NOW THAT NAIRA FLOATATION BITES

No one needs to be a great scholar or philosopher to see it any more. Up till now only a few perceived what the immediate impact of free float of the Naira will be but then, that is no reason now to say I told you so.

Nigeria now has an inter bank foreign exchange market where buyers and sellers are free to interact and agree on deal prices as they like, of course, through their banks

On the side too, a futures over the counter market also exists organised by an authorised independent operator with own rules and regulations for coming on board to trade in future expectations.

However no one, not even those who called for it all these years, expected it to be a win win oracle for all. No policy ever has such an impact not to talk of a policy from a social science that glorifies caveats in the guise of all things being equal.

So now the pains are. Inflation rate, says the National Bureau of statistics has hit 16.48%, a ten year high and can not be expected to have capped yet. The composite valuation basket now has prices of imported goods and food as major contributory factors.

Now many locally manufactured goods have also shot up primarily because input materials still have to be imported. Yet at the same time, national demand hit by less Naira value is asking for lower prices, not higher ones for demand to stay level.

Also some Nigerian companies that only a while ago sourced foreign loans to finance expansions and new products at home and mostly within African countries are now very scared of the huge loss due to Naira rate drop in recent weeks. La Farge Africa had sent notice of this already to shareholders and the investing public.

This week it was the turn of Oando PLC as an accompanying post reports.

Certainly, many more companies are also now so scared and the ones we are reading about are quoted companies compelled by regulations to these days make such fears public knowledge.

The thing is these are not the best of times to owe and have to repay any debt denominated in foreign currency; to belong to an international group that consolidates in currency other than the Naira; and to have fixed and recurrent expenditure denominated in foreign currency.

Thus so long as supply and demand remains out of balance leading to continuous drop in the value of the Naira, any one in the shoes above will continue to most moan and suffer.

But then, that should not be any reason to consider any policy change back to fixed exchange rates or semi fixed. This is because, no policy that evolves with an eye on its social impact on a broad spectrum ever misses its target if you stay long enough on course, and anticipated or planned for its negative or unintended impact before hand.

In other words, the fixed exchange rate alongside forex allocation had the possibility of achieving its objectives as the current regime has. All we continue to need is the capacity to stay focussed on the goals while mitigating as much as possible the negative aspects.

For example, these are the times to smile to the bank as you receive support funds from relatives abroad, as you export anything, as you source longer term foreign currency loans for long term investment in Nigeria with enough time before repayment starts and a good time too to earn anything in currency other than  the Naira.

Unfortunately, it will be quite a long while, especially as crude oil prices continue to stay down, for the majority to find themselves in this winners group in today's Nigeria.

It will continue to be tough but well, there is hope if we could stay focussed on ways to encourage more value added, more exports and more production. This is not the time to stomach parasitism, politicking, and stimulate demand without first ensuring that there is increased production to satisfy it.