Public rejoinders to Newspaper Opinion Columns, may often provide, useful, feedback on how well the message is understood by the reading public. Evidently, not every critic of an article, will find the time or inclination to send rejoinders, which may serve as a barometer of the understanding between the reading public and the messenger.

Admittedly, some rejoinders could be totally off track or even aggressively partisan, and abusive; nonetheless, the columnist must remain objective and truthful, to recognise any merit, expressed in his critic’s intervention.

The title “Can CBN Save the Naira and Save Nigerians” was published a week ago, and that article, incidentally, elicited rejoinders from a reader of the Punch and another reader from Vanguard Newspapers, respectively. Hereafter, both rejoinders will be published, while this writer’s attempt to resolve differences between author and reader’s positions will follow thereafter.

Nonetheless, the authors of both rejoinders, are commended for sharing their concerns on this writer’s prescriptions for the recovery of the Naira and Nigeria’s economy. The first rejoinder to the article “Can CBN Save the Naira and Save Nigerians” was a certain William Norris, who noted as follows:

“I've tried for years to understand what policy you support. I don't know if you want devaluation, free float or a continuation of the current framework. Do you want strong naira or a weak one? You've been persistent in spreading your articles all over but you give no enlightenment whatsoever. At the very least, make your writing less dense so that lay people like me can at least follow your reasoning. Blowing big grammar is not equivalent to education for your audience. Thanks.”

This writer most certainly regrets any agony or discomfort, to William Norris, in his sustained efforts to grasp the kernel of this column’s ceaseless recommendations for the vibrant renaissance of Nigeria’s economy, particularly as it relates to inflation and exchange rate management. 

This column has persistently declared, that further devaluation of the Naira is totally unacceptable, since it is irrefutable that the history of deepening mass poverty in Nigeria, loyally correlates the Naira trajectory from about 50Kobo=$1, in the 1970s, to the present odious level of N305-360=$1! 

Secondly, since the currency free-float mechanism, is internationally proven best practice in successful economies, this writer also advises that “if Nigeria wants to be strong and fly as an Eagle,” we should also adopt the modus operandi of progressive Eagle economies. In fact, Nigeria’s economy will continue to falter and poverty will further deepen nationwide, as already witnessed, if CBN continues, as standard practice, to auction dollar rations in a market that the same CBN readily admits, to be eternally deluged with Naira surplus; predictably, excess supplies of any commodity, whether Naira or tomatoes, will invariably attract cheaper prices! In fact, an inexplicably, very weak Naira rate, clearly, remains the major driver of industrial dislocation and increasing unemployment and poverty in Nigeria!

Notably, this writer has forever decried the adoption of the strategy of auctioning dollar rations in a market, that is irredeemably chocked with oppressive surplus Naira, for determining the Naira exchange rate. Invariably, any item put, on auction will be sold to the highest bids, so it is not difficult to recognise that it is Treason for the CBN to auction any foreign currency against its own Naira, in a market with extremely surplus Naira.

Instructively, free-floating exchange rate is still best practice strategy for rate determination in those successful economies, to which our youths and professionals flee, to guarantee a more secure and comfortable lifestyle. Nevertheless, it would be foolhardy to float the Naira, in a market which “eternally” suffers the oppressive inflationary burden of perennial Naira surplus! Invariably, Nigerians can forget any prospect of economic recovery, talk less of growth if Naira is floated, as Nigeria’s odious crown of the World’s Poverty Capital will inevitably remain permanent! 

Conversely, a stronger Naira will increase the Naira’s purchasing power and stimulate consumer demand, which will in turn, instigate production and more job opportunities, to gradually reduce the related horrendous level of insecurity. Invariably, therefore, any agenda for a weaker Naira is not a viable option, as the related challenges are clearly apparent. 

Once again, my apologies to William Norris for unintentionally, “blowing big grammar,” which may be made it difficult for some readers to comprehend the related monetary analysis in last week’s article. In fact, I thank Norris for bringing his dilemma to my attention, as we all know the futility of winking at a lady in the dark! 

The second rejoinder is from the Vanguard Newspaper, where, one Samuel Okezie, also commented as follows:

“The writer ignores the more important point that Ghana and Nigeria have very little to sell to the world to earn foreign currency. That is the root of the problem. We don't earn enough foreign currency and do not manufacture locally enough, thereby making the economy heavily reliant on forex for imports. Obsessing about managing the scarce forex we earn and speculating on fraud and abuse of the system does not negate the fact we have a huge import demand. The winning strategy is to aggressively support our local manufacturers, improve skills, there is little skills, emphasise more on skills than just going to a University, encourage entrepreneurship, and yes imports of non essential items should be very expensive.” - Samuel Okezie 

From the foregoing, Samuel Okezie, has identified the heavy reliance on ‘scare’ forex for our huge import demand, and also fingered the relatively modest output from local industries as the causes of a weak Naira exchange rate. Okezie may be right, but it is also undeniable that Nigeria’s real sector, has remained and will remain backward and less productive, so long as cost of borrowing remains uncompetitive, at well above best practice rates of 2-7 per cent in successful economies everywhere! Furthermore, with double-digit annual inflation rates, the purchasing value of all incomes, invariably become halved every 4-5 years, with an inevitable repressive impact on the very critical facilitator of consumer demand, which systemically instigates the appetite of manufacturers to produce and expand capacity with increasing job opportunities in tow, if they can also borrow at cheaper rates below 7 per cent to satisfy expanding market demand!

Predictably, therefore, double-digit inflation rates and very high cost of funds will induce rising unemployment, while Nigeria’s industrial output will continue to remain uncompetitive and induce factory closures and deepen unemployment, as cheaper import substitutes replace local production. 

In effect, with such an inherent disruptive framework, Nigeria’s industrial subsector will, forever, remain comatose; furthermore, so long as inflation and cost of borrowing steadfastly remain above 5 per cent, Nigeria’s industrial output will also remain uncompetitive against the prices of import substitutes and we will never earn sufficient forex to pay for our imports. This stark reality has invariably constrained meaningful and inclusive economic growth since 1985!

Furthermore, since inflation is, notably, the main driver of high interest rates, (as it is not rational for anyone to lend below the rate of inflation), it is compelling that the starting point to Nigeria’s economic renaissance must be the object of bringing down inflation, below 3 per cent to promote consumer demand, so that manufacturers and ALL businesses can also borrow below 7 per cent to satisfy increasing demand for goods and services and create more jobs!

Evidently, however, the inflation rate will remain irrepressible, so long as the perennial challenge of surplus Naira, in Nigeria’s money market subsists! It is also indisputable, that Nigeria’s eternal Naira liquidity excess which drives higher rates of inflation, is in fact, the product of CBN’s deliberate substitution of Naira allocations for monthly distributable dollar denominated revenue. Expectedly, therefore, the higher the dollar export earnings, the higher will ultimately be the level of excess Naira supply and the greater will be the threat of inflation, higher cost of borrowing and weaker Naira rates!