“Prior to the first devaluation of naira in the 80s, naira exchanged favourably with major currencies. A university graduate could hope to save enough money few months after graduation, sufficient to purchase a brand new car. With drop in value of naira, the car became a commodity out of the reach of many university graduates. Graduate cannot even afford to purchase a used car called “Tokunbo”. Development effectively destroyed the middle class in Nigeria. Without a middle class, a country is doomed economically”.

Last week I commended the decision of President Muhammadu Buhari to put a stop to further devaluation of the naira. In doing this I traced the history of devaluation of the nation’s currency to the military and how that decision continues to affect Nigerians. This week I intend to continue my highlight of the President’s commendable decision against the background of just how the Naira’s loss of value has continuously affected Nigeria over the years.

As I stated earlier In the 70s and 80s prior to the first devaluation of the Naira, the naira exchanged favourably with major currencies such as the United States Dollar and the British Pound. This ensured that Nigerians received their pay in a currency that was strong and could thus buy them the necessities of life. For example, the salary paid Nigerian Judges was the same as those paid to their counterparts in England. This also applied to University Professors and Doctors. With this state of affairs there was little or no need for such professionals to leave the country in search of the proverbial Golden Fleece. However following the devaluation of the Naira several key sectors were affected by a massive exodus of qualified personnel. Doctors started to seek employment in Europe, the Middle East and other parts of Africa whilst University Professors started to explore opportunities open to them in foreign Universities. On their part Judicial officers were compelled to work under harrowing conditions as Government failed to provide much needed infrastructure for the efficient running of the Judiciary.

 

 

EEFECT OF DEVALUATION ON ORDINARY NIGERIANS

However ordinary Nigerians were also affected. At a time in Nigeria, a University graduate could hope to save enough money, few months after graduation sufficient to purchase a brand new car. However with the drop in value of the Naira a car became a commodity out of the reach of many University graduates. This situation prevails to the present day in which most graduates cannot even afford to purchase a foreign used car, popularly referred to as “Tokunbo”. Many Nigerians could no longer afford to put food on the table. Basic healthcare became a luxury of sorts for millions of Nigerians.

DESTRUCTION OF THE MIDDLE CLASS

These developments effectively destroyed the middle class in Nigeria and as Political and Economic analyst all agree, the Middle Class is the driving force of any economy. Without a middle class a country is doomed economically and politically. On the 7th December 2011 President Barrack Obama in a speech delivered on the importance of the middle class stated as follows:

“When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy from top to bottom. … that’s why a CEO like Henry Ford made it his mission to pay his workers enough so they could buy the cars they made.”

In a similar vein a public commentator, David Madland stated as follows:

“Perhaps the most important way a strong middle class boosts economic growth is by creating better governance. The president alluded to this when he argued that inequality distorts our democracy by giving “an outsized voice to the few who can afford high priced lobbyists and unlimited campaign contributions.” This is a problem Theodore Roosevelt also discussed in his speech in Osawatomie, Kansas, a century before.

The middle class promotes efficient and honest delivery of government services, as well as forward-looking public investments—in education and infrastructure, for example—that benefit all of society rather than only special interests. Such good governance sets the stage for economic growth. But when the middle class is weak, government tends to operate poorly as the wealthy use their disproportionate power and influence to secure special favors, wasting taxpayer dollars on narrow tax breaks, bank bailouts, special copyright terms, and giveaways of public resources.

The middle class has a strong interest in promoting foresighted policies and making government work well because their economic fate is more closely tied to the quality of government than that of the wealthy. Quite simply, the middle class depend more on public services than the rich. High-income individuals can more easily opt out of public services because they can readily use private services unavailable to individuals with average income.”

In stark contrast to the above, the divide between the rich and poor in Nigeria continued to widen. As stated by David Madland, the rich in Nigeria became less concerned in the dwindling state of educational and health facilities provided by the government as they could afford to send their Children to private schools within and outside Nigeria whilst at the same time flying out of the Country to seek medical attention for the most trivial of ailments. The middle class who could have influenced a change in governmental attitude had had their fortunes reversed by the drastic drop in the value of the Nigeria. As a result of these unemployment became the order of the day and where unemployment is rife, poverty is sure to take a foothold. Little wonder then that Nigeria since the 80s experienced a surge in violent crimes including armed robbery and kidnapping. Despite all insinuations regarding the political undertones of the Boko-Haram menace, I believe that poverty has also contributed in no small measure to the rise of the insurgency. I find it difficult to imagine that any one assured of the basic amenities of life and guaranteed of a bright future which only a sound economy can provide, will willingly take up arms against his government or volunteer his life as a suicide bomber.

Next week I will focus on the solution available to the country other than devaluation of the naira.

 

AARE AFE BABALOLA, SAN, CON, D.LL, D.Litt

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