Sir Chigozie Okafor Shares Strategy that Can Save the Naira

At the time of writing, the exchange rate of one dollar in Nigeria almost hit north of N900 in the last couple days and continually threatens to hit and exceed N1,000. The upward trend is the same for the British Pound, Euros, Chinese Yuan and several others. This unpleasant situation has brought about a terrible surge in the cost of production and living across various sectors of the federation. Government seems to have been trying to curb this menace for a while now.

However, the government has the power to end this and thankfully, there is one thing the government can do. In the opinion of Sir Chigozie Chukwudi Okafor, CEO Dynatech Group “All hard currency related transactions within the country can and should be made cashless while the economic forces of demand and supply handles the rest. It is just that simple. People get to receive regulated credit deposits for specific uses into their respective domiciliary accounts but not in cash. This means online forex transfers will get mainstream attention just like the usual naira to naira money transfers via bank apps. In the end, panic over the dollar rise or fall would technically become history”

(Sir Okafor, CEO Dynatech Group)

You see, the major cause of the hike in the exchange rate of the dollar is largely due to speculation from just about everyone. These days, anyone can become a speculator even without decent education in economics or experience with finance and administration. The average Nigerian believes that “the dollar will go up” and as a result wants to buy and hoard as many dollar notes as possible even when s/he does not need them. This creates an unnecessary artificial scarcity for people who need it plus associated panic in the general populace.

Now, while anyone is free to earn as many dollars as possible, the government can technically save the naira and combat inflation by limiting the supply of dollar notes to the general populace. By all means, people who should have access to the dollar must be people who need it: importers processing Form M to pay their suppliers in diaspora, students processing Form A for tuition fees, people seeking forex to pay for medical bills abroad, etc cetera.

Dollar bills aren’t makeup materials or elements of interior decor that people stack up and use to beautify their homes or spaces. It should not be seen stacked in a clay pat in grandpa’s kitchen in the village if that will affect general supply and productivity.

Naira Remains Nigeria’s Official Currency

So why the craze about dollar notes particularly people who do not need it? And why must the rise and fall of the dollar affect fresh tomatoes in the market or palm oil far in the villages? It will be wise if the government can create regulatory policies and outfits that will foresee the allocation of forex to commercial banks and track its usage.

For instance, if the Central Bank of Nigeria (CBN) allocates x amount of dollars or pounds or euros to a certain commercial bank for the month of September, they would be unable to access more forex until the allocated volume is exhausted. To exhaust the allocated volume would mean that individuals or businesspersons that would access this forex must have submitted proper documentation showing the amount of forex needed and why it is needed. Should a submission qualify, the amount of forex involved is sent directly overseas to the international entity that required the payment.

Conversely, freelancers and businesspersons who receive payments, donations and funding from outside the country would receive credits in their domiciliary accounts but will be given naira equivalent of their money’s worth when they go to withdraw.

In a Nutshell

All these strategies above will neutralize the unnecessarily high attention given to dollar notes while gradually restoring relevance and confidence to the naira. Also, as people adjust to the new normal by focusing more on economic activities instead of hoarding hard currencies, the dollar would fall, cost of living will drop and inflation will slow down. It is no rocket science. Let’s go cashless on hard currencies. People will stop hoarding what they don’t need and can’t even find. Everyone falls back to the naira. People who need hard currencies gain access cashlessly when they qualify. Economic activities increase.  Inflation slows down. Government and citizens are happy. The end!