How Floating the Naira Benefits You
By Reno Omokri
When the Central Bank of Nigeria used to set the value of the Naira and defend that value by artificially pumping Dollars into the market, you, as an ordinary citizen, did not benefit. It was another fuel subsidy. But this time, the subsidy recipients were importers and people who wanted to ferry money out of Nigeria.
Last year, the CBN was projected to have spent $8 billion to defend the naira’s value artificially. The year before, it spent almost $9 billion. That is more than what Nigeria spends on infrastructure annually. And that money just flies out of our economy, benefiting traders and foreign investors rather than manufacturers.
It dissuaded local manufacturing of made in Nigeria goods and services because it almost guaranteed that imports would be cheaper. That is why Aliko Dangote had to close his tomato paste factory in Kano because Peter Obi (the single biggest individual importer of consumables in Nigeria) could always import and sell cheaper, substandard tomato paste at his Next Stores.
All that will gradually end with the floating of the Naira. Our reserves will no longer be used to defend the Naira. Those who wish to take Dollars, Pounds, Euros and Yuan out of the country can look for it where they can legally find it. Anywhere except the Central Bank of Nigeria.
Also Read: 10 Major Implications Of Naira Exchange Rates Unification, by Taiwo Oyedele
Our reserves will be used to defend local production instead of foreign consumption. The price of goods in Peter Obi’s Next Cash and Carry will rise because they are almost 100% imported.
The price of locally manufactured goods, like Innoson Vehicles, and Dangote Tomato paste, will also rise, but not at the same rate as imported goods will increase.
But you, as a citizen, will gain because the money previously used to defend the Naira will now instead be used to pay Nigerians a living wage, build infrastructure, and service the proposed student loans, amongst other things.
All those who became overnight billionaires by using their political influence to buy Dollars at the CBN rate and round trip it back to Bureau de Change to sell to you at parallel market rates have lost their parasitic business. To sustain their lifestyles, they now have to work or go broke.
It is a win-win scenario. That is why nobody who loves Nigeria should attack or oppose this patriotic policy that all major Presidential candidates, except Rabiu Musa Kwankwaso, promised to implement. It is not Tinubu’s idea. It is the right idea!
Reno Omokri, is social media influencer
