. If you run the numbers, that is a 10X appreciation over the Naira in less than ten years! Kenyan Shilling has delivered something closer.
For South Africa’s rand, the Naira has lost a factor of 6 over the same period (1 Rand was about N15 in 2015; today, it can buy N90). Against the US dollars, Naira officially is off by a factor of 3!
So, even though we open the day writing about the Euro, British Pounds and the US dollar, the issue is that the Naira has underperformed in Africa in the last decade.
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For years, Nigerians enjoyed the flip where our currency was outperforming our neighbours’ currencies. People would go to Cotonou to buy clothes, cars, fridges, etc in the port, and bring them into Nigeria. Today, they’re the ones coming to buy our foodstuffs, and the major challenge in the Nigerian Customs is to prevent smuggling of foodstuff out of Nigeria.
Now you know why the Cotonou’s old-decades cheap second-hand clothes are no more affordable in Nigeria. You may ask: how do we fix this problem? From a village boy perspective, I will say, reorder the architecture of the Nigerian economy and de-financialize it. Today, the economy of Nigeria has been financialized.
Though what he was doing was not on my horizon, after reading books, I do conclude that Nigeria’s IBB (Babangida) was a good operator even though he scaled many bad things in the country. I mean he built Abuja, 3rd Mainland Bridge, and many other catalytic infrastructures. Yet, he messed up with SAP (structural adjustment programme), and in the bid to recover, he liberated the banking & financial sector at scale, without connecting them to manufacturing.
Today, from GTBank to Zenith Bank, Access to modern UBA, and beyond, some of the leading banks in Nigeria were created within 1989 to 1993, and a policy framework made that possible. Just like that, the financialization of Nigeria began, and that started the erosion of the core pillars of Nigeria. He made finance better but ignored manufacturing!
In the 1950s, 1960s, 1970s and early 1980s, nobody knew who owned banks because our economy was managed by industrialists and manufacturers, from Aba to Ibadan to Kano. But SAP sapped Nigeria, and turned flipping and exchanging Naira and USD as the fastest way to create wealth. We all bought into it, and nobody wants to build anything. Why build if you can flip Naira and become richer? People, we need to be making things in Nigeria to help Naira.
Comment in LinkedIn Feed
Comment #1: we spent the last 3 decades flipflopping currencies. Who has time to build factories when you can make more money with less risks trading money. The results of our 3 decades long actions have fully matured. Guess what, the actions we are taking now which is short termed (survivalism) to solve that problem will also mature soon and the results will be equally bad. Let no one deceive us, we will be in this survival mode for a while because we have learned to take advantage of the opportunities it presents.
Comment #2: For years, many artisans from Cotonou enjoyed working in our country because the naira used to be stronger than their CFA franc. However, today they are gradually returning to their home countries. This shift is due to the changing economic dynamics, including currency devaluation and economic instability, which have reduced the financial incentives for them to work abroad.
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The reordering will begin from value system and reward system. We give so much reverence to anyone with plenty money, without ever asking what sort of enterprise that generates such amount of money. We don’t care. The generation before now founded banks and took advantage of the financialisation and made plenty money, what did the generation after them do? They continued with founding fintech companies. So, for decades, all we have been doing is trading and circulating money.
What is the next generation thinking about? They are even worse, they have no regard for proper education, but they care about making plenty money from crypto, content creation, being influencers on social media, skit making; just anything that is not productive on its own. We want to provide services without a production base, and as number of those who need services continues to shrink, we become angrier and practically fight everyone and everything.
Can we start rewarding kids based on practical endeavours, productive skills and consequential innovation? Those who can build or produce things are our most important compatriots, no questions.
It’s why Aliko Dangote is the most important Nigerian, if you disagree, just know that you are irrelevant.