Starting under Professor Charles Soludo and continuing under Sanusi Lamido Sanusi, Nigeria (via the Central Bank of Nigeria) has depleted its external reserves by tens of billions to defend (in this case "propping up") the value of the Naira against the Dollar. They were helped in their task by the dollar's depreciation against other major world currencies in the same period. Heaven knows how much we would have spent if the dollar's value had been stable, or if it had appreciated.
Elsewhere in the world, when the currency depreciates, people start talking about how it will help exports. In Nigeria we spend tens of billions to keep the Naira up because we gain nothing from its decline.
It possible the CBN is acting to protect citizens' and firms' from the decline savings and other Naira-denominated assets losing assetsavings from eroding. It is much more likely the CBN is acting to prevent the price of imports from going up.
Which is the other side of the paradox.
Elsewhere in the world, people are happy to be able to export more and to have domestic producers claim a greater share of the local market as imports go up in price. But not Nigeria. It would be only a minor exaggeration to say our economy revolves around exporting unprocessed, unrefined crude oil and importing everything else.
We import capital equipment and spare parts, so we have to keep import prices down, or so they say. However, we are unable to use cheap labour (made more so by a depreciating currency) to attract capital investment in labour-intensive industry.
We cannot bring the textile industry back to life, so the moribund industry cannot benefit from an improved exchange rate (from the perspective of an exporter). So it is a priority to keep the Naira from a decline that would make it difficult for the people to buy imported textile products.
But it is more than that.
A few years ago, there was much talk of agricultural subsidies in Europe and North America. African governments talked about it. The Bretton Woods institutions talked about it. Commentators in the African media wrote about it. International non-governmental organizations and national "civil society" groups protested it. The World Trade Organization weighed in, as did the African Union. The European Union, the United States, Canada and Japan made the usual rhetorical statements that were (as usual) the direct opposite of what they were actually doing. Everyone said Western agricultural subsidies were destroying African agriculture, and everyone said the subsidies had to be removed.
It was quite a sexy topic for a while. Nowadays, no one talks about it much.
Agricultural subsidies were (and are) only the tip of a massive iceberg of market-distorting policies employed by global economic powers. The truth about the "free" market is it has never been free and it has never been fair. If an interested party demands some specific thing be done to make the market more free and fair, odds are the thing they are asking for is something that will distort the market to the advantage of that particular interest party (or that party's industry in general).
It is not a fair playing field, which is why I get very angry with Nigerian (and African) politics, economics and social dynamics. We are so far behind, so lacking in the basic infrastructure and superstructure we need to compete with the rest of the world, and yet we continue to waste vast amounts of time, energy and resources arguing with each other, not to mention fighting and sometimes killing each other, over rubbish that has nothing to do with maximizing our potential or achieving the strategic necessities.
What is interesting is there is a school of thought in Africa that believes the expanding trade with China is superior to the traditional trade with Europe and North America.
I am perfectly aware that the rise of China and India has been of monumental benefit to Nigeria. Once upon a time, all of the world's resource producers had to sell all of their product to a tiny fraction of the world's population. With supply high and demand limited (even people who consume to excess can only consume so much), commodity prices were low and flat. Adding India and China to the demand side of the commodity trade ratcheted up demand, even as supply remained fairly flat, and commodity prices shot up. In the first decade of the 21st century, before the Great Recession, Nigeria was able to enjoy a second Oil Boom, albeit a smaller boom than we had in the 1970s.
But if you were a Nigerian interested in diversifying our economy in general, our exports in particular, and manufacturing specifically ... you would immediately realize we were facing the same glass ceiling we faced during the era when Europe and North America dominated our import/export trade. China's currency manipulation, domestic market protectionism, lax protection of intellectual property theft, and other policies would be as much of a problem for us as the infamous agricultural subsidies (and other policies) of Europe and North America were and still are. All told, what we considered a neo-colonial trading pattern continues as always, but with China taking a share of a trade that used to be the exclusive preserve of the Europeans and North Americans.
Of course a conversation of how the trade policies of global powers affects us is just academic, virtual, ephemeral, theoretical. There is not practical import to talking about it.
You see, inasmuch as we suffer the effects of these policies, we do not actually notice the pain. We don't notice the pain because we are in no position to feel the pain.
Okay, let me speak plainly. And I will use China once more for comparative purposes.
It is not just their market-distorting policies that gives them the economic advantage over us. They also have better infrastructure, better superstructure, better administration, more effective bureaucracy and higher productivity among other advantages.
What bothers me is, even if we Nigerians fix our deficiencies in all of those sectors, we would still have to deal with the legacy of China's market-distorting policies, same as with the rest of the global powers.
When I say "legacy", I mean things that start out as short-term or medium-term distortions, but which eventually acquire a sort of permanence, and immortality if you will, until everyone (investors, consumers, traders, politicians, administrators, everybody) treats it as the "normal" structure of world production and trade even though it is in effect a permanently distorted production or trading pattern.
But like I said, we are not even at the point where we truly feel the pain.
Where we are right now, a devaluation of the Naira does not help exports. Just makes it difficult for us to import things that other countries are able to sell to use because of market-distorting policies.
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