WHY THE NAIRA MUST BE PROTECTED

Right now, the debate is on for and against allowing market forces to determine the value of the Nigerian Naira. Indeed, at the monetary policy committee meeting scheduled for tomorrow, the debate is expected to be a major part of the agenda.
It is actually two issues in one: For and against more devaluation and going back to market forces.
It is possible that not all who support more devaluation for the Naira now are in support of back to market forces.
Hence, the likelihood may be for more committee members to itch for another devaluation if only to hopefully attract foreign investors and make it easier for Nigerians to export goods.
Unfortunately, what Nigeria is grappling with today as far the reserve position is concerned is akin to what occurs in a war economy: Extreme scarcity not within government control.
From time, during war times all scarce goods and services are subject to rationing and or price control because ultimately, the objective always is for most efficient resource allocation under existing realities or circumstances.
Also, there is no parent on earth that will insist on lowering his expectations on his child's potential because of a temporary disability not the child's making. Instead, the best course of action is to protect that child from further exposure to situations that will aggravate his temporary disability.
The same with the Naira now. Yes, past round tripping by powerful parasites, public fund looting and transfer abroad, national penchant for consumer goods importation and smuggling under the very eyes of and aided by some security official, have all brought the Naira to its present knees. But for these, Nigeria would have had far more robust foreign reserve than it has now.
Fortunately, one will like to believe that those who are debating the Naira fate, would prefer to put all of that behind us and look ahead.
Fine but it has to be acknowledged that present day weakness of the Naira was brought on by these and, thank God, by today's tumbling crude oil prices. In other words, today offers the best chance not only to block all the leakages, but more importantly, to refocus national resource allocation for the best returns.
In the case of the Naira, the contending forces are on one side, the need to encourage exports and inflow of investment capital and on the other, the need to protect local manufacturing from imported cost-push inflation, from importation of substandard or foreign subsidised goods and the need to encourage import substitution.
Given that all cars on Nigerian roads today are imported after the failure of home grown car assemblies just like most tyres, most batteries, most wears, very many fruits, most spare parts, most electrical and electronic appliances, most telecommunication gadgets, most raw materials and so on, not to talk of virtually every process technology, it stands to reason that what will be in the best interest of Nigeria is a protected Naira and a more judicious allocation of available foreign exchange. Not devaluation just because the Naira is admittedly weak or better still, is temporarily disabled.
In other words, take it that Nigeria is today fighting for its own soul. Internally, drainpipes exist in the form of the war against terrorism, pipeline vandalism, militancy, agitations or threats to secede, and growing number of deadly clashes.
All demanding more military action, more policing, more para military intervention. Yet, let's face it, employing more men for any of these does not directly lead to increased economic production.
Then from outside Nigeria, many power blocks would love a weak Nigeria that is in their pocket. So, it pays good dividend to help crude oil prices tumble, and to get Nigerian leaders to come calling with begging bowl.
Added to all these is the over stretching of facilities by fast growing young population and the existence of social media which has turned every one into an expert on anything public governance.
Hence all said and done, the Naira needs to be protected now, more than ever before. Devalue today, rest assured that so long as the underlining factors remain the same you must devalue again, soon enough.
But limit demand and forex allocation to those who truly must have it to continue to produce, to acquire knowledge abroad, to broaden the nations technological base and so on, will be a surer, though less popular, way to finally loosen the forex stranglehold akin to a war economy.
Unfortunately, presently, the job of doing that is being left only to the Central Bank with government more preoccupied with war against corruption and shoring up its non-oil revenue.
That is not good enough. The Central Bank governor is NOT the nations finance minister or President, Yes, the CBN has constitutional responsibility for monetary policy but its positions must be supported with related fiscal policy to have the desired impact.
It is not enough for President Buhari to say he won't support devaluation, his policies must be the types that make Naira devaluation unnecessary even while the Naira is temporarily on its knees.