In the past, I had written about our rather obsessive preoccupation with ‘the true value of the Naira’. Every talking head on our favorite TV channels waxed lyrical about this true value, with many foisting what was their sheer opinions as the pure gospel, akin to the tablets with 10 Commandments that God himself handed over to Father Moses for the Israelites. How many times have they sworn that the naira is overvalued, and that we must devalue urgently (the usual refrain), only for the naira to gain strength? Many have applied academic formulas strictly to this naira value, with some suggesting a crawling peg by which the naira will be devalued yearly by the difference between US and Nigerian inflation (that would be an endless devaluation as far as the eye can see, because Nigeria – a developing country – is not expected to achieve 2 per cent inflation which may mean that our economy will not achieve growth at all, after all some healthy level of inflation is important for economies like ours to grow). If inflation was too low in Nigeria, that would be a disincentive to productive industries who need to be able to mark up their prices from time to time (if only to adjust for imported inflation that comes with their raw materials or other inputs). Inflation at say 2 per cent in Nigeria would be too close to deflation, which marks a death knell for industries and the economy. Pakistan went through this barely two years ago.
The productive value of the naira, By ‘Tope Fasua
