MORE MONEY OR BETTER VALUE? 25122006" /> MORE MONEY OR BETTER VALUE? 25122006">

MORE MONEY OR BETTER VALUE? 25122006

© MORE MONEY OR BETTER VALUE? 25122006
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MORE MONEY OR BETTER VALUE?

BY: LES LEBA (Email: lesleba@yahoo.com; Website:  www.betternaijanow.com)

An acquaintance once joked amidst banters of how he took advantage of the naivety of his younger siblings in his disbursement of the daily pocket money (counted in kobo in those days) provided by their parents for lunch and snacks at school.  The kobo coin was much larger in size than the three pence and the six pence coins, and our later day ‘419er’ continued to convince his younger siblings to prefer the bigger kobo coins as they will automatically command more purchasing value!  In this event, his siblings willingly allowed him keep the toros and six pence in what they probably thought was an altruistic gesture by their elder brother!  The behavioral pattern between the siblings in our story may also be an appropriate metaphor for the monetary relationship between our rulers and us, the proletariat.

Nigerians including the Labour Unions clamour for the optical size rather than the real value of money.  The story of our ‘overindulgent’ senior brother occurred at a time when the Nigerian pound was at par with the British pound sterling!  In this period, a respectable number of Nigerian families, particularly from the Southern part of Nigeria were able to train their children in various British educational and vocational institutions from the legitimate proceeds from their employment or enterprise back home in Nigeria.  It was generally unheard of for a Nigerian who is resident or studying in the UK to send money back home to Nigeria for the upkeep or as supplementary income of parents, relations and other dependants at home.  Indeed, the dream of every Nigerian youth, who went abroad at that time was to return to the comfort of home and friends and the ‘better life’ in Nigeria.

Today, the number of Nigerians who can educate their children abroad from income derived from genuine and legitimate wages or enterprise as opposed to the proceeds of treasury looting and other such corrupt engagements has diminished significantly in ratio terms.  Worse still, impoverished as we are, we train our children by dint of sacrifice with our scarce resources only to turn them out into a jobless market, which propels them to seek mean jobs abroad!  But who cares? Those youths who can make it legally or illegally via desert routes and open oceans in rickety transport modes will become the providers for the impoverished and hopeless families they left behind in Nigeria.  This emerging scenario developed with the loss in the purchasing power of the naira!

There are basically two main ways in which the currency of a country can lose value; these are by an uncontrolled inflationary spiral (unabated rising prices of goods and services over time) and/or by an actual formal devaluation of a nation’s currency by the monetary authorities!  In our particular case, the two factors have conspired to wreak havoc on our value system, our lifestyle, and our hope and aspirations, both as individuals and as a people.  

As the naira continued to be devalued from stronger than parity to its current rate of N130=$1, this has meant that in order for an average family who earned, say, N10,000/annum in 1980 to maintain the same income, they would require a minimum salary of N1,300,000/annum today; and this amount does not accommodate the devastation caused by spiraling inflation over the last 25 years; for example, a bag of rice which cost less than N20 in 1980 now costs over N7000, a finger of plantain which cost less than 10 kobo now costs over N20 each.  So, in truth, our average family in 2006 would require over N2m to maintain the same standard of living that they enjoyed in 1980, but pray, what percentage of Nigerians, even after the decimation of the middle class by the evil twins of devaluation and inflation, currently earns such money?  Various administrations have either voluntarily or by the pressure of prevailing labour unions pumped up the quantum salaries paid to civil servants to ameliorate the ravages of a currency with a diminishing value, but it is clear that a yawning gap exists between the higher numerical wage levels and the goods and services and the standard of living that they can afford.

In this regard, my attention was drawn to the media report of Wednesday, 20/12/06 on pg 5 of the Guardian Newspapers that the Federal Government has approved a 15% wage increase for all civil servants with effect from January 2007.  Under normal circumstances, any attempt to bridge the poverty gap caused by loss in purchasing power of incomes would be welcome, but in a situation where the monetary authorities have decried the presence of too much cash (otherwise known as excess liquidity) in the system, and the inflationary potential of a rise in petrol pump prices (with reduced subsidy as indicated in 2007 budget) and the also legitimate pressure to spend more of our idle accumulated reserves on the improvement of our dilapidated infrastructure, it may be a pipedream to expect that the bigger quantum salaries, just as the bigger kobo coin, will bring succour to any home.  Thus, incomes and salaries will be nominally bigger but the additional loss in the value of the naira that the combination of forces will bring about will as usual leave majority or our people poorer than they were in 2006!

I never cease to be amazed that inspite of this recurrent cycle of increasing salaries and income and abiding poverty, our Trade Unions continue to clamour for quantum elevations rather than a demand that the income that they earn be given better value so that the same income will buy more and more, rather than the less and less that increasing income packages bring!  Like the siblings of our 419er elder brother, they seem captivated by the theme of big is good, but fail to see that less could be much better!

I have advocated in several articles in this column that the naira in our pockets can and will buy more, if the value of the naira is not debased by the conversion of our export dollar earnings into naira before sharing to the three tiers of government.  The need to accumulate the naira from the money market as well as supplementary currency printing for this purpose remains the bane of our monetary system.  So long as this system persists, the naira will continue to be under pressure to depreciate, even in the face of rising external reserves; an economic paradox, if there was one!

If the CBN releases its stranglehold on the supply side of the foreign exchange market by the payment of the dollar component of the federation pool with dollar certificates, the naira will quickly consolidate to below N50=$1 as the dollar certificates chase a limited naira supply, and all the economic policy shenanigans which have brought additional suffering to the masses will become unnecessary as inflation will drop to less than 1% and interest rates fall to 5-7% - the requisite parameters for real growth in a sensibly managed economy. They know this, but will they listen?  Merry Christmas!

SAVE THE NAIRA, SAVE NIGERIANS! 

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