AS THE NAIRA SEEKS A BOTTOM

One thing was obvious from the conclusions reached by the Central Bank of Nigeria Monetary policy committee meeting on Monday: Wisely, there is no immediate panic rethink on the newly introduced foreign exchange inter bank market.

Instead the committee resolved to give the market more free hand to fix the nation's exchange rate through the interplay of market forces.

Fine but there is a caveat: For the Naira to survive the ordeal ahead, there is urgent need to export more to earn foreign exchange and produce more at home to discourage imports that ideally should become too expensive now to encourage increased consumption.

None of these can be achieved through monetary policy alone, indeed the real key to them is in creating the right environment for this to happen. And fiscal policy holds the ace in this regard.

Unfortunately, that too is where the danger of misplaced optimism and stubborn determination to stay populist, continues to pose real danger.

In the wake of IMF recent downgrading of its growth expectations for the Nigerian economy, all we heard from the federal executive council is that we are not yet into real recession, we are better off than fellow crude oil dependent Venezuela and next year, all will be well because the economy will bounce back.

Possible but till then what? The Naira should continue to seek the bottom in the guise of a mirage? Continue seeking the bottom in an obvious nadir?

Soon, most governments in the country will begin to harvest more Naira from less dollar earned by the nation and so, be in a position to day dream that the good times will soon be here.

Unfortunately that may not ease the current stranglehold of foreign exchange short supply. It could in fact make it worse if many resume business as usual like resuming state sponsored hajj and pilgrimage; sponsored mass marriage; scholarship for the children of the rich and powerful at the expense of gifted children; like gleefully proceeding to fulfil social welfare packages and free meals without sound economic base and seeing no reason any more to cut down  political and civil staff and be more prudent.

What could make it better is for the windfall likely in Naira as the bottom stays out of sight for the Naira to be deployed in encouraging exports, and giving some relief to local manufacturers being hit hard by free float because of their inevitable dependence on input imports or exposure to foreign loans.

Yes the average Nigerian on the street, the fixed pension senior citizens, the low income and even the middle class are bound to be hit by spiralling prices but the way out, in this case is actually measures to step up real production, sustain current levels of employment as much as possible and encourage all and sundry to engage more in self help and prudent spending.

Social welfare is good and Nigeria needs it badly but when the economy is on its knees is not the best time to do anything in that direction.

It is also not the best time to add to local business problems by increasing interest rate even though theoretically this could encourage some fund inflow.