when, last week, some of my brothers – mainly importers of goods from China, Dubai and Western Europe – confronted me with questions regarding dollar scarcity in the country, I told them to prepare for the long haul by changing their line of business. To curb our insatiable appetite for foreign goods, I added, the current policy of the Central Bank of Nigeria – restriction of foreign exchange supply – is the way to go.
What I forgot to tell them is that the forex crunch has actually come 21 years late. I was privy to information, in 1994, that the Abacha regime had concluded a plan to abolish the sale of forex to financial institutions and their appendages. I have yet to understand what led to a reversal of that plan, but Abacha's ambition to transform to a civilian president (along with the looting spree that followed) must have been a factor. As it turned out, Nigeria has remained a mono-product economy and an import-dependent economy – two evils that no serious administration should condone.
Several times this column has advocated what the CBN has now accepted. While welcoming the appointment of the current CBN governor, Mr Godwin Emefiele, for instance, on February 23, 2014, I stated: "Before he starts the job in June, I want him to consider an idea I have sold to previous holders of the office: To eradicate corruption in the banking sector by ending foreign exchange trade, to encourage exports and discourage imports, to build huge foreign reserves and boost the Nigerian economy, the CBN must STOP granting requests for forex every week. Whoever needs dollars or pounds should get them from any source but the CBN.
"In the short term, N500 may exchange with $1. The prices of foreign goods may hit the roof but nobody would buy them. In the medium term, Nigeria would find its level – and the economy would start recovering. In the long term, the country would become an economic superpower. I know that bankers and the authorities won't sanction such policy. But that is the stuff of revolutionaries."
Nigerian importers would now do well to become exporters instead. That way, they would earn the foreign exchange direly needed by other Nigerians now. Who are these dollar seekers anyway? They include those who pay the fees of their children studying abroad, those who travel overseas to see their doctors, fuel importers together with other "international businessmen" who import all manner of goods from all corners of the globe, and Nigerian politicians who seek to impress party delegates by bribing them with dollars at party conventions.
No economy attacked by such army of locusts can long survive. Perhaps, Nigeria has been able to withstand the shocks because crude oil has, for most part of this century, sold above $100 per barrel. With the fall in crude price from $114 to less than $28 in 18 months, the situation can only spell trouble for a country that depends on oil for 80 per cent of its foreign exchange earnings. Until recently, the nation raked in more than $3.2billion each month; now it gets barely $1billion.
Ever since the early 1980s, we have heard the gospel of diversification, but nobody seemed to have mustered the political will to save the nation from this looming disaster. Is President Buhari now equal to the challenge? Are Emefiele and his team in the CBN now ready to take the bull by the horns?
They have little choice now. It is either they meet the demands of importers and other forex seekers and then crash the economy within a few months or they restrict forex transactions as they have done, in the face of grossly reduced earnings from oil. More nations have discovered oil and former importers of Nigerian crude, including the United States and Canada, have become exporters of the commodity. China, Russia, India and some other European nations are facing a slowdown in growth.
One temptation the Nigerian authorities must not succumb to is to devalue the naira, that is, officially. There are items like essential medicines, agricultural equipment and, unfortunately, fuel that still need to be "subsidised"; that is, their importers should receive the dollar at the official rate. But that should be a temporary measure. There is no substitute for self-sufficiency in food production, in refining fuel locally for local consumption, in encouraging local industries to source their raw materials at home and use local machinery.
Achieving these may seem impossible. Yet, it has been done before. Almost 50 years ago, a section of Nigeria [Biafra] survived for three years without importing a litre of fuel. How did the Biafrans do it? They refined their petrol and diesel and kerosene in their kitchens. And the petrol so refined did not crash any vehicle's engine! That's why I frown at the continued destruction of "illegal" refineries in the creeks of the Niger Delta. Had we been wiser, the oil companies operating in Nigeria would have since been compelled to establish refineries in the country to create more jobs for our people.
We are lucky that the day of reckoning has come at a time the CBN has an ally in a president who is frugal with scarce resources. Let those who delight in driving luxury cars and private jets understand that not even a bicycle spoke is manufactured in their own country. Those who send their children abroad to study should buy the dollar at N1, 000 if they like from autonomous sources. Ditto health tourists – those who reach for the airport at the first sign of fever. Sooner than later, they will come to the realisation that our education system has to be fixed, that our hospitals should no longer be "mere consulting clinics", and that local rice and toothpicks are better than imported ones. As for me and my family, we have little demand for luxury goods and services! I rarely travel abroad, unlike those who always enjoy summer vacations with their family in Europe and America.
Some patriots have prayed for oil to dry up so that Nigeria could begin to face reality. The prayer is being answered by low oil prices. Shall we continue to churn out millions of unemployable youths from hundreds of institutions each year or shall we have schools where people can learn skills and thereafter employ themselves and others? Shall we begin to extract medicines from roots, herbs and leaves that dot our landscape or shall we keep depending on synthetic drugs from doubtful sources? Is it not time we developed our rail and marine transportation so that many would have no need for fuel-guzzling personal cars?
Oil prices are not expected to rebound in the near future. Until they do, Emefiele would have to keep intervening in the management of forex outflow. After all, neither the apex bank nor the Buhari administration created the current forex challenge. This is only an opportunity for all of us to look inwards for solutions to our problems and not depend on foreign countries and their currencies.