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Monday, May 20, 2024

A non-economist’s economic advice to President Tinubu’s govt

A non-economist’s economic advice to President Tinubu’s govt

By Bashir Saleh Abdu

I am not an economist, but I have some suggestions for the Nigerian economy as it is being managed by the Tinubu led administration.

I did not vote for him and I actively campaigned against his election, but at the moment I am more optimistic than most APC voters who have already regretted having contributed to his coming to power.

My suggestion is in twofold, the first set of suggestions is for the government while the second set is for our businesses.

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For the government, I will start by commending the government on the regulation of the foreign exchange regime through the Central Bank of Nigeria, even though critics are of the view that it is an unsustainable measure.

This brings me to my first suggestion. As we all know, no serious nation allows its currency to float endlessly without regulation. Therefore, I urge the government to even borrow, if need be, in order to sustain the measure for at least the medium term and, if possible, for the long term as it will lead to the drastic reduction of commodity prices in the near future. I need not overestimate the importance of reduction in commodity prices on Nigerians.

My second suggestion is from the point of relative ignorance, but I believe re-denomination of the Naira will be a step in the right direction at a time like this.

Words on the streets are that there are more dollars notes in Nigeria than are available even in the United States. However exaggerating this may sound, we know that there are dollars stashed in homes of many Nigerians as we have turned it from an ordinary means of exchange to a store for value.

Whoever takes the dollar as a store for value because it has been gaining against the Naira for so many years is doing it mostly because they can store a great deal of money in a very little space.

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If that little space will store that value for them in Naira notes, I am sure they won’t mind, especially now that the Naira has been gaining against the Dollar for a couple of weeks consistently.

Taking say, two decimal points off the face value of the Naira will surely entice a great deal of Dollar-stashers to consider stashing in re-denominated Naira notes since they will not require so much space also and this will ultimately ease the effort of government in reducing the pressure the dollar has been exerting on the Naira for so long thereby sustaining the bullish trend the Naira is enjoying against the dollar on the long run.

For our businessmen and women, especially importers of goods and services, we are experiencing a new phenomenon in terms of the rapid decline in the value of the dollar, which to my little knowledge, we have never experienced before as a nation.

Therefore, the earlier you crash the prices of your commodities the more merciful the incoming market forces will be on you. Let me give an example of the price of rice in our border towns, the price of foreign rice is eighty-five thousand Naira per bag in some shops that have old stocks, while it is found at sixty-three thousand Naira in shops with new stock. Which madman will opt for the old stock when the price of the new stock is considerably cheaper.

Those that stock commodities in warehouses should aid themselves and reduce the prices as soon as possible before the new stock reaches every nook and crannies of the country as it is better to do it willingly than to be forced into doing same by the aggressive market forces.

Those that can restock their goods by air cargo have an advantage over those that require sea freight. Let’s do a simple math, an iPhone seller sells his wares at the cost of a Million Eight Hundred Thousand Naira because he bought it when the dollar was one thousand seven hundred Naira to a Dollar, now the Dollar is a thousand one Hundred Naira and he is still selling at that same price claiming it is an old stock.

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A new order was placed by his competitor and he is able to sell the same wares at One Million three hundred thousand, who do you think the customers will troop to? Remember phones largely come in through air cargo which means it will take only a couple of days to be on the stalls. The earlier a phone seller reduces the prices of his wares in order to discard his old stock and take advantage of the new price of the dollar the better for him. Afterall, in dollar terms his investment remains intact even though it has lost value in Naira terms and since he invests using the dollar, he will still be a strong contender in the market. A stitch in time, they say, saves nine.

I am only writing this because I have not seen any economist doing the needful.

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