By S.O.K. Shillings
Since the advent of money as a means and measure of exchange of goods and services transitioning the barter epoch, money in its denominations, exchange rate, quantity and quality and other properties is a big factor in the economy of nations and individuals. It is complex and cumbersome in its science and administration; and, is a big tool of political economy in the hands of the superpowers.
Money is not needed for its extrinsic value but for what it gets. Its value is not just what is written on its face but what it commands hence a hundred naira is not a hundred dollars and not same in value over time. It is weighted in gold (bullions) and such other valuables. It is more the liquid form of gold stored and exchanged. So, it cannot be printed in any quantity whimsically. The strength of a currency vis-a-vis foreign currency especially the global bulls: the dollar, euro and yen, is a function of the interplay of demand and supply vis-a-vis the import-export coefficient.
Good knowledge of the science is essential for wealth accumulation and security as money itself is a commodity in loans and advances, shares market speculation, currency ‘black market’, irregular currencies like bitcoins and other cryptocurrencies in which money is gained and lost without exchange of goods or services.
The State controls the economy with policies and operations on money and the multiplier. For instance, liquidity is effected by printing of money not backed this creating an artificial inflation by way of borrowing from the economy. Other control options like open market operation are local steering wheels for balance in the global waves. The exchange rate could also be manipulated to enhance productivity and stimulate market such as China deliberately devaluing the yuan at a time it wants the international market to accept its goods cheaply.
The eco-political importance of currency can be seen in the effort of China to force the yen on its controlled market and the cold war that is generating with the USA. China is the leading economy now. It wants to buy and sell in its currency. If all is about market forces, why is currency loyalty an issue?
Since our currency independence in 1962, Nigeria’s economic growth has been impaired in part by the mismanagement and dearth of knowledge of the science of money. When General Gowon informed the world that our problem was not money but how to spend it, the international hawk advisors advised bumper pay to civil servants to stimulate economic activities which culminated in ‘Udoji Money’ that translated to importation and purchase of vehicles and household electronics and other perishables from the oil money. It was the beginning of export deficit and devaluation of our currency.
The International Monetary Fund (IMF) and the World Bank have severally advised the devaluation of the Naira in a monolithic economy whose export profile is over 90% oil that has a steady market and it came to past especially through the Structural Adjustment Program of the 80s.
In 1984, the Naira was redesigned in an effort to inanify (mind my English) money stored through corrupt enrichment. There were queues in front of banks for many days. It was a torturous exercise especially in the North of the country that was under-banked. The same mistake was repeated for the same reason in 2022 and it failed woefully. It was shoddy and perhaps designedly so. All reasons advanced for the action went into cold vapour as we ended up achieving the opposite after being saddled with two different colours of same currency printed at great cost. It is not a case of pounds and sterling appearing only in name, it is doubling of the quantity in circulation. With the old notes still in circulation after two and a half years and in virtually same quantity, the naira is heavily devalued and, like in doubling the pepper soup salt, the economy is wounded severely. It opens the space for counterfeiting and a damaging corruption. It is unregulated inflation. The enemies of this economy have dealt another dastardly blow on us.
‘First World’ countries rejected Binance, Nigeria accepted it and later started a complaint. But Binance could not be prosecuted because Government could not exactly explain the infraction. It is a product of ignorance and corruption; a case of a confused accuser. Again, our universities are unhelpful.
Just like the European coalition adopted the euros and the yen is a zonal currency in Asia, the proposition of a West African currency remains utopian as the francophone countries continue to be tied to France in modern day colonialism and slavery. The level of regional trade is low. And, Nigeria has not shown capacity to manage a national currency lest still a regional one.
Time is money. Interest rates denote the time value of money. So, when projects are not executed on time, it is a colossal waste. Oftentimes, we borrow money for long term projects in a lump. Interests accumulate on the lump while the money is wasted in the idle period of every penny so borrowed. At a time when a nation is in the borrower status, its expenditure must be restricted to value and capital generation. Ostentations, like subsidies for pilgrimage and special concession of exchange rate for non-necessities including overseas education are burdens.
Interest rate is not properly monitored and the people are slaves of one(s) by the other(s). sometimes, the lenders, including communication service providers, deduct the interest at the time of giving the loan and the borrower is immediately shortchanged. Interest rate must be properly regulated so that money as capital is not too expensive.
In 1991, coins and smaller denominations were phased out while higher currencies were printed with no reasonable excuse.
In 1980, a dozen of peak milk sold for #2.20 (two naira twenty kobo). In 2024, it sells for about #10,000.00. That is 4,545 folds over a period of about 45 years. It is a measure of the devaluation of the Naira through trade misappropriation and currency mismanagement during the period; an index of a falling economy. The lack of stability and integrity of the Naira is a disaster!
I am not an economist and my ignorance may be excused and forgiven. But those who know should get us out of the woods.
S. O. K. Shillings Esq, writes from Ikorodu.
