Last Chapter! DEVALUATION BY THE MILITARY. Things however came to a head when the administration of General Ibrahim Babangida devalued the naira in fulfillment of conditions imposed by the International Monetary Fund (IMF) for the grant of a loan facility to the country. Whilst economists agree that devaluation in some cases brings with it some advantages such as a fall in the price of exports and growths in domestic industry and employment, the devaluation done by the Babangida administration irreversibly put Nigeria on a course of economic disaster, the effects of which are still being felt today. Interestingly, successive governments have failed to learn from the mistakes of the Babangida administration. Rather than pursue means of strengthening the economy and making it less dependent on oil revenue and the attendant risks, little or nothing was done in the area of diversification particularly in the agricultural sector using value chain. Therefore, when oil prices started to tumble this year, we once returned to what some consider to be the best way out; further devaluation of the naira. The problem with devaluation, however, is that the factors which ordinarily would make it serve as a stimulus for recovery are not present in Nigeria. As I stated earlier, devaluation in normal situations would encourage exportation and bring about foreign interests in local industries. But in Nigeria the local manufacturing industry has for long been almost comatose having buckled under the strain of consistent failure of governments to provide much needed infrastructure such as power. Many factories have since closed down and in some instances relocated to other countries effected from capital flight. The situation at hand today in which the naira has lost much of its value is one that will continue to affect Nigerians. The purchasing power of many will be adversely affected during this holiday period and even beyond. Some families may find it difficult to feed at this time. When schools resume early in the coming year on the fifth to be precise, some children may be forced to drop out of school owing to the inability of their parents or guardians to pay their school fees for no other reason but the fact that their earnings have decreased tremendously in value. These are real problems which Nigerians will encounter in the coming months. I therefore believe that one of the lessons which must be learnt from the current slump of oil prices is the need to pay attention to the value of our local currency. If this had been done over the years,Nigeria would today have been the better for it. This is the convenient point on this thesis. Thank you and enjoy the rest of the day.
Posted on: Thu, 25 Dec 2014 13:53:49 +0000
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