Soludo deserved what he got

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Uncle Chukwuma deserved the embarrassment he got from the President Yar'Adua. Like I mentioned in my previous post, the Naira re-denomination was an artificial way to get us back to where we were in 1985. We should ask ourselves how we got to where we are right now. It's like setting out on a journey to Ibadan and ending up in Ijebu Ode. Shouldn't you ask yourself how you got there so you can retrace your steps back to Ibadan? Should you begin to frolic at an owambe in Ijebu simply because that's where you are at that point in time.

Back to the matter at hand, Prof Soludo should have obtained permission and clarified the re-denomination matter with his boss before making the matter public. I think the man is trying to make a name for himself and build some sort of parallel government/empire. Admittedly, he has done a lot for the Nigerian banking sector. But that doesn't mean he knows it all. We just spend billions printing new N5, N10, N20 and N50 notes. The N1000 note is barely 2 years old yet he wants us to fritter away all that money and print even more notes?

Something is definitely wrong somewhere. My colleague (who is very adept at developing conspiracy theories) thinks Soludo was a scapegoat and a victim of politics. Whatever the reason, he needs to be less bullish and more humble in his approach to issues. Yes the man is smart, but humility gets you further than brilliance.

If Nigeria becomes more productive and a net exporter, the Naira to dollar exchange rate will come crashing down. Don't forget that the rate became what it is today because of the mismanagement of our economy. Reversing the trend will require sound economic management policies. The issue with a country's currency is not really what it can buy but how much of it individuals have. If I earn N1000 per month and this meets all my basic needs; food housing and shelter, is that not better than earning N10,000 and struggling just to transport myself to work? Think about it for a moment.

I really respect Soludo and think he's a whizz but on this matter, the man goofed.

Naira Redonimation: Nothing will change

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Other than the psychological effect of spending fewer note, the recently announced redenomination of the Naira doesn't mean anything. The question we should be asking is how we got here in the first place. Pre 1985, the Naira to dollar exchange rate was 1:1. It wasn't a redenomination that depreciated the Naira to this level. Our inability to generate employment, our status as a net importer of goods and services, low level of technological advancement, underinvestment in infrastructure, low level of productivity and other economic failures got us here.

If we don't address the fundamentals, we will find ourselves going back to the N125:$1 regime pretty quickly. Redenomination can't help Zimbabwe on the path to economic recovery for example. Admittedly the exchange rate has been stable over the last two or three years, but this needs to be sustained by concerted macro-economic policies.

Honestly, I don't know if this tonic will get us where we are going. If we do all the right things, the exchange rate will appreciate by itself. Don't economic experts tell us that exchange rates are determined by market forces and not executive fiat?!