The Nigeria’s history won’t be concluded
without mentioning the United Kingdom (UK). In view of this, the latter has
hitherto remained a household name when discussing the former, particularly in
the aspect of the country’s politics as well as economy.
It’s noteworthy that the UK comprises
mainly the Great Britain and the Northern Ireland. If further split, the former
consists of England, Scotland and Wales; among these three, the first two
countries majorly constitute the Britain. Owing to both the population and
landmass’ percentage Britain occupies in the bloc, the UK is usually referred
to as Britain.
The Britain, which remains the prime
sovereignty in the UK, has invariably been playing the role of a father in the
Nigeria’s polity as a whole. The obvious fact that Nigeria was a British colony
from the 19th century till it became an independent nation in 1960
can never be swept under the carpet or be forgotten in a hurry. The unending
appreciation of the two countries’ bilateral relation cannot be unconnected
with the aforementioned record.
Penultimate
week, the UK’s Export Finance agency disclosed its intention to add the
Nigeria’s legal tender, naira to its list of ‘pre-approved currencies’,
allowing it to provide financing for transactions with Nigerian businesses
dominated in the local currency. By so doing, the naira will become one of the
three West African legal tenders that the UK export finance has pre-approved
for its means of funding transactions that promote trade with the UK.
It would be recalled that the Britain
voted in 2016 to leave the European Union (EU). The awaited exit has persuaded
London, the capital territory of the UK, to embrace a rethink over its trade
ties with the rest of the world. It’s thus needless to state that the country
is currently reviewing its existing trade and investment policies towards
ushering in more suitable and beneficial ones.
It’s worth noting that in the last
three years, severe dollar shortage in the Nigeria’s foreign exchange market
caused by the emergence of lower oil prices, forced the Central Bank of Nigeria
(CBN) to allow the naira to float after it lost third of its official value
against the dollar. This, therefore, is the reason the currency has not ceased
to stagger within the period in review.
It is imperative to acknowledge that
the pronouncement in question, if duly implemented, would go a long way in
strengthening the Nigeria – UK bilateral cooperation, thereby easing the rate
of importation of goods from the latter to the former. Since the naira would be
accepted as a legal tender in the aforesaid foreign country, Nigeria importers
can easily pay for goods and services over there with the use of the currency.
This implies that the said set of traders wouldn’t need to queue at the
Nigeria’s foreign exchange market to change the naira for dollar or pound
sterling.
But if critically viewed, it would be
realized that such a policy can cause overflow of the naira, which is presently
in a pathetic mood. More so, the ongoing double-digit interest rate will
equally soar the prices of the goods to be imported into the country from the
UK since it’s understandable that borrowing is synonymous with importers. I’m
afraid; these foreseen consequences might result to further depreciation of the
naira.
Besides,
the President Muhammadu Buhari–led government that is deeply concerned about
boosting the country’s local market may not be favoured by the policy, which is
likely to lead to another phase of over-dependence of imported commodities that
has overtime bedeviled our economy. It’s not anymore news that the present
administration’s mantra is anchored on diversification of the country’s revenue
base. So, for this to come at a time Nigerians are encouraged to think home is
enough reason to say that anyone that really means well for Nigeria is still
sceptical over the actual merits that are attached to the policy.
This is to say that, in the long run, the
monetary policy might mainly boom individual pockets to the detriment of the
national coffer. Such resultant effect wouldn’t augur well for the country’s
export base that’s seriously yearning for rescue, hence at the expense of her
economy at large. Any fiscal measure that’s liable to benefit just a few
individuals but impoverish the majority isn’t worth celebrating.
As much as the UK is apparently trying
to boost the Nigeria’s pride in the international market by initiating suchlike
policy, we mustn’t forget so fast that the former stands to be the key
beneficiary of the initiative, hence the need for us not to be carried away by
the euphoria that accompanies the news.
The good news is that, such an approach
would make the naira to be more recognized and respected globally. On the other
hand, it could also reduce the ongoing influx at the parallel market because
most importers may have little or no business to transact over there, thereby
returning the rightful status of the commercial banks.
However, that doesn’t change the fact
that if critically examined, the naira might not get its fair share of the deal;
that the naira might cry foul as the odyssey progresses; that it may end up
causing the currency more harm than good. We must note that in any business or
relation, every partner involved is more concerned about what his personal
benefit entails. Think about it!
Comrade Fred Doc Nwaozor
Executive Director, Docfred Resource Hub (DRH) - Owerri
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Twitter: @mediambassador
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