GET RID OF THIS UNPLEASANT FX REGIME

The World Bank and International Monetary Fund, two Bretton Woods organizations that helped establish the existing foreign exchange regime alongside the British colonizers, are aware that the pattern is doomed to failure for the permanently repressed peripheral countries.

By the way, does Spain have a naira hoard to cover the cost of its imports, or does the Netherlands, which purchase cocoa and petroleum from Nigeria, have one？ Furthermore, why, for example, does the US not receive payment for its foreign loans in naira？

Ultimately, documents suggest that the United States has accepted IMF loans denominated in the currencies of Germany and Japan, its partners in the Organization for Economic Co-operation and Development: the German mark and the yen, respectively.

Increased demand would make the currencies of the peripheral economies stronger if such loans were made in those currencies. It's remarkable that no leader of a Third World nation is questioning this, with the exception of William Ruto, the president of Kenya.

This foreign exchange template comes from Adam Smith's rule book, which advised metropolitan economies to sell their excess industrial (and agricultural) produce to peripheral economies. It requires nations such as Nigeria to maintain a sufficient inventory of foreign reserves in their banks to finance imports.

The premise that peripheral economies, such as Nigeria, can never manufacture the consumer goods they want and will always import them from metropolitan economies is one that is working well in favor of the metropolitan economies.

Regretfully, the Nigerian economy has been designed by those in charge of running the country's policies in such a way that the country is constantly in need of hard currency in order to support its large government and substantial import bill for consumer products.

For this reason, an anticipated exchange rate of N800 to $1 must be included in the budget by the Minister of Budget and Economic Planning. America used the dollar as leverage to force Saudi Arabia and the Organization of Petroleum Exporting Countries to accept it as payment for the sale of oil on the global market.

The naira would appreciate in value relative to the so-called hard currencies, such as the US dollar, the British pound sterling, the Euro mark, and the Japanese yen, if Nigeria were to be paid in naira for its petroleum.

Because President Bola Tinubu and Central Bank of Nigeria governor Yemi Cardoso don't appear to be able to tame the wild forex cat, at least not in the near term, members of Nigeria's rentier class, who profit from the inefficiencies of the futile, half-hearted attempt to tame the exchange rate regime, are still grinning to the bank.

What you are witnessing is a mere vestige of the British colonialist era, serving the interests of the rentier elite, the indigenous colonizers who control Nigeria's central banking system, government, and political system for their own gain.

“So that the bureaucrats who run the CBN, the government, and their friends will be able to tweak the exchange rate to their own advantage,” is the response to the question, “Why would the CBN be the trader as well as the regulator of forex？”

A friend tells me that they don't sell forex. Indeed, in the same manner that it adjusts interest rates and the cash reserve to manage inflation in the financial system, the CBN can step in to control foreign exchange.

Actor, attorney, and former spokesperson for Peter Obi's Labour Party Presidential Campaign Council Kenneth Okonkwo has submitted a list of the detrimental effects of today's ineffective foreign currency regulation. For the next four years (of President Tinubu's administration), people will go hungry, he bemoaned, “because the naira will not appreciate.”

Okonkwo continues, “(A) strong currency is reliant on (a) strong economy... to illustrate that a productive real sector is the remedy to a weak currency.” (A) A stable export market and an industrial foundation are necessary for a robust economy.

In other words, the main remedies to the FX crisis are not yet the monetary policies of the CBN, but rather sound macroeconomic and fiscal policies under the purview of the ministers of Finance, Budget, and National Planning.

Is there an other economic theory than the West-centric one that suggests central banks or governments should be the ones issuing foreign exchange？ For example, why should the CBN give airlines foreign exchange？

Similar to Rufai Oseni, co-anchor of Arise TV's “The Morning Show,” who believes conventional wisdom

For example, why should petroleum earnings go to the Federal Government (or the Special Purpose Vehicle Federation Account) rather than to Nigerian individuals who hold the country's most significant political office？

It is not the government's role to distribute funds to subnational organizations. You must have observed that the bureaucrats are still clinging to power despite the fact that the Petroleum Industry Act changed the government-owned Nigerian National Petroleum Corporation into a “privatised” Nigeria National Petroleum Company Limited. Their cash cow is that.

Why is Nigeria unable to strengthen the naira through the utilization of its petroleum resources？ Paul Alaje, a chief economist with SPM Professionals and consultant on finance and development, is likely an iconoclast who believes in extreme ideas that the rentier class would not embrace.

Although this template will force foreign buyers of Nigerian petroleum to first accumulate enough naira (as foreign reserves) to buy Nigerian petroleum, the rentier class in Nigeria, which benefits from the government's centralized control over the country's petroleum resources, will not like to see the dollar lose its significance in the country's economy.

Apart from augmenting the local production and accessibility of petroleum products, Alaje's proposal ought to fortify the naira and diminish the importance of the so-called hard currencies in Nigeria's economy.

Furthermore, there's no denying that Nigeria might be saving the 40% of its foreign exchange that it claims is used to import petroleum products, which are perhaps the country's most important consumer goods.