By Emeka Chiakwelu
“The power of life and death is in the tongue” (Proverbs 18:21).
Words, images and remarks are powerful. Again, spoken words have consequences. One of United States of America most respected and influential economists, Steve Hanke, a professor of applied economics at Johns Hopkins University, made a remark on Nigeria’s currency during an interview with CNBC, which I philosophically disagreed with. Professor Hanke called the naira a “junk” currency.
Professor Hanke is also co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at Johns Hopkins University. At Cato Institute, he is a senior fellow and director of the Troubled Currencies Project and has been a senior adviser at the Renmin University of China’s International Monetary Research Institute in Beijing for some time. Therefore when he speaks, the world of commerce and currency listens.
Professor Hanke said: “Nigeria is in trouble. Amid double-digit inflation, Nigeria’s foreign reserves are dwindling as the government races to shore up a swooning currency, the naira.”
And then he made the devastating “J” statement.
His words: “The currency (naira) is junk and the government is incompetent and corrupt. The only sure-fire way to solve all these problems is for Nigeria to officially replace its junk currency.”
Those who are not accustomed to how remarks and words affect global commerce and currency, when spoken by a highly esteemed economist like Prof. Hanke, will be asking: what is the big deal?
Yes, it is a big deal because in most cases, perception does become reality. Already, inflation is biting hard on ordinary Nigerians due to the weakening naira, but further destruction of the currency will totally destabilise the country’s economic and financial topography.
As I mentioned in one of my articles on naira and wealth of a nation: The value and worth of a currency is determined by the wealth of a nation. In this era of global capitalism, a wealth of nation goes beyond the conventional valuation based on the natural and human resources. A nation’s image, perception, security and stability also played an important role in the determination of a nation’s wealth. Therefore, currency and its value become the bellwether and principal indicator of the economic status and financial wellbeing of a given nation.
I did agree with Hanke that “Nigeria is in trouble” and I will further assent that the cause of that is rooted in corruption and incompetence.
But it must be made crystal clear that the mismanagement of naira and economy has been a long time problem. Therefore there is no easy way out; neither is there a panacea that can immediately neutralise the surging and contemporary calamity facing the country.
When Prof. Hanke said the only sure-fire way to solve all these problems is for Nigeria to officially replace its junk currency, I would like to know for sure what he was actual saying. Does he want Nigeria to come up with a new currency or is he implying that further devaluation of naira is necessary and inevitable? Whatever he might be saying or implying, Nigeria’s problem cannot be solved with his subscriptions and suggestions.
Nigeria is in a deeper hole beyond the perception of the educated and influential professor of allied economics. Nigeria has a macroeconomics dislocation that hinges on its one commodity-based economy and mismanagement rooted in mediocrity and corruption. A nation that failed to do the right thing will also pay the price when the time for reckoning
comes.
Due to colonial inferiority complex embedded in low self-esteem, Africa’s policy-makers have failed to look inward, but every step of the way laid their trust, hope and projections on the Bretton Woods institutions like the International Monetary Fund (IMF), World Bank and any other institutions that are using Africa as a Petri-dish to convolute, fabricate and conjure policies that may not be workable in any other places.
Surely, Nigeria’s naira is in trouble. Nevertheless, it is not
a junk currency.
• Chiakwelu is Principal Policy Strategist at AFRIPOL. His works have appeared in Wall Street Journal, Huffington Post, Forbes and many other important journals around the world.
