When Nigeria got independence from Britain (1960), we needed just 0.71 Nigerian Naira in exchange for 1 USD. The prospect was good and subsequent developments in the oil market was great, such that by 1980, we could get almost $2 USD with just N1 Nigerian Naira (N 0.5445/USD).
It was so good to be true that Nigerian Naira that was been exchanged for N2/GBP in 1960 became more valuable than the great British Pound Sterling in 1974, and it remained so until 1985.
But as Nigeria marks her 51st Independence Anniversary; it is not surprising that we now need N150 in exchange for 1 USD and N250 for 1 GBP but the rhetoric is “how did we get here as a nation”?
Trend of Nigerian Naira Exchange Rate with USD & GBP
Simple economics would explain that Non-competitive export, Rising Inflation, Falling Revenue, among others could explain such, but the trend of Nigerian revenue over the years coupled with the OPEC as a cartel negate such explanation in our own case. A rapidly growing revenue matched with a rapidly devalued currency!
High revenue does not translate into high worth, particularly in a growing population. But this cannot be blamed on our growing population. At independence, Nigeria had almost twice of India’s GDP per capital and three times that of China. Today, China has four times Nigeria’s GDP per capital and India is almost twice.
How did we get here?
The country was so blessed with the oil boom of the early 1970s beyond the administrative capacity of the then ruling class that a commission was set up in 1972 (Udoji Commission) to come up with ways to share the “Excess Petro Dollars” among households. The commission submitted that workers salaries be doubled and be paid in retroactive to 6 months.
The minimum wage was increased by 131% from N312 ($506) to N720 ($1,168) in 1974. But as the country marks her 51st independence anniversary (2011), the state governments are unable to afford $120 USD (N18,000) minimum wage to Nigerian workers. How did we get here?
Three (3) years after doubling salaries; Nigerian government organised a 28 days mammoth jamboree (January 15 – February 12, 1977) for African nations. It is called FESTAC 77, an “opportunity for recounting the achievements of our ancestors”, according to the then Head of State (General Obasanjo). – Up till date, no African country has attempted such a jamboree again.
Here is our snapshots of events thereafter:
|Head of State||Tenor||Brief|
|Shagari||Oct. 1, 1979 – Dec. 31, 1983||A gentleman ill-equipped for the murky waters of Nigerian politics and the moneybags. The oil glut came down on the nation and rumours of money disappearing from the treasury. The phrase “Empty- Treasury” entered Nigerian diction.|
|Buhari||Dec. 31, 1983 – Aug. 27, 1985||Stringent and upright officer but with little competency on economy. Changed the Nigerian currency in an effort to punish those who looted and stacked Nigerian treasury. A similar extreme monetary policy taken by Germany after the world war.|
|IBB||Aug. 27, 1985 – Aug. 26, 1993||Epitome of recent Nigeria. Oil windfall as a result of gulf war not properly accounted for ($2.2Billion). Promulgated the most controversial economic policy in conjunction with IMF, so far in the history of the country (Structural Adjustment Programme – SAP).|
|Abacha||Aug. 26, 1993 – Jun. 8, 1998||Ran a close economy because of non-acceptance by the international community. The isolation had its own setback but there was massive abuse of the Treasury by close associates|
|Abdusalam||Jun. 8, 1998 – May29, 1999||Depleted the Reserve (despite normal earnings) by 79% within 12 months|
|Obj.||May29, 1999 – May29, 2007||Spent the first 4 years travelling on excuse of image laundry for the country and was surrounded by same of old minions. Got down to work by the second term but was too late and the 3rd term did not materialise.|
|Yaradua||May29, 2007 -May 5, 2010||No plan to become Head of State but later developed genuine intention for change but ill health never permitted him.|
|Jonathan||May 5, 2010 – Till Date||Still Strategising but we maintain our reservation.|
One of the Nigerian renowned scholars, Professor Pat Utomi asserted that “it seems clearer everyday that the poverty that holds Nigeria hostage and devalues the lives of so many, comes from a divorce from creative application of the intellect to the solution of people’s problem by those who offer leadership and the implementing bureaucracies.”
Naijanomics agrees that, we got to where we are because; we have been ruled by people low in Economic IQ but high in Looting Co-efficient.
HAPPY 51st INDEPENDENCE ANNIVERSARY, NIGERIA!
Data Source – World Bank and Central Bank of Nigeria.
Devaluation has its own economic merits but only when you have a competitive export (China)