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Dollar-Centric: The Trouble with Nigeria
As the war within Africa against colonialism moved towards neocolonialism, Blackman Eurocentric imitation of the white is still a matter of concern among Nigerians, particularly as we see as inferior, anything without foreign touch. It has got so bad that names are now fashioned in foreign manner such as Honiphade instead of Onifade, Hayor instead of Ayo, Harderhonke instead of Aderonke and others. Many Nigerians cannot patronize locally made goods except it is written “Made in China”, “made in Germany”, or “made in Paris.” It is even so bad now that “Made in Ghana” product or any country in Africa is preferred to “Made in Nigeria”. Children’s name are daily Europeanized to the detriment of our local names, European languages are included in our school curriculum and taught while our local languages die without remedy. Our government officials on daily basis steal and store our commonwealth in foreign land where moth and rust doth corrupt and later goes back to borrow same on interest. The current tragedy is the degradation of naira, our symbol of national identity! What is wrong with us?
According to the extant law of financial regulations in Nigeria, section 20(1) of the Central Bank of Nigeria Act 2007 states among other things that: “the currency notes issued by the Bank shall be legal tender in Nigeria…for the payment of any amount.” As the act by this stipulates that only the currencies issue by the Central Bank of Nigeria which is our head bank is qualified to be issued as legal tender, the provision also states that anyone who contravenes this position is guilty of an offence and shall be liable on conviction to a prescribed fine or six months imprisonment.
In this direction, naira automatically becomes the only legal tender in Nigeria. However, its coexistence with US dollar over the years has done so much damage to our economy and the value of naira. Dollarization of Nigerian economy as this is called is the process whereby the inhabitants of a nation use foreign currency in parallel to or in place of their domestic currency as a medium of exchange. It is sad that nearly every government functionary from the federal to state and local government levels, business managers and captains of industry spend dollar in Nigeria to the detriment of naira and without inhibition by anybody thereby turning it to another legal tender within the country. But how did it start?
The popularization of the use of dollar in Nigeria began from the adoption of the Structural Adjustment Programme (SAP) at a time the CBN formally encouraged the opening of domiciliary account and permitted hotels to accept dollar from foreigners when Nigeria was in want of foreign exchange to foot the cost of accumulated foreign trade. However, the result was higher inflation, a decrease in the demand for naira, and an increase in the demand for dollar. This process, called “domestic money flight”, ultimately led to the rapid dollarization of Nigeria’s economy. This is the situation with Nigeria and not because she has officially approved dollar as a medium of exchange
The economic implications of dollarizing any economy as we currently see with Nigeria are the deposit of dollar in the domestic banking system and the share of such currency resident in our various homes. In Nigeria in particular, naira as a legal tender is gradually losing its value and if this goes on unchecked, who knows if a day will come that it will be displaced by dollar as the current situation dictates. The unregulated use of dollar in Nigeria has increased the demand for it and also led to the dwindling fortune of naira. This has made currency traders to have ultimate faith in dollar and relying on it as a store of value and leading everyday to a free fall of our dear naira. This is why school fees, hotel bills and many employees in Nigeria are paid in dollar and those who have no business with dollar such as sachet water sellers, groundnut, fruit, food sellers and others will simply tell you “dollar don rise” as the reason for increasing the price of their product.
Since this is a sad reality of our orientation about locally made goods and our craze for foreign products that has resulted into many untold hardship due to the high demand for dollar, it should be noted that the continuous use of dollar as an unapproved substitute legal tender in Nigeria can open Nigerian economy to considerable exchange rate risk, impacting trade balance and also affect the overall economic activities. It can also create a situation whereby Nigeria will depend on the economic policy of the US that will of course be counterproductive. Other disadvantages which include increasing socioeconomic inequality, is already seen at work as those who have access to US dollar are the rich Nigeria politicians, wealthy members of the society and captains of industries as against the less privileged members of the society who are left to grapple with increase in essential commodity every day.
The story of dollarizing Nigeria’s economy is the story of leadership balderdash in the country because the major violators of the law against dollarizing the economy are leaders who attend and spend dollars at party halls, for party primary elections, night clubs, hotels and in expensive boutiques across Nigeria. This has unfortunately made it impossible to address multinational companies such as oil and gas who pays their workers in dollars because you can’t force anybody in your home to obey the law that you are not keeping. This speaks more about our values, love for oneself, other people around us and our nation at large.
In the colonial era, it was our traditional rulers and other wealthy members of the society that sold their subjects and other fellow Africans into slavery. Otherwise, with the communal system of living embraced by most African communities in the pre-colonial era, it would have been almost impossible for any intruder to penetrate. As it was, so it is now that our leaders have plundered the wealth of the nation in various dimensions to inflict pains on their subjects. It is sad that the more we travel politically and economically, the more bad things get.
It is this same leaders that will build school here but send their children abroad, built medical centres but travel abroad for medical check-up without examining if any of their counterparts from other nations come for medical check-up in Nigeria. It is these same leaders that will travel for tourism without deeming it necessary to revamp our various tourism centres in the country so it could generate revenue for economic development. It is these same leaders who will embezzle money meant for public project for the use of their family. At least the case is still fresh with us of a governor who took money from the state treasury, converted it to dollars and sent about $900,000 to his children’s school for upward payment of all their school fees to their last days in the school. Annoyingly, after deduction of the school fees, the school kept the remaining $760,000 in case the governor produces more children in future. What has Nigerians not seen in the hand of leaders?
As leaders in Nigeria have made it practically impossible for institutions to work, they should be reminded that naira is the pictogram of Nigeria’s independence and cultural identity and can be disrupted by the introduction of foreign currency such as dollar (as we have seen) which will in turn bring about loss of national distinctiveness and the country’s monetary policy. It must be warned that the nonchalant attitude with which we handle our institutions and national issues that give the impetus to foreigners to misbehave in our soil and violate our laws thereby fixing prices of products and pay their workers in foreign currency must stop. It is in this guise that we must all rise to defend our currency and stop the dollarization of Nigerian economy. How then do we go about this?
Already, the Economic and Financial Crime Commission (EFCC) has issued strong warning to foreign missions operating in Nigeria, barring them from carrying out business transaction in foreign currencies and necessitating them to use the naira for their financial activities in order to combat the dollarization of the Nigerian economy. As the commission has already inaugurated a task force of 7, 000 individuals to tackle and end the use of dollar as a means of exchange in Nigeria, it is advised the commission stays by the set out objectives for this operation. In particular, the more than 70 international schools already listed to be charging school fees in dollar should be stopped immediately and others in the same categories. After all, the extant law of their country of operation should take precedence over any other law.
The readiness of EFCC to clamp down on schools, hotels, supermarkets and other business outfits that are charging customers in dollar should also be extended to private universities that are charging in dollar because the National University Commission (NUC) has maintained that no tertiary institution is allowed to charge in dollar on the soil of Nigeria except while dealing with international students. Other notable programmes already embarked upon by the commission aimed at ending this act of insubordination should go on nonstop.
The Committee on Banking Regulation that was mandated by the House of Representative to investigate the use of the United States dollar as a legal tender in Nigeria should work holistically without sentiment and favour and our dear National Assembly should work together and put in place laws that will prohibit governors, senators and other political office holders including captains of industries and other moneybags from using dollar as a medium of transaction with stiff penalty set out for defaulters. If it could be stopped successfully at this level, its disappearance at every level of the society will automatically be guaranteed. National Orientation Agency (NOA) should be out in full scale for public enlightenment and education on the need to absolutely prohibit the use of dollar as a medium of exchange in Nigeria.
As it has been sufficiently established that if a considerable part of our financial structure is formally or otherwise dollarized, it could generate stability risks in the form of liquidity or solvency hazard as we are presently experiencing with naira instability, the administration of Bola Tinubu, CBN and the country’s monetary authority should work concertedly to eradicate the use of dollar as a medium of transaction in Nigeria. No doubt this will go a long way to affect the stability of naira when achieved. CBN should collaborate with various agencies in order to address this ugly situation which will also bear great impact on the rising of the value of naira against the US dollar.
Let’s say no to naira degradation and replacement with dollar.
Olushola Omogbehin a public affair analyst writes from Gwarinpa Abuja
18th May 2024
