There is a popular saying in my local language that says it is not good to eat with one’s 10 fingers. This means that one must save some of his earnings and not consume it all at once, because there may be future or unexpected expenses. This idea has been the guiding principle motivating individuals to create and invest personal savings from times past, when there was real value and stability in Nigeria’s currency, the Naira. One of the benefits of personal savings is to ensure a certain standard of living, and also to procure goods and services when such needs come up in future. These needs may include things such as securing healthcare services, maintenance of personal and home equipment and other contributions one has to make as a member of the society.
But how can an individual be motivated to have personal savings when they are not sure if their current saving will be able to meet the cost of goods and services in the future in this country, especially now that naira is falling compared to other currencies, especially the US dollar? Before, we used to hear statement such as the “naira is rising and falling,” but now it’s only falling! The current abysmal performance of the naira has largely affected Nigeria’s economy negatively as a good number of products consumed locally are imported and paid for in foreign currency.
A stable value is needed for the country’s currency in order to ensure stability in the prices of goods and services, and also to alleviate the fear of inflation and Naira devaluation. One of the main reasons for the instability of the Naira is the lack of large scale exportation of goods and services to other countries. Nigeria stands as one of the countries that consume imported goods and services in large quantity, but has failed to export a higher amount of goods and services to gain foreign exchange.
Successive governments so largely relied on crude oil exportation as the main source of income for the country, rather than looking for more ways to increase the exportation of non-oil goods. Allowing this to continue will endanger the economy of Nigeria.
While Nigeria continues to rely on crude oil exportation, other countries such as China are busy investing in alternative sources of energy to put their cars and engines to work. There are record numbers of people, even in Nigeria, who make use of solar energy rather than fuel because of high price of petrol and the instability in the price of fuel.
It is good that crude oil prices are appreciating as crude oil export has been doing good to the country’s economy. The fact that it has been sustaining our countries for years cannot be despised. But it will be better if the government and the people can produce more goods and services that the country can export to foreign countries.
It will also be a good idea if the government can moderate the rate of importation of goods and products in our country. Moderation in the sense that the rate of export should be higher than the rate of import. But this can only be attained when the country is developed enough to be able to provide its basic needs and also ensure a good standard of living for its citizens.
It is not a good idea to completely oppose the importation of goods in the country, but promoting a high rate of importation of goods while ignoring the export potentials that the country has is a risk and danger to Nigeria’s economy.
The stability of the currency is one the factors that boosts the confidence of foreign investors. But a country that has a low export level will suffer from a devalued local currency and a high exchange rate compared to other currencies that are supported by a good and standard export system. This is the cause of currency devaluation which has led people being discouraged when it comes to saving their money. However, this can be addressed whenever the government and the people are ready to take appropriate steps against Naira devaluation.
It will be good if the people of Nigeria and the government are ready to take the appropriate steps in order to ensure stability in the value of the naira, now and in the future.
Akinola writes from the Department of Mass Communication, Dominion University, Ibadan
