NEW FX MARKET: HOW TO AVOID REVERSE GEAR SOON

The fact that the decision by the Central Bank of Nigeria (CBN) to introduce single inter bank foreign exchange market from Monday has been hailed by many inside and outside Nigeria is no guarantee that at last Nigeria has a sure horse for economic development. It could in fact still become another pothole.

One, because this remains an under developed economy with very limited resources, almost non existent innovation, more of quick readiness to import the latest; and because the population growth remains very high.

A very good reason why all looking from outside, particularly the IMF and world trade, could praise the FX liberalisation to high heavens remains that it guarantees easy exit and entry of capital into Nigeria
That looks good enough too for Nigerians in the thick of it all within the country provided immediate inflow is bountiful and it is sustainable. In other words, tha  more Fx flows in faster than it flows out immediately from Monday and on sustainable basis.

If not, from Monday only the Naira will be searching for a bottom that is bottomless  so long as crude oil earnings do not pick up.

Then there is a second porthole to watch out for. Sure, once you allow people to source and sell or buy to their heart's content, you can't turn around to command that they should seek profit only in a particular area that will indeed engender real economic growth for Nigeria. You only duty then will be to create the right environment and incentives to move incoming and available capital towards desired sectors.

Unfortunately, that is easier said than done because first, those controlling in flow taps will do so from mindset conditioned by the needs of their own county, and their own brand of greed all underpinned by potential for high profit at low risks once considered two strange bedfellows.

For a third, money actually touches every aspect of modern life. Free its pricing process, actually demands that you be ready too to free opportunities for making money within the country.

For example, the CBN hopes to intervene in the new market from time to time but with what Fx? The one earned by Nigeria that continues to extract crude oil from lands without opportunities being given to those who own the land enjoy the full benefits of their possession? What is the CBN's own input into crude oil exploration and production to be entitled to earnings from petrol dollars?

In the United States of America, for example,the state of California alone controls an economy smaller than only the American economy itself all because it earns from resources in it's soil and no one claims what is there belongs to all Americans. And no American president later takes his friends to the governor hinting that they should be supported or for funds to foot presidential campaign bills

If the American model is too much, then check out too the Indian model where rich and poor States live side by side without the centre taking from the endowed to share with the less endowed. Yet the federation accepts it has population issues and so controls birth and tries it's very best to culturally make every Indian outside its shores import all importables from India to consume or sell where ever they are.

However, if these federation models seem too loose to be workable in Nigeria, then please fashion out a workable one. But please note: Almost 20 years after liberalising telecommunications, Nigeria is yet able to manufacture an handset or have any input into simcard or battery production, for example. That is not progressive enough.

Note too that mdifferentlyfive decades after the take off single market for buying and selling of stocks and shares, majority of Nigerians still do not know what it is about, talk less of savings kobos over time to get involved.

Please not too that more than five decades after independence, states still depend on money shared from the so called common federal purse which  many suffer side effects and reap from its accumulation differently.

That resource  and team management is yet part of elected leaders duties with many instead more inclined to allocate based on political affiliation, ethnic link and potential for promoting political ambitions and well being of select few lucky to finally have one of their own in position.

None of these can continue to create the right environment for sustainable FX free flow and  increasingly efficient application. Yet without both, it is only a matter of time before the CBN revises the FX market guidelines once again and in the reverse gear.