Vincent De Paul Ajagu The more I read what Gen. Buhari is saying and promising Nigerians, the more I am convinced that Nigerians are going to reject him again the forth time. In his new year wish, Buhari said that while GEJ is telling Nigerians that 2015 will be tough on them, he is bringing them hope. Buhari went further to blame GEJ for Naira devaluation and its consequences. Good thing is that the majority of Nigerians are educated to the level of understanding some economics. It is really very good that GEJ told Nigerians that there are some challenges in 2015 but he did not just stop there. GEJ went further to outline all his administration is doing to sustain the country. I am very sure that many Nigerians would rather that you tell them exactly how it is rather than lying and telling them that all is well with the economy. Many politicians will lie just to be elected but GEJ choose to tell us the truth. On the issue of Naira devaluation, it beats my imagination how Buhari will be blaming GEJ for that. Does Buhari know the economic reason of the Naira devaluation? Does he know the cause of Naira devaluation? Does he have an economic adviser? Buharis recent comments about Naira devaluation shows that the answers to the above questions are no. Most Nigerians do not need any more lectures on Naira devaluation but let us try a little bit to educate Buhari and a few others who may not get it yet about Naira devaluation. The main cause of Naira devaluation is the fall of our oil price. The price of oil went down in 2014 for more than 40%. It means that Nigeria lost more than 40% of its foreign revenue. As a result of this, there is a lot of pressure on Naira. Every country tries to balance their trade. Nigeria loosing 40% of its foreign revenue is the same as saying that Nigerias export was cut down by more than 40%. This will result in a trade imbalance. A country that is faced with this kind of situation will have to find better ways to balance trade. You do it in such a way that you will not face retaliation from other countries. Now that our export is down more than 40%, how do we cut import to have a balance trade? This is where Naira devaluation comes into place. It helps to balance trade. For example, when the exchange rate was at N168 to $1, if an importer or a foreign company doing business in Nigeria made N1 million profit, When he or she exchanges the N1 miilion to Us dollars then, it comes to $5,952.38. After the devaluation, the exchange rate is now at about N190 to $1. The same N1 million is now worth $5,263.16. That is a loss of $689.14 or N130,937.00. To make up for this loss, the importer or the foreign company will have to increase the price of their products. In the short run, the consumers will suffer the price increase. Many consumers will now switch to locally made goods that cost less. This will boost locally made products. On the long run, the demand for locally made products will continue to increase and this will encourage many business people to get into manufacturing business in Nigeria which means more job opportunities in Nigeria. Nigeria does not want to continue in depending mostly on oil for their foreign revenue. We want diversification and that is what the govt. is doing. Yes, on the short run, it will be tough on us but on the long run, it will benefit us collectively. Let me give you one example, in USA, Americans were paying almost $4.00 per gallon for fuel. This went on for many years. But when this was going on, the US government under Obama, was busy working on many projects to changes things for better. While Obama was busy, his opposition was attacking him, calling him all sorts of names. The opposition said that Obama is the worst president of US. But guess what? Today the gallon of fuel that was sold for $4.00 per gallon now sells for $1.92 per gallon and it is still going down. He did so many other great things that past presidents tried but failed like universal healthcare, etc. Still opposition party in US call him the worst president. This is the same thing happening in Nigeria. Do not let anybody to fool you. America was smart enough and gave Obama four more years to complete his project. I have confident in my fellow Nigerians that we are as smart as Americans and that we will give GEJ four more years to finish his transformation agenda for Nigeria. May God bless and keep us.
Posted on: Thu, 01 Jan 2015 23:26:43 +0000
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