Blessing Ibunge in Port Harcourt
The alarming exchange rate has been described as a major challenge affecting the Nigerian economy, and which has brought untold hardship on Nigerians.
A business analyst, Mr. My-Ace China, who spoke on the dwindling economy of the country, noted that Nigerians now patronise foreign currency and goods thereby neglecting the impact on the economy of the country.
He also identified insecurity and epileptic power generation across the country as contributing a high percent to the cause of inflation in the country, which has threatened the country’s economy.
China, who is a Port Harcourt-based real estate magnate, spoke with THISDAY in Port Harcourt, Rivers State capital, yesterday.
He said in a country that is export-based, the local currency is always strong because the people produce what they consume, regretting that in Nigeria products consumed are 95percent import-based, and that has affected the naira badly.
According to him, “In 2022, we have hit 20.35 percent. That is huge because of the kind of inflation we have in Nigeria.
“The effect is that because not all inflations are negative, we are talking about Nigeria. It is worrisome in Nigeria because we do not have a demand-pull effect inflation in the country right now. What we have is the cost-push and built-in inflations, the worse two.
“Insecurity is on the rise. When the people are no more motivated and secure to go to production location, the rate of production will drop. This is the case with agro-products (foods). Food comes from farms and insecurity is affecting the farm locations. This is where security is core to the survival of Nigerians because more farmers are abandoning their farms. This is driving prices of commodities high up.
“In a country that is export-based, the local currency is always strong because you produce what you consume. But in Nigeria, which is 95 percent-import-based, and the naira has gone down badly because of insecurity and bad leadership. What causes exchange rate is no longer gold reserve.
“Before, what caused exchange rate was gold reserve, but now that money is paper currency, what causes exchange rate is the level of confidence in the economy. If the global community has confidence in your economy, demand for your local currency will be high and the exchange rate of that currency will appreciate.”
China observed: “Now, because of insecurity and failure of leadership, the demand on naira is very low. Even our own people don’t want to use the naira, especially during the presidential primaries when they transacted in dollars. It was all over the world that we have lost confidence in our naira.
“Despite the war, the Russian rubble is one of the highest currencies in the world, not because Russia does not have challenges, but the government put a deliberate policy that if you must do business in Russia, it must be in rubble. So, all companies are demanding the rubble; oil is sold in rubble. The demand for it makes the rubble high even in a war.”