The Naira abuse is the result of poor fiscal/monetary policies and gross abuse of our financial systems as a request of massive corruption, lack of accountability and lack of adequate planning and forecasting.
Our foreign reserve dropped from over $60billion to about $24billion dollars between 2007 and 2015 even at a time when our crude oil price was at its maximum.
The foreign reserve is the number one factor responsible for destabilization of Naira. The lower our foreign exchange, the more the country is under pressure to buy more dollars to offset its bills owing to the fact that we a 99% consumer nation.
The 2nd reason is over dependence on Crude oil for foreign exchange. Anything that affects the price of crude oil significantly affects the value of our currency. The only way to cushion the shock of crude oil price drop is to use foreign reserve as stop gap while waiting for oil prices to normalize. But then again, there is no foreign reserve to solve this problem. Hence the need for government to seriously diversify at least 50% oil and 50% Other areas.
This brings us to lack of planning and accountability issues. The nigerian story reminds me of the popular story “who will bell the cat?”. Our leaders all know of the problem at hand but they’re all afraid of putting a leash on the menance caused by over dependence on oil .
Massive corruption in government sector is causing the country severe hemorrhage. If the country is at least 50% accountable for all its cash flows, there will be tremendous improvements.
Revaluation of our currency will not really help us if we cannot guarantee a stabilized currency that lasts at least 4-8 years.