Hey, what is Naira?--
By Nimi Wariboko
To devalue the naira or not is the raging debate in the country today. This ongoing debate presupposes we all know what the naira is. We pretend that the naira as we know, conceptualize, or operationalize it is receptive to what is at stake in our country at this time: the recasting of foundations for our economic independence, greatness, and future global economic prowess.
I am afraid most of our so-called economic experts do not know what the naira is. When next you meet those government officials or economists who claim to know more than the rest of us ask them this simple question: What is naira? Until we are clearly able to define, conceptualize, or operationalize what we mean by naira we cannot in good conscience deliberate on its value, its value integrity, or its telos.
Now I could almost hear the reader say: "What is the meaning of the question when we know that naira is the name of our national currency." The name naira does not qualify the nature of our national currency; it signifies that it exists, that we have a national currency, but not what it is, not even that it will serve our national interest. It is only our monetary and financial policies that will ensure that the naira enters into a beneficial, glorious relationship with our collective national interest and they provide the measure for it.
What is naira? Let us begin by clarifying what a national currency qua national currency is. A national currency is the site where what it means to be (exist) in common with other national economies is open to definition and contestation. It is a place where a nation's economic potentials and greatness are brought into play. A national currency is not just about forces of demand and supply or a contestation of national loci of power relations. It is the space where the Yes and No of a people's progress through economic life could be discerned. What takes place in a national currency is connectivity: multiple, dispersed, fragmented existences of economic lives and spheres of a nation co-appear in it and with it. In it the economic lives of a people move and have their being.
So what is naira? We will respond to this question by discerning the internal and external relations of our national currency. This is to say we want to examine the naira in terms of what it does for us within the Nigerian economy and also decipher its place in the global hierarchy of national currencies. Internally, the naira is a resource exporter, dispersing the nation's resources and store of value to other countries. The naira since its creation has worked as an instrument of industrial outsourcing and underemployment of domestic resources. It has not worked to spread development to all classes, groups, and regions in the country. Majority of Nigerians work hard for the naira, but the naira does not work hard for the people.
The naira does not encourage the bulk of Nigerians to actively participate in the production and distribution of value. The few that do participate or pretend to do so always work to shift the center of gravity of the naira abroad. In their hands the naira does not grow local content in manufacturing and they allow the hegemonic, imperial currencies and even national currencies of third-rate economic powers to attract to themselves the natural, financial, and human resources of Nigeria. The end result is that the Nigeria's national currency does not help Nigerians to determine their economic patterns of resource use and control.
How so? Any good national currency works to coordinate three important markets in the domestic sphere for the benefit of its owners. First, there is the currency market where the national currency functions as the instrument of trade and payment; and it is in this market that it is daily created and recreated. The proper goal of the creation and recreation is to minimize the erosion of value through inflation. Second, we have the financial market that mobilizes, gathers, and distributes savings for national economic development. Finally, we have the industrial/commodity market that principally distributes work and its rewards across all social segments. These three markets are guided, respectively, by the ethical principles of value integrity, solidarity, and subsidiarity.
The naira has never really functioned to coordinate these three markets and do so for the material and social wellbeing of Nigerians. The naira does not encourage entrepreneurship; it promotes short-term investment decisions, and does not spread development to the places where people are so they can use their local resources to improve their lives and abodes. The naira is risk averse, anti-development, and anti-people.
Let us now turn to the external sphere. There is a hierarchy of national/imperial currencies with a few serving as reserve currencies. The first-tier currency nations (such as the USA and UK) manage the international reserves of their second-tier underlings (such as Nigeria and Ghana)—savings move from poor countries to rich countries. The leading countries of the West control the resources of the world and their currencies are "strange attractors" for the savings and resources of the rest of the world. The foreign exchange reserves of the Global South, for instance, are kept in the banks and financial houses of issuer of global reserve currencies.
The currencies of the leading economies are also the vehicular currencies of global trade and payments. There are power games going on all the time, which show that global economic control is not evenly distributed and gravitates to certain countries. The games are played in certain centers with obvious insiders and outsiders. The United States, the issuer of world's chief reserve currency runs a current account deficit with impunity. No poor country can do this.
If the United States decides to "devalue" its currency in order to improve its current account deficit, Asian central banks, which have built up huge foreign exchange reserve (which are of course in U.S dollars and government liabilities), immediately go into massive dollar purchases to raise the price of dollar, thus continuing the U.S balance of payments deficit. These games are played by countries which can afford to be in the exclusive, segregated, privileged corner of the international public arena and such games are played from definite localities with repercussions for the rest of the world, especially for Africa which is always outside but looking in through the window as a lad presses his face into the glass pane to view the delicacies in the baker's shop. Nigeria is such a lad!
The naira is a "colony" of the West and thus by extension the Nigerian economy is a "colonized economy." An empire does not exist only because it can mobilize and distribute savings or goods and services from far and near by military force, military threat, military umbrella or political subjugation of other societies, but also by—and often in combination with—the use of its currency's monopoly power to do the same.
Hey, what is naira? It is colonized currency that is against its owners. All our current debates about devaluation evade its proper point of departure. Buhari and his economic team need to first work out how to "decolonize" and reengineer the naira so it can foster endogenous economic development. This is the beginning of patriotic economic wisdom.
Wariboko is the Walter G. Muelder professor of social ethics (specialization in economic ethics) at Boston University.
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