BY EMEKA EJERE
Amid a high inflation rate and rising unemployment figure not helped by productivity deficit, the naira has continued on the struggling lane to come it of its woes worsened by the shocks of the new forex policy of the Central Bank of Nigeria (CBN).
On July 27, 2021, the CBN ended the sale of forex to bureau de change operators across the country, saying the parallel market had become a conduit for illicit forex flows and graft. This has seen the naira embark on a plummeting journey that leaves it hovering in the neighborhood of N570/$ at the black market.
However, the local currency gained significantly against the U.S dollar at the official market on Thursday, after it experienced a profound fall against the hard currency in the previous session Wednesday.
Data from FMDQ securities exchange window, also known as the Investor and Exporters (I&E) window where forex is officially traded showed naira which opened at N413.71 closed at N413. 38/$1.
The currency’s performance on Thursday implies N1.35 or 0.33 per cent appreciation from N414.73 it exchanged hands with the greenback currency on Wednesday. This became significant as foreign exchange supply remained unchanged at $467.56 million, the same rate recorded at the close of business on Wednesday.
Naira touched an intraday high of N404.00 and a low of N415.20 before closing at N413.38 per $1 on Thursday.
Meanwhile, at the black market in Abuja and Lagos, dealers exchanged the naira at N570.00 per $1 on Thursday. In Uyo, dealers said it traded at N575.00 a dollar in the morning but rose to N573.00 at the close of business on Thursday.
The naira situation does not look favourable to the rehashed pledge by President Muhammadu Buhari that his government would lift 100 million Nigerians out of poverty in 10 years.
Although critics have described it as a daunting task, citing a high inflation rate and rising unemployment figure amid a devalued naira, Buhari said in his 61st independence anniversary broadcast Friday that the target was achievable.
“We remain confident that our goal of lifting 100 million Nigerians out of poverty in 10 years is achievable,” the President maintained.
Already, inflation and rising prices pushed about 7 million Nigerians below the poverty line in 2020 alone, the World Bank said in June – an albatross that has weakened the purchasing power of Nigerians significantly.
The National Bureau of Statistics (NBS) put Nigeria’s poverty figure at over 82.9 million Nigerians, or 40 per cent of the country’s population.
The unemployment rate also spiked to 33.3 per cent in the fourth quarter of 2020, the highest in over 13 years.
The Socio-Economic Rights and Accountability Project (SERAP), recently claimed that an estimated 27.4 million Nigerians earn less than N100,000 yearly.
Two weeks ago, the Debt Management Office (DMO) disclosed that Nigeria’s total public debt, comprising states and federal government debt obligations, grew by 7.75 per cent, from N32.916 trillion in December 2020 to N35.465 trillion as of June this year.
Only recently, chairman of President Muhammadu Buhari’s Economic Advisory Council (EAC), Dr. Doyin Salami, revealed that the nation’s debt service-to-revenue ratio stood at 97.7 per cent (January to May 2021).
Findings revealed that in 2020, the federal government collected N3.42 trillion as revenues and spent N3.34 trillion to service her obligations, implying that every other expenditure of the government was done via borrowings.
PwC Nigeria said in a recent report that the increasing cost of servicing debt continued to weigh on the federal government’s revenue profile.
It said, “Actual debt servicing cost in 2020 stood at N3.27tn and represented about 10 per cent over the budgeted amount of N2.95tn. This puts the debt-to-revenue ratio at approximately 83 per cent, nearly double the 46 per cent that was budgeted.
“This implies that about N83 out of every N100 the federal government earned was used to settle interest payments for outstanding domestic and foreign debts within the reference period.”
It added that in 2021, the FG planned to spend N3.32tn to service its outstanding debt, a figure higher than the N2.95tn budgeted in 2020.